Extorre Gold Mines Ltd company history: the story so far

History

Extorre found the high-grade Zoe discovery at Argentina's Cerro Moro in 2011, grew its resource, raised money in three placements and bought deals, and by May 2012 was weighing a staged mine build.

2011: The Zoe discovery

Extorre Gold Mines set out to develop its 100%-owned Cerro Moro project in Santa Cruz, Argentina. In April 2011 it reported first results from a new discovery called Zoe, including 4.84 m at 64.6 g/t gold and 7,530 g/t silver. The company put half its drill rigs on Zoe. By early May, high grades had been shown over a 350 m strike length, with the structure confirmed over 1,400 m. By June, 34 holes defined about 1.5 km of strike, though near-surface mineralization was lower grade than at depth.

Elsewhere, Extorre reported a silver-gold discovery, Renaldo, at its Puntudo project. Cerro Moro's environmental impact assessment, covering 750 tonnes a day, was approved on May 16, 2011. Cash had slipped from about $33 million in April to about $26 million by June.

2011: Funding and a bigger resource

In June the company agreed to sell 2,400,000 shares at $10.50 for $25.2 million. The deal closed on July 12, 2011, with a 6% commission and broker warrants. In August a second Preliminary Economic Assessment (an early, rough study of the economics) set out a 1,000 tonne-a-day mine with a 8.25-year life. It carried higher costs than the October 2010 study and excluded Zoe. Cash was about $44 million.

In December a Cube Consulting report put Cerro Moro at 1.35 million gold-equivalent ounces Indicated and 1.05 million Inferred. In April 2011 the figures had been 927,000 and 396,000 ounces. Cash was CDN $27 million.

2012: Bigger plans, more shares

Extorre returned to the market in 2012. In late January it agreed to sell 5,300,000 shares at CAD$9.45 for CAD$50.1 million, with an over-allotment option for up to 795,000 more. Closing was expected by February 22, but the filings do not confirm it. In March it announced a second placement of 3,530,000 shares at C$7.10, below the January price, raising C$25.06 million. That closed on March 16, 2012. Both deals diluted existing shareholders.

The third study, released in April, assumed 1,300 tonnes a day and a nine-year life. It forecast about 248,000 gold-equivalent ounces a year for five years at a mine-site cash cost of US$303 an ounce. Initial capital rose to about US$284 million including refundable VAT. Pre-tax NPV was US$737.4 million and after-tax IRR 47%. The study includes inferred resources, so the company said there was no certainty it would be realized. An addition to the environmental approval for the higher rate was to be prepared within about 60 days.

May 2012: Where it stood

On May 17, 2012, Extorre reported 64 more drill holes, including 5.00 m at 54.0 g/t gold and 7,155 g/t silver in Zoe hole MD1552. More than 100 holes awaited assay, and eight Zoe East holes had returned only minor gold. The company said the market price did not reflect Cerro Moro's value. It was evaluating a staged mine development, funding the rest of the capital cost from operating cash flow and seeking the least dilutive financing, with parameters promised before the end of May. Total shares on issue were not disclosed.

Written from the 13 story beats below (2011 to 17 May 2012), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2012

17 May
Extorre says the current market for its shares does not reflect the value of Cerro Moro and is evaluating a staged mine development, funding the rest of the PEA-3 capex from operating cash flow and pursuing the least dilutive financing; parameters are promised before month end. It also reported 64 more holes, including 5.00 m at 54.0 g/t gold and 7,155 g/t silver in Zoe hole MD1552, with over 100 more holes awaiting assay and eight Zoe East holes returning only minor gold so far.
drilling result
4 Apr
Extorre released PEA-3 for Cerro Moro, the study scheduled for late Q1 2012: preferred 1,300 tpd case gives about 248,036 gold-equivalent oz/yr for the first 5 years, 9-year mine life, initial capex about US$284M including refundable VAT (up from US$149.8M direct plus US$25.7M VAT in PEA-2), pre-tax NPV (5%) US$737.4M and after-tax IRR 47%. Mine site cash costs are US$303/oz (first 5 years) and the study includes inferred resources, so the company notes there is no certainty it will be realized; an EIA addendum for the higher throughput is to be prepared over the next 60 days.
resource reserve update
19 Mar
The C$25.06M bought-deal placement announced March 7 closed: 3,530,000 shares were issued at C$7.10, with a 5% cash commission to the underwriter and a four-month hold period. Proceeds go to Argentine exploration and development and working capital; this resolves the pending placement and the shares issued dilute existing holders.
capital raising announcement
7 Mar
Extorre announced another bought-deal private placement: 3,530,000 shares at C$7.10 for gross proceeds of C$25,063,000, with a 5% cash commission and a four-month hold period; closing is expected by March 29, 2012. The price is below the C$9.45 of the January 2012 offering (a fact from comparing the two filings); proceeds are for Argentine exploration and development and working capital, and it further dilutes existing shareholders if it closes.
capital raising announcement
1 Feb
Extorre agreed with underwriters to sell 5,300,000 new shares at CAD$9.45 each for gross proceeds of CAD$50,085,000, plus an over-allotment option of up to 795,000 more shares (up to CAD$7,512,750 extra). Closing is expected by February 22, 2012, with a 5% underwriters' commission; proceeds are for Argentine exploration and development and working capital. It follows the 2011 placement and means existing shareholders' stakes will be diluted if it closes.
capital raising announcement

