Scorpio Gold Announces Positive Feasibility Study for Processing the Heap Leach Mineral Resource at Mineral Ridge

VANCOUVER, British Columbia, Oct.10, 2017(GLOBE NEWSWIRE) -- Scorpio Gold Corporation ("Scorpio Gold" or the "Company") (TSXV:SGN) is pleased to announce the results of a positive feasibility study ("the Project") to reprocess the heap leach residual material at its Mineral Ridge property, located in Esmeralda County, Nevada. Scorpio Gold holds a 70% interest in the project with joint venture partner Elevon, LLC (30%).

Brian Lock, Interim CEO comments, "I would first like to take this opportunity to thank Novus Engineering Inc. ("Novus"), Mine Technical Services ("MTS"), NewFields and our Scorpio Gold employees for their dedicated effort in completing this study. The combined effort of all parties involved produced a very thorough study of our Mineral Ridge heap leach resource and proposed milling facility. This economically positive study provides the foundation for recovering a substantial portion of the 122,000 ounces of gold resources contained on the heap leach pad. This project, when completed, will provide Mineral Ridge with five years of additional mine life. Additionally, due to higher expected recovery rates provided by the new milling circuit, the Company is proceeding with a third-party analysis of its other known mineral resources. When complete, and if determined economically viable, this study should add additional reserves and further extend the Mineral Ridge life of mine. Further exploration at Mineral Ridge may also add additional resources."

Feasibility Study Description

About 68% recovery of gold was realized from the previous heap leach operations at Mineral Ridge. Sonic core drilling was completed to create a mineral resource estimate from the heap pad, which was previously issued by MTS on July 12, 2017. Independent testing of the residual heap leach material indicates 91% recovery by further grinding the heap material and reprocessing using the carbon-in-leach ("CIL") process. Novus was engaged by Scorpio Gold to design a processing facility and develop capital expenditure ("CAPEX") and operating expenditure ("OPEX") estimates related to the new processing facility. NewFields developed the methodology for "mining" the heap residual material and for returning the tailings material from the processing facility to the lined pad. NewFields also provided the CAPEX and OPEX estimates related to the mining and filtered-tailings placement activities. Scorpio Gold provided information on the balance of project costs and general and administrative cost estimates. The economic highlights of the project are presented in Table 1 below.

Table 1: Economic Highlights

Defined terms not otherwise defined herein shall have the meanings ascribed to them under the heading "Units of Measure" in this news release.

Drilling

A total of 3,671 ft (1,119 m) of drilling in 34 sonic core drill holes was completed to test the grade of the leach pad material. Sonic drill core was placed in plastic bags in nominal 2.5 ft (0.76 m) intervals at the drill rig by the drillers and transferred to the Mineral Ridge assay laboratory on site after the completion of each drill hole by Mineral Ridge, LLC ("Mineral Ridge") geologists. At the Mineral Ridge assay laboratory, the material from the sample bags was composited into 10 ft (3 m) intervals, dried, disaggregated, split to 250 g, and sent to Florin Analytical Services ("Florin") in Reno for gold and silver assay. At Florin, the entire sample was pulverized to 80% passing 75 microns, homogenized, and gold determined by one-assay ton fire assay and AAS finish and silver determined by four-acid digestion and AAS finish.

Blanks, standards, and duplicates were inserted into the sample sequence by Mineral Ridge prior to sending the samples to Florin for analysis to determine the quality of the Florin gold assays. Standards and blanks indicate that Florin assays are acceptably accurate and there is no significant carryover contamination. Duplicate pairs returned poor precision and screen fire assays indicate that coarse gold is likely a contributing factor in the poor precision of the duplicate results. The 2017 Florin gold assay data are sufficiently accurate and precise for use in mineral resource estimation.

Mineral Resources and Mineral Reserves

There has been no change to the mineral resource estimate as disclosed in the press release dated August 14, 2017.

The mineral resources are comprised of material contained entirely within the leach pad as of June 29, 2017. While newly mined material from the available open-pit resource will continue to be placed on the heap leach pad through October 2017, the material added in this time period is not included as it has not been validated as part of the current mineral resource estimate.

