Scorpio Gold Announces Results of Updated Feasibili ty Study for
TSX -V: SGN
1462 de la Québécoise
Val-d’Or, QC, J9P 5H4
T: 604- 678-9639
www.s cor piog old .com
News Release No. 254
Scorpio Gold Announces Results of Updated Feasibili ty Study for
Mineral Ridge, Nevada
Vancouver, January 4, 2018 - Scorpio Gold Corporati on (“Scorpio Gold” or the “Company”) (TSX
V:SGN) is pleased to announce the results of an upd ated positive feasibility study (“the Project”) to
process the heap leach material and additional open -pit mineral reserves at its Mineral Ridge property
(“the Property”), located in Esmeralda County, Neva da. Scorpio Gold holds a 70% interest in the
Property, along with joint venture partner Elevon, LLC (30%).
This updated feasibility study includes the economic results of processing the reserves, in addition to the
previously issued feasibility study (refer to press releases of October 10, 2017 and November 6, 2017)
which considered only the processing of the heap leach pad reserves.
Brian Lock, Interim CEO comments, “Further to our prior announcement of the October 2017 feasibility
study, the Company has received the results from Mine Technical Services on the mineable, higher-grade
mineralization in the existing pits at Mineral Ridg e, which increase the available mineral resources t o
348,200 oz in the measured and indicated category, for an initial total reserve of 272,200 oz in the proven
and probable category. The positive updated feasibility study indicates average gold sales of 33,400 oz/yr
over an operating period of 7.5 years, with a net p resent value (NPV) discounted at 5% (after-tax) of
$35.1 million and an internal rate of return (IRR) of 30.0%. In addition, the Company believes future
exploration at Mineral Ridge, if successful, may ad d to the known resources and potentially further
extend the life-of-mine. Given the long operating h istory of Mineral Ridge by Scorpio Gold and
predecessor companies, the existing infrastructure on site, and our management team’s experience at th e
Project, we are confident in successfully executing on this next phase of the mine.”
Mineral Resource Statement
The Mineral Resource estimate for the material on t he heap leach pad that is directly amenable to
processing is provided in Table 1 Table . No cut-off criteria have been applied since there will be no
selectivity of areas to be processed and the leach pad will be processed in its entirety. The Mineral
Resources are reported inclusive of Mineral Reserves and have an effective date of 29 June 2017. Mineral
Resources that are not Mineral Reserves do not have demonstrated economic viability. The Qualified
Person (QP) for the estimate is Mr. Ian Crundwell, P.Geo.
The Mineral Resource estimate for the open-pit (other) areas is provided in Table 2 (Measured
and Indicated) and Table 3 (Inferred). The Mineral Resources are reported inclusive of Mineral
Reserves and have an effective date of 30 November 2017. Mineral Resources that are not
Mineral Reserves do not have demonstrated economic viability. The Qualified Person for the
estimate is Mr. Ian Crundwell, P.Geo.
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Table 1: Mineral Resource Estimate for Mineralization Contained within the Heap Leach Pad
Mineral Resource
Classification
Tons
('000)
Gold
(opt)
Silver
(opt)
Contained Gold
('000 oz)
Contained Silver
('000 oz)
Measured 2,895 0.017 0.016 48.5 46.4
Indicated 4,220 0.017 0.018 73.2 74.1
Measured & Indicated 7,117 0.017 0.017 121.7 120.4
Inferred 76 0.016 0.027 1.2 2.0
Notes:
1. The effective date of the Mineral Resource estimate is June 29, 2017.
2. The QP for the estimate is Mr. Ian Crundwell, P.Geo .
3. Mineral Resources are quoted inclusive of Mineral R eserves. Mineral Resources that are not Mineral Res erves do not have
demonstrated economic viability.
4. Mineral Resources are contained within the Mineral Ridge leach pad facility with the following assumpt ions: a long-term
gold price of $1,216/oz; assumed process costs of $ 11/t; and metallurgical recovery for gold of 91%. S ilver was not used in
the consideration of reasonable prospects for event ual economic extraction. Silver recoveries from hea p leach pad
material are projected to be 24%.
