The 100% owned Nuestra Señora Project is located approximately 10 km east of the town of Cosala in Sinaloa State, Mexico. A paved highway connects Cosala with Mazatlan, 161
km southeast, and Culiacan, 164 km to the north. The property is accessible from Cosala via two heavy equipment access roads constructed by Scorpio. A 12-km road that passes through the village of La Seca accesses the Nuestra
Señora, Santo Domingo and Santa Teresa workings at river level. A 28-km road that passes through the village of Santa Ana accesses the upper Candelaria workings 120
m above river level.
The property comprises five mineral exploitation claims covering an area of
1,896 ha and six exploration claims encompassing 13,560 ha. Scorpio Mining's wholly owned Mexican mining subsidiary, Minera Cosala SA de CV, holds 100% ownership of the Nuestra
Señora mineral rights with no underlying royalties or interest payments.
Satellite View Looking Northwest
The Nuestra Señora Deposits
Mineralization within the four known deposits occurs as carbonate replacement-style (CRD) mantos, veins, chimneys, chimney breccias, and mineralized exo- and endo-skarn within limestone host rocks and granodiorite intrusive. The extent and character of the mineralization on the Nuestra
Señora property suggest a large mineralizing system, the potential of which has not been tested by historic or modern exploration.
Nuestra Señora Property Geology
Nuestra Señora Land Position
Exploration & Development
Nuestra Señora Deposit
In early 2005, the Company focused its efforts on underground development and definition drilling of the
Nuestra Señora deposit. The program was highly successful, resulting in the discovery of two large mineralized zones (Hoag and Sept 9) adjacent to the main Nuestra
Señora deposit and other high-grade lenses (North and South) peripheral to its extensions.
The current understanding of the mineralized zones and their relation to other deposits in the area is that a series of stacked thrust faults provided the main conduit for mineralizing fluids. Subsequent deformation along the thrust faults created dilational zones, which provided wider structural traps for the emplacement of mineralization.
Structures Controlling Mineralization
Stacked Thrust Faults
The drill intersections and assay results to date demonstrate significant upsize potential for the project. The Hoag and Sept 9 zones do not outcrop at surface but are situated between the Nuestra
Señora deposit and the Santo Domingo and Santa Teresa deposits, all of which have surface expressions. Management believes there is excellent potential to find other such "blind" (unexposed) mineralized bodies within the immediate area.
Longitudinal sections showing the location of the Hoag and Sept 9 zones relative to the Nuestra Señora
deposit and underground workings are presented below.
Plan View of Nuestra Señora and Satellite Deposits
Longitudinal of Hoag, Sept 9 relative to St. Teresa & Nuestra Main Zone
The following images illustrate mining plans for the Main Northwest, Hoag, Sept 9
and Santa Teresa zones.
Main NW Zone 9-11 Levels
Main NW Zone Mine Plan
Hoag Zone Mine Plan
Santa Teresa Mine Plan
Santa Teresa Deposit & Santa Teresa Extension Zone
The surface expression of the Santa Teresa deposit is located 150 m northeast of the Santo Domingo adit and 250
m east of the Nuestra Señora mine. Surface and underground drilling of the deposit to date has intersected significant grades and widths of mineralization. Mineralization intersected by underground drilling from the 9th level lies 180
m below surface and is only 17 m from the haulage ramp, making it readily accessible for extraction.
The Santa Teresa Extension zone is parallel to and southeast of the Hoag zone. As shown
in the figures below, the Santa Teresa Extension and Hoag zones are linked by the Sept 9
zone, where recent underground development on the 9th and 10th levels has delineated impressive sulphide mineralization within the structure.
It has been determined that the Sept 9 zone is actually a mineralized feeder
conduit for the emplacement of mineralization into the Hoag and Santa Teresa zones.
The Santa Teresa Extension continues to show good widths in the majority of
drill holes and the geometry of the lens (as currently defined) suggests it will be amenable to low-cost, long-hole mining methods. The zone remains open
in both dip directions along the rake of the mineralization.
Hoag, Santa Teresa & Sept 9 Zones
Santa Teresa & Sept 9 Zones
Santo Domingo Deposit
Mineralization within the Santo Domingo deposit is exposed at river level approximately 150
m southwest of the Santa Teresa occurrence. No previous drilling of the deposit has been recorded. Scorpio's initial four surface holes into the deposit have returned positive results as reported in the Company's July 10, 2007 news release. Future underground drilling of the Santo Domingo will be conducted from the 6th level workings of the Nuestra
Señora mine.
