Scorpio Gold Corporation (TSXV:SGN) is a Canadian-based gold producer with assets located near Tonopah within the prolific Walker Lane gold belt in south-west Nevada. The company is the 70% owner and operator of the Mineral Ridge gold mine and 100% owner of the advanced exploration-stage Goldwedge property.
Currently in its third year of commercial production at Mineral Ridge, Scorpio Gold produced a total of 39,160 oz. of gold in 2013. The company is forecasting 40,000 to 45,000 oz. of gold to be produced at Mineral Ridge in 2014.
Scorpio Gold acquired the Goldwedge property and processing facility in December 2012. The company is assessing its exploration plans as well as the potential for toll milling at the Goldwedge mill, which is currently permitted for 400 tons per day.
- Record production of 39,160 oz. gold in 2013; a 22% increase over 2012.
- Cash cost per oz. gold sold reduced to US$734 in 2013; an 18% decrease from 2012.
- 2014 production forecast: 40,000 – 45,000 oz. gold.
- Poised for production growth through development of satellite deposits.
- Exceptional safety record; honored by the Nevada Mining Association with a second place award in safety ratings in the small surface mining category.
Mineral Ridge is a conventional open pit heap leaching operation located 6 km northwest of the town of Silver Peak and 56 km west of Tonopah in Esmeralda County, Nevada. The project area encompasses 5,010 hectares (12,380 acres) and is host to multiple deposits at exploration, development and production stages. Prior to Scorpio Gold and dating back to the late-nineteenth century, the property historically produced ~575,000 oz. of gold, including ~170,000 oz. from open pit and ~405,000 oz. from underground mining operations.
Scorpio Gold acquired a 70% interest in the Mineral Ridge project in March 2010 and under the terms of the joint venture agreement is currently entitled to receive 80% of the cash flow generated.
Following major site rehabilitation and refinement of the heap leaching and processing operations, Scorpio Gold achieved commercial production status on January 1, 2012.
In 2013, total gold production increased by 22% over 2012 to 39,160 ounces. Increased efficiencies, higher production levels and higher head grades led to an 18% reduction in total cash cost per ounce of gold sold from US$890 in 2012 to US$734 in 2013.
All gold is unhedged, and there are no underlying royalties in areas currently being mined.
In September 2013, the Mineral Ridge Mine Operation was recognized amongst some of the major producers in Nevada for its commitment to worker safety, when it received a safety award by the Nevada Mining Association for its performance in the 2012 calendar year.
2014 Production Guidance and Operations Forecast
Scorpio Gold has forecasted 40,000-45,000 oz. gold for its third year of commercial production at Mineral Ridge based on a conservative approach that estimates total cash cost for 2014 at US$800-$850 per ounce of gold sold. Budgets for capital expenditure, development, and exploration are set at US$1.2 million, $5.9 million and $3.9 million respectively for 2014.
Key parameters for the estimated 2014 production forecast include:
- An average throughput of 2,840 short tons (2,580 metric tonnes) per day
- An average grade of 0.061 oz. of gold per short ton (2.09 grams per tonne)
- A waste to ore ratio of 4.3 to 1 for the Drinkwater and Mary/LC producing pits combined
Mineral Ridge Deposits
The Drinkwater and Mary are the two main deposits currently in production. Five additional satellite deposits known as Brodie, Bluelite, Solberry, Oromonte and Wedge are located west and southwest of Drinkwater Pit and lie in close proximity to the leach pad. Mineral reserve and resource estimates have been reported for the Drinkwater and Mary deposits and an Inferred mineral resource has been reported for the satellite deposits.
Near-term production growth opportunities lie in the Mary-Mary LC pit expansion and four of the adjacent satellite deposits currently in the development pipeline. A new reserve estimate extending Life of Mine is expected in Q2 2014.
The Goldwedge project is located 54 km north-northeast of the town of Tonopah within the Manhattan Mining District of south-central Nevada. Scorpio Gold holds a 100% interest in the project, with the property covering three separate claim blocks and encompassing the Goldwedge, Keystone and Jumbo gold deposits.
The Goldwedge project includes a fully permitted underground mine with over 600 meters of development and a 400 ton per day mill facility with gravity circuit. Scorpio Gold has nearly completed rehabilitation of the plant and surrounding infrastructure.
The Goldwedge deposit is situated on the southern periphery of the Manhattan Caldera, approximately 16 kilometers south of the 15 million oz. Round Mountain Mine. Historic mining in the Manhattan Mining District dates back to the nineteenth century, with district-wide gold production estimated at 566,000 oz. The largest gold production came from the Manhattan Mine East & West pits located within a kilometer south of the Goldwedge deposit, where Echo Bay Mines reportedly produced an estimated 236,000 oz.
Scorpio Gold recently completed a preliminary 3-D geological model of the Goldwedge deposit based on data obtained from previous operators. Once interpretation and modelling of the mineralized system has been completed and a budget is in place, the company plans to proceed with surface and underground core drilling programs.
