Vancouver, May 26, 2011 - Scorpio Gold Corporation (the "Company") (TSX-V: SGN) today announced that it has amended the terms of its US$8,000,000 outstanding debt (the "Debt") owing to Waterton Global Value, L.P. ("Waterton"), as originally announced in the Company's news releases dated October 8, 2010 and October 25, 2010.
Pursuant to an amended and restated senior secured note (the "Amended Note") dated May 18, 2011, which replaces the original promissory note (the "Original Note") representing the Debt:
- the US$8,000,000 principal amount of the Debt will now be payable in 12 equal monthly payments commencing on the last business day of October, 2011, and ending on the last business day of September, 2012;
- each monthly repayment of the Amended Note will be made, at the option of Waterton, either by the delivery by the Company to Waterton of gold bullion ounces with a notional value of US$833,333, based on a deemed price per ounce equal to the lesser of (i) the spot price of gold and (ii) the trailing 30 day average spot price, or by the payment of the cash equivalent of such number of ounces of gold;
- at the time of each monthly repayment under the Amended Note, the Company will also pay Waterton a profit participation fee equal to US$595 multiplied by 25% of the amount by which the spot price per ounce of gold exceeds $1400;
- the interest payable under the terms of Original Note ceases to be payable as of the date of the Amended Note; and
- the Company will no longer be required to place its revenues from gold sales at the Mineral Ridge property into a segregated bank account.
Security and other material terms of the Debt remain unchanged from the Original Note.
The Company has separately entered into a life of mine gold and silver supply agreement (the "Supply Agreement") with Waterton, pursuant to which the Company will sell all gold and silver produced at the Mineral Ridge property to Waterton, as and when it makes such sales. During the first five years following the execution of the Supply Agreement, the gold and silver will be generally sold at a 0.5% discount to the lesser of (i) the spot price on the day prior to such sale, and (ii) the average spot price for the 30 days prior to such sale, and thereafter it will be sold at a nominal discount to such price.
Peter J. Hawley, President and Chief Executive Officer, reports, "We are pleased to make these debt re-structuring arrangements with Waterton as it provides the Company with significant cash flow flexibility, which will be important for the Company's continued growth. The Company would like to acknowledge Waterton's pragmatic approach to this debt amendment transaction. It is as a result of Waterton's practical approach to commercial transactions that the Company has decided to enter into a long-term relationship with Waterton to sell its Mineral Ridge gold and silver on commercial terms under the Supply Agreement."
For additional information please see the Company's website at www.scorpiogold.com
ON BEHALF OF THE BOARD
SCORPIO GOLD CORPORATION
Peter J. Hawley,
President & CEO
For further information contact:
Peter J. Hawley Tel: (819) 825-7618
Torrey Hills Capital
Andrew Hoffman Tel: (858) 456-7300
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, including statements as to future sales. 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 Company's plans with respect to the exploration and development of its projects. 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 those risk factors outlined in the Company's Management Discussion and Analysis for the year ended December 31, 2010 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 therein.