Scorpio Mining Advances Expansion Planning to Increase Production Capacity at Nuestra Señora Processing Plant by Over 80%

TORONTO, Jan. 30, 2012 /CNW/ - Scorpio Mining Corporation (TSX: SPM) ("Scorpio" or the "Corporation") is pleased to announce that the proposal to expand its 100% owned Nuestra Señora processing plant, located in Sinaloa, Mexico has been approved by its Board of Directors.

Parviz Farsangi, President & CEO, comments, "Our continued improvements and success in the areas of production, processing and financial strength have allowed us to focus on a major expansion project that is expected to increase our current production capacity by over 80%. Scorpio Mining has a strong resource base from which to build on and significant exploration upside in the Cosalá and Parral districts, providing excellent opportunity to grow substantially in the near term through advancing our 100% owned assets."

Over the past four months, the Corporation carried out internal engineering and scoping studies to determine the optimum size of the Nuestra Señora plant expansion from its current capacity of 1,500 tonnes per day (tpd). Scorpio is pleased to report that the planned expansion is expected to result in a daily processing capacity of approximately 2,750 tpd, reflecting an increase of over 80% from current processing capacity. Additional tonnage to support the increased processing capacity may be delivered from several sources, including additional production from the Nuestra Señora Mine, the refurbished La Verde Mine, and new production from the San Rafael and El Cajón deposits. Further evaluation will determine the best feed combination according to potential production schedules and permitting status.

The La Verde Mine has been in continuous production since 1988 and is located 23 km by road from the Nuestra Señora processing facility. Since being acquired by Minera Platte River Gold in 2008, mine production was leased to a private contract mining company. Production at La Verde during 2010 by non-mechanized methods totalled 121,000 tonnes grading 114 g/t silver and 0.44% copper, with silver and copper recoveries of 78% and 82%, respectively. Scorpio assumed control of the operation in early 2011 and commenced refurbishment for improved safety and future production. In addition, over 8,000 tonnes of La Verde ore were processed at the Nuestra Señora plant during 2011 to determine metallurgical performance.

Work completed to date and currently in progress to prepare the La Verde Mine for mechanized mining production includes:

  • Refurbishment of all services (mostly completed).
  • Upgrading electrical network in preparation for mechanized mining methods (completed).
  • Installing roof bolts and developing safer accesses (in progress).
  • Formalizing access and employment agreements with the local community (completed).
  • Exploration and definition drilling to support a NI 43-101 reserve and resource estimate (in progress).

Presently, 3,200 metres of the initial drilling program of 4,000 metres have been completed on the La Verde Phase I Program; results will be released on a timely basis as received and compiled. Completion of a NI 43-101 compliant mineral reserve and resource estimate for La Verde is expected by early Q2-2012.

The San Rafael and El Cajón deposits are located approximately 15 km by road from the Nuestra Señora processing facility. NI 43-101 compliant mineral resources have been defined for both deposits (see News Release dated October 15, 2009). Diamond drilling to increase the resource base and support an upgrade to reserve category is in progress. Completion of the drilling program is expected by the end of Q1-2012; results will be released on a timely basis as received and compiled. Updated NI 43-101 compliant mineral reserve and resource estimates for the San Rafael and El Cajón deposits are expected in Q2-2012.

Key elements included in the Nuestra Señora plant expansion studies were capital cost and construction schedule estimation supported by performance guarantees, the identification of major component requirements, and used equipment sourcing. With the increase in plant capacity from the original plan of 2,250 tpd (see News Release dated June 27, 2011) to 2,750 tpd, completion of the plant expansion is now scheduled for the fourth quarter 2012, providing for full operation at 2750 tpd throughout 2013.

The cost of expansion is estimated at US$20 million and includes detailed engineering, procurement and construction, as well as associated mine capital to support the increased capacity. All required capital for this expansion project will be funded internally from operational cash flows.

The plant expansion project is subject to granting of permits by Mexico's Ministry of Environment and Natural Resources (SEMARNAT). Reaching a processing rate of 2750 tpd by January 2013 is contingent on a successful drilling program at La Verde to confirm mineral resources and a reliable source of ore feed to the plant. La Verde, by virtue of its recent operating status, is positioned as the earliest source of ore feed amongst the advanced deposits in the Cosalá District.

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 and plant located in the Cosalá district of Sinaloa State, Mexico, has proven to be a low-cost operation with the benefit of flexible mining methods and diversified metal production. It boasts a fully mechanized underground operation and a processing facility built for expansion to 4,000 tonnes per day. The plant produces zinc, copper and lead concentrates; with a significant silver component in the copper and lead concentrates. In addition, the company has over 40 exploration targets mostly in the vicinity of its current operations. The Corporation also holds a 100% interest in the La Revancha silver and Tepozán silver-gold exploration properties in the Parral District of Chihuahua State, Mexico.The Corporation's strategy focuses on exploring and developing its existing mineral properties.

Scorpio Mining's President and CEO, Parviz Farsangi, MEng, MBA, PhD, PEng, is a Qualified Person for the Corporation's Mexico projects and has reviewed the content of this release.

ON BEHALF OF SCORPIO MINING CORPORATION

Parviz Farsangi
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 plant expansion, production, objectives, strategy, mine operations, exploration, future performance, our management team, and plans. 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 Nuestra Señora and La Verde projects, risks related to international operations, construction delays and cost overruns, equipment breakdowns, 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 30, 2011. 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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