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EXTORRE PROPOSES STAGED DEVELOPMENT FOR CERRO MORO
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Extorre Proposes Staged Development For Cerro Moro
Vancouver, B.C., May 30, 2012 – Extorre Gold Mines Limited (NYSE
-MKT:XG;TSX:XG, Frankfurt: E1R, "Extorre" or the "Company")
provides details of a preliminary internal study for the staging
of mine development contemplated in PEA-3 for the Cerro Moro
gold-silver project announced on April 2, 2012.
The study
indicates potential mine development CAPEX of approximately US
$124 million in stage one of a two stage approach while
maintaining initial production exceeding 170,000 ounces per year
gold equivalent* in the first year of production.
Production/cost Summary: 1st Stage: 500 – 600 tpd
Estimated Range Initial Annual Production (Gold Equivalent*
Ounces) 170,000 180,000 Initial Capital Expenditure (Excludes
Recoverable Taxes) US$ 110 million US$ 120 million Approximate
Recoverable Taxes US$ 14 million US$ 16 million Initial
Operating Costs (Excludes Royalties and Export Tax) US$ 200 per
recoverable gold eqv.* oz Potential Free Cash Flow (Before
Royalties and Taxes) US$ 190 million US$ 200 million
The first year of a potential two staged mine development
foresees an initial mine throughput of 500 - 600 tonnes per day
("tpd") increasing to 1,000 to 1,100 tpd levels within eighteen
months of production start-up.
This approach potentially reduces
the initial CAPEX to US$110 million (excluding recoverable tax
of US$14 million) while the balance of the mines capital
expenditure requirements could be funded through operating cash
flow.
The substantial potential early cash flows generated from mining
very high grade open pit mineralization would fund ongoing
development costs and allow process plant and infrastructure
expansion, as well as underground mine development to commence
within six months of mine start up.
The potential mine expansion
to 1,000 to 1,100 tpd levels could be achieved within eighteen
months of commencement of production.
Highlights of the revised potential mine development program are
as follows:
1st Stage: 500 – 600 tpd
A small processing plant and minimum infrastructure.
Open pit
mining only.
High grade mineralization from open pits to be
blended with lower grade material to maintain a constant feed
grade to the plant.
The high grades provide potential high cash
flows and low operating costs on a per ounce basis.
Open pit
mining at this level is potentially sustainable for up to three
years (based on resources to November 2011).
2nd Stage: 1,000 – 1,100 tpd
Expand the processing plant and complete the full infrastructure.
Start underground mining operation.
Continue mining the
remaining open pit material, blending such feed with high grade
underground material.
Plant expansion to be completed within 36
months of mine start up.
Metal production:
Total life of mine: 889,500 oz of gold and 48 million oz of
silver (1.8m oz gold equivalent* or 92 million oz silver
equivalent**).
First year: 170,000 to 180,000 oz gold equivalent
.* Average first five years: 190,000 to 200,000 oz gold
equivalent.* Average life of mine production (12 years): 154,000
oz* per year gold equivalent comprising gold production of 74
,000 oz per year plus silver production of 4.0 million oz per
year.
Capital Expenditure:
Base CAPEX: US$110 million – US$120 million plus 13% VAT
(refundable) of approximately US$14 million to US$16 million.
Base CAPEX includes a contingency on the plant and open pit
mining fleet and also includes indirect + owners costs + spares
of US$21.5 million.
Sustaining CAPEX US$250 million - US$270
million (largely underground development costs and power line).
An option is to add US$15 million to the initial CAPEX to
accommodate the plant upgrade and to minimize lost time on the
changeover for increased throughput in phase 2.
This would
reduce the sustaining CAPEX by an equivalent amount.
Cost of 1st
decline (Escondida): US$13 million (plus VAT) – early start up
dependent on available financing.
Mine working capital: US$15
million.
Operating costs (minesite, excludes royalties and export tax):
1st Stage: approximately US$250 – US$260 per oz (gold equivalent*
) recovered First 6 years: approximately US$290 – US$300 per oz
(gold equivalent*) recovered Life of mine cash cost per oz (gold
equivalent*): US$330 – US$340.
Mr.
Trevor Mulroney, Extorre CEO stated: "Cerro Moro is very well
suited to our preferred staged development approach because of
the reduced initial capital requirements and our ability to
rapidly and selectively access very high grade mineralized zones
.
In fact the head grade on a diluted basis exceeds 30 g/t for
the first stage of production.
"The staged development allows Extorre to meet its objective of
commencing production in 2014 and train a workforce while
significantly reducing initial capital requirements, which is an
important consideration given the state of current capital
markets.
The strong operating cash-flows allow for future
development expansion.
"For the first five years annual mine output is 60 – 70% of that
modelled in PEA-3 (193,000 oz/yr versus 248,000 oz/yr gold
equivalent).
This is achieved against a 57 percent reduction in
the up-front capital requirement.
"Operating cash costs on a gold equivalent* basis are in fact
lower than in PEA-3 because of the higher head grade feed being
supplied to the processing plant.
That is to say the higher
grades more than offset the higher unit costs associated with a
smaller mine throughput."
It should be noted that the information provided above and in PEA
-3 is preliminary in nature, as inferred mineral resources which
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
categorized as mineral reserves have been included in the
information provided above and PEA-3, and there is no certainty
that a potential mine described in this news release or in PEA-3
will be realized.
A mine development decision based on a PEA
rather than a bankable feasibility study carries additional
potential risks which include, but are not limited to, the
inclusion of inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as
mineral reserves, and there is no certainty that the preliminary
economic assessment will be realized; mine design and mining
schedules, metallurgical flow sheets and process plant designs
which may require additional detailed work to ensure
satisfactory operational conditions and the inability to acquire
adequate finance due to requirements of bankers.
