Scorpio Mining Announces Second Quarter Financial Results
TORONTO, July 29, 2011 /CNW/ --
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
THE U.S.
TSX:SPM
TORONTO, July 29, 2011 /CNW/ - Scorpio Mining Corporation (TSX: SPM)
('Scorpio Mining' or the 'Corporation') is pleased to announce its
unaudited financial and operating results for the second quarter ('Q2')
of 2011. This press release should be read in conjunction with the
Corporation's Management Discussion & Analysis, Financial Statements
and Notes to Financial Statements for the six month period ended June
30, 2011, available on the Corporation's website at www.scorpiomining.com and on SEDAR at www.sedar.com. All monetary figures are expressed in Canadian dollars unless
otherwise specified.
Performance Highlights:
Three
months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
$ $ $ $
Revenue
('000) 17,637 6,464 35,902 12,486
Mine
operating
earnings
('000) 10,298 920 22,844 2,280
Investment
in Scorpio
Gold
Corporation
('000) (1,020) 176 (1,251) 19,562
Net
earnings
(loss)
('000) 3,259 (1,176) 9,817 17,468
Earnings
(loss) per
share 0.02 (0.01) 0.05 0.12
Adjusted
EBITDA((1)
)(000) 11,644 2,005 23,555 3,180
Cash
operating
cost per
tonne((2)
)USD 46.66 48.80 44.36 41.04
Cash
operating
cost per
silver
payable
ounce net
of base
metal
credits(
(2)) USD( ) (0.08) 5.39 (3.51) 3.89
Ounces
Silver
payable
(ounces) 322,776 167,780 644,489 363,219
Silver
equivalent
produced(
(2) )
(ounces) 745,826 403,025 1,548,174 863,492
Parviz Farsangi, President and CEO, reports: 'We are very pleased to
report another solid quarter of production and financial performance
from Scorpio Mining's Nuestra Señora operations. A robust operating
cash flow allowed the Corporation to eliminate its debt during the
quarter, placing us in an ideal position to advance our stated growth
initiatives, including process expansion and development of our
existing assets.'
Highlights for the Second Quarter Ended June 30, 2011
Second Quarter
-- Mine operating earnings for Q2 2011 were $10,297,681 (Q2 2010:
$920,266).
-- Net earnings were $3,259,339 or $0.02 per share (basic) for Q2
2011 compared to a net loss of $(1,175,928) or $(0.01) per
share (basic) for Q2 2010.
-- Adjusted EBITDA((1)) for Q2 2011 was $11,644,000 (Q2 2010:
$2,005,437).
-- Cash flows from operating activities in Q2 2011 were
$11,953,854 (Q2 2010: $769,781).
-- Underground ore production in Q2 2011 was 135,970 tonnes (Q2
2010: 62,703); representing an increase of 117% from Q2 2010.
-- Mill throughput at the Nuestra Senora plant for Q2 2011 was
128,674 tonnes (Q2 2010: 69,138); representing an increase of
86% from Q2 2010.
-- Processed head grades during Q2 2011 averaged 106 g/t silver,
2.31% zinc, 0.91% lead and 0.27% copper compared to 114 g/t
silver, 2.22% zinc, 0.96% lead and 0.36% copper during Q2 2010.
As of June 30, 2011, surface ore stockpiles amounted to 16,915
tonnes compared to 45,444 tonnes as of June 30, 2010.
-- In Q2 2011, contained metals produced in concentrates consisted
of 365,692 ounces of silver (Q2 2010: 187,496), 5,588,179
pounds of zinc (Q2 2010: 2,859,765), 438,529 pounds of copper
(Q2 2010: 374,904) and 1,871,789 pounds of lead (Q2 2010:
923,700); reflecting increases from Q2 2010 of 95%, 95%, 17%
and 103%, respectively.
-- Recovered silver equivalent ounces((2)) for Q2 2011 was 745,826
ounces (Q2 2010: 403,025); an increase of 85% compared to Q2
2010.
-- Total cash (recovery)/cost per silver payable ounce in Q2 2011
was US$(0.08) (Q2 2010: $5.39) based on silver payable ounces
of 322,776 (Q2 2010: 167,680).
-- Revenue from metal payable for Q2 2011 totalled $19,972,125 (Q2
2010: $8,038,897) and was distributed as follows: silver 59%
(2010: 48%); zinc 23% (2010: 28%); lead 9% (2010: 10%); copper
9% (2010: 14%).
-- As of June 30, 2011, the Corporation had $16,801,384 in cash
compared to $27,662,589 as of March 31, 2011. The Corporation
used existing cash to repay the $20,000,000 outstanding
convertible debenture at maturity on May 5, 2011.
