TSX: SPM
TORONTO, March 18, 2014 /CNW/ - Scorpio Mining Corporation (TSX: SPM) ("Scorpio Mining" or the "Company") today reported its
financial and operating results for the fourth quarter ("Q4") and year
ended December 31, 2013. This press release should be read in
conjunction with the Company's audited Financial Statements,
Management's Discussion and Analysis ("MD&A") and Annual Information
Form ("AIF") for the year ended December 31, 2013, as 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 AND YEAR ENDED DECEMBER, 2013
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| Three Months Ended |
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| December 31, | September 30, | December 31, |
| Year Ended |
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| 2013 | 2013 | 2012 |
| 2013 | 2012 |
Mine operating earnings (loss) ($000's)
| $ | (868) |
$
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803
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$
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3,884
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| $ | 186 |
$
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15,202
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Net (loss) earnings ($000's)
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| $ | (1,873) |
$
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(5,381)
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$
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1,429
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| $ | (9,187) |
$
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7,090
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(Loss) earnings per share (basic)
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| $ | (0.01) |
$
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(0.03)
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$
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0.01
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| $ | (0.05) |
$
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0.04
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Adjusted EBITDA ($000's) (1) |
| $ | 570 |
$
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2,012
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$
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5,319
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| $ | 4,261 |
$
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15,543
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Adjusted EBITDA per share (basic)(1) |
| $ | 0.00 |
$
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0.01
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$
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0.03
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| $ | 0.02 |
$
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0.08
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Cash flows from operating activities
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before changes in working capital ($000's)(1) | $ | 636 |
$
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2,050
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$
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5,347
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| $ | 4,419 |
$
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15,615
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Underground ore production (tonnes)
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| 145,872 |
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123,807
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130,006
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| 522,227 |
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517,788
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Plant throughput (tonnes)
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| 134,437 |
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136,610
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129,115
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| 534,043 |
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521,557
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Surface stockpile (tonnes)
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| 41,826 |
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19,580
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36,679
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| 41,826 |
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36,679
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Head Grades:
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Silver grade (g/t)
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| 75 |
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67
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91
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| 70 |
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90
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Zinc grade (%)
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| 1.51 |
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2.09
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1.60
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| 1.65 |
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1.85
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Copper grade(%)
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| 0.23 |
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0.16
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0.27
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| 0.23 |
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0.28
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Lead grade (%)
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| 0.71 |
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0.95
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0.72
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| 0.82 |
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0.87
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Recovered metals in concentrates:
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Silver ounces
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| 262,380 |
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240,499
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296,243
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| 969,025 |
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1,184,964
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Zinc pounds (000's)
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| 3,406 |
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4,738
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3,321
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| 14,536 |
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16,463
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Copper pounds (000's)
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| 333 |
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201
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347
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| 1,312 |
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1,608
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Lead pounds (000's)
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| 1,444 |
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2,036
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1,330
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| 6,762 |
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6,550
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Silver equivalent ounces (2) |
| 492,832 |
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523,780
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521,295
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| | 1,959,113 |
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2,282,512
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Total cash cost per payable
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silver ounce (US$) (1) |
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| $ | 14.25 |
$
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11.16
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$
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10.56
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| $ | 13.76 |
$
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11.93
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Payable metals in concentrates:
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Silver ounces
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| 206,207 |
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207,316
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247,877
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| 815,043 |
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999,462
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Zinc pounds (000's)
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| 3,133 |
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3,698
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2,879
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| 12,208 |
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14,105
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Copper pounds (000's)
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| 323 |
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194
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338
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| 1,224 |
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1,543
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Lead pounds (000's)
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| 1,277 |
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1,919
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1,168
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| 6,167 |
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5,965
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Silver equivalent ounces (2) |
| 418,686 |
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446,245
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448,931
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| | 1,682,606 |
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1,977,108
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Revenue from payable metals ($000's)
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| $ | 9,675 |
$
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10,823
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$
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12,546
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| $ | 39,146 |
$
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54,966
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Revenue distribution:
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Silver
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| 46% |
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46%
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61%
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| 48% |
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58%
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Zinc
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| 29% |
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30%
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21%
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| 27% |
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22%
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Copper
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| 11% |
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6%
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9%
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| 10% |
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10%
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Lead
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| 14% |
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18%
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9%
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| 15% |
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10%
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(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. |
RECONCILIATION OF RESERVES AND RESOURCES - NUESTRA SEÑORA
The Company completed an internal reconciliation of its Mineral Reserves
and Resources as at December 31, 2013, against the amounts declared as
at December 31, 2012 in the report titled "Technical Report and
Preliminary Economic Assessment, Nuestra Señora, San Rafael and El
Cajón Deposits" prepared by Mine Development Associates ("MDA Technical
Report"). The reconciliation was prepared by the Company's technical
services team under the supervision of the Company's V.P. Exploration,
James Stonehouse who is a Qualified Person in accordance with NI
43-101.
