Scorpio Announces Acquisition of Platte River Gold Inc.
TSX:SPM
Peter J. Hawley, Chairman, CEO reports, "We are very pleased to come to an agreement with the Platte River management group and major shareholders, all of whom not only support the planned arrangement but envision a larger, low-cost producer with near-term increased production, organic reserve and resource growth and high-quality assets allowing a long-term, Cosala-based mining company to emerge. The acquisition of Platte River's deposits in the Cosala area, which are amenable to both underground and open pit mining methods and located less than 10 kilometres from Scorpio's existing, and scaleable, mill facility, supports the Company's mandate to be a growing, low-cost producer. This will also substantially increase the size of the Company's property holdings in Cosala and its overall exploration potential. Other favourable factors include the ownership of the surface rights for these properties, excellent roads and electrical supply infrastructure and year-round availability to water. All of these factors will help to streamline and fast track the exploitation of the Platte River deposits in a timely and cost-effective manner."
The Transaction
It is anticipated that the transaction will be in the form of a corporate amalgamation or plan of arrangement involving the issuance of approximately 74.8 million Scorpio common shares with a nominal value of approximately
Highlights of the Transaction
- Diversified production base from a minimum of two silver-zinc mines
less than 10 kilometres from Scorpio's central milling facility in a
mining-friendly jurisdiction.
- Scorpio's existing milling facility was designed with additional
capacity and could be expected to process all of Platte River's
material with a low capital outlay.
- Increases overall mineral resource base.
- Combines experienced management teams.
- Reduces overhead from combined operations less than 10 kilometres
apart.
- Enhances market presence.
- Increases leverage to current metal price environment.
- Combines high-quality institutional shareholder bases.
- Potential increased cash flow to support organic growth and Scorpio's
strategy of low-cost external growth through consolidation.
About Platte River Gold Inc.
Platte River is a private Canadian company formed in
Platte River has a significant institutional shareholder base for a private company, with Tocqueville, CGT, Libra, Sprott and US Global owning 83% of the shares.
The company's Mexican subsidiary, Minera Platte River S.L. de C.V. (MPRG), controls four significant projects in
The La Verde mine is producing approximately 12,000 tonnes per month and is currently leased out to a Mexican mine contractor for a monthly payment and royalty to MPRG.
In the La Verde Project area, MPRG has drilled 371 holes and more than 65,700 meters of core and reverse circulation drilling and has identified several significant deposits. These include the San Rafael deposit, with the related Zn-Ag-Pb-Au massive sulphide "Main Zone", the Ag-Cu-Au +/- Zn-Pb "120 Zone" and the Ag-Au "Upper Zone" deposits. All of these zones have been drilled out at 25-50 meter drill spacing and remain open to expansion. In addition, preliminary metallurgical work has been completed on the Main and 120 Zones and indicates normal recoveries. An internal study has reviewed the economics of exploitation of the deposits by open pit mining followed by underground extraction.
Recently prepared mineral resource estimates for the San Raphael deposits using 1.5% and 4.5% zinc equivalent cutoff grades are as follows:
San Rafael Related Deposits
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Table 1. Mineral Resource Estimate - Main Zone and Upper Zone -
August 12, 2009
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Cutoff
% Zn eq Category Tonnes Ag g/t Zn % Pb % Cu % Au g/t
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1.5% Measured 3,250,000 59.4 2.51 1.12 0.05 0.081
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1.5% Indicated 9,403,000 58.9 1.95 0.90 0.04 0.112
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1.5% M & I 12,653,000 59.1 2.09 .96 0.04 0.104
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1.5% Inferred 198,000 28.1 0.95 0.63 0.01 0.069
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4.5% Measured 1,491,000 92.1 4.07 1.79 0.07 0.094
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4.5% Indicated 3,322,000 100.9 3.70 1.54 0.07 0.131
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4.5% M & I 4,813,000 98.2 3.82 1.62 0.07 0.119
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4.5% Inferred 4,000 93.1 1.90 1.48 0.04 0.113
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Table 2. Mineral Resource Estimate - Upper Zone (Only) - August 12, 2009
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Cutoff
% Zn eq Category Tonnes Ag g/t Zn % Pb % Cu % Au g/t
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1.5% Indicated 993,000 121.9 0.25 0.20 0.06 0.426
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1.5% Inferred 18,000 99.6 .01 0.04 0.02 0.211
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4.5% Indicated 228,000 287.5 0.38 0.34 0.12 0.766
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4.5% Inferred 1,000 234.3 0.00 0.00 0.02 0.075
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Table 3. Mineral Resource Estimate - 120 Zone - August 12, 2009
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Cutoff
% Zn eq Category Tonnes Ag g/t Zn % Pb % Cu % Au g/t
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1.5% Indicated 3,089,000 94.5 0.48 0.14 0.25 0.132
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1.5% Inferred 347,000 98.2 0.06 0.01 0.22 0.127
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4.5% Indicated 645,000 244.8 0.36 0.08 0.57 0.248
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4.5% Inferred 43,000 302.6 0.13 0.01 0.43 0.207
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Note: Metal prices used in above estimates are US$12/oz silver, US
$0.80/lb zinc, US$0.70/lb lead, US$2.00/lb copper and US$750 /oz gold.