5. Rounding may result in apparent differences when su mming tons, grade and contained metal content.
6. Tonnage and grade measurements are in Imperial unit s. Grades are reported in ounces per ton.
Table 2: Measured and Indicated Mineral Resource Tabulation for Other Areas
Area Classification
Tons
(kt)
Gold Grade
(opt)
Contained Gold
(koz)
Brodie Measured 455.7 0.063 28.6
Indicated 237.9 0.056 13.4
Subtotal Measured and Indicated 693.6 0.060 41.9
Custer Measured 147.8 0.083 12.3
Indicated 75.4 0.088 6.6
Subtotal Measured and Indicated 223.2 0.085 18.9
Drinkwater HW Measured 527.3 0.046 24.3
Indicated 209.2 0.049 10.3
Subtotal Measured and Indicated 736.6 0.047 34.6
Mary LC &
Bunkhouse
Measured 721.4 0.072 51.7
Indicated 403.3 0.074 29.8
Subtotal Measured and Indicated 1,124.7 0.072 81.5
Oromonte Measured 235.8 0.162 38.3
Indicated 169.0 0.074 12.6
Subtotal Measured and Indicated 404.8 0.126 50.9
Combined Measured 2,088.0 0.074 155.2
Indicated 1,094.8 0.066 72.6
Total Measured and Indicated 3,182.8 0.072 227.8
Notes:
1. The effective date of the Mineral Resource estimate is November 30, 2017.
2. The QP for the estimate is Mr. Ian Crundwell, P.Geo .
3. Mineral Resources are reported inclusive of Mineral Reserves at a gold cut-off grade of 0.01 opt Miner al Resources that
are not Mineral Reserves do not have demonstrated e conomic viability.
4. Mineral Resources are constrained to the area withi n the grade-shell wireframes. The areas outside of these grade shells
are assumed to be at zero grade.
5. These Mineral Resource are considered to be amenabl e to open-pit mining. Conceptual Whittle pit shells used the
following assumptions: a long-term gold price of $1 ,350/oz; assumed combined operating costs of $12.36 /t (mining,
process, general and administrative); metallurgical recovery for gold of 95%, and variable pit slope a ngles that ranged
from 38–42º.
6. Rounding may result in apparent differences between when summing tons, grade and contained metal conte nt. Tonnage
and grade measurements are in Imperial units. Grade s are reported in ounces per ton.
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Table 3: Inferred Mineral Resource Tabulation for Other Areas
Area Classification
Tons
(kt)
Gold Grade
(opt)
Contained Gold
(koz)
Brodie Inferred 2.4 0.034 0.08
Custer Inferred -- -- --
Drinkwater HW Inferred 180.1 0.059 10.61
Mary LC & Bunkhouse Inferred 0.1 0.061 0.01
Oromonte Inferred 0.4 0.092 0.03
Combined Total Inferred 182.9 0.059 10.73
Notes:
1. The effective date of the Mineral Resource estimate is November 30, 2017.
2. The QP for the estimate is Mr. Ian Crundwell, P.Geo .
3. Mineral Resources are reported inclusive of Mineral Reserves at a gold cut-off grade of 0.01 opt. Mine ral Resources that
are not Mineral Reserves do not have demonstrated e conomic viability
4. Mineral Resources are constrained to the area withi n the grade-shell wireframes. The areas outside of these grade shells
are assumed to be at zero grade.
5. These Mineral Resource are considered to be amenabl e to open-pit mining. Conceptual Whittle pit shells used the
following assumptions: a long-term gold price of $1 ,350/oz; assumed combined operating costs of $12.36 /t (mining,
process, general and administrative); metallurgical recovery for gold of 95%, and variable pit slope a ngles that ranged
from 38–42º.
6. Rounding may result in apparent differences between when summing tons, grade and contained metal conte nt. Tonnage
and grade measurements are in Imperial units. Grade s are reported in ounces per ton.
Mineral Reserve Statement
The Mineral Reserve estimates were prepared with re ference to the 2014 Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) Definition Standards and the 2003 CIM Best Practice Guidelines. The
Qualified Person for the estimate is Mr. Jeffery Choquette P.E., an HRC employee.
The Mineral Reserve estimate for the material on the heap leach pad is provided in Table 4. The estimate
has an effective date of June 29, 2017.
Proven and Probable Mineral Reserves for the open-pit (other) area material are reported within the final
pit design used for the mine production schedule and are shown in Table 5. The estimate has an effective
date of November 30, 2017.
