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Scorpio Mining Corporation Creates Gold Subsidiary
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NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.
Vancouver, May 16, 2007 - Scorpio Mining Corporation (TSX:SPM) (the "Company") announces that it has formed a wholly-owned subsidiary company named Scorpio Gold Corporation, which is intended to hold and separately finance development of the Company's gold assets.
The Company realizes that it currently receives little value in the market for its gold assets and at present its main focus it to put its flagship Nuestra Senora silver-zinc property into production with the current funds on hand. The Company has formed an independent committee of its Board to evaluate its gold assets under current industry standards. Once this valuation has been received, and upon Toronto Stock Exchange approval, the Company will move forward in looking at various alternatives for Scorpio Gold to create value for the Company's shareholders with the gold assets.
The purpose of this initiative is as follows:
- To advance the Company's gold assets without share dilution to Scorpio Mining Corporation shareholders or use of existing funds.
- To review various alternatives for taking Scorpio Gold public so it can advance and finance the gold assets in Quebec and Nova Scotia independent of Scorpio Mining Corporation.
- To realize value for the gold assets through a controlling share stake in a potentially publicly traded company, Scorpio Gold.
- To take advantage of the current upswing in the gold metal prices and financial markets.
The Company currently has in its gold portfolio three assets, the Lac Arseneault project, Quebec, the Cochrane Hill property in Nova Scotia and the Caribou property in Nova Scotia. About the properties;
Lac Arseneault Property, Gaspe Area, Quebec
The Lac Arseneault property consists of 30 contiguous claims encompassing 480 hectares, and is located in Bonaventure County on the Gaspe Peninsula of Quebec. Scorpio can vest a 100% interest in the property, subject to a 2% net smelter return royalty, by issuing the balance of 50,000 treasury shares to the underlying property owner.
The property is considered to be in an advanced exploration stage. Previously optioned to Appalaches Resources Inc. (Appalaches), a January 10, 2007 NI 43-101 report prepared for that company by Geominex presented the following average grades and widths from 2001 chip sampling of the stripped mineralized veins on the property:
Principle Gold-Bearing Veins on Lac Arseneault Property
Vein |
Length Exposed (m) |
Sample Width (m) |
Gold (g/t) |
Silver g/t) |
Baker |
45
|
0.72 |
13.54
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453.94
|
Mersereau |
75
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0.53 |
10.35
|
113.03
|
Marleau |
76
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0.49 |
5.59
|
Not Analysed
|
Line 4W |
84
|
0.46 |
1.47
|
Not Analysed
|
Greek |
11
|
2.52 |
0.56
|
Not Analysed
|
As per the above report, significant results of surface sampling by Appalaches in 2006 included 38.8 g/t gold and 257 g/t silver over 0.92 m on the Baker Vein and 17.9 g/t gold and 201 g/t silver over 0.30 m on the Mersereau Vein. Results from diamond drilling in 2006 reported significant intersections of 7.2 g/t Au over 3 m and 14.7 g/t gold over 0.7 m on the Baker Vein and 6.74 g/t gold over 0.4 m on the Mersereau vein.
Caribou Property, Nova Scotia
The Caribou gold property comprises 16 contiguous mineral claims encompassing 256 hectares in Halifax County, Nova Scotia. Scorpio has an option to acquire a 100% interest in the property subject to an underlying net smelter return royalty.
The property is considered an advanced stage property ready for development. The property hosts 5 main shafts and was mined to a depth of 240 metres producing 3,366,575 grams of gold or 13,995 grams of gold per vertical metre.
A mineral resource estimate was prepared for the Caribou Deposit by independent Qualified Person, Guy Mac Gillivray, PGeo. The Inferred Resource estimate using uncut gold assays is 350,305 tonnes grading 8.41 g/t gold. Using a statistical cut-off for gold of 47 g/t, the Inferred Resource for the property is 350,305 tonnes grading 5.83 g/t gold (Reference: "Technical Report - Preliminary Resource Estimate for the Caribou Property and Recommendations for Additional Work" dated December 30, 2006; Sedar filing February 21, 2007). Mineral resources are not reserves and do not have demonstrated economic viability.
Cochrane Hill Property, Nova Scotia
The Cochrane Hill property consists of 65 contiguous mineral claims encompassing 1,192 hectares of land in Guysborough County, Nova Scotia. Scorpio holds a 100% interest in 53 claims encompassing 848 hectares subject to an underlying net smelter return royalty. The remaining 12 claims encompassing 344 hectares were acquired by staking and are 100% owned by Scorpio.
The property is considered an advance stage property ready for development. Auriferous quartz veins occur singly or in groups or belts up to 25 feet wide. Access to underground working is by two shafts and one ramp. Five mineralized vein sets have been outlined within a sheared, arsenopyrite-bearing slate zone that varies in width from 15 to 30 metres.
A mineral resource estimate was prepared for the Cochrane Hill Gold Deposit in 2004 by independent Qualified Person, Guy Mac Gillivray, PGeo. The estimate contains Indicated Resources of 588,794 tons grading 0.191 oz/ton gold for a total 112,460 contained ounces of gold. Inferred Resources total 29,422 tons grading 0.165 oz/ton gold, projected to a depth 175 feet vertically below the Indicated Resources. (Reference: "Resource Report, Scorpio Mining Corporation, Cochrane Hill Property, Guysborough County, Nova Scotia" dated July 1, 2004; Sedar filing July 12, 2004). Mineral resources are not reserves and do not have demonstrated economic viability.
Further details concerning this initiative will be provided when available.
Further information on the Company, the Nuestra Señora project and its gold properties are available on the Scorpio Mining web site at: www.scorpiomining.com.
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley
Chairman & CEO
For further information contact:
Glenn Little, Jackson Little Holdings Ltd: 604-930-4375; 1-888-930-4375
Email: jlconsulting@telus.net
Rich Kaiser, YES International: 1-800-631-8127; 001-757-306-6090 (outside North America)
Email: yes@yesinternational.com
This news release includes certain statements that may be deemed "forward-looking statements". All statements in this news release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Company expects, are forward looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include metal prices, exploration success, continued availability of capital and financing, and general economic, market or business conditions. |
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