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Extorre Gold Mines receives govt' approval to develop Cerro Moro mine

May 17, 2011 10:57 AM ETPAAS
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Extorre Gold Mines (TSE:XG)(AMEX:XG) said Tuesday that a provincial government in Argentina has formally approved the company's Environmental Impact Assessment (EIA) on the Cerro Moro gold-silver project.

The environmental study was submitted to the government of Santa Cruz, Argentina, in September last year.

The formal approval, together with the receipt of the pre-feasibility study expected in June, will allow Extorre to proceed with advanced engineering and mine development at the property.

"The successful permitting of the Cerro Moro gold-silver mine represents an important milestone for Extorre, and is the first step in what we expect will be a straight-forward mine development," said president and CEO Eric Roth.

The company said that Cerro Moro's ideal location, in combination with its very high grade gold-silver veins, should allow Extorre to obtain near-term and low cash cost gold and silver production, from a "relatively modest" capital investment.

Indeed, according to a preliminary economic report last October, the project is expected to produce an average of 133,500 gold equivalent ounces per year during the first five years of operations, at a cash cost of just US$201 per ounce. Capex has been estimated at US$131 million.

"With our ongoing exploration success, including the recently announced high grade gold-silver discovery at Zoe, the company will now have an opportunity to evaluate the potential for expanding the scope and the life of the proposed mine," added Roth.

In April, the company announced the NI 43-101 compliant resource for the property, which identified 612,000 gold equivalent indicated ounces at an average grade of 32.3 g/t gold, plus an additional 390,000 inferred ounces.

Four drill rigs are currently working on site to expand the known resource; as such, an updated resource report is expected in the third quarter.

Separately, Extorre also announced today that it completed the purchase of the 14,000 hectare ranch that covers the principal vein zones at Cerro Moro, providing the company with full ownership of surface rights.

Canada-based Extorre owns a portfolio of exploration properties in Argentina, including the Cerro Morro and Don Sixto projects.

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