Scorpio Gold puts out resource on Mineral Ridge

Vancouver – Scorpio Gold (SGN-V) has released the first compliant resource estimate for the Mineral Ridge gold project almost exactly a year after completing its initial due diligence on the property.

Various owners operated the southwest Nevada-based project as an open pit between 1989 and 2005, while it was an underground operation before that. So far almost 575,000 oz. gold have been produced from the site.

Scorpio is moving quickly to try and make it operational again, working through a drill program to confirm historic data on the site while both expanding and defining the mineral resource.

The newly released resource estimate on the project covers the historic Drinkwater and Mary pits. The estimate contains 4.23 million indicated tonnes grading 1.46 grams gold per tonne for 221,000 contained oz. and 3.44 million inferred tonnes grading 1.12 grams gold for a further 136,000 oz.

Scorpio owns 70% of the project through a joint venture finalized in January with Golden Phoenix Minerals (GPXM-O). Scorpio is responsible for funding all costs to bring the project to production and paid Golden Phoenix US$7 million in cash and stock. The company also spent US$3 million buying an 8% net smelter royalty on the project from Mary Mining Trust last October.

Golden Phoenix has provided a US$3 million bond and the project is permitted for heap-leach gold processing and production. The property has a heap leach pad, crushing circuit and adsoption-desorption-recovery plant that the company describes as in “fair to good condition.” The site also has road access, power lines and water wells.

The overall land package currently spans 4,118 hectares over 351 claims following an extensive expansion by Scorpio in February. The known mineralization zones occur over an area roughly 4.3 km north-south and 4.6 km east-west, with deposits consisting of structurally controlled epithermal gold mineralization associated with quartz veins and veinlets.

Scorpio has the option of earning a further 10% in the joint venture by starting commercial production at the project within 30 months of closing the agreement with Golden. Scorpio can earn the final 20% needed for full ownership by purchasing Golden’s remaining stake within 24 months of the start of commercial production. The price of Golden’s share will be based on the net asset value of the project minus a 10% discount.

In March Scorpio closed a $12.5 million private placement, selling 27.8 million units at 45¢ each. Each unit contained one share and one half warrant, with a full warrant redeemable at 60¢ until Sept. 10, 2011. In June roughly 4.5 million warrants were exercised for a further $2.7 million in cash to the company.

Scorpio’s stock price closed at 73¢ the day the resource was released. The company has 45 million shares outstanding.