Other risks may
include, but not limited to, availability of power and water and
political risks.
(Additional risk factors are noted below).
Some
of the risks noted above may be mitigated by technical studies
undertaken solely on the Indicated category resources and will
have sufficient capital (CAPEX) and operating (OPEX) cost data
to demonstrate economic viability.
* Gold equivalent ounces are calculated by dividing the silver
ounces by 50 and adding it to the gold value.
** Silver equivalent ounces are calculated by multiplying the
gold ounces by 50 and adding it to the silver value.
Mr Bryce Roxburgh, Co-Chairman of Extorre Gold Mines Ltd, is a
qualified person as defined in NI 43-101 and is responsible for
preparing the information contained in this news release.
About Extorre
Extorre is a Canadian public company listed on the Toronto and
NYSE Amex Exchanges under the symbol XG.
The principal assets of
the Company comprise CDN $27 million in cash and the Cerro Moro,
Puntudo, and Falcon projects in Argentina.
Detailed engineering and development planning continue at Cerro
Moro.
Permitting is in place for the initial proposed throughput
in this release.
Exploration with two drills continues at Cerro Moro, with the aim
to increase the total resources on the property and to in-fill
drill certain areas for mine planning purposes.
Results from
current drilling will be released as they are received.
Drilling
utilizing one drill rig recently commenced at its Falcon project
in Santa Cruz Province.
You are invited to visit the Extorre web site at
Latest news
May 25 2012
Extorre Adopts Shareholder Rights Plan
more
May 16 2012
Extorre Reacts to Current Market Conditions and Announces Further
High Grade Drilling Results at Cerro Moro
more
April 19 2012
Extorre Comments on YPF Developments in Argentina
more
Contact
EXTORRE GOLD MINES LIMITED
Mr.
Trevor Mulroney
President and Chief Executive Officer
[]
Suite 1660, 999 West Hastings St.
Vancouver, BC Canada V6C 2W2
For further information, please contact:
Rob Grey
VP Corporate Communications
T: 604.681.9512
F: 604.688.9532
Toll-free: 1.888.688.9512
Safe Harbour Statement – This news release contains "forward
looking information" and "forward looking statements" (together,
the "forward looking statements") within the meaning of
applicable securities laws and the United States Private
Securities Litigation Reform Act of 1995, including our belief
as to the extent and timing of its drilling programs, various
studies including the Preliminary Economic Assessment for a two
staged mine development, and the Environmental Impact Assessment
, and exploration results, the potential tonnage, grades and
content of deposits, timing, potential costs and metal
production; establishment and extent of resources estimates,
potential production from and viability of its properties,
production costs and permitting submission and timing.
These
forward looking statements are made as of the date of this news
release.
Readers are cautioned not to place undue reliance on
forward looking statements, as there can be no assurance that
the future circumstances, outcomes or results anticipated in or
implied by such forward looking statements will occur or that
plans, intentions or expectations upon which the forward looking
statements are based will occur.
While we have based these
forward looking statements on our expectations about future
events as at the date that such statements were prepared, the
statements are not a guarantee that such future events will
occur and are subject to risks, uncertainties, assumptions and
other factors which could cause events or outcomes to differ
materially from those expressed or implied by such forward
looking statements.
Such factors and assumptions include, among
others, the effects of general economic conditions, the price of
gold and silver, changing foreign exchange rates and actions by
government authorities, uncertainties associated with legal
proceedings and negotiations and misjudgments in the course of
preparing forward looking information.
In addition, there are
known and unknown risk factors which could cause our actual
results, performance or achievements to differ materially from
any future results, performance or achievements expressed or
implied by the forward looking statements.
Known risk factors
include risks associated with project development; the need for
additional financing; operational risks associated with mining
and mineral processing; fluctuations in metal prices; title
matters; uncertainties and risks related to carrying on business
in foreign countries; environmental liability claims and
insurance; reliance on key personnel; the potential for
conflicts of interest among certain of our officers, directors
or promoters of with certain other projects; the absence of
dividends; currency fluctuations; competition; dilution; the
volatility of the our common share price and volume; tax
consequences to U.S.
investors; and other risks and
uncertainties, including those relating to the Cerro Moro
project and general risks associated with the mineral
exploration and development industry described in the Companys
Annual Information Form for the fiscal period ended December 31,
2011, dated March 30, 2012 filed with the Canadian Securities
Administrators and available at www.sedar.com.
Although we have
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward looking statements, there may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended.
There can be no assurance
that forward looking statements will prove to be accurate, as
actual results and future events could differ materially from
those anticipated in such statements.
Accordingly, readers
should not place undue reliance on forward looking statements.
We are under no obligation to update or alter any forward
looking statements except as required under applicable
securities laws.
Cautionary Note to United States Investors - The information
contained herein and incorporated by reference herein has been
prepared in accordance with the requirements of Canadian
securities laws, which differ from the requirements of United
States securities laws.
In particular, the term "resource" does
not equate to the term "reserve".
The Securities Exchange
Commissions (the "SEC") disclosure standards normally do not
permit the inclusion of information concerning "measured mineral
resources", "indicated mineral resources" or "inferred mineral
resources" or other descriptions of the amount of mineralization
in mineral deposits that do not constitute "reserves" by SEC
standards, unless such information is required to be disclosed
by the law of the Companys jurisdiction of incorporation or of
a jurisdiction in which its securities are traded.
U.S.
investors should also understand that "inferred mineral
resources" have a great amount of uncertainty as to their
existence and great uncertainty as to their economic and legal
feasibility.
Disclosure of "contained ounces" is permitted
disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measures.
NEITHER THE TSX NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED IN THE POLICIES OF THE TSX EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE
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