The following table presents the remaining reserves and resources in the
Nuestra Señora Mine, accounting for mining operations and definition
drilling work through 2013.
Reconciliation of Nuestra Señora Reserves and Resources at EOY 2013
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| Reserves - Proven and Probable |
| K Tonnes | g Ag /t | Zn% | Pb% | Cu% | K Ozs Ag | K Lbs Zn | K Lbs Pb | K Lbs Cu |
Balance, December 31, 2012(1)(2) |
533
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98.2
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1.74
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0.88
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0.25
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1,683
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20,411
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10,378
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2,997
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2013 depletion
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167
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91.6
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1.88
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0.97
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0.13
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494
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7,590
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3,932
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526
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Balance, December 31, 2013
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366
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101.2
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1.46
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0.73
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0.28
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1,189
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12,821
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6,446
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2,471
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| Resources - Measured and Indicated |
| K Tonnes | g Ag /t | Zn% | Pb% | Cu% | K Ozs Ag | K Lbs Zn | K Lbs Pb | K Lbs Cu |
Balance, December 31, 2012(1)(2) |
2,420
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94.92
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1.74
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0.90
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0.27
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7,385
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92,967
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48,142
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14,186
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2013 depletion
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175
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92.68
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2.26
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0.99
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0.22
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520
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8,710
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3,805
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834
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Balance, December 31, 2013
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2,245
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95.09
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1.56
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0.82
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0.25
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6,865
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84,257
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44,337
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13,352
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| Resources - Inferred |
| K Tonnes | g Ag /t | Zn% | Pb% | Cu% | K Ozs Ag | K Lbs Zn | K Lbs Pb | K Lbs Cu |
Balance, December 31, 2012(1) |
2,025
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88.98
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1.44
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0.71
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0.26
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5,793
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64,287
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31,697
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11,607
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2013 depletion
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50
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120.74
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2.18
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1.10
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0.41
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193
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2,389
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2,939
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20
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Balance, December 31, 2013
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1,975
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88.18
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1.30
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0.61
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0.24
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5,600
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61,898
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28,758
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11,587
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(1)Based on MDA Technical Report
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(2)Reserves included in M&I Resources
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During 2013, only 31% of the reserves were thus depleted, representing
31% of the overall plant feed tonnage processed, with the balance
provided from non-reserve material within Nuestra Señora and from La
Verde. The remaining reserves of 366 kilotonnes represent 65% of the
budgeted plant feed in 2014, with the possibility of adding more
tonnage as plant feed from the resource envelope, as mining and
development progress during the year.
2013 HIGHLIGHTS
Financial
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Revenue from payable metals of $39.1 million in 2013, decreased from
$55.0 million in 2012 due to lower metal prices for silver, zinc and
copper and lower head grades for all metals;
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Cash cost per payable silver ounce, net of by-product credits(1), increased to $13.76 in 2013 compared to $11.93 in 2012 due to a
decrease in payable silver ounces; a decrease in by-product credits as
a result of lower metal production and metal prices for all metals,
except lead; partially offset by increased throughput due to high
processing plant availability and utilization;
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Net loss in 2013 was $(9.2) million or $(0.05) per share (basic)
compared to net earnings of $7.1 million, or $0.04 per share (basic) in
2012. The 2013 net loss includes an impairment charge of $(5.5) million
or $(0.03) per share(basic) related to the Company's investment in the
common shares of Scorpio Gold Corporation ("Scorpio Gold"); and an
impairment charge of $(0.8) million, net of tax, in respect of the
Company's deferred development and exploration costs at its Nuestra
Señora Mine;
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Adjusted EBITDA(1) of $4.3 million in 2013 decreased from $15.5 million in 2012 as a result
of lower revenues described above;
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Cash flow from operating activities before movements in working capital
of $4.4 million in 2013 decreased from $15.6 million in 2012; and
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Working capital was $35.8 million at the end of 2013, down from $44.7
million at the end of 2012.
Operations
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On a year-to-year basis, 2013 experienced the highest annual plant
throughput at 534,043 tonnes. Lead production increased in 2013
compared to 2012 whereas all other metals experienced relative
declines. Silver recovery increased from 79% to 81%, and lead from 66%
to 70%, despite pressure on plant efficiency coming from the decrease
in head grades, from 90 g/t to 70 g/t and 0.87% to 0.82%, for silver
and lead, respectively;
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Recovered silver equivalent ounces(2), at 1,959,113 ounces in 2013, decreased by 14% from 2,282,512 ounces in
2012 mainly due to the lower head grades;
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Focus on decreasing costs and increasing efficiencies led to drafting of
changes to work schedules for plant and mine personnel, resulting in
the reduction of overlaps and overtime. A review of the required
manpower base led to the identification of operations and exploration
personnel redundancies. As such, during 2013, a 14% reduction in the
Company's workforce was implemented across these departments;
-
Contract mining commenced at the Company's wholly-owned silver-copper La
Verde Mine during Q3 2013 and production from La Verde totalled 34,265
silver equivalent ounces (2) during 2013; and
-
Concentrate sales contracts have been renegotiated for copper and
extended for zinc, with the copper and lead concentrates placed until
June 30, 2014, and zinc concentrate until December 31, 2014.
