tsx-v: sgn otc: srcrf frankfurt: z3s may 2017 mining ...tsx-v: sgn • nevada –most attractive us...
TRANSCRIPT
Mining Nevada Gold
TSX-V: SGN
OTC: SRCRF
Frankfurt: Z3S
May 2017
2016 Production: 36,879 oz. Gold
TSX-V: SGN 2
Cautionary Statement
Forward Looking Statements:
Except for the statements of historical fact, the information contained herein is of a forward-looking nature. Such forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results,performance or achievement of the Company to be materially different from any future results, performance or achievementsexpressed or implied by statements containing forward-looking information. Such factors include metal prices, explorationsuccess, continued availability of capital and financing and general economic, market or business conditions.
Although the Company has attempted to identify important factors that could cause actual results to differ materially, there maybe other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that statementscontaining forward looking information will prove to be accurate as actual results and future events could differ materially fromthose anticipated in such statements. Accordingly, readers should not place undue reliance on statements containing forwardlooking information. Readers should review the risk factors set out in the Company’s Filing Statement as filed on SEDAR.
Cautionary Note to U.S. Investors Concerning Estimates of Inferred Resources:
This presentation uses the term “Inferred Resources”. U.S. investors are advised that while this term is recognized and requiredby Canadian regulations, the Securities and Exchange Commission does not recognize it. “Inferred Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of “Inferred Resources” may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an “Inferred Mineral Resource” exists, or is economically or legally mineable.
Qualified Person:
The technical information contained within this presentation has been reviewed and approved by the Company's Chairman,Peter Hawley, PGeo, a Qualified Person as defined by NI 43-101.
TSX-V: SGN
• Nevada – most attractive US jurisdiction for mining investment
• Open Pit & Heap Leach Operation – cash flow positive – all gold is unhedged
• Production from the Mary LC, Brodie and Bluelite South pits through to August 2017 is estimated at 20,000-25,000 oz. gold. The Custer and Oromonte deposits are in the permitting process and will be evaluated for economics of associated mining timelines when permits are received
• An evaluation of the heap leach pad is in progress for the potential recovery of gold remaining, including a feasibility study for a milling circuit, which may be followed by a feasibility study on building a mill facility on site. The Company estimates that the leach pad contains approximately 6.3 million tonnes of material grading 0.61 g/t for an estimated remaining inventory of approximately 120,000-130,000 oz. of gold.
• Exploration at Mineral Ridge in 2017 is focused on a large underexplored area of the property and will include drill testing of high priority targets
• Goldwedge has a fully permitted mine and mill facility, currently on care and maintenance and available for toll milling
• The 2017 exploration program at Goldwedge includes RC drilling in the Goldwedge mine area, generating new targets external to the mine and scout core drilling at Keystone-Jumbo
Overview
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TSX-V: SGN
Mineral Ridge Operation
▪ Primary asset; 70% interest
▪ Completed fifth year of commercial production
▪ 2016 production totalled 36,879 oz. gold at a total cash cost of US$881 per oz. gold sold
▪ 2017 production, not including areas for which permitting is outstanding, is estimated at 20,000-25,000 oz. at a total cash cost of $1,050-$1,100 per oz. gold sold
Goldwedge Project
▪ 100% interest
▪ Fully permitted mine and mill; mill currently on care and maintenance
▪ 16 km south of Round Mountain Mine
