Scorpio Mining Reports Financial Results for First Quarter 2013

TORONTO, May 10, 2013 /CNW/ - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Company") reports its financial and operating results for the first quarter ("Q1") ended March 31, 2013. This press release should be read in conjunction with the Company's unaudited Financial Statements and Management's Discussion and Analysis for the first quarter ended March 31, 2013, available on the Company's website at www.scorpiomining.com and on SEDAR at www.sedar.com. All monetary figures are expressed in Canadian dollars unless otherwise specified.

HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2013

   
  Three Months Ended
  Mar 31, 2013 Dec 31, 2012 Mar 31, 2012
Mine operating earnings ($000's) $2,226 $3,884 $5,983
Net earnings ($000's) $1,255 $1,429 $4,013
Earnings per share (basic) $0.01 $0.01 $0.02
Adjusted EBITDA ($000's) (1) $3,238 $5,319 $5,485
Adjusted EBITDA per share (basic) (1) $0.02 $0.03 $0.03
Cash flows from operating activities before movements
in working capital (000's)
$3,276 $5,347 $5,485
Underground ore production (tonnes) 124,383 130,006 140,653
Plant throughput (tonnes) 136,128 129,115 132,042
Surface stockpile (tonnes) 24,480 36,679 28,581
Head Grades:      
  Silver grade (g/t) 70 91 98
  Zinc grade (%) 1.44 1.60 1.65
  Copper grade (%) 0.28 0.27 0.39
  Lead grade (%) 0.84 0.72 0.82
Recovered metals in concentrates:      
  Silver ounces 251,220 296,243 330,487
  Zinc pounds (000's) 3,194 3,322 3,833
  Copper pounds (000's) 440 347 600
  Lead pounds (000's) 1,808 1,330 1,564
Recovered silver equivalent ounces (2) 502,934 521,295 620,356
Total cash cost per silver payable ounce (US$) (1) $10.42 $10.56 $7.78
Silver payable ounces 221,447 247,877 265,009
Zinc payable pounds (000's) 2,482 2,879 3,382
Copper payable pounds (000's) 413 338 524
Lead payable pounds (000's) 1,653 1,168 1,426
Revenue from metals payable ($000's) $11,047 $12,546 $15,585
Distribution:      
  Silver 54% 61% 59%
  Zinc 21% 21% 20%
  Copper 11% 9% 12%
  Lead 14% 9% 9%

FIRST QUARTER 2013 HIGHLIGHTS & SUBSEQUENT EVENTS

Financial

  • Revenue from metals payable of $11.0 million in Q1 2013 is down from $12.5 million in Q4 2012 due to lower recorded metal prices for all metals and lower silver and zinc head grades, albeit compensated by higher copper and lead grades;
  • Cash cost per silver payable ounce, net of by-product credits(1), decreased to $10.42 in Q1 2013 compared to $10.56 in Q4 2012 due to decreased costs and an increase in by-product credits from increased production of lead and copper;
  • Net earnings in Q1 2013 decreased to $1.3 million or $0.01 per share (basic) compared to net earnings of $1.4 million, or $0.01 per share (basic), in Q4 2012;
  • Adjusted EBITDA(1) of $3.2 million in Q1 2013 decreased from $5.3 million in Q4 2012 as a result of lower revenues described above; and
  • Cash flow from operating activities before movements in working capital of $3.3 million in Q1 2013 decreased from $5.5 million in Q4 2012.

Operations

  • Achieved the highest plant throughput in Q1 2013, compared to any previous quarter, and an increase of 6% compared to Q4 2012;
  • Increased recoveries in Q1 2013 for all metals compared to Q4 2012;
  • Recovered metals in concentrates in Q1 2013 reflect an increase in lead and copper and a decrease for silver and zinc, compared to Q4 2012;
  • Recovered silver equivalent ounces(2), at 502,934 ounces in Q1 2013, decreased 4% from 521,295 ounces in Q4 2012 mainly due to a reduction in silver and zinc head grades, which was partially offset by higher lead and copper grades;
  • Increased production of lead and copper concentrates;
  • Continued focus on decreasing costs and increasing efficiencies to reduce overall cost per tonne of material mined and processed; and
  • Took receipt of a mechanized roof-bolter (Sandvik DS410) for underground development and commenced its commissioning.

(1)     This is a non-IFRS performance measure; see Non-IFRS Performance Measures section of the Q1 2013 Management's Discussion and Analysis.
(2)     Silver equivalent ounces were calculated using the following metal prices: silver US$24/oz.; zinc US$0.90/lb.; copper US$3.50/ lb.; and lead US$0.90/ lb.