Also included in the Goldwedge property are the Jumbo and Keystone deposits, located 3.8 and 4.3 km southeast respectively from the Goldwedge deposit. Scorpio Gold considers both deposits to have considerable exploration merit given their style of mineralization, location along strike of the regionally significant northwest trending Reliance Fault Zone and both have been previously mined on a small scale via open pit method.
In less than two years, Scorpio Gold brought the idle Mineral Ridge gold mine into production and has since achieved marked success in increasing year-over-year gold production while decreasing its total cash cost per ounce of gold sold. Scorpio Gold produced a record 39,160 ounces at Mineral Ridge in 2013 and is currently forecasting 40,000 to 45,000 ounces of gold to be recovered in 2014. Near-term opportunity for production growth lies in the Mary-Mary LC pit expansion and adjacent satellite deposits currently in the development pipeline. A new reserve estimate extending Life of Mine is expected in Q2 2014.
Scorpio Gold also owns 100% of the fully permitted Goldwedge mine and mill facility in nearby Manhattan, Nevada, where surface and underground exploration is planned in 2014 that could lead to future production opportunities.
Peter J. Hawley, BSc, BEng, PGeo – CEO, Director
Peter Hawley has 30 years of mining-industry experience that spans grassroots exploration through to development and production, and has worked extensively with a large number of intermediate and senior mining companies including Teck, Noranda, Placer Dome and Barrick Gold. He is the founder of Scorpio Mining Corporation and served as CEO of that company from 1998 through 2010 and is currently a director. Mr. Hawley is also highly experienced in private and public company financing and corporate administration.
Steve Roebuck, BSc, PGeo – President
Steve Roebuck has 20 years mining industry experience, beginning his career with Placer Dome and Aur Resources. In 1995, Steve joined Royal Oak Mines working as an exploration and production geologist at the Giant, Colomac and Matachewan gold mines in Ontario and the NWT. In 2000, he joined BHP Billiton as a production geologist and later promoted to production engineer at the EKATI Diamond Mine in NWT. From 2005 to 2007, he was Vice President of Exploration for Forest Gate Resources., exploring diamond properties in Quebec and Saskatchewan. From 2008 until 2012, Steve was Vice President of Exploration for Advanced Explorations, working with the feasibility study team for the Roche Bay Iron Ore project in Nunavut. Steve joined Scorpio Gold in 2007 while it was a private company as Vice President of Development and was instrumental in the company’s creation and early property portfolio, rejoining the company in 2012 as its President.
Gilbert Comtois, CPA, CA – Chief Financial Officer
Gilbert Comtois was appointed CFO of Scorpio Gold Corporation in May 2007. He joined Scorpio Mining Corporation as Controller in July 2006 and was the CFO of Scorpio Mining from September 2007 to April 2011. Prior to July 2006, he worked 18 years with Deloitte in auditing of private and public companies, including junior exploration and operating mining companies.
Peter Brieger – Director
Mr. Brieger, HBA, CFA, is a graduate of the Richard Ivey School of Business at the University of Western Ontario. He has over 50 years’ experience in Canadian investment business as a securities research analyst, market strategist and portfolio manager in Toronto, London, England and New York. In 1988, he co-founded GlobeInvest Capital Management Inc. and built it into a nationally recognized portfolio management firm where he is currently CEO and Managing Director. Peter has been a regular guest on Business News Network (BNN) and an occasional guest on the CTV News Channel. Mr. Brieger has also served as a guest lecturer on international investing at Queen’s University and the Richard Ivey School of Business.
Brian Lock – Director
Mr. Lock has over 30 years of experience in the operations, feasibility, design engineering and construction of numerous precious metals and base metal mining projects around the world. In 1985 he founded Proton International Engineering Corp., a Canadian engineering and construction company devoted to the development of small- and medium-sized mining projects. He was an officer of Frontier Pacific Mining Corporation from early 2006 until its take-over in July 2008. Mr. Lock has managed and/or served as a director of several Canadian public and private companies.
Luc Pelchat – Director
Mr. Pelchat is the founder and President of the Canadian Chamber of Commerce in North Mexico. Following 24 years with a Canadian multinational company operating in the construction industry, Mr. Pelchat formed a number of his own companies and has realized multiple projects in the construction industry in Mexico. He has extensive business, financial and human resources experience in Canada, Mexico and Africa.
David Smalley – Director
Mr. Smalley is owner of David Smalley Law Corporation, prior to which he was a partner at Fraser and Company LLP in Vancouver, BC. He has been a director and officer of public companies for over 13 years.
Andrew Lee Smith – Director
Mr. Smith is a Professional Geologist with over 25 years of experience successfully exploring, developing and operating North American base and precious metals mining projects. He is currently a director and Interim CEO for East Africa Metals as well as President, CEO and a director of Tigray Resources and a director of True North Gems.
Janet Horbulyk – Corporate Secretary
Janet Horbulyk has 30 years of experience with securities and stock exchange regulatory matters including seven years with the listings department of the Vancouver Stock Exchange.