▪ Historical resource estimate
Focused on Nevada
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Nevada:
• Politically safe• Pro-mining
TSX-V: SGN
Company History
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March 2010 – Acquired 70% interest in the idle Mineral Ridge Gold Mine
January 2012 – Commenced commercial production at Mineral Ridge; acquired Goldwedge Mine & mill facility
2013 – Rehabilitated Goldwedge mill & site infrastructure; conducted batch testing of high-grade Mineral Ridge ore at Goldwedge mill in 2014
2015 – Commenced mining of satellite deposits; successful exploration of multiple new target areas increases development and production pipeline
2016 – Commercial production at Mineral Ridge from January 2012 to December 2016 exceeds 194K oz. gold
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Mineral Ridge Mining History
Year Operator Type Short Tons Grade (opt) Au (oz)
1864 - 1902 Multiple UG ?? ?? 55,742
1903 - 1904 Mary Gold Mining UG 1,466 1.446 2,120
1907 - 1918 Pittsburgh Silver Peak Gold Mining UG 1,148,178 0.244 279,940
1919 - 1922 Blair Mines Co. UG 5,794 0.579 3,357
1917 - 1941 Black Mammoth Consolidated Mining UG 333,167 0.36 120,866
Subtotal (1903-1941) UG 1,488,605 0.273 406,283
Total UG 1864 - 1941 UG +1,488,605 462,025
1989 Zephyr Resources Pit 76,551 0.120 9,204
1990 Zephyr Resources/Homestead Minerals Pit 466,578 0.089 41,397
1991 - 1992 Homestead Minerals Pit 852,904 0.074 63,360
1993 - 1998 Cornucopia (MRRI) Pit 644,587 0.062 40,076
1998 - 2000 Vista (Including Trustee) Pit 1,010,940 0.052 52,367
2000 - 2009 Golden Phoenix (GPMI) Pit 287,000 0.068 19,516
2010 – Q1 2017 Scorpio Gold Pit 5,233,840 0.054 280,295
Total Pit 1989 – Q1 2017 Pit 8,572,400 0.059 506,215
Total UG & Pit 1864 – Q1 2017 UG/Pit +10,061,005 968,240
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Historical Mine & Mill Workings
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Mineral Ridge Property – 13,879 Acres
Total Production 1864 – 2016 Exceeds 960,000 oz.
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Operations Area Deposits & Exploration Targets
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Property-Wide Untested Surface Gold Showings
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Mineral RidgeQ1
2016Q2
2016Q3
2016Q4
2016Total2016
Q12017
Mining Operations
Producing pits
Ore tonnes mined 250,124 178,288 167,603 154,189 750,204 137,701
Waste tonnes mined 930,086 1,059,117 1,072,439 983,134 4,044,776 994,994
Total mined 1,180,210 1,237,405 1,240,042 1,137,323 4,794,980 1,132,695
Strip ratio 3.7 5.9 6.4 6.4 5.4 7.2
Pits under development
Ore tonnes mined - - - - - 178
Waste tonnes mined 55,622 67,732 25,876 160,672 309,902 212,595
Total mined 55,622 67,732 25,876 160,672 309,902 212,773
Processing
Tonnes processed 251,587 275,551 176,901 142,101 846,140 138,392
Gold head grade (g/t) 1.65 1.33 1.35 1.37 1.44 1.70
Oz. produced:
Gold 8,508 10,089 9,981 8,301 36,879 5,741
Silver 3,921 4,325 4,630 4,074 16,950 2,854
Precious Metal Sales
Gold (oz.) 8,300 10,015 10,000 6,309 36,624 TBA
Silver (oz.) 4,000 4,425 4,450 3,448 16,323 TBA
2016 & 2017 YTD Production Highlights
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Quarterly Production by Metal & Cost
$-
$200
$400
$600
$800
$1,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Gold oz. produced Silver oz. produced Total cash cost per oz. gold sold
Oz. US$
TSX-V: SGN
2012 2013 2014 2015 2016 Q1 2017
650,785
903,337974,346
891,997 846,140
138,392
Tonnes Processed
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Processing
Custom designed crushing facility commissioned in 2013
High capacity carbon column commissioned in 2014
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2016 Financial Highlights
All monetary figures presented in US dollars. 1 This is a non-IFRS measure; please see Non-IFRS Performance Measures section in the Company's Management Discussion & Analysis.