Project Development

  • Increased plant throughput achieved in Q1 2013, and going forward, is largely due to the installation of efficient cyclone feed pumps and resizing of cyclone components near the end of Q4 2012, as well as the effect of the flash flotation cell on the mill circulating load;
  • Advanced definitive engineering for the development of the El Cajón Project;
  • Received archaeological clearance for the new haulage road between the Cosalá Norte development area and the existing Nuestra Señora processing plant;
  • Subsequent to the end of Q1 2013, the Company received approval of its Environmental Impact Statement ("EIS", the acronym in Spanish "MIA") for exploitation of the El Cajón and San Rafael underground deposits from SEMARNAT;
  • Subsequent to the end of Q1 2013, the Company hosted a site inspection by SEMARNAT technicians as part of the process to obtain the Change of Land Use Permit for the Cosalá Norte projects; and
  • Nuestra Señora reserve estimate and Cosalá Norte District Preliminary Economic Assessment ("PEA") slated for completion in Q2 2013, by Reno-based Mine Development Associates ("MDA").

Exploration

  • The Company has planned 11,500 meters of both surface and underground drilling at the Nuestra Señora Mine to investigate new areas and to further define and upgrade areas with currently defined Inferred resources;
  • An additional 5,000 meters of surface drilling will test the Venado, Los Cristos, and San Ramon targets, where significant silver-lead-zinc+/-copper mineralization has been identified in either outcrop, drill core or historical workings; and
  • The planned 2013 exploration program, which also includes an airborne geophysical survey and ASTER alteration study, is budgeted at $5.2 million. Follow-up programs will be planned based on success of the drilling and results from the numerous surveys underway.

OUTLOOK

The Nuestra Señora operations continue on their path to improvement with the processing plant operating at full capacity. Cost reduction programs are ongoing and are meeting with continued success.

The Company looks forward to the near-term receipt of the PEA study by MDA. The PEA will include an updated reserve estimate for the Nuestra Señora Mine and an economic assessment of the nearby El Cajón and San Rafael projects based on a sequential development schedule. Now that the EIS has been received, construction and mine development at El Cajón, located 14 kilometers by existing road to the Nuestra Señora processing facility, is scheduled to commence upon receipt of the Change of Land Use permit.

As an updated Nuestra Señora reserve estimate and associated mine plan are received, additional controls are envisaged to enable the stabilization of head grades being delivered to the processing plant. In addition, there are significant on-going efforts to upgrade areas containing Inferred resources as well as to define ore sources currently outside of the existing resource model.

As at March 31, 2013 the Company had $26.0 million in its treasury and the cash flow generated from its Nuestra Señora operation continues to allow the Company to finance its immediate capital, development and exploration plans, as well as to look for growth opportunities.

About Us

Scorpio Mining Corporation is a silver producer operating in Mexico with significant base metal by-product credits. The 100% owned Nuestra Señora Mine in the Cosalá District of Sinaloa State, Mexico, has flexible mining methods and diversified metal production. It has a fully mechanized underground operation and a processing facility with permitted capacity for expansion to 4,000 tonnes per day. The plant produces zinc, copper and lead concentrates, with a significant payable silver component in the copper and lead concentrates.

In addition, the Company has numerous exploration targets in the vicinity of its current operations as well as the advanced El Cajón and San Rafael development projects. The Company's strategy for near-term growth is currently focused on mine development of the El Cajón deposit upon receipt of permitting.

Scorpio Mining's President and CEO, Mr. Pierre Lacombe, Eng., is a Qualified Person as defined under National Instrument 43-101 and has reviewed the content of this release.

ON BEHALF OF SCORPIO MINING CORPORATION

Pierre Lacombe
President & CEO

This news release includes certain statements that may be deemed "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the Company's operations, exploration and development plans, expansion plans, estimates, expectations, forecasts, objectives, predictions and projections of the future. Generally, these forward-looking statements can be identified by the forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "projects", "intends", "anticipates", or "does not anticipate", or "believes", or "variations of such words and phrases or state that certain actions, events or results "may", "can", "could", "would", "might", or "will" be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Scorpio Mining Corporation to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the exploration and development and operation of the Company's projects in Mexico, risks related to international operations, construction delays and cost overruns, the actual results of current exploration, development and construction activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, future prices of silver, zinc, copper, lead and gold, risks relating to completing acquisition transactions as well as those factors discussed in the sections relating to risk factors of our business filed in Scorpio Mining Corporation's required securities filings on SEDAR, including its Annual Information Form dated March 14, 2013. Although Scorpio Mining Corporation has attempted to identify important factors that could cause results to differ materially from those contained in forward-looking statements, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended.

There can be no assurance that any forward-looking statements will prove accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Scorpio Mining Corporation does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.

SOURCE: Scorpio Mining Corporation

For further information:

Victoria Vargas, Vice President Investor Relations and Corporate Communications +1 416-585-2200 Email: vvargas@scorpiomining.com
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North America)
Email: rkaiser@scorpiomining.com

Website: www.scorpiomining.com

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