Extorre Gold Mines (CVE:XG) (AMEX:XG) Thursday gave an updated NI 43-101 compliant mineral resource estimate for its flagship Cerro Moro project in Argentina, increasing the indicated and inferred resource categories by 46 percent and 166 percent, respectively.
The market received the update favourably, with Extorre stock up over three percent at $7.96 in Toronto Thursday morning.
The new estimate gives indicated resources of 1.35 million ounces gold equivalent, comprising 2.42 million tonnes (Mt) at 7.4 grams per tonne (g/t) gold and 498 g/t silver, for a gold equivalent grade of 17.4 g/t. In the inferred category, the new estimate gives 1.05 million ounces gold equivalent, comprising 4.74 Mt at 3.5 g/t gold and 172 g/t silver for a gold equivalent grade of 6.9 g/t gold.
Extorre said the rapid increase was is in large part due to the Zoe discovery, which contributed 61 percent of the new gold equivalent ounces.
The new resources will form the basis of an updated mining and economic study for the project scheduled for release during the first quarter of 2012, with the potential for mine development at a larger scale - of around 1,000 to 1,500 tonnes per day - Extorre said.
Extorre said that the new study will be at a confidence level sufficient for the board to make a financing and mine development decision.
The new resource estimate, undertaken by Cube Consulting, is based on all drill data available as of October 10 and includes maiden contributions from four new mineralized zones: Zoe, Martina, Carla, and Nini.
Extorre added that 76 percent of the new indicated resource is at a gold equivalent grade above 30 g/t, a grade considered "exceptional" by industry standards. The silver content of the deposit remains high, and accounts for approximately 55 percent by value of the indicated resource, based on a silver to gold ratio of 50:1.
Additional inferred resources of 1.05 million ounces gold equivalent are reported from the Escondida, Loma Escondida, Zoe, Martina, Carla, Gabriela, Esperanza and Deborah veins.
Exploration is continuing at the Cerro Moro project, where six drill rigs have been operating continuously. In November, Extorre will reduce the number of rigs to four, with three rigs continuing to delineate the Zoe deposit and potential extensions.
Zoe itself has been tested for 2.2 kilometres of strike so far, with significant mineralization delineated over a 1.1 kilometre long zone.
In a preliminary economic assessment issued in August, Extorre gave an indicated resource of 0.66 Mt at 19 g/t gold and 835 g/t silver from the high grade Escondida and Loma Escondida vein zones, plus lower grade indicated resources from the Gabriela vein - of 0.53 Mt at 2 g/t gold and 371 g/t silver - and inferred resources of 1.86 Mt at 3.0 g/t gold and 182 g/t silver from the Escondida, Loma Escondida, Gabriela, Esperanza, and Deborah veins.
Data from the Zoe, Martina, Carla and Esperanza veins were not included at the time.
Separately, in the wake of Argentina cutting subsidies for profitable industries such as mining and energy, Extorre said it does not currently foresee a material change on the investment outlook for its Cerro Moro project.
In late October, the recently-elected government in Argentina ordered energy and mining companies to cash in all their export revenue on the local foreign exchange market before distributing it either locally or overseas.
This overturns the previous benefits that exempted energy and mining firms from currency repatriation laws that apply to all other primary producers in the South American nation.
Argentina put the new rules into place to stem the tide of money flowing out of the country.
Extorre's Cerro Moro gold-silver project is located in the north-eastern Santa Cruz province within the emergent Deseado Massif gold-silver mining district, approximately 70 kilometers southwest of the regional centre and port of Puerto Deseado.
The Cerro Moro property is covered by 175 square kilometers of mining concessions.