Financial ResultsQ1
2016Q2
2016Q3
2016Q4
2016Total2016
Revenue (000’s) $9,428 $12,434 $13,328 $7,569 $42,759
Mine operating earnings (000’s) $1,865 $3,067 $3,177 $1,529 $9,638
Net (loss) earnings (000’s) $1,079 $1,199 $2,331 $(4,270) $339
Basic & diluted (loss) earnings per share $0.01 $0.01 $0.01 $(0.03) $(0.00)
Adjusted net earnings1 (000’s) $1,115 $2,183 $2,379 $804 $6,481
Adjusted basic & diluted net earnings per share1 $0.01 $0.01 $0.01 $0.00 $0.03
Adjusted EBITDA1 (000’s) $1,569 $2,816 $3,508 $1,617 $9,510
Adjusted basic & diluted EBITDA per share1 $0.01 $0.02 $0.02 $0.01 $0.05
Cash flow from (used by) operating activities (000’s) $(366) $4,878 $5,906 $582 $11,000
Total cash cost per oz. of gold sold1 $801 $879 $956 $873 $881
As of December 31, 2016:
• Working capital: $8.4 million
• Metal in process inventory: $3.3 million
• Finished goods inventory: $2.7 million
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Mineral Ridge – Mineral Reserve Estimate
DepositOre
(tons)Ore
(tonnes)Grade(oz/t)
Grade (g/t)
Gold(oz)
Waste(tons)
Waste (tonnes)
StripRatio
Mary LC 353,130 320,354 0.043 1.48 15,278 1,613,710 1,463,933 4.6
Bluelite South 20,500 18,597 0.053 1.80 1,078 174,170 158,004 8.5
Brodie 71,570 64,927 0.051 1.76 3,678 540,810 490,615 7.6
Custer* 189,720 172,111 0.068 2.32 12,838 2,079,570 1,886,554 11.0
Calculated Reserves Remaining
634,920 575,990 0.052 1.78 32,872 4,408,260 3,999,106 6.9
Life-of-Mine Mineral Reserve Summary – As of December 31, 2016
Notes:
1. Mineral Reserves are contained within a designed pit with access ramps based on the Lerchs-Grossmann (LG) algorithm utilizing a $1,200 oz. gold price. The optimization mining cost was $4.25/t of ore mined at Mary LC, $3,21/t of ore mined at the BL South and Brodie, $4.63/t of ore mined at Custer, 2.60/t of waste mined, and $1.40/t of fill mined. An average crushing/processing cost of $10.25 was applied per ton processed. G&A costs were applied at $3.98 per ton processed. Shipping and refining costs of $25/oz. gold produced were applied. A 67% metallurgical recovery was applied. Overall pit slope angles ranged from 45 degrees to 49 degrees.
2. Mineral Reserves are reported at a 0.020 oz/ton gold cut-off grade.
3. Mineral Reserves are classed as Probable Mineral Reserves.
4. Mineral Reserves are reported on a 100% Project basis.
5. Rounding as required by reporting guidelines may result in apparent summation differences between tons, grade, and contained metal content.
6. Estimate prepared by Jim Ashton, PEng, former Mine Manager for the Mineral Ridge Operation and Qualified Person as defined by National Instrument 43-101.
* The Custer deposit is in the permitting process and will be evaluated for economics of associated mining timelines when permits are received.
