TORONTO, Nov. 11, 2013 /CNW/ - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Company") today reported its
financial and operating results for the third quarter ("Q3") ended
September 30, 2013. This press release should be read in conjunction
with the Company's unaudited Financial Statements and Management's
Discussion and Analysis ("MD&A") for the corresponding period,
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 SEPTEMBER, 2013
|
|
| Three Months Ended |
|
| Sep 30, 2013 |
| Jun 30, 2013 |
| Sep 30, 2012 |
Mine operating earnings ($000's)
| $ | 803 |
$
|
(1,975)
|
$
|
3,398
|
Net (loss) earnings ($000's)
| $ | (5,381) |
$
|
(3,188)
|
$
|
1,073
|
|
|
|
|
|
|
|
(Loss) earnings per share (basic)
| $ | (0.03) |
$
|
(0.02)
|
$
|
0.01
|
Adjusted EBITDA ($000's) (1) | $ | 2,012 |
$
|
(1,559)
|
$
|
2,706
|
Adjusted EBITDA per share (basic) (1) | $ | 0.01 |
$
|
(0.01)
|
$
|
0.01
|
Cash flows from operating activities before movements
|
|
|
|
|
|
|
in working capital (000's)
| $ | 2,050 |
$
|
(1,516)
|
$
|
2,750
|
Underground ore production (tonnes)
|
| 123,807 |
|
128,165
|
|
126,603
|
Plant throughput (tonnes)
|
| 136,610 |
|
126,868
|
|
127,478
|
Surface stockpile (tonnes)
|
| 19,580 |
|
29,836
|
|
13,040
|
Head Grades:
|
|
|
|
|
|
|
|
Silver grade (g/t)
|
| 67 |
|
66
|
|
89
|
|
Zinc grade (%)
|
| 2.09 |
|
1.55
|
|
1.98
|
|
Copper grade (%)
|
| 0.16 |
|
0.25
|
|
0.21
|
|
Lead grade (%)
|
| 0.95 |
|
0.77
|
|
0.94
|
Recovered metals in concentrates:
|
|
|
|
|
|
|
|
Silver ounces
|
| 240,499 |
|
214,926
|
|
282,036
|
|
Zinc pounds (000's)
|
| 4,738 |
|
3,198
|
|
4,109
|
|
Copper pounds (000's)
|
| 201 |
|
339
|
|
234
|
|
Lead pounds (000's)
|
| 2,036 |
|
1,475
|
|
1,702
|
Recovered silver equivalent ounces (2) |
| 523,780 |
|
439,567
|
|
534,075
|
Total cash cost per silver payable ounce (US$) (1) | $ | 11.16 |
$
|
20.29
|
$
|
14.74
|
Payable metals in concentrates:
|
|
|
|
|
|
|
|
Silver ounces
|
|
207,316
|
|
180,073
|
|
252,624
|
|
Zinc pounds (000's)
|
|
3,698
|
|
2,895
|
|
3,915
|
|
Copper pounds (000's)
|
|
194
|
|
294
|
|
221
|
|
Lead pounds (000's)
|
|
1,919
|
|
1,318
|
|
1,757
|
Revenue from metals payable ($000's)
| $ | 10,823 |
$
|
7,600
|
$
|
14,287
|
Revenue distribution: |
|
|
|
|
|
|
|
Silver
|
| 46% |
|
45%
|
|
58%
|
|
Zinc
|
| 30% |
|
28%
|
|
24%
|
|
Copper
|
| 6% |
|
11%
|
|
7%
|
|
Lead
|
| 18% |
|
16%
|
|
11%
|
(1) |
| This is a non-IFRS performance measure; see Non-IFRS Performance
Measures section in the MD&A. |
(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. |
THIRD QUARTER 2013 HIGHLIGHTS & SUBSEQUENT EVENTS
Financial
-
Revenue from metals payable of $10.8 million in Q3 2013, increased from
$7.6 million in Q2 2013 due to higher metal prices and head grades for
silver, zinc and lead; and higher plant throughput;;
-
Cash cost per silver payable ounce, net of by-product credits(1) , decreased to $11.16 in Q3 2013 compared to $20.29 in Q2 2013 due to an
increase in silver payable ounces; an increase in by-product credits as
a result of higher metal production and prices for lead and zinc;
increased throughput due to high processing plant availability and
utilization; and improved efficiency;
-
Net loss in Q3 2013 was $(5.4) million or $(0.03) per share (basic)
compared to net loss of $(3.2) million, or $(0.02) per share (basic) in
Q2 2013. The Q3 2013 net loss includes an impairment charge of $(5.5)
million related to the Company's investment in the common shares of
Scorpio Gold Corporation ;
-
Adjusted EBITDA(1) of $2.0 million in Q3 2013 increased from $(1.6) million in Q2 2013 as a
result of higher revenues and lower costs described above;
-
Cash flow from (used in) operating activities before movements in
working capital of $2.1 million in Q3 2013 increased from $(1.5)
million in Q2 2013; and
-
Working capital was $36.0 million at the end of Q3 2013 consistent with
the end of Q2 2013.
