Scorpio Gold Corporation ("Scorpio Gold" or the "Company") (TSX VENTURE:SGN)
announces results of an updated Life of Mine Plan ("LOM") completed for the
Drinkwater, Mary/LC, Brodie, Bluelite, Solberry, Wedge and Oromonte deposits at
the 70% owned Mineral Ridge Gold Operation, located in Nevada.
The updated mine plan, which includes an updated mineral reserve estimate,
projects mine life for Mineral Ridge extending into the 3rd quarter of 2016, or
approximately 29 months as of the end of March 2014, the date of the LOM update.
Average ore production over this time frame is estimated at 73,700 tons per
month ("t/m") based on estimated Probable Mineral Reserves of 2.1 million tons
("Mt") grading 0.061 oz/ton gold (131,190 oz contained gold) within estimated
Indicated Mineral Resources of 2.7 Mt grading 0.059 ounces per ton ("oz/ton")
gold (160,300 oz contained gold). Expansion and infill drilling of the satellite
deposits has continued since the March 31, 2014 cut-off date for the LOM and is
expected to add to the resource base and potentially support further conversion
of current mineral resources to mineral reserves.
This LOM is inclusive of the Drinkwater and Mary/LC deposits and the five
satellite deposits, Brodie, Wedge, Bluelite, Solberry and Oromonte. An Inferred
Mineral Resource estimate for the Brodie, Wedge, Bluelite, and Solberry
deposits, dated June 1, 2013, was reported in the Company's August 16, 2013 news
release. Development drilling over the past two years has allowed for an upgrade
of the previous resource estimate to include Indicated Mineral Resources
containing Probable Mineral Reserves. The updated Indicated Mineral Resource
estimate for the five satellite deposits is 625,100 tons grading 0.061 oz/ton
gold (38,360 oz contained gold), which includes a Probable Mineral Reserve for
four of the deposits of 463,880 tons grading 0.065 oz/ton gold (30,050 oz
contained gold).
Peter J. Hawley, CEO comments, "We are very pleased with the results of this
updated LOM study, which places the Mineral Ridge operation in a very similar
position to where it was as of April 30, 2012, the date of the previous LOM
study. Over the two year span, approximately 1.7 Mt of ore have been mined at
Mineral Ridge, which has been more than replaced by ongoing exploration,
resulting in the 2.1 Mt of ore outlined as of March 31, 2014. Results from
additional development drilling completed since the March 31, 2014 cut-off date
of the study have been very positive and are fully expected to further increase
mine life. This latest economic study reinforces that Mineral Ridge has the
potential to continue as a producing mine for years to come."
Principal Outcomes - Life of Mine Study
-- Estimated Probable Mineral Reserves: 2.1 Mt grading 0.061 oz/ton gold
(131,190 oz contained gold).
-- 2.5 year mine life at 73,700 t/m ore throughput as of March 31, 2014.
-- Total gold production over projected life of mine is approximately
97,700 ounces gold which includes 85,300 recoverable ounces mined and
12,400 recoverable ounces gold in inventory as of March 31, 2014.
-- Average total cash cost per ounce of gold sold of $1,074.
-- After tax net present value until mine closure of $7.4 million (8%
discount rate) using an average gold price of $1,300/oz.
-- Key risks include:
-- Current estimated reserves may not be realized causing a shortfall
in gold production.
-- Current water requirements for the heap leach solution would be in
jeopardy if the main water well were to fail. The Company is
currently rehabilitating a second water well to reduce this risk.
-- Key opportunities include:
-- Current estimated reserves may be exceeded, thus increasing gold
production.
-- There is potential to identify additional mineralization from drill-
defined extensions to the known deposits, which may support Mineral
Resource estimation updates and potentially be converted into
Mineral Reserves.
-- Exploration potential of other identified prospects on the Mineral
Ridge property.
Mineral Reserves presented in Table 1 have demonstrated economic viability. All
Mineral Reserves are classified as Probable Mineral Reserves with no Proven
Mineral Reserves.
