-- Posted 21 June, 2011 | |
Vancouver, B.C., June 21, 2011 – Extorre Gold Mines Limited (AMEX:XG; TSX:XG; Frankfurt: E1R, “Extorre” or the “Company”) reports the economic study currently underway will include a larger production scenario to reflect the expanding gold-silver inventory on the property. The release date for the study is mid-July.
Key parameters for the study are as follows:
· The July study will be categorised as a Preliminary Economic Assessment (“PEA”) instead of a Prefeasibility Study (“PFS”) to facilitate the incorporation of additional mineralized zones.
· The engineering inputs are to the confidence level of a PFS but a portion of the resource for the July study will be in inferred. Although the lower confidence resource would not be mined until the latter years of the project they do contribute to the mine life.
· The daily throughput in this study is being modelled at 750 and 1,000 tonnes/day, not just the 750 tonnes/day scenario contemplated in the October 19, 2010 study.
· The study will use a silver/gold value ratio of 50:1, not the 60:1 ratio of the earlier study.
· Gold and silver prices used in the study are US$1,320 and US$26 respectively.
· A new PEA with a further 50% production expansion is proposed before year-end. That scenario will include the Zoe discovery and a number of additional veins that are not included in the current PEA.
The designation change for the current study from a PFS to a PEA reflects the fact that the Company’s recent exploration success has demonstrated that the start-up Cerro Moro project will be larger than previously modelled. However, a PFS cannot include “inferred resources” and can only be followed by another PFS or a feasibility study, not a PEA. The Zoe discovery in particular would have to be fully drilled off to “indicated resources” status before the Company could undertake a change of scope for the project. This would have potentially taken up to one year. By releasing the current study as a PEA the Company can follow up with an updated PEA within six months. That study will include the economic impact of the Zoe discovery.
The $25 million bought deal financing recently announced enables the Company to maintain the six drill rig program through the balance of 2011 and to perform a PEA update.
Extorre is currently relocating the two drills from the Puntudo project to Cerro Moro. Both rigs will assist with in-fill drilling on the Zoe discovery. Of the total six rigs at Cerro Moro, one of the drills will test regional targets as Company geologists are of a view that additional discoveries are likely.
Drilling results for the balance of the 22 drill holes completed to date on the Puntudo project are expected with the next few weeks.
Extorre is a Canadian public company listed on the Toronto and NYSE Amex Exchanges (symbol XG). Extorre’s assets comprise approximately $24 million in cash (excludes the $25 million financing announced on June 20), the Cerro Morro and Don Sixto projects, and other mineral exploration properties in Argentina.
On April 19, 2010, Extorre announced a NI 43-101 compliant mineral resource estimate for Cerro Moro:
Indicated Category: 357,000 oz. gold + 15.3 million oz. silver (662,440 oz. gold equivalent*), plus Inferred Category: 190,000 oz. gold + 12.0 million oz. silver (430,880oz. gold equivalent*)
The 662,440 ounce gold equivalent* indicated resource, has an average grade of 35 g/t gold equivalent*, a grade considered exceptional by industry standards. The silver contribution is high, accounting for about 50% of the metal value. Additional inferred resources of 430,880 ounces gold equivalent* are also reported from Cerro Moro.
Extorre released the results of a PEA of the Cerro Moro project on October 19, 2010. The PEA highlighted the robust economics of a future mine expected to produce an average of 144,400 gold equivalent* ounces annually during the first 5 years of operations. The cash cost per ounce is estimated to be US$185 per ounce gold equivalent*. Project CAPEX has been estimated at US$131million. The project economics were calculated using gold and silver prices of US$950/ounce and US$16/ounce, respectively. Gold equivalent values have been re-calculated at a 50:1 gold to silver ratio.
*Gold equivalent grade is calculated by dividing the silver assay result by 50, adding it to the gold value and assuming 100% metallurgical recovery.
The Province of Santa Cruz formally approved the Cerro Moro Environmental Impact Assessment report on May 17, 2011. That report approves the mining plan put forward to the Province in September 2010.
You are invited to visit the Extorre web site at www.extorre.com.
EXTORRE GOLD MINES LIMITED
President and CEO
Suite 1660, 999 West Hastings St.
Vancouver, BC Canada V6C 2W2
For further information, please contact:
Rob Grey, VP Corporate Communications
Tel: 604.681.9512 Fax: 604.688.9532