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Mineral Ridge Mining Outlook
Custer
Mary LC
BlueliteSouth
Brodie
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Mineral Ridge – 2016 Exploration
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Scorpio Gold completed 64,720 ft of infill and exploration drilling in Phase 1 of the 2016 exploration program. A breakthrough in the understanding of the structural and lithological controls to gold emplacement prompted a comprehensive Phase 2 program:
• 15,228 ft RC and core drilling
• Detailed geological mapping and sampling
• Ground geophysics over areas of interest using total field and vertical gradient magnetics and VLF electromagnetics
• Definition drilling to further define the NW Drinkwater Highwall and Bunkhouse Hill open pit economics
• Definition drilling in the planned Custer pit and the Phase 4 area of the Mary LC
Drilling in 2016 totalled 79,948 ft in 171 RC holes and 14 core holes
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Relationship of Strain to Gold Grades
Newly understood controls to mineralization are illustrated below for 2014 core hole, MR14987
MR14987 0.059 oz/t over 23 ft
2.04 g/t over 7 m
• The ore zone is associated with intense ductile deformation and fracture-controlled sulphides surrounding a shear quartz vein
• The intensity of ductile deformation correlates broadly with the gold interval, while fracture intensity is the best specific indicator for gold within the ore zone
• The symmetry of gold grades around the quartz vein is suggestive of an alteration and structural halo to the shear vein
* 1 ppm = 1 g/t
MR14987,
Mary
From (ft)
Ductile deformation intensity
(1-7)Gold grade (LnAuppm+4.3)
Gold
grade
ppm Rock
252.9 4 2.22 0.1244
255.6 4 0.83 0.0311
258.4 5 0.83 0.0311
261 3 1.93 0.0933
264.5 4 1.93 0.0933
268 4 1.52 0.0622
270.6 4 1.52 0.0622
273.7 4.5 0.83 0.0311
275.5 5 -0.31 0.01
277.2 5 4.44 1.15
279.3 6.5 2.64 0.19 Lube Wyman
282.6 4 5.55 3.5 Altered alaskite
286.2 6 4.40 1.1 Altered alaskite
290.2 3 2.18 0.12 Qz vein
292.8 3 4.40 1.1 Qz vein
293.9 5.5 3.61 0.5 Altered alaskite
295 4.5 5.66 3.9 Altered alaskite
300.2 7 4.19 0.9 Lube Wyman
302 2 0.79 0.03 granite
307.7 1 0.79 0.03 graphic granite/peg
weak to mod foliated
alaskite
*
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Mineral Ridge Drilling 2010–2016
Annual Drilling (feet) includingPercent Footage Drilled with Grade >0.01 OPT Gold
Footage
Drilled
% Footage
Drilled
with Grade
>0.01 OPT Au
12,455
60,745
84,960 78,325
145,644
211,547
79,948
0.0%
4.0%
8.0%
12.0%
-
40,000
80,000
120,000
160,000
200,000
2010 2011 2012 2013 2014 2015 2016
Footage Grade > .010
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Mineral Ridge 2010-2016 Drilling by Target
Drinkwater14%
Brodie13%
Bluelite13%
Mary12%
Mary LC9%
Solberry8%
Oromonte4%
Wedge4%
Custer3%
State Bank3%
NW Drinkwater2%
Defiance2%
All others
13%
TSX-V: SGN 21
Mineral Ridge 2015-2016 Exploration Drilling
Oromonte Deposit
40.40 g/t gold over 7.62 m
18.18 g/t gold over 9.14 m
17.08 g/t gold over 4.02 m
10.56 g/t gold over 12.19 m
Custer Deposit
15.31 g/t gold over 4.57 m
11.79 g/t gold over 9.14 m
9.67 g/t gold over 12.19 m
8.11 g/t gold over 7.62 m
OROMONTEDEPOSIT
Select drilling highlights on the Oromonte and Custer deposits; in permitting process and will be evaluated for economics of associated mining timelines when permits are received.
TSX-V: SGN 22
Mineral Ridge – 2017 Exploration
The 2017 exploration program at Mineral Ridge is budgeted exceeds $0.5 M and includes:
• Geological mapping, ground geophysics and stream sediment sampling to generate drill targets at the North Springs target
• Geological mapping, ground geophysics and drilling on the Tarantula target
• Geological mapping and ground geophysics on the Eagle Canyon target
• Sampling and geophysical analysis on the recently acquired Orléans claim
• Evaluation of the heap leach pad for the potential recovery of ~125,000 oz. of gold remaining, including sonic drilling, metallurgical testing, resource estimation and a feasibility study for a milling circuit. Positive results are expected to lead to additional budgeting for a feasibility study on building a mill facility on site.