Table 1. Probable Mineral Reserves Estimate - March 31, 2014
----------------------------------------------------------------------------
Ore Gold Grade Contained Waste Total Strip Ratio
Deposit (Tons) (oz/ton) Gold (oz) (Tons) (Tons) (waste:ore)
----------------------------------------------------------------------------
Drinkwater 170,680 0.056 9,630 322,430 493,110 1.9
Mary/LC 1,502,560 0.061 91,510 12,468,550 13,971,110 8.3
Brodie 105,260 0.069 7,270 1,356,250 1,461,510 12.9
Bluelite 227,480 0.066 15,010 1,267,620 1,495,100 5.6
Solberry 91,700 0.068 6,210 589,890 681,590 6.4
Wedge 39,440 0.040 1,560 198,440 237,880 5.0
Total 2,137,120 0.061 131,190 16,203,180 18,340,300 7.6
----------------------------------------------------------------------------
Notes to Table 1:
1. The effective date of the Mineral Reserve estimate is March 31, 2014.
2. The Mineral Reserve estimate was prepared by Jim Ashton, P.E., of
Scorpio Gold and audited by independent qualified person, Randy Martin,
SME-RM, of Welsh Hagen Associates.
3. Mineral Reserves are reported at a 0.020 oz/ton gold cut-off grade.
4. Mineral Reserves are contained within a designed pit with access ramps
based on the Lerchs-Grossmann (LG) algorithm utilizing a $1,300 oz gold
price. The optimization mining cost was $4.15/t of ore mined at
Drinkwater, $3.79/t of ore mined at Mary/LC, $2.96/t of ore mined from
the satellite deposits, $2.92/t for waste mined from the Drinkwater,
$2.57/t for waste mined from the Mary/LC and satellite deposits, and
$1.56/t of fill mined. An average processing cost of $11.29 was applied
per ton processed. G&A costs were applied at $4.70 per ton processed.
Shipping and refining costs of $28.82/oz gold produced were applied. A
65% metallurgical recovery was applied. Overall pit slope angles ranged
from 45 degrees to 49 degrees.
5. No economic pit was developed for the Oromonte deposit.
Table 2. Indicated Mineral Resources Estimate - March 31, 2014
----------------------------------------------------------------------------
Gold Grade Contained
Deposit Tons (oz/ton) Gold (oz)
----------------------------------------------------------------------------
Drinkwater 537,900 0.047 25,280
Mary/LC 1,534,500 0.063 96,670
Brodie 136,400 0.067 9,140
Bluelite 285,800 0.063 18,010
Solberry 110,000 0.067 7,370
Wedge 81,900 0.042 3,440
Oromonte 11,000 0.036 400
Total 2,697,500 0.059 160,300
----------------------------------------------------------------------------
Table 3. Inferred Mineral Resources Estimate - March 31, 2014
----------------------------------------------------------------------------
Gold Grade Contained
Deposit Tons (oz/ton) Gold (oz)
----------------------------------------------------------------------------
Drinkwater 11,100 0.035 390
Mary/LC 50,900 0.061 3,100
Brodie 2,390 0.060 140
Bluelite 4,550 0.035 160
Solberry 100 0.043 4
Wedge 2,500 0.048 120
Oromonte 1,190 0.042 50
Total 72,730 0.055 3,970
----------------------------------------------------------------------------
Notes to Tables 2 & 3:
1. Mineral Resources in Table 2 are reported inclusive of Mineral Reserves.
2. The effective date of the Mineral Resource estimate is March 31, 2014.
3. The Mineral Resource estimate was prepared by Jim Ashton, P.E., of
Scorpio Gold and audited by independent qualified person, Randy Martin,
SME-RM, of Welsh Hagen Associates.
4. Mineral Resources are reported at or above a 0.020 oz/ton gold cut-off
grade.
5. Mineral Resources are reported using a long-term gold price of
US$1,500/oz.
6. Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability.
The Mineral Resource estimate is based on a total of 2,514 drill holes and
108,969 assay results collected between 1939 and 2014 from the Drinkwater, Mary,
Brodie, Bluelite, Solberry, Wedge, and Oromonte deposits. The cut-off date for
information used in the geologic model and Mineral Resource model was March 31,
2014.
Key Assumptions, Parameters & Methods Used:
-- Mineral Resources reported are constrained within a conceptual Lerchs-
Grossmann (LG) pit shell and are inclusive of Mineral Reserves.
-- The economic parameters used to construct the Mineral Resource LG pit
are the same as those used in the Mineral Reserve pit except that the
price of gold was increased from $1,300 per ounce to a long-term gold
price of $1,500 per ounce.