Mineral resources are not reserves and do not have demonstrated economic
viability.
El Cajon Deposit
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The El Cajon Ag-Cu-Au deposit has also been explored with 25-50 meter drill spacing and is also open to expansion. Preliminary metallurgical work completed to date reports acceptable industry normal recoveries. An internal study has reviewed the economics of exploitation of the deposit by underground extraction.
A recently prepared mineral resource estimate for the El Cajon deposit using 50 g/t and 100 g/t silver equivalent cutoff grades is as follows:
Table 4. Mineral Resource Estimate - El Cajon Deposit - October 8, 2009
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Cutoff
g/t Ag eq Category Tonnes Ag g/t Cu % Au g/t
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50 Indicated 2,442,000 129.4 0.44 0.19
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50 Inferred 996,000 97.2 0.34 0.13
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100 Indicated 1,751,000 161.7 0.54 0.25
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100 Inferred 545,000 138.5 0.49 0.20
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Note: Metal prices used in above estimate are US$12/oz silver, US$2.00/lb
copper and US$750 /oz gold. Mineral resources are not reserves and do not
have demonstrated economic viability.
For the above mineral resource estimates, Platte River and Mine Development Associates (MDA) of Reno, Nevada worked together to define geologic models using interpretive cross sections spaced evenly at 25-meter intervals. The geologic interpretations were then used to guide the creation of individual metal domain models (based on naturally occurring populations for each metal) on the same 25-meter cross sections. The initial cross sections were subsequently "sliced" and rectified on perpendicular long sections spaced evenly every 3 meters. Metal grade compositing was done to 3-meter down-hole lengths, honoring all material type and mineral domain boundaries, and the block model metal grades were estimated individually using ordinary kriging methods. The stated resource for each deposit is fully diluted to 3 meter by 3 meter by 3 meter blocks and tabulated using zinc equivalent grades for the San Rafael deposit and silver equivalent grades for the El Cajon deposit.
In addition to the exploration and exploitation concessions, MPRG has title to the surface rights to more than 430 hectares of land at the La Verde Mine and the San Rafael and El Cajon deposits. Elsewhere on the property there are an extensive number of additional polymetallic and precious metal targets, some with drilling and others identified and ready for initial drilling.
In and around the Parral District, Chihuahua,
In Nevada, Platte River Gold (US) Inc. (PRG) controls three projects and 368 mining claims. The most important project is the Gabel Project (51% PRG) in the northern Roberts Mountains and within the Battle Mountain - Eureka Gold Trend. This project is a joint venture with Blue Cove Capital (49%) and consists of 303 unpatented mining claims on BLM land, covering primarily lower-plate lithologies prospective for sediment-hosted gold mineralization. Limited drilling by PRG in 2008 encountered a 180-foot (54.8-meter) intersection grading 0.45 g/t gold in one hole and 170 feet (51.8 meters) grading 0.35 g/t gold in another hole at depths less than 350 feet (106 meters) in the Denay Formation. This formation is an important host to gold mineralization elsewhere in northern Nevada and has not been well explored in the northern Roberts Mountains. The property also contains a gold resource at Chert Cliff, which is historical in nature and currently non-compliant with NI 43-101.
Further information is available on the Company's web site at: www.scorpiomining.com.
Scorpio's President,
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley
Chairman & CEO
This news release includes certain statements that may be deemed "forward-looking statements" within the meaning of the
There can be no assurance that any forward-looking statements will prove accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Scorpio Mining Corporation does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.
For further information: Rich Kaiser, YES International: 1-800-631-8127, 001-757-306-6090 (outside North America), Email: [email protected]
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