Scorpio Gold Corporation | 1
Scorpio Gold Corporation | 1
TSX -V: SGN
206-595 Howe St.
Vancouver, British Columbia
Canada, V6C 2T5
Tel: (604) 678-9639
www.scor piog old .com
News Release No. 261
Scorpio Gold Reports Financial Results for Second Quarter of 2018
Vancouver, August 28, 2018 - Scorpio Gold Corporation (“Scorpio Gold” or the “Company”) (TSX-V:
SGN) announces its financial results for the second quarter (“Q2”) ended June 30, 2018. This press release
should be read in conjunction with the Company’s condensed interim consolidated financial statements for
Q2 and Management’s Discussion & Analysis (“MD&A”) for the same period, available on the Company’s
website at www.scorpiogold.com and under the Company’s name on SEDAR at www.sedar.com. All
monetary amounts are expressed in US dollars unless otherwise specified.
PERFORMANCE HIGHLIGHTS:
Q2 2018 Q2 2017 H1 2018 H1 2017
$ $ $ $
Revenue (000’s) 2,492 6,299 5,518 16,174
Mine operating earnings (000’s) 895 1,142 2,007 3,520
Net (loss) earnings (000’s) 246 (285) 390 (245)
Basic and diluted (loss) earnings per
share 0.00 (0.00) (0.00) (0.00)
Adjusted net earnings (1) (000’s) 291 464 726 1,925
Adjusted basic and diluted net
earnings per share (1) 0.00 0.00 0.00 0.01
Adjusted EBITDA (1) (000’s) 537 957 1,227 3,032
Adjusted basic and diluted
EBITDA per share (1) 0.00 0.00 0.01 0.02
Cash flow (used in) from operating
activities (000’s) 363 (885) 1,191 2,564
Total cash cost per ounce of gold
sold (1) 849 968 840 911
Gold ounces sold 1,900 5,025 4,200 13,127
Gold ounces produced 1,727 4,660 4,560 10,401
(1) This is a non-IFRS measure; refer to Non-IFRS Measur es section of this press release and the Company’s
Management Discussion & Analysis for Q2 of 2018 for a compl ete definition and reconciliation to the IFRS
results reported in the Company’s financial statements for Q2 of 2018.
Scorpio Gold Corporation | 2
HIGHLIGHTS FOR THE SECOND QUARTER (“Q2”) ENDED JUNE 30, 2018 AND
SUBSEQUENT EVENT
• 1,727 ounces of gold were produced at the Mineral Ridge mine dur ing Q2 of 2018, compared to
4,660 ounces during Q2 of 2017.
• Revenue of $2.5 million, compared to $6.3 million during Q2 of 2017.
• Total cash cost per ounce of gold sold (1) of $849 compared to $968 during Q2 of 2017.
• Mine operating earnings of $0.9 million compared to $1.1 million during Q2 of 2017.
• Net earnings of $0.2 million ($0.00 basic and diluted per sha re), compared to a net loss of $0.3
million ($0.00 basic and diluted per share) during Q2 of 2017.
• Adjusted net earnings (1) of $0.3 million ($0.00 basic and diluted per share) compared to $0.5
million ($0.00 basic and diluted per share) for Q2 of 2017.
• Adjusted EBITDA (1) of $0.5 million ($0.00 basic and diluted per share) compared to $1.0 million
($0.00 basic and diluted per share) during Q2 of 2017.
• On August 13, 2018, the Company requested and received from its lender an extension to October
15, 2018 of the maturity date of its senior secured debt, sub ject to continued compliance with the
terms of the applicable credit agreement and forbearance agreement.
HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2018
• 4,560 ounces of gold were produced at the Mineral Ridge mine, compa red to 10,401 ounces
produced during the six months ended June 30, 2017.
• Revenue of $5.5 million, compared to $16.2 million during the six months ended June 30, 2017.
• Total cash cost per ounce of gold sold (1) of $840, compared to $911 during the six months ended
June 30, 2017.
• Mine operating earnings of $2.0 million, compared to $3.5 mil lion during the six months ended
June 30, 2017.
• Net earnings of $0.4 million ($0.00 basic and diluted per sha re), compared to a net loss of $0.2
million ($0.00 basic and diluted per share) during the six months ended June 30, 2017.
• Adjusted net earnings (1) of $0.7 million ($0.00 basic and diluted per share), compared to $1.9
million ($0.01 basic and diluted per share) during the six months ended June 30, 2017.
• Adjusted EBITDA (1) of $1.2 million ($0.01 basic and diluted per share), compared to $3.0 million
($0.02 basic and diluted per share) million during the six months ended June 30, 2017.
Going Concern and Extension of Debt Maturity Date
The Company’s only source of revenue, the 70% owned Mineral R idge mine, suspended mining in
November 2017 as the Company had mined all of its economical m ineral reserves based on gold pricing
and heap leach recovery parameters. Remaining reserves are determined uneconomical to continue mining
with the existing processing infrastructure due to higher associated strip ratios and heap leach recoveries
and will require higher gold prices or mill processing to be considered economical. Management expects to
(1) This is a non-IFRS measure; please see Non-IFRS performance measures section.