-- The block model consists of 15 ft x 15 ft x 10 ft blocks estimated using
inverse-distance to the second power methodology. Mineralized envelopes
were constructed on 25 ft spaced sections using a 0.010 oz/ton gold
assay grade as a guide. The envelopes were combined into wire-frames
that defined the extent of mineralization for all the deposits.
-- Extensive historical underground workings are present in the Drinkwater
and Mary areas. Underground wire-frames were used to remove the
percentage of the block contained within the mineralized envelope.
-- A single bulk density factor of 13 cubic ft per short ton was assigned
to all blocks that represent in-situ rock and used in the Mineral
Resource estimates.
-- In the Drinkwater area, assays were capped at a threshold of 1.6 oz/ton
gold, in the Mary/LC and Oromonte areas assays were capped at a
threshold of 1.0 oz/ton gold, in the Brodie, Bluelite, and Solberry area
assays were capped at 0.650 oz/ton gold, and in the Wedge area assays
were capped at 1.50 oz/ton.
-- Mineralization pinches and swells, and is not easily mapped, and
correlation between sections is often difficult, therefore outlier
restriction was also applied to restrict gold interpolation at a
threshold of 0.5 oz/ton gold and a distance of 60 ft for the Drinkwater
and Mary/LC deposits and a distance of 40 ft for the satellite deposits.
The Mineral Resource and Mineral Reserve estimates were prepared by qualified
person, Jim Ashton, P.E., of Scorpio Gold and audited by independent qualified
person, Mr. Randy Martin, RM-SME of Welsh Hagen Associates. An independent
technical report supporting the disclosure of the Mineral Resource and Mineral
Reserve estimate is being prepared by Welsh Hagen Associates and will be filed
on SEDAR within 45 days of this news release.
About Scorpio Gold
Scorpio Gold holds a 70% interest in the producing Mineral Ridge gold mining
operation located in Esmeralda County, Nevada with joint venture partner
Waterton Global Value L.P. (30%), and Scorpio Gold is currently entitled to
receive 80% of cash flow generated. Mineral Ridge is a conventional open pit
mining and heap leach operation. The Mineral Ridge property is host to multiple
gold-bearing structures, veins and lenses at exploration, development and
production stages. Scorpio Gold also holds a 100% interest in the advanced
exploration-stage Goldwedge property and processing facility in Manhattan,
Nevada. The Company is assessing its exploration plans for the Goldwedge
property as well as the potential for toll milling at the Goldwedge plant, which
is currently permitted for 400 tons per day.
Scorpio Gold's CEO, Peter J. Hawley, PGeo, is a Qualified Person as defined by
National Instrument 43-101 and has reviewed and approved the content of this
release.
ON BEHALF OF THE BOARD
SCORPIO GOLD CORPORATION
Peter J. Hawley, CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
The Company relies on litigation protection for "forward-looking" statements.
This news release contains forward-looking statements that are based on the
Company's current expectations and estimates. Forward-looking statements are
frequently characterized by words such as "plan", "expect", "project", "intend",
"believe", "anticipate", "estimate", "suggest", "indicate" and other similar
words or statements that certain events or conditions "may" or "will" occur, and
include, without limitation, statements regarding the potential expansion or
upgrading of any mineral reserve or resource estimates and the Company's plans
with respect to the filing of a technical report in support of the mineral
reserve and resource estimates included herein and the exploration, development
and exploitation of its Mineral Ridge project. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could
cause actual events or results to differ materially from estimated or
anticipated events or results implied or expressed in such forward-looking
statements, including risks such as mining and operational risks affecting
projected production and those risk factors outlined in the Company's Management
Discussion and Analysis as filed on SEDAR. Any forward-looking statement speaks
only as of the date on which it is made and, except as may be required by
applicable securities laws, the Company disclaims any intent or obligation to
update any forward-looking statement, whether as a result of new information,
future events or results or otherwise. Forward-looking statements are not
guarantees of future performance and accordingly undue reliance should not be
put on such statements due to the inherent uncertainty thereof.
FOR FURTHER INFORMATION PLEASE CONTACT:
Steve Roebuck, President
Tel: (819) 825-7618
Email: sroebuck@scorpiogold.com
Investor Relations:
Jim Macdonald, Torrey Hills Capital
Tel: (858) 456-7300
Email: jm@sdthc.com
Website:
www.scorpiogold.com
Scorpio Gold (TSXV:SGN)
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