Extorre's gold project could turn into a silver mine

By Lawrence Williams, Mineweb.com

When Mineweb visited Extorre's gold project in Argentina's Patagonia region in October, the company's geologists were getting excited about drill intercepts on a new vein - the Lucia - in the north of the property, some 10km from the main area which had been drilled so far.  Visually the new cores looked extremely promising, but no assays were available yet so little could be said at the time.

Now the first drillhole assays from the Julia vein have been announced by the company, and while the results are patchy, as is the nature of these vein deposits, some exceedingly high values, particularly of silver, have certainly suggested this new vein is well worth considerably more work.

One of the six holes drilled to date intersected 5.15m at 5.9 g/t gold and 1,083 g/t silver (23.9 g/t gold equivalent) within which there was a true bonanza grade section grading 0.45m at 51.8 g/t gold and 10,987 g/t silver (234.9 g/t gold equivalent).  A second hole also intersected excellent silver and gold grades, while the other four all came up with promising gold and silver values - although nothing like the bonanza grades in the first two holes mentioned. (For a detailed tabulation of the grades in all six holes click here for a link to Extorre's press release)

Extorre currently classifies its project as a prospective gold mine and is already working on getting an operating mine up and running focused on the high grade Escondida vein system and veins running close to this and their extensions (including another silver-rich vein - the Gabriela), but with the recent surge in the silver price, with the gold:silver ratio moving much further towards silver, the company could actually end up generating more revenue from silver than gold. 

The high silver values from this new vein could add to the prospect of Cerro Moro becoming a silver-dominant property.  Indeed the company's co-Chairman, Bryce Roxburgh, says as much.  "The discovery of a second silver dominant vein in the northern sector of the Cerro Moro field (Gabriela was the first) has significant implications for the project. Historically, 40% of the project value lies with silver, yet with increasing silver prices and the identification of additional silver dominant veins, Cerro Moro has the potential to transition to a silver dominant deposit."

Whether this is actually good for the stock price remains to be seen though as gold projects have tended to carry a premium, so Extorre may want to hold on to its gold mine tag regardless.  However in terms of revenues, particularly if silver continues to outperform gold (and if both continue to rise), then these silver rich areas could provide a nice bonus for the putative precious metals miner.

As the company moves forward, with a prospective first production date of late 2012, it will continue drilling out a number of veins, but it is a question of prioritisation as the exploration area has many which are still untested.

With drilling on both the Gabriela Central and Loma Escondida zones now essentially complete Extorre plans to deploy three of its four drill rigs to define further gold and silver resources on the Cerro Moro exploration concession. The priority targets currently include the Lucia, Gabriela extensions, Esperanza, Carla and Martina zones. 

The company is working towards its next resource announcement in the second quarter of next year.  It last announced an Indicated resource of 612,000 ounces gold equivalent (590,000 t at 18.9 g/t gold and 805 g/t silver, for a gold equivalent grade of 32.3 g/t), plus an Inferred resource of 390,000 ounces gold equivalent (190,000 t at 3.0 g/t gold and 190 g/t silver, for a gold equivalent grade of 6.1 g/t gold).  The company President and CEO, Eric Roth, has gone on record as telling Mineweb they are now targeting a resource of 2 million ounces gold equivalent - it remains to be seen whether the company can reach that in its next resource announcement, but whether it does or not there should be a good positive increase on its existing figures which were announced in April this year.