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Exeter Resource calls shareholder meeting for spin-out of Cerro Morro project into Extorre Gold Mines

Exeter Resource Corporation (AMEX: XRA, TSX: XRC and FSE: EXB) has called a special meeting of shareholders to approve the spin-out of its Argentine exploration assets, notably the Cerro Moro project, into a new company which has now been named as Extorre Gold Mines Ltd.

The proposed transaction will result in each Exeter shareholder receiving one share in Extorre for each share held in Exeter. There will be no change in the holdings in Exeter Resource Corporation.

The meeting is expected to be convened on March 11 2010. The proposed spin-out was announced by Exeter on 19 January 2010 after several months of consideration. According to Mineweb.com, Exeter CEO Bryce Roxburgh initially discussed the possible move back in November 2009, following Mineweb’s visit to both the Cerro Morro and Caspiche sites.

Extorre will initially focus on the progression of the Cerro Moro project through feasibility, project financing, development and into production. A Preliminary Assessment Study is scheduled for Q3 2010, which will provide a detailed description of a potential mine at Cerro Moro, including forecast production rates, capital costs, operating costs and cash flows.

Extorre also intends to increase the Cerro Moro resource by drilling the many partially explored veins on the property.

Earlier this month, Exeter reported more high grade and bonanza grade gold intersects from in-fill drilling at the Cerro Moro project in Santa Cruz Province, Argentina.  The latest drill results continued to highlight the potential of the project; the most impressive result emanated from drill hole MD644 which returned 5.38 meters at an average grade of 149.9 grams per tonne gold equivalent. 12 of the 28 holes reported high grade gold. On 3 February, Exeter’s Exploration Manager Matt Williams stated “Within two weeks the company will have completed the infill drilling considered sufficient to bring a substantial component of the Escondida mineralization into the Indicated Resource category”.

Exeter’s current mine development manager, Dr. Eric Roth will be appointed Extorre’s CEO and president. Roth has extensive experience in mine development, through his roles as a mine geologist and an exploration geologist for BHP Billiton (ASX: BHP; LSE: BLT), Rio Tinto (LSE, ASX: RIO) and AUR Resources. Most recently he was head of greenfields exploration for AngloGold Ashanti (LSE, ASX: AGG; NYSE: AU).

Exeter Chairman Yale Simpson and CEO Bryce Roxburgh will become Extorre’s co-chairmen. Ignacio Celorrio, an Argentine lawyer specialising in mining law, also joins the board along with Exeter directors Louis Montpellier, Cecil Bond, Robert Reynolds. Darcy Daubaras will be chief finance officer of Extorre.

Santa Cruz province is one of the most prolific locations for gold explorers and producers alike, with a string of discoveries made in recent years and several mid-tier and top-tier gold and silver companies active in the area.

Exeter will retain all assets relating to the Caspiche gold-copper discovery in Chile, together with approximately US$50 million in working capital. The current Exeter board and the Chilean management team will remain to take the Caspiche project forward. Exeter said it intends to continue building shareholder value through the expansion of the large gold-copper resources and the completion of the mine development studies currently underway.

Disclosure: The author holds no postitions in the company