-- As of June 15, 2011, the Corporation no longer maintains
significant influence over the operations of Scorpio Gold
Corporation ('Scorpio Gold'). The Corporation has elected to
record its investment in Scorpio Gold as an available-for-sale
financial instrument measured at fair value with changes in
fair value being recognized in other comprehensive income.
Included in the statements of operations for the three-month
period ended June 30, 2011 is a loss on adjustment to fair
value of Scorpio Gold upon initial recognition as
available-for-sale instrument of $738,897. Included in other
comprehensive income for the three-month period ended June 30,
2011 is an unrealized loss on these shares of $395,231. As of
June 30, 2011, Scorpio Mining still holds approximately 19.8
million shares in Scorpio Gold representing 19.4% of Scorpio
Gold's issued and outstanding shares.
While comparisons to the second quarter of 2010 show large production
increases, it should be noted that Q2 2010 suffered from a significant
throughput reduction due to a ball mill failure.
Six Months
-- Mine operating earnings were $22,844,323 for the six-month
period ended June 30, 2011 compared to $2,279,549 for the same
period of 2010.
-- Net earnings were $9,816,780 or $0.05 per share (basic) for the
six-month period ended June 30, 2011 compared to $17,468,001 or
$0.12 per share (basic) for the same period of 2010. The
six-month 2010 results include a $20,162,832 gain on dilution
and deconsolidation of Scorpio Gold Corporation.
-- Adjusted EBITDA((1)) was $23,554,955 (2010: $3,179,773).
-- Cash flows from operating activities for the six-month period
ended June 30, 2011 were $22,789,718 (Q2 2010: $2,557,617).
-- Mill throughput at the Nuestra Senora plant was 250,736 tonnes
(2010: 161,706).
-- Processed head grades for the six-month period ended June 30,
2011 averaged 111 g/t silver, 2.39% zinc, 0.94% lead and 0.34%
copper compared to 99 g/t silver, 2.14% zinc, 1.08% lead and
0.30% copper for the same period in 2010.
-- In the six-month period ended June 30, 2011, contained metals
produced in concentrates consisted of 734,558 ounces of silver
(2010: 383,161), 11,444,526 pounds of zinc (2010: 6,338,765),
1,169,607 pounds of copper (2010: 654,904) and 3,706,483 pounds
of lead (2010: 2,726,700); reflecting increases from the same
period in 2010 of 92%, 81%, 79% and 36%, respectively.
-- Recovered silver equivalent ounces((2)) was 1,548,174 ounces
(2010: 863,492), representing an increase of 79% from 2010.
-- Total cash (recovery)/cost((2)) per silver payable ounce for
the six-months ended June 30, 2011 was US$(3.51) (2010: $3.89)
based on silver payable ounces of 644,489 (2010: 363,219).
-- Revenue from metal payable for the six-months ended June 30,
2011 totalled $40,784,273 (Q2 2010: $15,987,640) and was
distributed as follows: silver 56% (2010: 43%); zinc 23% (2010:
30%); lead 9% (2010: 16%); copper 12% (2010: 11%).
This is a non-IFRS performance measure; please see Non-IFRS
((1)) Performance Measures section in the Corporation's Management
Discussion and Analysis.
Silver equivalent ounces in 2011 were established using
((2)) budgeted prices as follows: lead US$1.02 per lb; zinc
US$1.01 per lb; copper US$3.58 per lb and silver US$24 per
oz.
Outlook
As of October 31, 2010, the existing reserves at the Nuestra Señora mine
provide the equivalent of six years of production at the current
processing capacity of the Nuestra Señora plant. In the Cosalá
district, the Corporation has NI 43-101 compliant mineral resources at
the San Rafael and El Cajón projects, as well as having several
advanced exploration projects. The Corporation is aggressively
advancing its exploration activities to further increase mineral
resources and prove additional reserves.
The Nuestra Señora processing plant has an existing capacity of
approximately 1,500 tonnes per day ('TPD'), but is expandable up to
approximately 4,000 TPD. The Corporation has commenced engineering
studies to quantify the investment required for varying expansion
scenarios. Other growth alternatives being evaluated include the
development of a second processing facility in the Cosalá district.
Such expansion would allow for the diversification of process circuits
and reduce the distances between multiple ore sources and processing
facilities.
The Corporation will advance feasibility studies for the expansion of
processing capacity and make development decisions during 2011.
The Corporation continues to seek new projects that would increase its
asset base as well as enhance value for its shareholders.
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 the Corporation'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
Corporation'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 29, 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.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/July2011/29/c8293.html
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North America)
Email: rkaiser@scorpiomining.com