Table 4: Mineral Reserve Estimate for the Heap Leach Pad
Mineral Reserve
Classification
Tons
('000)
Gold
(opt)
Silver
(opt)
Contained Gold
('000 oz)
Contained Silver
('000 oz)
Proven 2,895 0.017 0.016 48.5 46.4
Probable 4,220 0.017 0.018 73.2 74.1
Less Material Remaining in Place due to
facility designs
(260) 0.017 0.017 (4.5) (4.6)
Total Proven & Probable 6,855 0.017 0.017 117.2 115 .9
Notes:
1. The Mineral Reserves have an effective date of June 29, 2017.
2. The QP for the estimate is Mr. Jeffery Choquette P. E., an employee of Hard Rock Consulting.
3. Mineral Reserves are contained within the Project l each pad facility with the following assumptions: l ong-term gold price
of $1,300/oz; assumed total ore process costs of $1 0.59/t; metallurgical recovery for gold of 91%, and 24% for silver,
refining and smelting cost of $28.39/oz of gold. Al lowance has been made for the facility location whi ch excludes
260,000 t; this material must remain in-place, base d on the to the heap material mining and tailings p lacement design.
4. Rounding as required by reporting guidelines may re sult in summation differences.
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Table 5: Mineral Reserve Estimate for the Other Areas
Pit Area Mineral Reserve Classification Tons
('000)
Gold
(opt)
Contained Gold
('000 oz)
Brodie Proven 51 0.042 2.1
Probable 12 0.027 0.3
Subtotal Proven and Probable 63 0.039 2.5
Custer Proven 314 0.047 14.8
Probable 144 0.032 4.6
Subtotal Proven and Probable 459 0.042 19.4
Drinkwater Proven 836 0.038 32.1
Probable 352 0.033 11.7
Subtotal Proven and Probable 1,189 0.037 43.7
Mary LC Proven 470 0.035 16.3
Probable 276 0.035 9.7
Subtotal Proven and Probable 746 0.035 26.0
Bunkhouse Proven 239 0.047 11.1
Probable 4 0.021 0.1
Subtotal Proven and Probable 243 0.046 11.2
Oromonte Proven 563 0.071 39.8
Probable 449 0.030 13.7
Subtotal Proven and Probable 1,012 0.053 53.5
Total Combined Proven 2,474 0.047 116.2
Probable 1,239 0.032 40.1
Total Proven and Probable 3,713 0.042 156.3
Notes:
1. The Mineral Reserves have an effective date of Nove mber 30, 2017.
2. The Qualified Person for the estimate is Mr. Jeffer y Choquette P.E., an employee of Hard Rock Consulti ng LLC.
3. Mineral Reserves are reported within the pit design s at a 0.01 opt gold cut-off grade. Pit designs inc orporate the following
considerations: base case gold price of $1,300/oz; pit slope angles that range from 38–47º; average li fe-of-mine
metallurgical recovery assumption of 93%; crushing costs of $1.81/t, process cost of $5.79/t, general and administrative
and tax costs of $2.90/t; and average mining costs of $1.42/t mined
4. Rounding as required by reporting guidelines may re sult in summation differences.
Economic Parameters
The economic viability of the Project has been eval uated using constant dollar after-tax discounted ca sh
flow methodology. This valuation method requires projecting material balances estimated from operations
and calculating resulting economics. Economic value is calculated from sales of metal, plus net
equipment salvage value and bond collateral less cash outflows such as operating costs, management fees,
capital costs, working capital changes, any applicable taxes and reclamation costs. Of the $67.5 million in
total capital required for the Project, $28.9 milli on is financed through a capital lease. Resulting a nnual
cash flows are used to calculate the net present value and internal rate of return of the Project.
The economic evaluation is based on the estimated Mineral Reserves on the heap leach pad as of June 29,
2017, plus the Mineral Reserves estimated in other areas that can be mined using open pit methods. Since
the Project entails use of infrastructure active up to, and including, the time of capital investment,
continuity of administrative and certain operational activities is expected, which allows certain costs to be
determined based on actual history. Otherwise, oper ating and capital costs for proposed new activities
have been derived by third-party engineers.
During the Project life (one year of initial capital investment and seven-and-one-half years of operation),
the site will undergo further evaluation to extend its operating life, and as such, no end-of-project
reclamation is included in this Project analysis.
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The open-pit mining equipment is assumed to be acquired through a capital lease. The lease is modeled at
a four-year term at 6% interest. Interest payments are reported as cash operating costs, principal payments
reduce cash as a financing activity and costs are booked as assets on the balance sheet.
Economic Results
Based on the economic parameters summarized above, the Project returns a NPV5% (after-tax) of $35.1
million and an IRR of 30.0%, and achieves payback in 2.9 years (Table 6).
