Vancouver, August 16, 2013 - Scorpio Gold Corporation ("Scorpio Gold" or the "Company") (TSX-V: SGN) reports on the mineral resource study prepared by Telesto Nevada Inc. ("Telesto") on five satellite deposits at the 70% owned Mineral Ridge Project, located in Nevada.
Mineral resource estimates were prepared on four of five deposits using drilling data available up to June 1, 2013. All of the deposits lie to the west and southwest of the currently producing Drinkwater and Mary pits, and are situated within 400 metres of the existing leach pad.
Peter J. Hawley, CEO comments: "The Telesto report gives us a strong basis to move forward with a conceptual development and mine plan for the satellite deposits and a clear outline of where additional in-fill and step out drilling could allow for both upgrading and significant increases in the resource. Drilling has already commenced in the Brodie and Bluelite areas and is meeting with success, and we are mobilizing a second rig to the property in September 2013 that will be dedicated to the satellite deposits. In addition, there is no shortage of high priority exploration targets on the property that remain to be tested."
The following inferred mineral resource estimate was prepared using a breakeven cutoff grade of 0.024 ounces per ton (opt) gold. The resource is constrained by a conceptual floating cone pit shape that is defined by certain metal price, cost, recovery and pit slope assumptions as outlined further below. A plan map of the satellite areas and floating cone outlines is available at: View Map
Table 1. Inferred Mineral Resource Estimate - Satellite Deposits - June 1, 2013
Notes to the Mineral Resource Estimate:
|Mineral Resource Summary Within Floating Cone Pit Shells
All Material Classified as Inferred
Mineral Resource Expansion Potential
- Mineral resources are reported using a long term gold price of $1400/oz.
- Rounding of tons and contained gold results in apparent differences in totals and is in accord with reporting guidelines.
- "Fill" refers to previously mined waste placed on top of the original topography that must be mined in the future to develop the resource. Fill is assumed to be sterile waste.
- A portion of the resource in the Wedge deposit is under or directly adjacent to current facilities.
- Mineral resources are as of June 1, 2013.
- Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Within Telesto's resource block model there is approximately an additional 1.5 million tons of mineralized material outside the floating cone economics that is above a cutoff grade of 0.02 opt gold. The areal extent of this mineralization is presented in a plan section of the resource model wireframes available at: View Map
. Cross-section views of the mineralized wireframe envelopes that extend or lie outside of the pit shells is available at: View Cross-Sections
. With additional drilling; some or all of these areas could potentially be added to the mineral resource estimate after applying floating cone economics.
Satellite Deposits - Development Plan
Scorpio Gold's plans for development of the satellite deposits include the following:
- Drilling of 75 reverse circulation ("RC") holes to attempt to confirm and expand the mineralization at the Solberry, Bluelite, and Brodie deposits.
- Compilation of all mineralized drill hole sample rejects for metallurgical and density testing.
- Continued collection of baseline data for permitting.
A conceptual layout of pits, waste dumps, and haul roads for the Brodie, Bluelite, and Solberry deposits has been developed for planning, scheduling and permitting purposes. Due to the location of the three deposits, the Solberry and Bluelite deposits would be exploited first in order to access the haul road to the crushing facility. Exploitation of the Brodie deposit would follow their completion, given that the current Brodie pit design overlaps the haul road to the crusher.
Scorpio Gold has outlined a conceptual operational schedule with potential commencement of mining of the Solberry and Bluelite deposits beginning in the third quarter of 2014 with the Brodie pit mined in 2015. With several high priority exploration targets in close proximity to the mine still to be tested, this schedule could easily change.
Mineral Resource Database
The mineral resource study by Telesto was conducted on five deposits in total, using data from a total of 631 drill holes and 25,208 assay values. Included in the study was the Oromonte deposit; however, generation of a floating cone resource for Oromonte was not possible due to insufficient drill hole density. Near surface and relatively high-grade mineralized material was intercepted by drilling in the east-central portion of the Oromonte deposit, and additional drilling is recommended.
Of the 631 drill holes used in the resource study, 460 are legacy holes drilled from 1986 to 2008 and 171 holes were drilled by Scorpio Gold during its 2010-2012 drilling campaigns. Scorpio Gold has been unable to locate laboratory assay certificates corresponding to documented assays in some of the legacy holes, amounting to thirty-two percent of the overall drill hole assay database. Telesto notes that the assay database for the Mineral Ridge project has been scrutinized by several reputable mining consulting companies, including Mineral Resources Development Inc., Behr Dolbear, Pincock, Allen & Holt and Micon International. The conclusions drawn from previous intensive database analyses is that the assay database of the Mineral Ridge project, including the satellite areas, is sufficient to support a mineral resource estimate. However, because the original assay sources for 32% of the assay data could not be located for verification, Telesto's opinion is that the database has a significant component of uncertainty and is sufficient to support an estimate of inferred mineral resources only.
The reader is cautioned that inferred resources are considered too speculative geologically to have economics applied and there is no certainty that the economic results can be achieved.
Key Assumptions, Parameters & Methods Used
The mineral resource study used the current mining, processing and G&A costs at the Mineral Ridge operation of $21.72 per ton of ore, and a long-term gold price of $1,400 per ounce. The mineral resources reported are constrained within a floating cone pit shell and are compliant with CIM Definition Standards of "reasonable prospects for economic extraction".
Grade zone shells used for resource modeling are based on a geologic interpretation of mineralization controls. Separate resource grade and background grade models for gold were generated using ordinary kriging. A diluted gold model was then created based on the percent of mineralized material and background material in each block. The mineralized envelopes were constructed on 25 foot spaced E-W sections and were combined into wire-frames that defined the extent of mineralization for all the near resource development targets. These wireframes were used to assign a percent mineralized zone value to 5x5x2 foot grade blocks.
A single floating cone was run on the combined model using an overall pit slope of 49 degrees. The goal of the floating cone analysis is to identify material within the resource areas that may be amenable to economic extraction by open pit mining techniques. A 65% gold metallurgical recovery was applied when evaluating the economic viability of the satellite deposits.
The mineral resource estimate was prepared by Telesto personnel, Patricia Maloney, SME-RM, Douglas Willis, C.P.G and Randall Martin, SME-RM. Ms. Maloney, Mr. Willis and Mr. Martin are qualified persons as defined by NI 43-101 and have reviewed and approved the contents of this news release with respect to the mineral resource estimate on the Mineral Ridge satellite deposits.
A NI 43-101 compliant technical report supporting the disclosure of the mineral resource estimate is in final preparation by Telesto and will be filed on SEDAR within 45 days of this press release.
About Scorpio Gold
Scorpio Gold holds a 70% interest in the Mineral Ridge gold mining operation located in Esmeralda County, Nevada with joint venture partner Waterton Global Value L.P. (30%), and is currently entitled to receive 80% of cash flow generated. Mineral Ridge is currently in production as a conventional open pit mining and heap leach operation. The Mineral Ridge property is host to multiple gold-bearing structures, veins and bodies at exploration, development and production stages. Scorpio Gold recently acquired the Goldwedge advanced exploration-stage property and processing facility in Manhattan, Nevada, and the Pinon advanced exploration-stage gold property near Carlin, Nevada. The Company is assessing its exploration plans for these properties 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,
For further information contact:
Steve Roebuck Tel: (819) 825-7618
Jim Macdonald, Torrey Hills Capital
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. 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 resource estimates and Company's plans with respect to the filing of a technical report in support of the mineral resource estimate included herein and the exploration, development and exploitation of the satellite deposits 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 delays related to exploration, development and exploitation of the Mineral Ridge satellite deposits 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.