It is assumed that as the leach pad is mined, there will be no selectivity of the material to be processed, and therefore, the mineral resources presented represent a global estimate of the tonnage and grade.

Ordinary Kriging was used for the gold resource estimation with Inverse Distance, Inverse Distance Squared and Nearest Neighbor estimates serving as validation models. Silver estimates were run using a single Inverse Distance model and a Nearest Neighbor estimate as a validation model.

For reasonable prospects of eventual economic extraction, the gold price used is the 3-year trailing average gold price through June 2017. The process recovery is that obtained by Kappes, Cassiday & Associates ("KCA") test-work using reasonable mill-scenario. The processing cost was provided by Mineral Ridge using actual Mineral Ridge Mine labor costs, and conceptual mill processing costs estimated by Novus for a 4,000 tpd mill operation.

Table 2: Mineral Ridge Mineral Resource Statement

Notes:

1. The effective date of the Mineral Resource estimate is June 29, 2017.
2. The Qualified Person for the estimate is Mr Ian Crundwell, P.Geo.
3. Mineral Resources are quoted only for the Mineralized Leach Pad.
4. Mineral Resources are contained within the Mineral Ridge leach pad facility with the following assumptions:
   a. A long-term gold price of US$1,216/oz.
   b. Assumed process costs are US$11/t.
   c. Metallurgical recovery for gold is 91%.
5. Rounding may result in apparent differences between when summing tons, grade and contained metal content.
6. Tonnage and grade measurements are in Imperial units. Grades are reported in opt.
7. The resource estimate was prepared with reference to CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) and CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (2003).
8. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Conversion from Mineral Resources to Mineral Reserves is relatively straightforward. Given the nature of the reclaimed material on the heap leach pad and the method of mining, the assumption is that all material will be mined and processed, less any material left in place due to permit restrictions and facility location. Allowance has been made for facility location which excludes 260,000 tons, which must remain in place, according to the heap material mining and tailings placement design completed by Newfields.

Based on the criteria above, the Mineral Reserve Estimate is provided in Table 3 below. Given the positive economic analysis of the Project, the mill feed material can in fact be considered a Mineral Reserve.

Table 3: Mineral Ridge Mineral Reserve Estimate

Notes:

1. Mineral Resources are contained within the Mineral Ridge leach pad facility with the following assumptions:
   a. A long-term gold price of US$1,216/oz.
   b. Assumed process costs are US$11/t.
   c. Metallurgical recovery for gold is 91%.
2. Rounding may result in apparent differences between when summing tons, grade and contained metal content.
3. Tonnage and grade measurements are in Imperial units. Grades are reported in opt.

Mineral Processing

The proposed processing plant will be conventional and will re-process gold heap leach residual material at a rate of 4,000 tpd with an equipment availability of 92% (365 d/a). The process flowsheet developed for the Mineral Ridge heap leach residues is a combination of conventional comminution using ball-mills, and CIL cyanidation to recover gold and silver. The process plant will produce a gold and silver loaded activated carbon product from the CIL circuit.Based on the annual average throughput, and leaching and refinery recoveries, the process plant is estimated to produce approximately 22,583 oz of gold and 5,886 oz of silver from the mill feed grading 0.0171 opt gold and 0.0169 opt silver. The estimated gold and silver recoveries in the CIL circuit are 91% and 24% respectively. The loaded carbon will be shipped off-site to a refinery to recover the gold and silver. Refinery recovery is estimated in 99.4%.

The process plant will consist of:

• Reclaiming area including mixing and holding tanks
• Grinding circuit consisting of two parallel ball mills
• A Pre-leach thickener
• Carbon in leach cyanidation
• Tailings thickening and filtration

The process flowsheet was developed based on parameters established from test work conducted by KCA mainly from 2014 to 2017, as well as Novus' engineering experience. The size selection of the grinding mills was based on the amenability of the reclaimed ore to grinding determined through test programs performed by laboratories. The CIL tank sizing was based on leaching times determined by test work and using scale-up factors and experience.

