Mr. Parviz Farsangi reports
SCORPIO MINING IMPROVES Q1 2012 NET EARNINGS TO $4M
Scorpio Mining Corp. has released its financial and
operating results for the first quarter ended March 31, 2012.
This press release should be read in conjunction with the company's
unaudited condensed interim consolidated financial statements and the
management's discussion and analysis for the three months ended March
31, 2012, which are available on the company's website and on SEDAR.
HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2012
Three months ended
March 31, Dec. 31, March 31,
2012 2011 2011
Mine operating earnings ($000s) $ 5,983 $ 3,613 $ 12,547
Net earnings ($000s) $ 4,013 $ (1,040) $ 6,557
Earnings per share (basic) $ 0.02 $ - $ 0.03
Adjusted EBITDA ($000s)(1) $ 5,485 $ 3,574 $ 12,852
Adjusted EBITDA per share (basic)(1) $ 0.03 $ 0.01 $ 0.07
Cash flows from operating activities ($000s) $ 2,915 $ 1,129 $ 10,836
Underground ore production 140,653 135,084 113,826
Plant throughput 132,042 131,581 122,062
Head grades
Silver grade (g/t) 98 91 115
Zinc grade (%) 1.65 2.05 2.49
Copper grade(%) 0.39 0.34 0.42
Lead grade (%) 0.82 1.03 0.98
Contained metals in concentrates
Silver (ounces) 330,487 320,448 368,866
Zinc (pounds) 3,832,948 4,922,536 5,856,347
Copper (pounds) 599,854 522,468 731,078
Lead (pounds) 1,564,132 2,094,092 1,834,694
Contained silver equivalent ounces(2) 620,356 659,765 763,896
Total cash (recovery) cost per silver payable ounce (US$)(1) $ 7.78 $ 10.81 $ (7.63)
Silver payable ounces 265,009 246,114 321,713
Zinc payable pounds 3,381,615 4,103,691 4,546,654
Copper payable pounds 523,897 464,203 689,768
Lead payable pounds 1,425,840 1,646,566 1,626,241
Revenue from metal payable ($000s) $ 15,585 $ 13,776 $ 20,812
(1) This is a non-IFRS (international financial reporting standards) performance measure.
(2) Silver equivalent ounces were established using a silver price of $24 (U.S.) per ounce, a
zinc price of 90 U.S. cents per pound, a copper price of $3.50 (U.S.) per pound and a lead
price of 90 U.S. cents per pound.
Financial
- Revenue from metal payable increased 13 per cent from $13.8-million in the fourth quarter of 2011
to $15.6-million in the first quarter of 2012, due to improved silver grade and higher
recorded metal prices. Revenue from metal payable decreased 25 per cent
compared with $20.8-million in the first quarter of 2011, which was the best quarter in the
history of the company. The decrease in revenue relative to the first quarter of 2011
was due mainly to lower production of contained metals as a result of
lower head grades in all metals, decreases in the recorded metal prices
and an increase in all metal concentrate inventories at the end of the first quarter of
2012.
-
Cash cost (recovery) per silver payable ounce, net of byproduct
credits, was $7.78 in the first quarter of 2012, compared with $10.81 in the fourth quarter of 2011 and $(7.63)
in the first quarter of 2011. The decrease in first quarter 2012 relative to fourth quarter 2011 was due to
reduced costs and higher silver payable. The increase in the first quarter of 2012
relative to the first quarter of 2011 resulted from lower base metal credits due to a
decrease in base metal prices for lead, copper and zinc in the first quarter of 2012
compared with the first quarter of 2011, a decrease in contained metals produced, and
higher copper and lead concentrates in inventory, which contains
significant silver. In addition, the company incurred additional
costs in the first quarter of 2012 beyond those incurred in the first quarter of 2011, specifically
relating to contracting a third party to perform drilling until April,
2012.
-
Mine operating earnings increased 65 per cent from $3.6-million in the fourth quarter of 2011 to
$6-million in the first quarter of 2012, due to increased revenues and decreased costs.
Mine operating earnings in the first quarter of 2012 decreased 52 per cent compared with $12.5-million in the first quarter of 2011. The decrease in mine operating earnings is mainly
to decreases in metal payables and metal prices, an increase in
concentrate inventories that led to reduced revenues, and additional
costs.
Operations
- Recovered silver equivalent ounces(2) in the first quarter of 2012 decreased 6 per cent from 659,765 ounces in the fourth quarter of 2011 to 620,356
ounces, mainly due to reduction in zinc and lead. Recovered silver
equivalent ounces decreased 19 per cent compared with 763,896 silver equivalent
ounces in the first quarter of 2011.
-
However, copper concentrate inventory increased twofold at the end of the first quarter of
2012 compared with the fourth quarter of 2011, which included approximately 17,500 ounces and
3,100 ounces of silver payable, respectively. This increase in
inventory was due to the company awaiting third party sampling for
assay content. The silver content in the copper concentrate inventory
was significantly higher for first quarter 2012 inventory compared with fourth quarter 2011
inventory.
Notes
- This is a non-IFRS performance measure.
- Silver equivalent ounces were established using a silver price of $24 (U.S.) per ounce, a
zinc price of 90 U.S. cents per pound, a copper price of $3.50 (U.S.) per pound and a lead
price of 90 U.S. cents per pound.
Outlook
The company is continuing to work with Mine Development Associates,
an independent firm that has been engaged to prepare new resource and
reserve estimates for the Nuestra Senora mine. The company expects
the new resource estimate to be available by the end of the second quarter of 2012,
followed by the new reserve estimate in late third quarter 2012 or early fourth quarter 2012.
While the resource and reserve estimates at the Nuestra Senora mine are
currently under review, Scorpio Mining is working on several
initiatives to mitigate some of the expected reserve reduction, such as
the development campaigns at the San Rafael and El Cajon deposits. The
completion of new resource estimates for the San Rafael and El Cajon is
expected by the end of the second quarter of 2012. Drilling at San Rafael is complete, and
the final planned hole at El Cajon is in progress.
The company is continuing the construction of phase 1 of the
existing processing facility and is on time and within its $5-million
budget. The decision to proceed with, and eventual implementation
schedule of, phase 2 of the plant expansion, which increases processing
capacity by 80 per cent, taking production from 1,500 tonnes per day to 2,750 tonnes per day, will
depend on the results of the resource and reserve estimates at Nuestra
Senora, San Rafael and El Cajon, drilling results at La Verde, and
permitting.
At the Parral mining district, the company has currently completed
4,068 metres of its phase 1 drilling program at its 100-per-cent-owned La
Revancha project, Chihuahua state, Mexico, and commenced a 2,500-metre
drilling program at its nearby 100-per-cent-owned Tepozan project, Durango
state. A follow-up program of at least 2,000 metres for La Revancha is
planned beginning in late June or July, 2012. Subject to results, the
company anticipates conducting a preliminary resource calculation
for this project by year-end. The Tepozan program is expected to be
completed by June, 2012, at the earliest, with results reported at that
time.
Scorpio Mining's president and chief executive officer, Parviz Farsangi, MEng, MBA, PhD,
PEng, is a qualified person for the company's Mexico projects, and
has reviewed the content of this release.
We seek Safe Harbor.
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