Table 6: Economic Results
Area Unit Total/Average
Construction Period years 1
Operating Period years 7.5
Heap Leach Pad Material Milled kt 6,855
Average Leach Pad Gold Grade opt 0.017
ROM Material Milled kt 3,712
ROM Material Gold Grade opt 0.042
Recovery After Process and Refining % 91.6
Life of Project Gold Sold koz 250.5
Average Annual Gold Sold koz/a 33.4
Gold Price $/oz 1,250
Realized Gold Price $/oz 1,249.50
Average Silver Grade opt 0.017
Average Annual Silver Sold koz/a 3.7
Realized Silver Price (Average) $/oz 19.81
Total Cash Cost $/oz 805
Initial capital expenditures $ million 34.9
Open-Pit Ore Capital Expenditures (Ops Year 6) $ mi llion 32.6
Total After-tax Net Cash Flow $ million 53.5
Net Salvage Value $ million 13.1
NPV of Net Cash Flow Discounted at 5% $ million 35. 1
IRR % 30.0
Payback from End of Construction years 2.9
Management anticipates that the Project returns cou ld potentially be further enhanced through the
judicious sourcing and refurbishment of certain use d equipment, available for purchase in the south-
western United States. However, no economic studies have been undertaken with respect to sourcing and
refurbishing used equipment, including the Feasibility Study which is based on new equipment only.
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Sensitivity Analysis
Project sensitivity to variations in operating cost s, capital costs, gold grade and metals price was
evaluated with respect to the NPV. The NPV5% (after-tax) of the Project is more sensitive to changes in
metal price and metal grade, as compared to changes in CAPEX and OPEX. For example, at a gold price
of $1,100/oz, a 12% decrease, the NPV5% (after-tax) decreases to $10 million and the IRR declines to
13%. At a gold price of $1,400/oz, a 12% increase, the NPV5% (after-tax) increases to $58 million and
the IRR increases to 43%.
The NPV sensitivity to CAPEX, OPEX, gold price and head grade is shown graphically in Figure 1Figure
below.
Figure 1: NPV Sensitivity
Note: Figure prepared by MTS, 2017
Similarly, the sensitivity of the IRR to CAPEX, OPEX, gold price and head grade is shown
graphically in Figure 2 below.
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Figure 2: IRR Sensitivity
Note: Figure prepared by MTS, 2017
Conclusions
Based on the updated Feasibility Study, the Project , as defined in the technical report, is technicall y and
economically viable. It is therefore recommended th at Scorpio Gold construct the new processing
facilities as described, to process the heap leach material as well as the reported open-pit reserves at the
Property.
A technical report in support of the updated Feasib ility Study prepared in accordance with National
Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) will be filed on SEDAR
within 45 days of this news release. Readers are st rongly encouraged to review the final technical report
in its entirety.
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Units of Measure
Unless otherwise defined herein, the following defined terms have the following meanings:
Unit Symbol
foot ft
meter m
gram g
ounce oz
pound lb
ton (short = 2,000 lb) t
ounces per ton opt
kilo (x 1,000) k
million (x 1,000,000) M
hour h
minute min
year y
day d
annum a
tons per hour tph
tons per day tpd
tons per annum tpa
US gallon gal
cubic feet ft3
US gallons per minute gpm
US dollars $
Qualified Persons
The following are Qualified Persons (“QP”s) as defined by NI 43-101 and participated in the preparation
of the feasibility study:
Qualified Person Company QP Responsibility/Role
Mr. Todd Wakefield, RM-SME
Ms. Stella Searston, RM-SME Mine Technical Services Geology
Mr. Ian Crundwell, P. Geo. Mine Technical Services Mineral Resources
Mr. Jeff Choquette, P.E. Hard Rock Consulting, LLC Mineral Reserves and Mining
Methods
Mr. Paul Kaplan, P.E. NewFields Environment Studies and
Permitting
Mr. Gordon John Cooper, P. Eng. Novus Engineering I nc. Mineral Processing
Mr. Amritpal Singh Gosal, P.
Eng. Novus Engineering Inc. Infrastructure and Plant Des ign
Mr. Bruce Genereaux, RM-SME Mine Technical Services Economic Analysis
Scorpio Gold's Chairman, Peter J. Hawley, P.Geo., i s a Qualified Person as defined in National
Instrument 43-101 and has reviewed and approved the content of this release.
About Scorpio Gold
Scorpio Gold holds a 70% interest in the Mineral Ri dge gold mining operation located in Esmeralda
County, Nevada with joint venture partner Elevon, LLC (30%). Mineral Ridge is a conventional open pit