Test programs evaluated several options for treating the reclaimed Mineral Ridge heap leach material. Samples showed regular to poor responses to conventional flotation. The CIL process was chosen as the best available alternative due to higher gold recoveries. As part of the study, several areas for optimization and simplification were identified in the process plant design, which reduced operational and capital requirements.

The major criteria used in the plant design to process 4,000 tpd equivalent to 1,460,000 tpa is outlined in Table 4.

Table 4: Major Design Criteria

The grinding plant will receive material from the previous heap leaching operation. This material will be reclaimed, scalped to remove trash, and mixed with water to form slurry of approximately 55% solids. The slurry will then be transferred to a holding tank and pumped to the ball mill pump box. The design contemplates two ball mills operating in parallel, with a shared pump box for both mills and dedicated cyclone clusters for each ball mill. The cyclone overflow has a design 80% passing size of 200 mesh (74 microns) and feeds a pre-leach linear trash screen. The cyclone underflow will return to the two ball mills. The mills are designed to process 2,000 tpd each. The linear trash screen undersize reports by gravity to the pre-leach high-rate thickener where the slurry is flocculated and thickened to a density of 60% solids. The thickener overflow is recycled to the process water pond for reuse and the thickener underflow reports to the leaching circuit.

The leaching circuit will consist of four tanks operating in series with a total residence time of 36 hours. The slurry density will be adjusted by recycling the overflow from the tailings thickener for the CIL circuit to operate at 45% solids. It is expected that the slurry will arrive at the CIL circuit at a pH of 10.5; adjustments will be made to maintain the required pH level, as necessary. Slurry will flow by gravity to each tank. Dissolved gold and silver in the slurry will be adsorbed onto activated carbon and discharged from the circuit at a designed rate of two tons per day. Every 14 days bagged loaded carbon will be transported to an external facility for final gold and silver recovery, and carbon regeneration and recycling. The current operation at Mineral Ridge is a heap-leach operation, which uses reactivated carbon to adsorb gold from the pregnant leach solution. The existing carbon handling infrastructure, which includes carbon receiving, attritioning, sizing, sampling, and loading is suitable for the new process.

The CIL tailings will pass through a carbon safety screen to capture fugitive loaded carbon, and will report to a tailings thickener for cyanide solution recovery. The tailings thickener overflow will be recycled to the leach feed while the underflow will be sent to the tailings filters, where additional cyanide solution will be recovered. The filter cake at a designed moisture of 15% will be transported by existing grasshopper conveyors to the tailings pad. The tailings filter cake will be placed on the lined heap leach pad.

Infrastructure

The existing site infrastructure at the Mineral Ridge property is in good repair and is deemed suitable to support the envisioned operations in the feasibility study. The following items were reviewed and found suitable for use for the project.

Substation and power distribution: additional distribution costs were considered in the CAPEX estimate. The main substation was found suitable to support ongoing activities.

• Maintenance facilities: no expansion necessary.
• Fuel storage: suitable as is.
• Roads: suitable as is.
• Water Supply and Management: suitable as is.
• Assay Lab: suitable as is.
• Offices: suitable as is.
• Lined pad for tailings storage: expansion required and included in the CAPEX estimate.
• Carbon handling facility: suitable as is.

Economic Analysis

The economic viability of the project has been evaluated using constant dollar, unleveraged (no financing), after-tax discounted cash flow (DCF) 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. Resulting annual cash flows are used to calculate the net present value (NPV) and internal rate of return (IRR) of the project.

The NPV 5 is $16.5 million and the IRR is 22.5%, with payback 2.9 years from the end of construction. The project's economic metrics are most sensitive to changes in grade and metals price, and less sensitive to changes in operating and capital costs.

Permitting and duration of construction timetables are such that first production is scheduled to commence start of third quarter 2019. Table 5 sets for the production schedule, grades and recoveries that result in salable metal.

