Permitting / Current Exploration
Scorpio Gold’s successful exploration and modeling of the mineralized unit and related structures at
Mineral Ridge has led to an aggressive staking program adding an additional 2,934 hectares (7,250 acres)
of unpatented mining claims adjacent to the property. The overall land package of 351 claims now
encompasses 4,118 hectares (10,176 acres), representing an increase of 348% from the prior owner’s
holdings. Exploration targets on the new claims are currently being mapped and sampled and several drill
targets have been identified. The 2011 exploration plan originally included 13,167 meters of drilling,
however, to date 13,400 metres of drilling have already been completed during the first nine months of
2011.
A Finding of No Significant Impact (FONSI) was issued on October 7, 2011 by the Bureau of Land
Management (BLM) which approves the company’s Environmental Assessment (EA) for conducting
additional exploration drilling on public lands within the permitted mine boundary at Mineral Ridge.
Exploration Notices have also been approved by BLM for further exploration of targets outside of the
current plan of operations boundary.
Exploration targets have been defined in areas adjacent to the historical Oromonte underground mine.
Wide spaced drilling conducted by previous companies in the 1990s intersected significant intervals of
gold mineralization which warranted additional drilling. The drilling indicates that Oromonte
mineralization extends west of its previously known limits at depth. Additional drilling will be planned
when modeling of the existing mineralization has been completed.
Twenty-four close-spaced holes were completed on the west side of the Wedge B pit to define
mineralization left by previous owners when the pit was mined. The holes targeted the area over and
between the Wedge underground mine and the Wedge B pit. Drill results have been encouraging and as
such the Company is evaluating the potential to open pit this area especially due to it close proximity to
haul roads and the crushing unit.
Twenty-six holes were recently completed around the Brodie pit to better define known mineralization and
to test possible extensions of mineralization to the north, south, and southeast of the deposit. Pit
optimization studies in 2003 and 2008 indicate open pit resources in the southwest corner of the pit and
along a narrow high grade zone which strikes north from the pit. The new data will be added to the model
and an updated pit optimization will be completed. Also earlier in the year, several holes were drilled to
expand the northwest extension of the Brodie deposit. With the recent approval of the EA, additional
drilling on BLM controlled lands along this trend can now take place.
3
The Solberry area, to the west of Oromonte, hosts shallow dipping gold-bearing quartz zones, some of
which crop out at the surface as veins. A first pass of infill drilling intersected low grade gold over a large
area with several higher grade intercepts. Six additional holes have been completed west of a shallow high
grade hole in an area of historic mining. Assay results are pending.
The Bluelite area, south of Solberry, contains a large number of widely-spaced drill holes intersecting
multiple, shallow horizons of gold mineralization. In addition, there is evidence for the presence of a highangle,
high-grade mineralized structure. These targets of opportunity can now be pursued following
approval of the Company’s amendment to its Plan of Operations and associated EA on October 7, 2011,
which will allow this drilling to move forward.
Additional drilling is planned for the Mary and Last Chance (LC) areas to further explore the potential
between the Mary pit and a possible LC pit and to explore a southeast extension of mineralization from the
Last Chance to Custer Canyon areas. Approval of the EA will now permit drilling on BLM lands southeast
of LC.
The first round of exploration drilling was complete on the Coyote Project under an exploration permit.
Only a few scattered gold intercepts were encountered however the drilling intersected a large area of very
thick, low grade silver. Additional surface mapping and sampling is planned for this area.
An Exploration Notice was approved for the Vulcan area earlier this year but no drilling has taken place to
date. Drilling is planned to coincide with mobilizing the rig into Custer Canyon and will test the potential
of the Wyman formation underlying gold mineralization in the Reed dolomite.
Mining activities
Prior to the start of mining, in the spring of 2011, a new gold mineralization model was developed. This
model incorporated all the new drilling in and around the existing and potential open pit minable areas.
Gold grade envelopes were updated and solids were created from the envelopes. The model was then used
in conjunction with the Lerchs-Grossmann pit optimization routine to generate a rough pit with no haulage
ramps around the Drinkwater deposit. This pit was used as a template to generate a final pit with haulage
ramps. Effective May 1, 2011, a Mining Services Contract was signed with LEDCOR CMI Inc. to
perform mining, drilling, and blasting services for the mine. Pit preparation and clean-up began on May
11, 2011.
Pre-production mining officially began on May 31st with the first blast of 37,000 tons of waste material.
As of the end of September 2011, a total of 1,201,400 tons of material had been mined from the
Drinkwater pit which included 224,507 tons of mineralized material with an average grade of 0.061 ounces
of gold per ton (1.728 grams per tonne of gold). Mine plans call for mining to increase to a daily
extraction rate of 20,000 tons total material with an average of 2,500 tons of mineralized material
delivered to the crusher.
Crushing of the previous Golden Phoenix-mined gold bearing material on the pad began in early February
2011 and was completed in early June. The total dry tons crushed from the re-handling of this material was
258,839 tons. Leaching of this material is ongoing and recovered metals on loaded carbon from the ADR
plant continue to be shipped off site for custom stripping.
Processing of newly mined mineralized material from the Drinkwater pit began in early June and
production through the end of September stands at 215,322 dry tons. Production rates are expected to
continue to trend positively for the remainder of 2011 as mining rates improve.
4
In early July 2011, the Company signed an equipment lease with a purchase option for the existing
portable crushing system used at Mineral Ridge. In September the Company exercised the option to
purchase this equipment and began operating the crushing facility with Mineral Ridge employees.
Shipment of the gold bearing sludge previously recovered from the barren pond is complete with
exchanges of assays and final payment for those materials received in September. The Company
recovered 235 ounces of gold and 193 ounces of silver from that material, with net proceeds totalling
$298,758.
The newly expanded assay laboratory began processing samples from mining in the Drinkwater pit in
June, and with staffing levels nearing capacity in August, transitioned to operating around the clock.
Training of the laboratory staff is ongoing while production rates and cost per sample continue to improve.
Metals Research, located in Kimberley, Idaho continues its custom stripping of loaded carbon shipped
from Mineral Ridge. As of September 30, 2011, 61 tons of loaded carbon, containing an estimated 5,933
ounces of gold and 3,172 ounces of silver has been shipped to their facility. During the third quarter, the
Company’s metal sales from its production of recovered gold and silver totalled 2,399 ounces of gold and
1,999 ounces of silver to Waterton Global Resource Management, as per its long-term sales agreement.
Net proceeds of metal sales totalled $4,167,196 in the third quarter and were recorded as a reduction of the
Company’s deferred exploration and development expenditures as the operation remains in the preproduction
stage.
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