Vancouver, August 26, 2016 - Scorpio Gold Corporation ("Scorpio Gold" or the "Company") (TSX-V: SGN) is pleased to announce its financial results for the second quarter ended June 30, 2016 ("Q2"). This press release should be read in conjunction with the Company's condensed interim consolidated financial statements for Q2 and Management Discussion & Analysis for the same period, available on the Company's website at www.scorpiogold.com and under the Company's name on SEDAR at www.sedar.com. All monetary amounts are expressed in US dollars unless otherwise specified.
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Peter Hawley, CEO, comments, "We are pleased to report another strong quarter of production and cash flow at Mineral Ridge with 10,089 ounces of gold produced in the second quarter of 2016, representing a 15% increase over Q2 2015, and representing an aggregate of 18,597 ounces of gold produced in the first half of 2016. Performance in Q2 was partially driven by a 42% increase in processed material and a 39% increase in recoverable ounces placed on the leach pad. Gold head grade in Q2 decreased slightly by 3% compared to the same quarter in 2015
"The Company remains focused on being cost effective and anticipates that production at Mineral Ridge during the second half of 2016 will be mainly supported by the Mary LC Phase Three pit.
"Production guidance for the Mineral Ridge operation in 2016 remains at 30,000-35,000 ounces of gold at a revised estimated total cash cost of $900-$950 per ounce of gold sold, compared to the Company's initial estimate of $850-$900 per ounce of gold sold as reported on March 23, 2016. The Company foresees a higher total cash cost per ounce of gold during the second half of 2016 compared to the first half mainly due to an expected higher strip ratio in producing pits along with a reduction in grade as well as ore tonnage mined and processed.
"Scorpio Gold has expanded its 2016 exploration program to include surface mapping, sampling, geophysics and follow-up small diameter core drilling on first priority targets. This program will incorporate our revised model of structural controls to gold mineralization within the extensive underexplored areas of the Mineral Ridge property. The Company also intends to initiate diamond drilling on the Drinkwater Highwall and Mary LC Phase Four areas to confirm the Company's evaluation of potentially economic mineralization, which if successful is expected to increase the Life of Mine. In addition, an increase in the price of gold is allowing the Company to re-evaluate outlined mineralization sources within its permitted mining boundary that were previously deemed uneconomic.
"Permitted mining at Mineral Ridge remains scheduled to end in mid-2017. An initial presentation was made in March 2016 to the Bureau of Land Management (BLM) with respect to permitting the Custer and Oromonte claims for additional mining, which could extend the mining schedule. There can be no assurance that any applications made for permitting will be successful or be obtained before the current permitted mining expires."
Highlights for the Second Quarter Ended June 30, 2016 and subsequent event:
Highlights for the Six-Month Period Ended June 30, 2016:
- 10,089 ounces of gold were produced at the Mineral Ridge mine, compared to 8,738 ounces produced during Q2 of 2015.
- 10,015 ounces of gold sold, compared to 10,217 ounces sold during Q2 of 2015.
- Revenue of $12.4 million, compared to $12.1 million during Q2 of 2015.
- Total cash cost per ounce of gold sold(1) of $879, compared to $800 during Q2 of 2015.
- Mine operating earnings of $3.1 million, compared to $2.4 million during Q2 of 2015.
- Net earnings of $1.2 million ($0.00 basic and diluted per share), compared to $1.7 million ($0.01 basic and diluted per share) during Q2 of 2015.
- Adjusted net earnings(1) of $2.2 million ($0.01 basic and diluted per share), compared to $1.8 million ($0.01 basic and diluted per share) during Q2 of 2015.
- Adjusted EBITDA(1) of $2.8 million ($0.02 basic and diluted per share), compared to $2.9 million ($0.01 basic and diluted per share) during Q2 of 2015.
- Cash flow from operating activities of $4.9 million, compared to $4.6 million during Q2 of 2015.
- On August 3, 2016, the Second Judicial District Court of Washoe County, Nevada issued an oral ruling for summary judgment awarding a drilling company, National EWP, Inc. ("National"), US$2.3 million in its lawsuit against the Company's 70% indirectly owned subsidiary Mineral Ridge Gold, LLC, the operator of the Mineral Ridge gold operation. The Company and its legal advisors strongly disagree with both the Court's legal conclusions and its factual findings, and it is currently evaluating its options to contest the ruling and stay execution of the judgement, once entered.
(1) This is a non-IFRS measure; refer to Non-IFRS Measures section of this press release and the Company's Management Discussion & Analysis for Q2 of 2016 for a complete definition and reconciliation to the IFRS results reported in the Company's financial statements for Q2 of 2016.
- 18,597 ounces of gold were produced at the Mineral Ridge mine, compared to 20,690 ounces produced during the six months ended June 30, 2015.
- 18,315 ounces of gold sold, compared to 20,625 ounces sold during the six months ended June 30, 2015.
- Revenue of $21.9 million, compared to $24.4 million during the six months ended June 30, 2015.
- Total cash cost per ounce of gold sold(1) of $879, compared to $798 during the six months ended June 30, 2015.
- Mine operating earnings of $4.9 million, compared to $4.5 million during the six months ended June 30, 2015.
- Net earnings of $2.3 million ($0.01 basic and diluted per share), compared to net earnings of $2.5 million ($0.01 basic and diluted per share).
- Adjusted net earnings(1) of $3.3 million ($0.02 basic and diluted per share), compared to $2.8 million ($0.01 basic and diluted per share) during the six months ended June 30, 2015.
- Adjusted EBITDA(1) of $4.4 million ($0.02 basic and diluted per share), compared to $4.7 million ($0.02 basic and diluted per share) million during the six months ended June 30, 2015.
- Cash flow from operating activities of $4.5 million, compared to $9.0 million during the six months ended June 30, 2015.
The discussion of financial results in this press release includes reference to Adjusted EBITDA, Total cash cost per ounce of gold sold and Adjusted Net Earnings, which are non-IFRS measures. The Company provides these measures as additional information regarding the Company's financial results and performance. Please refer to the Company's MD&A for the six months ended June 30, 2016 for definitions of these terms and a reconciliation of these measures to reported International Financial Reporting Standards ("IFRS") results.
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 Elevon, LLC (30%). 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 lenses at exploration, development and production stages. Scorpio Gold also holds a 100% interest in the advanced exploration-stage Goldwedge property in Manhattan, Nevada, with a fully permitted underground mine and 400 ton per day mill facility. The Goldwedge mill facility has been placed on a care and maintenance basis and can be restarted immediately when needed.
ON BEHALF OF THE BOARD
SCORPIO GOLD CORPORATION
Peter J. Hawley,
For further information contact:
Chris Zerga, President
Tel: (819) 825-7618
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 Company's plans with respect to the exploration, development and exploitation of its Mineral Ridge project, including any forecasts regarding future production or costs related thereto. 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 relating to operation of a gold mine, including unanticipated changes in the mineral content of materials being mined; unanticipated changes in recovery rates; changes in project parameters; failure of equipment or processes to operate as anticipated; the failure of contracted parties to perform; availability of skilled labour and the impact of labour disputes; delays in obtaining governmental approvals; changes in metals prices; the availability of cash flows or financing to meet the Company's ongoing financial obligations; unanticipated changes in key management personnel; changes in general economic conditions; obtaining the required permits to expand and extend mining activities; the outcome of the litigation with National and other risks of the mining industry 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.