Cerro Moro
Extorre’s Cerro Moro gold-silver project is located in north-eastern Santa Cruz Province, approximately 70 kilometers southwest of the regional centre and port of Puerto Deseado. Access to Cerro Moro from Puerto Deseado is by paved highway to Tellier and then all-weather gravel provincial highways to the project, with a network of tracks providing good access to the individual prospects within the project area.
Cerro Moro is also located within the emergent Deseado Massif gold-silver mining district. Three mines (Cerro Vanguardia, Manantial Espejo, and San Jose) are currently in operation in the Deseado Massif, with combined precious metal production in 2009 totaling 350,000 ounces gold and 12 million ounces silver. The Deseado Massif also hosts a number of early-stage and advanced exploration projects - including Cerro Moro - where the primary targets are high-grade epithermal gold-silver veins.
Location of the Cerro Moro Project in the Deseado Massif, Santa Cruz Province.
Extorre’s work program at Cerro Moro combines two key strategies: i) to advance the high-grade Escondida gold-silver deposit along the path to development, and ii) to increase the resource base of the Cerro Moro District through both the drilling of extensions to known mineralization and the evaluation of new targets on a priority basis. Four drill rigs are currently dedicated to the discovery of new resource ounces at Cerro Moro, in addition to performing some water and infrastructure drilling.
Project Ownership
Extorre’s Argentine subsidiary Estelar Resources (“Estelar”) became the 100% owner of the Cerro Moro project in late-2007, after fulfilling all the requirements of an earn-in agreement signed with Cerro Vanguardia Sociedad Anonima (“CVSA”) in 2003. CVSA retains a 2% net smelter return royalty on all future production from the project. The Cerro Moro property is covered by 17,500 Ha (175 square kilometers) of mining concessions.
Cerro Moro Geology and Gold-Silver Mineralization
Cerro Moro is a low sulfidation epithermal gold-silver district in which +30 veins have been identified to date. The gold-silver-bearing veins at Cerro Moro are typically narrow (1-5 m in width), subvertical, and are hosted along fault zones which strike either northwest, east-west, or northeast (with the northwest-trending veins containing the highest tenor of precious metal mineralization). The Cerro Moro veins are also characterized by multiple phases of quartz-adularia +/- gold-silver deposition, with vein textures ranging from massive chalcedonic quartz to spectacular ginguro-banded veins. The high-grade Escondida gold-silver deposit hosts a significant proportion of the reported mineral resource at Cerro Moro (see below), and has been drill tested along approximately 2 km of strike extent and to a depth of 200m. Significant potential still exists, however, for the discovery of extensions to the known mineralization along strike and at depth at Escondida. Other significant veins at Cerro Moro include the Esperanza, Gabriela, Loma Escondida, Patricia, and Deborah veins. Gold at Cerro Moro occurs within the mineralized veins as either native gold or as electrum, whereas silver occurs either in electrum or in the silver sulfide acanthite. Base metal sulfides (chalcopyrite, sphalerite, galena) commonly accompany high grade gold-silver mineralization in the Escondida vein.
Deborah Vein in Outcrop and Drill Core from Escondida Far West
Host rocks to the mineralized veins at Cerro Moro are gently-dipping rhyolitic ignimbrites, felsic flows, acid to intermediate tuffs, tuff breccias and volcaniclastic sediments belonging to the Middle to Upper Jurassic Chon Aike and Matilde Formations. These volcanic rocks are locally overlain by Tertiary-age basalts and Quaternary gravels and sediments.
Click the thumbnail to download a PDF version of the legend for the Geology Map
Cerro Moro Concessions and Prospect Geology
Cerro Moro Mineral Resources
On November 3rd, 2011 an updated NI 43-101 compliant mineral resource estimate was released for Cerro Moro:
Indicated Category: 1.35 million ounces gold equivalent* (7.4 g/t gold and 498 g/t silver, for a gold equivalent grade** of 17.4 g/t), plus
Inferred Category: 1.05 million ounces gold equivalent* (3.5 g/t gold and 172 g/t silver, for a gold equivalent grade** of 6.9 g/t gold).
The Indicated Category resource includes 757,000 oz gold equivalent* from the Escondida and Loma Escondida sectors at an average grade of 35 g/t gold equivalent*, and 267,000 oz gold equivalent* from Zoe at an average grade of 79 g/t gold equivalent*, a grades that are considered exceptional by industry standards.
Updated mineral resource estimates were compiled for the Gabriela and Esperanza prospects and maiden mineral resource estimates were compiled for the Zoe, Martina, Carla and Nini prospects. There has been no change to the existing Escondida, Loma Escondida and Deborah mineral resources.
