CBJ - May 11 - Scorpio Mining Corporation has reported its financial and operating results for the first quarter ended March 31, 2012. According to the report, revenue from metal payable increased 13 per cent from $13.8 million in Q4 2011 to $ 15.6 million in Q1 2012 due to improved silver grade and higher recorded metal prices.

Revenue from metal payable decreased 25 per cent compared to $20.8 million in Q1 2011, the best quarter in the history of the corporation. The decrease in revenue relative to Q1 2011 was mainly due to lower production of contained metals as a result of lower head grades in all metals, decreases in the recorded metal prices and an increase in all metal concentrate inventories at the end of Q1 2012.

Cash cost (recovery) per silver payable ounce, net of byproduct credits, was $7.78 in Q1 2012 compared to $10.81 in Q4 2011 and -$7.63 in Q1 2011. The decrease in Q1 2012 relative to Q4 2011 was due to reduced costs and higher silver payable. The increase in Q1 2012 relative to Q1 2011 resulted from lower base metal credits due to a decrease in base metal prices for lead, copper, and zinc in Q1 2012 year over year, a decrease in contained metals produced, and higher copper and lead concentrates in inventory, which contains significant silver.

In addition, the corporation incurred additional costs in Q1 2012 beyond those incurred in Q1 2011, specifically relating to contracting a third party to perform drilling until April of this year.

Mine operating earnings increased 65 per cent from $3.6 million in Q4 2011 to $6 million in Q1 2012 due to increased revenues and decreased costs. Mine operating earnings in Q1 2012 decreased 52 per cent compared to $12.5 million in Q1 2011. The decrease in mine operating earnings is mainly due to decreases in metal payables and metal prices, an increase in concentrate inventories which led to reduced revenues and additional costs.

While the resource and reserve estimates at the Nuestra Senora Mine are currently under review, Scorpio Mining is working on several initiatives to mitigate some of the expected reserve reduction, such as the development campaigns at the San Rafael and El Cajon deposits.