Scorpio hits high grade at Nuestra Senora (September 22, 2008)

VANCOUVER — Underground drill at the Nuestra Senora mine in Mexico is returning bonanza intercepts for Scorpio Mining (SPM-T, SMNPF-O).

The company is targeting the North West Main zone from the mine’s ninth level, some 180 metres below surface, and keeps hitting short, high-grade intercepts.

The best result came from hole 175, which returned 2.5 metres grading 289 grams silver per tonne, 0.16 gram gold, 0.02% copper, 1.41% lead and 6.37% zinc, followed by an 18-metre segment of 1,124 grams silver, 0.36 gram gold, 0.13% copper, 2.2% lead and 1.41% zinc.

Several other drill intercepts returned promising results. Hole 146 cut 5.4 metres grading 272 grams silver, 0.25 gram gold, 0.15% copper, 1.65% lead and 4.72% zinc, followed by 8.3 metres averaging 129 grams silver, 0.13 gram gold, 1.39% copper, 2.74% lead and 4.16% zinc.

Hole 173 returned an especially zinc-rich hit: 6.3 metres of 721 grams silver, 0.25 gram gold, 2.59% copper, 18.6% lead and 21.92% zinc. And hole 174 returned 771 grams silver, 0.31 gram gold, 0.01% copper, 2.47% lead and 2.24% zinc.

As Scorpio CEO Peter Hawley explains it, drilling into the North West Main zone has supplied enough data for immediate mine planning. The company plans to start extracting high-grade material from the zone later in the fall.

Downplunge from the North West Main zone sits the Jewel Box area, where Scorpio is also developing extraction plans. Downward drilling from the tenth level (30 metres vertically below the ninth level) has confirmed the downplunge extension of the body. Assays are pending.

At the Main zone, drills continue to expand the mineralized area. Hole 123 returned 2.5 metres grading 190 grams silver, 0.17 gram gold, 0.29% copper, 4.07% lead and 10.71% zinc. Hole 125 cut 7.4 metres of 116 grams silver, 0.18 gram gold, 0.03% copper, 0.9% lead and 10.35% zinc. And hole 132 hit 5.8 metres averaging 308 grams silver, 0.19 gram gold, 1.73% copper, 4.83% lead and 11.52% zinc.

Further, the Santa Teresa zone to the west is continuing to report grades and widths amenable to mining. Recent intercepts include 7.8 metres of 161 grams silver, 0.13 gram gold, 1.5% copper, 3.37% lead and 3.63% zinc in hole 82, and 12 metres of 324 grams silver, 0.12 gram gold, 1.25% copper, 5.47% lead and 4% zinc in hole 117. Hole 155 hit a short, silver-and zinc-rich intercept: 1.6 metres of 1,640 grams silver, 0.351 gram gold, 0.74% copper, 3.54% lead and 9.73% zinc. And hole 157 returned 4 metres of 528 grams silver, 0.11 gram gold, 0.18% copper, 1.21% lead and 7.04% zinc.

Since it is becoming one of the larger stoping areas in the project, the company plans to use mechanized room-and-pillar mining methods. The Hoag and North West Main zones will be mined using long-hole methods. Both areas are currently being drilled for blasting.

Scorpio started mining at Nuestra Senora in June. Shipments of concentrates began in August and the company is already working to increase mill throughput, improve recoveries and reduce operating costs. Scorpio hopes Nuestra Senora will be cash flow positive within the six-month startup period.

During August, the mill processed 23,570 tonnes of material to produce 310 tonnes of lead concentrate averaging 56.38% lead and 2,927 grams silver, as well as 429 tonnes of zinc concentrate grading 53.75% zinc and 233 grams silver.

According to an estimate from mid-May, Nuestra Senora hosts 4.2 million measured and indicated tonnes grading 130 grams silver, 0.13 gram gold, 2.7% zinc, 1.29% lead and 0.36% copper. The project also hosts 867,800 inferred tonnes grading 168 grams silver, 0.22 gram gold, 3.06% zinc, 1.39% lead and 0.27% copper. Since May, however, Scorpio has conducted significant drilling to expand the resource.

On news of the latest intercepts from Nuestra Senora, Scorpio’s share price lost a penny, closing at 91. The company has a 52-week range of 76-$1.66 and has 112 million shares issued.