2011

20 Dec
Extorre filed the updated Cerro Moro resource report by Cube Consulting (dated December 16, 2011): Indicated 1.35 million gold-equivalent ounces (2.42 Mt at 7.4 g/t gold and 498 g/t silver) and Inferred 1.05 million gold-equivalent ounces (4.74 Mt at 3.5 g/t gold and 172 g/t silver). This delivers the Q4 2011 resource update (including Zoe) that was pending, and compares with 927koz indicated and 396koz inferred gold-equivalent in April 2011. PEA-3 is now scheduled for late Q1 2012, and cash is stated as CDN $27 million.
resource reserve update
10 Aug
Extorre released a second Preliminary Economic Assessment (PEA-2) for Cerro Moro: 1,000 tonnes/day, 8.25-year mine life, average 206,300 gold-equivalent oz/yr for the first 3 years at US$236/oz cash cost, initial direct capital US$149.8M plus US$25.7M refundable VAT, and pre-tax undiscounted cash flow of US$581M, using US$1,320 gold and US$26 silver. This follows the October 2010 PEA, with higher capital and operating costs than that study (133,500 oz/yr, US$201/oz, US$131M capex). It excludes Zoe, and the company says it is only a preliminary assessment with no certainty the economics will be realized. The approved EIA covers 750 tpd, so an addendum is needed for higher rates; the resource update including Zoe is still scheduled for Q4 2011, and cash is about $44 million.
resource reserve update
21 July
The $25.2 million placement announced June 20 closed on July 12, 2011: 2,400,000 shares were issued at $10.50. Underwriters received a 6% cash commission plus broker warrants over 5% of the shares issued, each exercisable at $11.15 for 12 months; the shares carry a four-month hold period. Proceeds go to Argentine exploration and development and working capital.
capital raising announcement
23 June
Extorre announced a deal with underwriters to buy 2,400,000 new common shares at $10.50 each, raising $25,200,000 in a private placement, with closing expected around July 12, 2011 subject to regulatory approvals. The money is for exploration and development in Argentina and general working capital; this adds to the roughly $26 million cash reported in June and means existing shareholders will own a smaller share of the company.
capital raising announcement
3 June
A third batch of Zoe results reports 9 more holes, including 8.00 m at 8.4 g/t gold and 1,332 g/t silver in MD1220; 34 holes now define about 1.5 km of strike. The company says near-surface mineralization is lower grade than at depth, so it will start step-back drilling and is considering moving two rigs from Puntudo to Cerro Moro in mid-June. It also notes that the Cerro Moro environmental impact assessment was approved on May 16, 2011, and cash is about $26 million.
drilling result
3 June
Extorre reports a silver-gold discovery, the Renaldo Prospect, at its 100%-owned Puntudo project, south of the Coeur d'Alene/Mirasol Joaquin project; 32 holes drilled and 15 assayed, with results such as 3.0 m at 695 g/t silver and 0.66 g/t gold in RD0004. The two Puntudo rigs will move to Cerro Moro for the southern winter, so Puntudo drilling pauses while Zoe drilling is stepped up. The company states the Cerro Moro environmental impact assessment was approved May 16, 2011, and expects its pre-feasibility study in Q2 2011; cash is about $26 million.
drilling result
4 May
Further Zoe drilling continues the April results: 10 more holes, including 8.60 m at 39.9 g/t gold and 4,056 g/t silver in MD1213. The company says high grades are now shown over a 350 m strike length and up to 240 m depth, with the structure confirmed over 1,400 m, and cash is about $32 million. Mining permits for Cerro Moro are expected before the end of Q2 2011, per the company.
drilling result
22 Apr
Extorre reported its first drill results from a new discovery called Zoe at its Cerro Moro project in Argentina, including 4.84 m at 64.6 g/t gold and 7,530 g/t silver (190.1 g/t gold equivalent) in hole MD1204. The company says it is putting 50% of its drill rigs on Zoe and wants Zoe included in the resource update it scheduled for Q3 2011 (the release elsewhere says July 2011); it also cites about $33 million in cash.
drilling result