Vancouver, August 6, 2008 - Scorpio Mining Corporation ("Scorpio Mining"),(TSX:SPM) is pleased to announce that Scorpio Gold Corporation ("Scorpio Gold") a 93.5% owned private subsidiary of Scorpio Mining, which holds certain gold assets in Nova Scotia and Quebec, has signed a Letter of Intent ("LOI") with Cincoro Gold Corp. ("Cincoro", TSX.V: FIV.P), a capital pool company listed on the TSXV Venture Exchange, whereby Cincoro has agreed to purchase (the "Acquisition") all of the issued and outstanding common shares of Scorpio Gold or otherwise complete a business combination with Cincoro. The Acquisition, if completed, will constitute Cincoro's "qualifying transaction" under the policies of the Exchange. The transaction with Cincoro will see Scorpio Mining become the controlling shareholder in Cincoro.
Pursuant to the LOI, Cincoro has agreed prior to the completion of the Transaction, subject to shareholder and regulatory acceptance, to consolidate its shares on a 3 to 1 basis (three pre-consolidated shares for each one post-consolidated share). Subject to the execution of a definitive agreement and regulatory acceptance to the Acquisition, Cincoro will acquire all of the issued and outstanding common shares of Scorpio Gold in exchange for the issuance of common shares of Cincoro on the basis of one post-consolidated common share of Cincoro for each one Scorpio Gold common share outstanding. Upon completion of the Acquisition, Scorpio Gold will become a wholly-owned subsidiary of Cincoro. The signing of a definitive agreement will be preceded by a 25 day due diligence period. The Transaction is expected to close during October 2008, and is subject to customary conditions, including definitive documentation, receipt of all requisite regulatory approvals, including the approval of the Exchange and the Toronto Stock Exchange and approval by the shareholders of Scorpio Gold.
The resulting company, to be called Scorpio Gold Corporation, will have a public trading platform and greater access to financial markets to advance Scorpio Gold's portfolio of advanced stage development properties in Nova Scotia and Quebec, and will be able to call on Scorpio Mining's expertise in Mexico for acquiring, developing, or operating complementary projects in Mexico.
Commenting on the proposed Transaction, Peter J. Hawley, Chairman and CEO of Scorpio Mining Corporation and CEO of Scorpio Gold Corporation said, "With the strength and experience of the resulting company board of directors, the strong advanced gold asset base and the exciting gold projects in the pipe line presently being evaluated we feel that the resulting company will be well positioned to advance rapidly into a new dynamic gold company with a Board with vision. We all are very excited about the potential for the resulting company."
The proposed management of the resulting company is as follows:
Peter J. Hawley, CEO
Gilbert Comtois, Chief Financial Officer
Janet Horbulyk, Corporate Secretary.
The proposed Board of Directors of the resulting company is as follows:
Peter J. Hawley
Andrew Lee Smith
The Scorpio Assets
Caribou Gold Property:
Located 80 km north of Halifax, Nova Scotia. Scorpio Gold has the right to earn a 100% interest in this past-producing high grade gold mine, considered to have potential to expand and upgrade the current NI 43-101 inferred resources of 350,305 tonnes grading 8.41 g/t gold, uncut (containing an estimated 94,763 ounces of gold). An exploration and development plan has begun that includes surface diamond drilling, dewatering of the old mine shaft, erection of a head frame, a hoist system, supporting surface infrastructure, underground mapping and diamond drilling. Completion of this program will require additional financing. Upon completion of the Acquisition, and completion of the Private Placement, the funds received from the issuance of the Flow-Through Shares will be spent on the first phase of the diamond drilling program.
During the summer of 2007 Scorpio Gold, holding a first right of refusal to acquire the Caribou Gold property from Scorpio Mining, began evaluation work on the property. The work comprised of brush clearing the main shaft area, refurbishment of the previous grid base lines, surveying the placement of buildings -- electrical lines -- shafts and trenches with respect to the existing base lines. Work also included the inspection of the existing shaft collar on the No. 3 shaft and checking the bedrock conditions of a proposed area for a possible hoist system.
In addition from July 9 -- 26, 2007 Scorpio Gold drilled 8 HQ sized surface diamond drill holes which comprised a total of 698 meters in length. The drilling was to target near surface stockwork style quartz veins and to test exploration models. Three of the 8 holes targeted the North Limb of the anticline, one was a near vertical hole testing the anticlinal axis which may have hosted a saddle reef type vein and four targeted the previously identified B/C Zone on the south limb. Five of the eight holes appear to have intersected the targets. At the time of the Caribou Report the drill holes had not been assayed for their mineral content. Results remain pending. No further exploration work has been conducted on this property to date.
Four major diamond drill programs have targeted gold mineralization on the Caribou property. Holes include approximately 165 surface holes and 206 underground holes, which test auriferous zones. Holes have tested the auriferous zone over a strike length of 800 meters and to an average depth of 240 meters.>
Cochrane Hill Property:
100% owned, located in Guysborough County, Nova Scotia. Recently, this advanced property was optioned to Atlantic Gold Mines NL ("Atlantic Gold") of Australia. The current NI 43-101 resource estimate calculated by Scorpio Mining Corporation in 2004 indicates a total indicated gold resource estimated at 588,794 tons grading 0.191 oz/ton gold (112,460 contained ounces of gold) and an inferred gold resource estimate of 29,422 tons grading 0.165 oz/ton gold. Atlantic Gold is working to increase this resource through a planned $4,750,000 exploration program and will also make $100,000 in cash payments over a four year period to earn a 60% interest in the project. Atlantic Gold's main focus is examining the economic viability of an open pit mining operation. Atlantic Gold is the operator of the Cochrane Hill property.
Lac Arseneault Property:
Located in the Gaspé region of eastern Quebec, the property is a mid-stage exploration project in which Scorpio Gold has a 100% interest. High-grade gold-silver-zinc-lead mineralization is hosted in an extensive system of quartz veins and breccia zones. Previous work includes mapping, geophysics, trenching and diamond drilling.
The Qualified Person, as defined under National Instrument 43-101 for Scorpio Gold's projects is Mr. Peter Hawley, the Chairman and Chief Executive Officer of Scorpio Mining and the President of Scorpio Gold. Mr. Hawley is responsible for the preparation of all technical information provided in this news release and has reviewed and approved the contents of this news release.
Further information on the Company is available on the Scorpio Mining web site at:www.scorpiomining.com
Mr. Peter Hawley, PGeo, is the Company's Chief Executive Officer and Qualified Person for the various Company projects. He is responsible for the current exploration and development programs and has reviewed the content of this release.
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley,
Chairman & CEO
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.