Portable Small Diameter “Winkie” Core Drill
TSX-V: SGN
Goldwedge Property
• Located within the Manhattan Mining District, 50 km north-northeast of Tonopah
• Situated on the southern periphery of the Manhattan Caldera, approximately 16 km south of the +10 M oz. Round Mountain Mine
• Fully permitted/bonded underground mine with over 600 m of development
• Mill facility with gravity circuit permitted for 400 tpd; currently on care and maintenance and available for toll milling
• Historical resource estimate
• Property covers three separate claim blocks encompassing the Goldwedge, Keystone and Jumbo gold deposits
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Goldwedge Property – Manhattan District
Manhattan Caldera
Manhattan District 566K oz. gold
Round Mountain+10 million oz. gold
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Manhattan District, Nevada
Goldwedge Mine
Manhattan Mine East & West Pits
Reliance Mine
Keystone PitJumbo Pit
• Mining in the Manhattan District dates back to the 19th century. Combined placer and underground production is estimated at 566K oz. gold
• The Reliance Mine produced ~59K tons grading 0.435 oz./ton Au from 1932-1941
• ~236K oz. was mined from the Manhattan Mine East & West pits from 1974 to 1990
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Goldwedge Mill Facility
26
• Scorpio Gold completed extensive refurbishment and modifications to the 400 tpd Goldwedge plant and surrounding infrastructure in 2013
• 1,392 tonnes of Mineral Ridge ore grading 8.87 g/t gold were processed at Goldwedge in Q1 2015
• Batch processing of high-grade ore from Mineral Ridge was undertaken in 2014 to optimize the milling circuit for recovery of coarse gold
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Keystone & Jumbo Deposits
• Jumbo and Keystone are located 3.7 and 4.3 km SE of the Goldwedge mine, along strike of the N30W trending Reliance fault zone
• High-grade mineralization is controlled by the intersections of high-angle N30W faults with weaker N30E and N80E structures
• Limited historic surface drilling at Keystone reported substantial downhole widths and grades (see following slide), leading Nevada Goldfields to undertake a small open pit excavation in 1990 that recovered 5,750 ounces of gold grading 0.32 oz/t
• New Concept Mining reported in-situ geological resource estimates for both deposits in May ’97; neither estimate is compliant with NI 43-101 and is subject to future verification by Scorpio Gold
Keystone Pit
Jumbo Pit
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Keystone – Historic High-Grade Drill Results
HoleNo.
From(ft)
To(ft)
Width(ft)
From(m)
To(m)
Width(m)
Gold(oz/t)
Gold(g/t)
L4H6 30 65 35 9.14 19.81 6.10 0.180 8.78
105 150 45 32.00 45.72 13.72 0.332 11.38
L5H07 5 20 15 1.52 6.10 4.57 0.149 5.11
L5H10 15 95 80 4.57 28.96 24.38 0.457 16.18
WC-50 145 155 10 44.20 47.24 3.05 0.330 11.31
KYPX1 65 115 50 19.81 35.05 15.24 0.257 8.81
KYPX2 0 145 145 0.00 44.20 44.20 0.410 14.06
L4H10 130 175 45 39.62 53.34 13.70 0.109 3.74
L4H11 40 70 30 12.19 21.34 9.14 0.160 5.49
L35H1 60 95 35 18.29 28.96 10.67 0.125 4.29
115 185 30 47.24 56.39 9.14 0.060 2.06
K4PY5 120 180 60 36.58 54.86 18.29 0.165 5.66
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Goldwedge–Keystone–Jumbo Exploration
• Surface and underground core drilling has provided new information on styles and structural controls to mineralization in the Goldwedge deposit area
• Detailed geological mapping and ground geophysics has also added to the structural interpretation in the Keystone-Jumbo area, identifying previously unknown NW trending structures
• A highly successful soil sampling program in the Keystone-Jumbo area has outlined a 1.2 km anomaly that sub-parallels the main structural control to mineralization in the area
• Prior exploration did not recognize these significant NW structures and they have yet to be tested
• Follow-up scout drilling in 2017 will utilize the Company’s small diameter Winkie drill
Keystone Pit
Jumbo Pit
2016 soil sampling program outlined a 1.2 km soil anomaly in the Keystone-Jumbo area
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Goldwedge – 2017 Exploration
The 2017 exploration program at Goldwedgeis budgeted at $0.7 M and includes:
▪ RC drilling (6 holes; 2,100 m) to test the mine area and down trend potential
▪ Based on success, follow-up UG core drilling
▪ Geological mapping and soil sampling to generate new targets outside the mine area
▪ 12 hole (450 m) scout drilling program at Keystone-Jumbo to test for mineralized structures
In June 2016 Scorpio Gold received approval for a Plan of Operations from the U.S. Forest Service that includes surface exploration drilling from 50 drill sites in the vicinity of the Goldwedge Mine. Extensive cultural and biological baseline studies have been completed on the property.