(1) |
| This is a non-IFRS performance measure; please see Non-IFRS Performance
Measures section in the MD&A.
|
Operations
-
Record quarterly throughput of 136,610 tonnes was attained in Q3 2013
due to high processing plant availability and utilization of 94.9% and
99.8%, respectively, in a period with limited planned maintenance
requirements;
-
Production from the Nuestra Señora Mine in Q3 2013 encountered higher
zinc, lead and silver head grades compared to Q2 2013, while copper
head grade was lower;
-
Changes in quarter-on-quarter metal recoveries were in line with
relative head grade changes;
-
Recovered silver equivalent ounces(2), at 523,780 ounces in Q3 2013, increased by 19% from 439,567 ounces in
Q2 2013 mainly due to the higher plant throughput and head grades
during the quarter; and
-
At the end of Q3 2013, a 14% cut in the Company's workforce was
implemented across operations and exploration departments.
(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
-
During Q3 2013, the Mexican Secretariat of Environment and Natural
Resources ("SEMARNAT") requested additional information from the
Company related to its Change of Land Use Permit (Spanish acronym
"CUS") application for the development of the El Cajón underground
mine. That information was submitted at the end of Q3 2013 and liaison
with SEMARNAT continues to advance this final pending permit
application review. Once in hand, the Company will immediately commence
the development work required to put the El Cajón deposit into
production. The related Environmental Impact Statement (Spanish acronym
"MIA") had been accepted in April 2013;
-
Contract mining has commenced at the Company's wholly-owned
silver-copper La Verde Mine. During Q3 2013, La Verde provided 6kt of
ore. Initial process optimization trials will commence during Q4 2013
and production should ramp-up soon after, approaching 15,000 tonnes per
month by year-end; and
-
During Q3 2013, JDS Energy and Mining Inc. was engaged to perform a
prefeasibility study ("PFS") for underground mining of the El Cajón
deposit. The completion of the PFS, expected in Q1 2014, will result in
the publication of NI 43-101-compliant mineral reserves.
Exploration
-
The majority of efforts have been directed at following up geophysical
and ASTER studies performed earlier in the year. Over 2,000 geochemical
samples have been taken in grids covering areas identified by
radiometric and aeromagnetic surveys. Mapping of these areas has been
performed as well;
-
A mapping and sampling program on surface at Nuestra Señora has led to
defining material which can be recovered from within the Nuestra Señora
Mine. This material is currently being developed;
-
An initial program was completed around outlying properties within the
Cosalá District, namely Venado, San Ramón and Los Cristos. All
encountered mineralization but not with significant continuity.
Follow-up programs however appear to be warranted at all three
properties; and
-
Resources have been devoted to a re-evaluation of the La Verde Mine and
surroundings. New mapping has defined previously unrecognized ore
controls. A program of re-logging holes previously drilled at La Verde
is underway and a program to combine this effort with new mapping in
the mine workings should lead to better production controls and
definition of exploration targets.
OUTLOOK
The Company is focused on maintaining plant throughput at current
levels. The increase in plant throughput in Q3 2013 was attained due to
high processing plant availability and utilization of 94.9% and 99.8%,
respectively, in a period with limited planned maintenance
requirements.
A program based on a continued thorough review of previously mined
sections of the Nuestra Senora orebody, including the Candelaria Zone,
the on-going placement of backfill, which enabled mining of secondary
stopes, and other initiatives provided higher plant feed grades in Q3
2013. These same sources, coupled with the incremental non-resource
material from La Verde are expected to be available through Q4 2013.
Access to the high grade glory hole above the Candelaria workings has
been completed. An additional entry point, above the one recently
established, is sought to speed up the withdrawal rate of the broken
material inventory. The Company expects that this program should
maintain or improve head grades. Mining of the resources at Nuestra
Señora will continue with additional ore as defined by short-term
definition drilling.
In addition, ore production from La Verde will soon contribute to plant
feed. Initial process optimization trials will commence during Q4 2013
and fresh ore supply from La Verde is expected to ramp-up soon after,
towards approximately 15,000 tonnes per month by year-end.
The CUS for the El Cajón deposit is in its final stage of the approval
process. With the substantive aspects of the CUS review process having
been completed; the Company is in regular contact with SEMARNAT and
SEDECO (the Secretariat of Economic Development for the State of
Sinaloa) and anticipates that a decision will be received in Q4 2013.
The Company's main focus is to commence development and obtain
production at El Cajón to feed its ore to the processing plant,
initially in conjunction with Nuestra Señora's output. A window of six
months would be required, from receipt of the CUS, to complete
sufficient development work underground at El Cajón to start supplying
material at the plant. An additional quarter will be needed to ramp the
mining activities to a regular production regime at an expected
potential of up to 1,500 tpd using design assumptions based solely on
surface drilling data. A level of sustainable output will be better
determined once underground operations are underway and access to the
orebody is achieved.
The Company ended Q3 2013 with approximately $19.4 million in its
treasury, over $36 million in working capital and no debt. Despite
reduced cash flows brought by the difficult metal pricing environment,
reduction in the operating and exploration expenditures, coupled with
improved head grades and commencement of mining at La Verde, provide
the Company with the confidence that its treasury and future cash flows
will be adequate to finance the development of El Cajón, define
resources at the La Verde Mine, de-risk the San Rafael Project and
sustain regional exploration during the year to come.
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 and approved 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
<p> Victoria Vargas, Vice President Investor Relations and Corporate Communications +1 416-585-2200 Email: <a href="mailto:vvargas@scorpiomining.com">vvargas@scorpiomining.com</a> </p> <p> Website: <a href="http://www.scorpiomining.com/">www.scorpiomining.com</a> </p>