A summary of drilling data for each prospect up to August 31, 2011 is as follows:
| Escondida (incl. Martina) | 631 drill holes for 94,115m (Extorre 94,010m, Mincorp 105m) |
| Zoe (Incl. Zoe East) | 151 drill holes for 37,562m (Extorre 37,562m) |
| Loma Escondida | 69 drill holes for 4,563m (Extorre 4,439m, Mincorp 124m) |
| Carla | 41 drill holes for 3,808m (Extorre 3,808m) |
| Gabriela | 155 drill holes for 23,741m (Extorre 23,741m) |
| Nini | 25 drill holes for 2,094m (Extorre 1,946m, Mincorp 148m) |
| Esperanza | 81 drill holes for 9,682m (Extorre 9,494m, Mincorp 188m) |
| Deborah | 24 drill holes for 1,466m (Extorre 1,364m, Mincorp 102m) |
**Gold equivalent ounces are calculated by dividing the silver ounces by 50, then adding those ounces to the gold-only ounces
Indicated Mineral Resource for Cerro Moro (at a 1g/t gold equivalent cut-off)
| Zone | Metric Tonnes (t) |
Gold (g/t) |
Silver (g/t) |
Gold Equivalent Grade (g/t)** |
Gold Ounces |
Silver Ounces |
Gold Equivalent Ounces* |
|---|---|---|---|---|---|---|---|
| Escondida | 620,000 | 18.8 | 829.2 | 35.4 | 374,000 | 16,530,000 | 705,000 |
| Loma Esc | 44,000 | 18.4 | 919.5 | 36.8 | 26,000 | 1,297,000 | 52,000 |
| Gabriela | 1,642,000 | 1.5 | 226.1 | 6.0 | 79,000 | 11,936,000 | 318,000 |
| Zoe | 105,000 | 27.2 | 2,614.5 | 79.5 | 91,000 | 8,798,000 | 267,000 |
| Carla | 15,000 | 16.0 | 701.2 | 30.0 | 7,000 | 327,000 | 14,000 |
| Total | 2,425,000 | 7.4 | 498.8 | 17.4 | 578,000 | 38,888,000 | 1,356,000 |
Inferred Mineral Resource for Cerro Moro (at a 1 g/t gold equivalent cut-off)
| Zone | Metric Tonnes (t) |
Gold (g/t) |
Silver (g/t) |
Gold Equivalent Grade (g/t)** |
Gold Ounces |
Silver Ounces |
Gold Equivalent Ounces* |
|---|---|---|---|---|---|---|---|
| Escondida | 508,000 | 4.3 | 164.8 | 7.6 | 70,000 | 2,689,000 | 123,000 |
| Loma Esc | 13,000 | 9.7 | 595.4 | 21.6 | 4,000 | 256,000 | 9,000 |
| Zoe | 1,248,000 | 4.1 | 280.3 | 9.8 | 167,000 | 11,250,000 | 391,000 |
| Martina | 293,000 | 13.0 | 60.3 | 14.2 | 123,000 | 568,000 | 134,000 |
| Carla | 2,000 | 9.5 | 390.4 | 17.3 | 1,000 | 29,000 | 1,000 |
| Gabriela | 331,000 | 1.3 | 219.7 | 5.7 | 14,000 | 2,336,000 | 61,000 |
| Esperanza-Nini | 1,773,000 | 1.8 | 144.3 | 4.7 | 105,000 | 8,226,000 | 270,000 |
| Deborah | 578,000 | 2.4 | 48.1 | 3.4 | 45,000 | 894,000 | 62,000 |
| Total | 4,747,000 | 3.5 | 172.0 | 6.9 | 528,000 | 26,249,000 | 1,053,000 |
* Gold equivalent ounces are calculated by dividing the silver ounces by 50, then adding those ounces to the gold-only ounces.
** Gold equivalent grade is calculated by dividing the silver assay result by 50, adding it to the gold value and assuming 100% metallurgical recovery.
Escondida Vein Long Section - Gold Equivalent g/t x True Width
Escondida Vein Long Section - 2010 Resource Classification
Martina Discovery Long Section - Martina will be Included in the next Resource Estimate
Four drill rigs are currently dedicated to new resource drilling at the Cerro Moro project, with particular emphasis being placed on the evaluation of the recent high grade gold-silver discovery at Zoe. The updated mineral resource estimate for the Cerro Moro project is includes maiden mineral resources for the Zoe, Carla, Martina, and Esperanza Northwest-Nini sectors. This resource estimate will be incorporated into an updated PEA-3 in the first quarter of 2012.
Aggressive Exploration Continues at Cerro Moro to Define New Ounces
On April 19th, 2011 Extorre announced bonanza grade gold-silver results from the first diamond drill holes completed on a discovery named Zoe at Cerro Moro, Santa Cruz Province, Argentina. Visual inspection of the core suggested that drilling had just entered the mineralised zone and that mineralization continued at depth.
Assay highlights included: MD1204 intersected 4.84 metres (“m”) at 64.6 grams per tonne (“g/t”) gold + 7,530 g/t silver (190.1 g/t gold equivalent*), including 1.36 m at 227.3 g/t gold + 25,428 g/t silver (651.1 g/t gold equivalent*).
The Zoe discovery is situated on the Escondida structure, 2.5 kilometres (km) east of the last known significant Escondida mineralization (the Martina shoot). The target is interpreted to be an east-west dilation zone, some 2 km in strike length. The discovery is essentially “blind” from surface, with the shallowest high grade mineralization appearing at a vertical depth of 80 metres.