Scorpio Gold Corporation | 3
generate limited revenues from residual but diminishing gold recoveries from the leach pads through the
remainder of 2018. As a result, the Company’s revenues from oper ations have been and continue to be
adversely affected, and cash flow from operations will soon be insufficient to support the Company.
In addition, the principal amount of $6.0 million of the Company’s senior secured debt matured on August
13, 2018. Since the Company was not in a position to repay the $6 million debt at that date, it requested and
received from its lender an extension of the maturity date of its senior secured debt agreement to October
15, 2018, subject to continued compliance with the terms of the applicable credit agreement and
forbearance agreement. For more information, see the Company’s press release dated August 13, 2018.
In light of this situation, the Company does not expect that it will be able to generate sufficient cash flows
from its operations to continue as a going concern in the nea r future. The Company will need to raise
additional capital to support its operations and to sett le its long-term debt. The Company is currently
evaluating various business alternatives, which involve refin ancing its long-term debt and raising the
required capital to support its operations and for the construction of a new processing facility at the Mineral
Ridge mine.
Outlook
The Company’s main focus is to identify potential sale transactions, business combinations, or
opportunities to raise sufficient financing to improve it s financial position and to re-finance its senior
secured debt obligations and as such allow it to proceed with the construction of a new processing facility at
Mineral Ridge with a view to process heap leach materials and additional open-pit mineral reserves.
NON-IFRS MEASURES
The discussion of financial results in this press relea se includes reference to Adjusted net earnings,
Adjusted EBITDA, Total cash cost per ounce of gold sold which are non-IFRS measures. The Company
provides these measures as additional information regarding the Company's financial results and
performance. Please refer to the Company's MD&A for th e three and six months periods ended June 30,
2018 for definitions of these terms and a reconciliation of these measures to reported International Financial
Reporting Standards (“IFRS”) results.
About Scorpio Gold Corporation
Scorpio Gold holds a 70% interest in the producing 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 mining and heap leach operation. Mining at Minera l Ridge was suspended in November 2017;
however, the Company continues to generate limited revenues from residual but diminishing recoveries
from the leach pads. Scorpio Gold also holds a 100% interest in the advanced exploration-stage Goldwedge
property in Manhattan, Nevada with a fully permitted underground mine and 400 ton per day mill facility.
The Goldwedge mill facility has been placed on a care an d maintenance basis and can be restarted
immediately when needed.
Scorpio Gold’s Chairman, Peter J. Hawley, P.Geo., is a Qualified Person as defined in National Instrument
43-101 and has reviewed and approved the content of this release.
ON BEHALF OF THE BOARD
SCORPIO GOLD CORPORATION
Brian Lock,
Interim CEO
Scorpio Gold Corporation | 4
For further information contact:
Chris Zerga, President
Tel: (604) 678-9639
Email: [email protected]
Website: www.scorpiogold.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the T SX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this release.
The Company relies on litigation protection for "forwa rd-looking" statements. This news release contains forwar d-looking
statements that are based on the Company’s current expe ctations and estimates. Forward-looking statements are f requently
characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “suggest”, “indicate” and
other similar words or statements that certain events o r conditions “may” or “will” occur, and include, without lim itation,
statements regarding the Company’s plans to identify potential sale or business combination transactions, seek and obtain sufficient
financing to improve its financial position, to re-finance its long-term debt and to construct a new processing facility at Mineral
Ridge, plans to re-commence mining operations and to plans with respect to the development and exploitation of its Mineral Ridge
mine, including any forecasts regarding future production or costs related thereto. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or
anticipated events or results implied or expressed in such forward-looking statements, including risks relating to compliance with
various agreements related to its long term debt, to operation of a gold mine, including the availability of cash flows or financing to
meet the Company’s ongoing financial obligations; the inabil ity of the Company to re-finance its long-term debt obli gations;
unanticipated changes in the mineral content of materials being mined; unanticipated changes in recovery rates; changes in project
parameters; failure of equipment or processes to operate as anticipated; the failure of contracted parties to perform; availability of
skilled labour and the impact of labour disputes; obtaining the required permits to expand and extend mining activities; delays in
obtaining governmental approvals; changes in metals price s; unanticipated changes in key management personnel; change s in
general economic conditions; other risks of the mining indus try and those risk factors outlined in the Company’s Managem ent
Discussion and Analysis as filed on SEDAR. Any forward-looking statement speaks only as of the date on which it is made and,
except as may be required by applicable securities laws , the Company disclaims any intent or obligation to updat e any
forward-looking statement, whether as a result of new inf ormation, future events or results or otherwise. Forwa rd-looking
statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the
inherent uncertainty thereof.