Delayed reaction sends Exeter shares up

Exeter Resource (XRC-V) is catching on with investors more than two weeks after drill results from its Argentinian flagship property, La Cabeza, were released.

As gold flirted with US$500 on Wednesday, the Vancouver-based junior exploration company climbed roughly 18% or 22 on just over 250,000 shares.

Exeter spokesman Rob Grey won’t pin the swell in share price on one event. Instead Grey offers three possibilities: being the only company in Argentina running three drills, having a good showing at the Gold & Precious Metals conference in San Francisco — and perhaps most importantly — increased interest in Europe.

The European interest came after a “strong buy” recommendation was attached to the stock in a newsletter on Bullvestor.com — a widely read subscriber-based investor resource from Germany.

By market close on Wednesday, more than 800,000 shares had been traded in Germany. Exeter is listed in Frankfurt under the ticker symbol EXB.

The newsletter called Exeter’s shares very underrated based on resources at La Cabeza, and cited Exeter’s 50 properties in Argentina and Chile as offering the likelihood of a significant find.

While in the past newsletter writers have been accused of pumping up stocks for short-term profit — with little news to back up their professed bullishness — Grey points out that many analysts interested in the company were visiting La Cabeza at the time of the last news release.

Some German analysts were on the site visit, and Grey sees the delay in the recommendation of the company as a result of the time it took analysts to return home and do their due diligence, crunching Exeter numbers.

As for the status of La Cabeza itself, Grey says the company will continue to drill into next year and possibly beyond that, depending on results.

>”If we continue to find more gold, we’ll continue to drill,” Grey says. “We won’t leave it in the ground.”

With a burn rate of roughly $300,000 to $400,000 a month and $2 million cash-in-hand, the company has the financing to see its drill program through until the end of the first quarter of 2006. After that, Grey says, the company will assess whether or not another prefeasibility study should be done.

The company’s first prefeasibility study at La Cabeza produced a reserve of 50,000 oz.

“Last year we did a 50,000 oz. prefeasibility, but obviously a 100,000 oz. is always better,” Grey says.

Indicated resources at La Cabeza are currently at 390,000 oz. gold from 6.2 million tonnes of ore at an average grade of 2 grams gold per tonne. Inferred resources are 500,000 oz. gold from 12.1 million tonnes of ore grading 1.3 grams gold per tonne. Both numbers were calculated using a cutoff grade of 0.5 gram gold.

Drill results listed on the Nov. 16 press release were from the central vein zone at La Cabeza, and were done as part of a resource expansion drilling — the company says it hopes to identify new open-pit mineralization.

Highlights from the release include 60.5 grams gold per tonne over an intercept of 6 metres in one vein and 33.9 grams gold per tonne over 3 metres in another.

The central vein zone comprises a series of veins, referred to by the company as the Mercedes and the Labio vein systems. The Mercedes vein has been defined over a strike length of 200 metres, and Labio has a mapped strike length of over 300 metres.

The company is roughly halfway through a 14,000-metre drill program, which includes diamond, reverse circulation and rotary air blast drilling.