2007 Pre-Feasibility Study
On June 14, 2007 Scorpio Mining released positive results from an independent Pre-Feasibility Study ("PFS") on the Nuestra
Señora deposit. The results of the PFS which was completed by Genivar, an independent qualified engineering company with the participation of other Qualified Persons and companies, demonstrated that an underground bulk mining operation at Nuestra
Señora was economically viable. The study projected that the cash cost of producing silver at the Nuestra
Señora project, after accounting for by-product credits,
would be a negative US$ 0.98 per ounce produced using discounted metal prices of US$ 11.00 per oz. for silver, US$ 1.25 per lb. for zinc, US$ 0.50 per pound for lead and US$ 2.25 for copper.
Using the same discounted metal prices, the projected after tax production cash flow
from commencement of production until the end of life of mine operations,
was US$59.5 million, excluding the pre-production capital expenditures of US$26.5
million. The estimated Net Present Value after tax was US$14.3 million and Internal Rate of Return
was 26.2% using a 10% real discount rate. These projections are
substantially increased when using undiscounted, current day metal prices.
The key project parameters and highlights of the PFS are outlined in the
Company's June 14, 2007 news release. A technical report for the pre-feasibility study was filed on Sedar on July 17, 2007 and is also available within the
"Technical Reports" section below.
Mine Development & Production
Based on the positive results of the PFS, the Company announced on June 25, 2007 its decision to proceed to production.
Construction of the mill facility commenced on August 1, 2007 and was
completed on schedule by March 31, 2008. Scorpio's dedicated 34-km power
line from the main hydro dam to the mill facility was activated on April 10,
2008, allowing the mill to enter its commissioning period. Shipment of concentrates commenced in August,
2008,
and the Company began receiving smelter and off-take payments the following
month. Official commercial production at the Nuestra Señora mine was achieved in January 2009.
Current Operations
The Company is proud to report a very successful first year in commercial production with the team, mine and mill facility out-performing all targets
set for each quarter. A summary of the Company's 2009 operating and financial results is presented in its April 1, 2010 news release.
In its first year of commercial production, the mill facility operated
271 days and processed 210,324 tonnes of material. Contained metals produced
in concentrates totalled 4.188 million pounds of lead, 1.186 million pounds
of copper, 8.747 million pounds of zinc and 600,375 ounces of silver.
For the year ended December 31, 2009, adjusted earnings amounted to $3.1 million, net earnings
were $13.5 million and earnings per share were $0.12. This stellar performance
could not have been achieved without
the continued hard work from the Scorpio team throughout the year, in
keeping operating costs low while increasing mine and mill throughput.
The Company continues to ramp up operations for 2010 and reported another very successful quarter
in its May 18, 2010 news release.
Highlights of the first quarter ended March 31, 2010 are as follows:
Nuestra Señora mine continued to increase production and,
for the first quarter of 2010, processed 92,658 tonnes, which is equivalent to 44% of the
total production for 2009.
Nuestra Señora mine operating earnings were $1,309,084 for
the three-month period ended March 31, 2010 compared to $895,596 for the same period of
2009.
Adjusted EBITDA were $1,862,218 for the
three-month period ended March 31, 2010 compared to $1,061,102 for the same period of 2009.
Due to the gain on dilution and deconsolidation of Scorpio
Gold Corporation of $19,786,287, net earnings were $18,617,827 for the three-month period
ended March 31, 2010 compared to net loss of $397,119 for the same period of 2009.
Nuestra Señora unit cash operating costs were
7.7% lower than 2009, at US$33.01 per tonne for the three-month period ended March 31, 2010
compared with US$35.78 per tonne for the same period of 2009.
The average monthly mill throughput increased from 13,199
tonnes in Q1 2009 to 30,886 tonnes in Q1 2010, an increase of 134%. During Q1 2010, the
Nuestra Señora mill processed 92,658 tonnes in 79 days of production at an average grade of
1.12% lead, 0.23% copper, 2.18% zinc and 81 g/t silver.
For the first quarter ending March 31, 2010, contained metals
produced in concentrates consisted of 1.758 million pounds of lead, 235,000 pounds of
copper, 3.434 million pounds of zinc and 213,435 ounces of silver.
With the completion of the Platte River Gold acquisition,
the Company continues to look forward to increased production and a planned
mill expansion for 2010.
President, Mr. D. Roger Scammell, PGeo, is the Company's Qualified Person for the Nuestra Señora project. All technical information for the project is obtained and reported under a formal quality assurance and quality control (QA/QC) program, details of which are presented in the PDF link below.
Presentations
360° View of the Nuestra Señora Mine Workings and River Canyon Topography