(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. |
Project development
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Released the latest reserve estimate for the Nuestra Señora Mine and the
Preliminary Economic Assessment ("PEA") for the advanced Cosalá
District mineral resources;
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Received approval from SEMARNAT for its Environmental Impact Statement
(Spanish acronym "MIA") pertaining to underground mining at the El
Cajón and San Rafael Projects;
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Received approval from SEMARNAT for the application for the Change of
Use of Soil ("CUS") pertaining to the development of underground mining
operations at the El Cajón Project, located in the Cosalá Norte
District;
-
JDS Energy and Mining Inc. ("JDS") was engaged to perform a
prefeasibility study ("PFS") for underground mining of the El Cajón
Project. While progressing through the preparation of the PFS, the
Company identified discrepancies between registered data and mapped
information relative to the boundaries of the concessions encompassing
the El Cajón resource outline. The Company is proceeding with
development work while awaiting confirmation of the boundaries from the
Dirección General de Minería ("DGM"). The completion of the PFS is
expected in Q3 2014, following incorporation of geotechnical data
analysis and resolution of the concession boundaries by the DGM, and
will then result in the publication of NI 43-101-compliant mineral
reserves; and
-
Received archaeological clearance for the haulage road realignment
linking the Cosalá Norte development area and the existing Nuestra
Señora processing plant.
Exploration
-
The Company completed 7,150 meters of underground drilling at the
Nuestra Señora Mine;
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Efforts have been directed at following up geophysical and ASTER studies
performed during Q1 2013. Over 4,000 geochemical samples have been
taken in grids covering areas identified by radiometric and
aeromagnetic surveys. Mapping of these areas has been performed as
well;
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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 program has now expanded to cover more distant targets in
the Nuestra Senora area. Efforts are underway to acquire the necessary
permissions to drill targets developed from the mapping and sampling
efforts adjacent to Nuestra Señora;
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Additional mapping at La Verde has defined previously unrecognized
mineralized material controls. Re-sampling of drill cores is aiding in
targeting new potential areas. The mine workings have been completely
re-mapped and all the drill cores re-logged in light of the new ore
controls. Plans are being formulated for a more detailed evaluation of
the mine area, towards definition of resources;
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Geochemistry and mapping based on geophysical data have outlined a 6
kilometer long structural zone, related to La Verde, which contains
several targets around small prospects conforming to the same La Verde
model. Steps are being taken to allow for the detailed exploration of
these zones. Archeological studies have been performed and cleared the
area for future work; and
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Programs have been designed to upgrade the resources at the San Rafael
Main Zone and El Cajón in 2014.
OUTLOOK FOR 2014
The Company is focused on maintaining ore production at current levels,
to meet the nominal plant capacity of 1,600 tpd throughout 2014, first
through providing the plant with a mixture of material mined from the
Nuestra Señora and La Verde Mines and, second through El Cajón which
becomes the primary source once it is fully ramped up. At this point,
remnant mining at Nuestra Señora would not justify maintaining a
production team and related equipment within this mine. These assets
would then be redeployed within El Cajón, to minimize equipment
purchases.
A program based on a continued thorough review of previously mined
sections of the Nuestra Señora 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
and Q4 2013. These same sources are expected to be available through Q4
2014. Mining of the reserves and resources at Nuestra Señora will
continue, with additional plant feed as defined by short-term
definition drilling while ensuring that safe, sustainable methods are
used.
The CUS for the El Cajón deposit was approved by SEMARNAT in Q4 2013.
This has allowed the Company to commence development of El Cajón in
early 2014. This underground development work at El Cajón is expected
to be completed in Q3 2014. 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 multiple
accesses to the orebody are achieved. JDS is currently working on a PFS
to be provided in Q3 2014. Geotechnical drilling and tree-clearing
activities have been completed at El Cajón, with cut-and-fill
activities at the location of the mine adit and surface infrastructures
nearing completion. A short-list of mine contractors for driving the
ramp has been completed, with the selection of the retained bidder
expected in March 2014.
The Company ended 2013 with approximately $16.4 million in its treasury,
over $35 million in working capital and no debt. Despite reduced cash
flows brought on by the difficult metal pricing environment, reduction
in the operating and exploration expenditures, coupled with improved
head grades, the Company believes 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 minimal regional exploration during 2014.
ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
Scorpio Mining also announces that its 2014 Annual General and Special
Meeting of Shareholders will be held at 4:00 pm Eastern Time on
Tuesday, May 13, 2014 at the New Brunswick Room, Main Mezzanine Floor
of the Fairmont Royal York Hotel, 100 Front Street West, Toronto,
Ontario, M5J 1T1.
Scorpio shareholders of record at the close of business on April 3, 2014
are entitled to attend the Annual General and Special Meeting and vote
their shares.
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> </p> <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>