In all respects the mineralization appears to be typical of the known Escondida deposit to the west. Specifically, the silver mineral acanthi is observed in many of the drill cores, with five holes showing electrum (metallic gold-silver). Base metals and pyrite are accessory minerals.
Image: Ground Magnetics & Zoe
Image: Escondida & Zoe Geological Map
Image: Potential for further exploration success at Zoe East
Image: As of April 19th, 2011
Ground Magnetics Leads to New Discoveries
Image: Many other high potential drill targets have been identified at Cerro Moro
Cerro Moro Development
Extorre released the results of an updated preliminary economic assessment ("PEA") of the Cerro Moro Project on August 5th, 2011. The PEA highlighted the robust economics of a future mine expected to produce an average of 206,300 gold equivalent* ounces annually during the first 3 years of operations. The cash cost per ounce is estimated to be US$236 per ounce gold equivalent*. Initial CAPEX (Direct Costs) $US 150M + $US 26M recoverable VAT, Initial Indirect Costs (EPCM, Owners Costs) $US 32M The project economics were calculated using gold and silver prices of US$1320/ounce and US$26/ounce, respectively. The PFS was based on the following parameters:
View the Second Preliminary Economic Assessment Technical Report, Dated August 2, 2011
PEA Parameters
Parameters utilised in the 1,000tpd Cerro Moro PEA are indicated in the table below:
| Summary of Project Parameters | |
|---|---|
| Tonnes Ore Produced - Underground | 1,041,000t |
| Tonnes Ore Produced - Open Pits | 1,686,000t |
| Tonnes Waste Moved - Open Pits | 45,356,000t |
| Ore Processing Rate | 336,000t p.a. |
| Mine Life | 8.25 years |
| Gold Recoveries | 95% |
| Silver Recoveries | 87.4% |
| Total Gold Ounces Recovered | 494,700 oz |
| Total Silver Ounces Recovered | 26,600,000 oz |
| Total Gold Equiv* Ounces Recovered | 1,025,000 oz |
| Total Silver Equiv** Ounces Recovered | 51,400,000 oz |
| Initial Project CAPEX (Direct costs) | US$ 149.8M + US$ 25.7M VAT (recoverable) |
| Initial CAPEX (Indirect Costs) | US$ 33.6M (EPCM contract, owners costs, commissioning) |
| Sustaining Capital Life of Mine | US$ 52.7M (includes UG development, equipment replacement, mine closure) |
| Mining Costs – Open Pit | US$ 2.15/t |
| Mining Costs – Underground | US$ 45.91/t |
| Milling and Processing | US$ 67/t |
| G+A | US$ 7M/year |
| Cut-off Grades (Gold Equivalent*) | Open Pit 2 g/t, Underground 3.3 g/t |
| Refining + Transport + Insurance | US$ 10/oz gold, US$ 0.50/oz silver |
| Royalties / NSR’s | 5% Export Tax and new 1% Provincial Royalty on doré sales, 3% “Boca Mina”, 2% NSR (Cerro Vanguardia SA) |
Click here for the Independent Technical Report (43-101): Resource Estimation for Extorre’s Cerro Moro Project, Santa Cruz Argentina (57.9MB Download)
Metallurgy
Metallurgical tests completed on Cerro Moro ores have indicated high recoveries for both gold (95%) and silver (87.4%). The Cerro Moro plant has been designed to achieve maximum recovery of precious metals through the utilisation of well established and proven technologies. The comminution circuit design involves a three stage crushing circuit followed by a single stage closed circuit ball mill.
Overflow from the grinding circuit is to be thickened prior to being leached in a five stage leach circuit with a nominal residence time of 48 hours. The leach residue will be washed in a 5 stage counter current decantation (CCD) thickening circuit with precious metals recovered from the pregnant solution by conventional Merrill Crowe circuit. The washed residue from the CCD thickening circuit is to undergo cyanide destruction prior to thickening and tailings disposal.
Flash flotation and centrifugal gravity have been incorporated into the grinding circuit to recover precious metals into a concentrate that is to be re-ground prior to intensive cyanidation. The leached concentrate is to be filtered and washed and the resulting pregnant solution fed to the Merrill Crow circuit for precious metal recovery. The washed filter cake is to be re-pulped and returned to the main leaching circuit. The processing plant has been designed to treat 1,000 tad of ore with maximum head grades of 25 g/t of gold and 1,000 g/t of silver.
Financial Model
The Cerro Moro Project (1,000 tad) has been evaluated using a cash flow analysis on a 100% equity basis, on a constant US dollar basis, and using the base-case assumption of gold and silver prices of $US 1,320/oz and $US 26/oz, respectively, over life of mine. Cash inflows consist of expected annual revenue projections, with cash outflows such as capital, operating costs, and royalties subtracted from inflows in order to calculate net annual cash flows. All applicable royalties have been incorporated in the current analysis (5% export tax and a new 1% provincial royalty on doré sales, 2% NSR to Cerro Vanguardia SA, and a 3% “boca mina” royalty).
Extorre will also seek to apply for tax credits of approximately US$ 50 million that relate to pre-mining exploration expenditures, as such credits are permissible under Argentine Tax Legislation but have not been included in the PEA financial model.