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Extorre yields more high grades from Zoe at Cerro Moro, revised PEA due in Q1 2012

Extorre Gold Mines (AMEX:XG) (TSE:XG) announced Wednesday high to bonanza grade gold-silver drill results from 17 of 28 new holes completed on the Zoe zone of its Cerro Moro project in Santa Cruz, Argentina.

Some of the holes represent potential extensions to the NI 43-101 compliant resource estimate from November of this year, the company said.

As of early November, indicated resources at Cerro Moro stood at 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, resources amount to 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 last month 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.

Highlights from the latest drill results at the Zoe discovery include 11.15 metres at 124.5 grams per tonne (g/t) of gold equivalent, including 0.65 metres at 1,247.2 g/t gold equivalent in hole MD1391.

Other notable results included: hole MD1405 with 4.60 metres of 96.0 g/t gold equivalent, including 0.80 metres of 372.5 g/t gold equivalent; hole MD1411 with 3.55 metres of 89.2 g/t gold equivalent including 0.32 metres at 352.0 g/t gold equivalent; hole MD1429 with 2.47 metres at 103.9 g/t gold equivalent, including 0.66 metres at 350.2 g/t gold equivalent; and hole MD1433 with 9.00 metres at 6.5 g/t gold equivalent, including 1.4 metres at 21.3  g/t gold equivalent.

The company said the gold equivalent grade is calculated by dividing silver grades by 50 and adding this figure to gold grade, assuming 100 percent metallurgical recovery.

Extorre's exploration manager, Matt Williams, said: "These results represent a mix of infill drilling to gain further confidence in the Zoe resource and step out drilling to test for extensions to the deposit.

"As Zoe represents 24% of the total indicated mineral resource and 37% of the inferred mineral resource for Cerro Moro, it remains our focus for two of the four drill rigs employed on the property.

“Of particular significance is the MD1433 drill intersection at a 420 metre vertical depth below surface, the deepest intercept to date of significant mineralization on the Cerro Moro property. The 420 metre depth, when compared to the other principal zones: 270 m at Escondida and 320 m at Gabriela, demonstrates the potential for expanding all of the veins at Cerro Moro to depth."

Of the two rigs at Zoe, one is testing for extensions at depth and the second is exploring for repetitions of the Zoe deposit up to three kilometres to the east.

The Escondida structure, on which the Zoe vein is located, has now been traced for over a strike length of 10 kilometres.

A third rig is currently drilling to provide geotechnical data for the open pit planning of pit wall angles and slope stability, which will feed into the revised preliminary economic assessment, scheduled for release in the first quarter 2012. The revised PEA will be based on the recent mineral resource estimate released in November, which was based on all drill data available as of October 10, including maiden contributions from four new mineralized zones: Zoe, Martina, Carla, and Nini.

The latest PEA from August, which was based on a resource estimate from April that did not include results from the Zoe discovery, indicated a proposed mine production plan of 1,000 tonnes per day for a total of 206,300 ounces of gold equivalent per year for the first three years of an 8.25 year life, at a cash cost of US$236 per ounce of gold equivalent.

The fourth and last drill rig continues to test new targets found by Extorre's geological team, the company said.
Elsewhere at Cerro Moro, a total of 65 drill holes have been completed on 22 targets, with a number of these holes intersecting veins with mineral assemblage considered favourable for high grades, the company said. Follow-up drilling is in progress to establish grade continuity of the discoveries.

Extorre, which holds around C$28 million in cash, also owns the Puntudo and Don Sixto projects, and other mineral exploration properties in Argentina. Shares rose over 1% Wednesday morning, to trade at $9.59 as of 11:44am ET.