Table 5: Production Schedule

Gold prices for all project years are forecast at $1,250/oz, less $0.50/oz. of gold per contract with buyer. Forecast silver prices are from a June 30, 2017 CIBC Global Mining Group, Analyst Consensus Commodity Price Forecasts study, less $0.01/oz. of silver per contract with buyer. The price of silver varies year over year between $19.28/oz to $19.82/oz, with an average price over the project life of $19.76/oz. Table 6 shows ounces of metal for sale, prices and resulting revenues. Given the terms of the selling agreement (payment five days following placement for sale) and production inventory time due to shipping from the mill to the stripper and then to the refinery (stripping time is 16 days and refining 7 days, inclusive of transport time), receipt of payment for revenues is delayed by 28 days. The cash impact of these timing differences is noted in the last two lines of Table 6 and, combined with accounts payable changes is noted as working capital in Table 9: Cash Flow.

Table 6: Salable Ounces, Price and Revenue and Working Capital Changes

Operating costs are summarized in Table 7.

Table 7: Operating Costs

Capital costs, reclamation bond collateral, reclamation costs and recovery of bond collateral are summarized in Table 8.

Table 8: Capital, Bond and Reclamation Costs

Table 9: Cash Flow

Figure 1: Cash Flow Chart

Figure 2: NPV Sensitivity

Figure 3: IRR Sensitivity

Risks

The following have been identified as contingent in the advancement of the project:

• Financing,
• A timely completion of the permitting process.

A technical report in support of the bankable feasibility 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 strongly encouraged to review the final technical report in its entirety.

Units of Measure

Unless otherwise defined herein, the following defined terms have the following meanings:

Qualified Persons

Peter J. Hawley, PGeo., Chairman of Scorpio Gold Corporation, and Mr. Amritpal Singh Gosal, P.Eng., Project Manager for Novus Engineering Inc., are Qualified Persons as defined by National Instrument 43-101 and have reviewed and approved the content of this release.

About Scorpio Gold

Scorpio Gold holds a 70% interest in the Mineral Ridge gold mining operation located in Esmeralda County, Nevada with joint venture partner Elevon, LLC (30%).Mineral Ridge is currently in production as a conventional open pit mining and heap leach operation. The Mineral Ridge property is host to multiple gold-bearing structures, veins and lenses at exploration, development and production stages. 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 and maintenance basis and can be restarted on short notice.

ON BEHALF OF THE BOARD
SCORPIO GOLD CORPORATION

Brian Lock,
Interim CEO

For further information contact:
Chris Zerga, President
Tel: (604) 678-9639
Email: czerga@scorpiogold.com

Website: www.scorpiogold.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The Company relies on litigation protection for forward-looking statements. This news release contains forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur, and include, without restriction, any statements regarding the results of the bankable feasibility study, including but not limited to, metal price and exchange rate assumptions, cashflow forecasts, projected capital and operating costs, metal or mineral recoveries, mine life and production rates; the Company's potential plans and operating performance, the estimation of the tonnage, grades and contents of deposits, and the extent of the resource and reserve estimates, potential production from and viability of the recoveries from the heap leach pads; estimates of future production and operating costs; estimates of permitting submissions and timing; the timing and receipt of necessary permits and project approvals for future operations; access to project funding, exploration results and expected filing of the NI 43-101 Technical Report. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause assumptions and actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements, including the ability of the Company to operate asgoing concern; risks related to open pit mining and heap leach operations, changes in the economic valuations of the Project, such as Net Present Value calculations, internal rates of return and payback periods; 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; delays in obtaining governmental approvals; the results of exploration and development programs and the timing and cost of such exploration and development programs; changes in metals prices; the availability of cash flows or financing to finance the processing of the leach pad material; meet the Company's ongoing financial obligations; unanticipated changes in key management personnel; changes in general economic conditions; the possibility that actual results of work may differ from projections/expectations or may not realize the perceived potential of the Company's projects; risks of accidents, equipment breakdowns; other unanticipated difficulties or interruptions and other risks of the mining industry; and those risk factors outlined in the Company's Management 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 update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-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.