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Goldwedge – 2017 Phase 1 Drilling
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Keystone-Jumbo – 2017 Scout Drilling
Keystone Pit
Jumbo Pit
2017 Scout Drilling – 12 hole (450 m) program is designed to test potentially mineralized structures utilizing Scorpio Gold’s portable Winkie core drill
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Brian Lock – Interim CEO
40+ years’ experience in operations, feasibility, design engineering and construction of global mining projects
Gilbert Comtois, CPA, CA – CFO
25+ years’ experience including CFO of Scorpio Mining from 2007-2011 and 18 years with Deloitte
Chris Zerga – President
30+ years’ mining experience in Nevada with Freeport McMoran, Anglo Gold, Minorco, Newmont and Queenstake
Diane Zerga, BS-IT – Mine Manager 25+ years’ mining experience in Nevada with Newmont; 3+ years’ as Branch Manager for ALS Geochemistry
David LaCount, BS – Controller
20+ years’ experience with Yukon-Nevada Gold, Queenstake and Titanium Metals
Peter Hawley, BEng, BSc, PGeo – Chairman; Founder and Director of Scorpio Mining (Americas Silver Corporation)
Peter A. Brieger, HBA, CFA – Chairman & Managing Director of GlobeInvest Capital Management
Brian Lock – Interim CEO of Scorpio Gold
Andrew Lee Smith, PGeo – President & CEO of East Africa Metals
Paul A. Parisotto, HBA Economics – Chairman of Noront Resources Ltd.
Luc Pelchat – Founder and President of the Chamber of Commerce of Canada in Northern Mexico
David Smalley, LLB – Owner, David Smalley Law Corporation
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TSX-V: SGN
Summary
• Focused on mining and exploration in Nevada
• Highly experienced management and operations team
• Excellent safety record and compliance with all environmental permits and regulations
• Strong operating performance at Mineral Ridge with 194,350 oz. gold and 86,574 oz. silver produced since commencing commercial production in January 2012
• Exploration in 2017 is focused on a large underexplored area of the Mineral Ridge property and will include drill testing of high priority targets
• An evaluation of the heap leach pad is in progress for the potential recovery of an estimated 120,000-130,000 oz. of gold remaining
• Goldwedge has a fully permitted mine and mill facility, currently on care and maintenance and available for toll milling
• Exploration in 2017 on the Goldwedge property includes RC drilling in the Goldwedge mine area, generating new targets outside the mine area and a scout core drilling program in the Keystone-Jumbo area
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Share Structure & 12 Month Stock History
35
• 124.9 MShares
Outstanding
• 10.0 MOptions1
• C$11.2 MMarket Cap2
• US$8.4 MWorking Capital3
1 As of December 31, 2016; avg. C$0.152 At C$0.08 share price3 As of December 31, 2016
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Contact
Investor RelationsJag Sandhu, JNS Capital Corp.
www.scorpiogold.com