New partner for Exeter at Cerro Moro gold-silver project

VANCOUVER — Exeter Resource (XRC-V, XRA-X) is taking big steps forward; the junior just outlined a strategic agreement with a government- owned company for the development of the Cerro Moro gold-silver project in Argentina, then followed that announcement with news of a $35-million private placement.

Cerro Moro is a high-grade epithermal deposit in Santa Cruz province, where gold and silver are primarily associated with sets of quartz veins that strike over distances ranging from 240 to 1,250 metres.

The agreement — a signed letter of intent — would see Fomento Minera de Santa Cruz Sociedad del Estado (Formicruz) acquire a 5% interest in Cerro Moro. In exchange, Exeter would have the right to earn up to an 80% interest in the 763 sq. km of Formicruz exploration properties adjoining Cerro Moro by spending $10 million on exploration within a specified timeframe. Exeter would continue to manage and finance exploration and potential development of Cerro Moro; Formicruz would repay an agreed amount of those costs from 50% of its share of net revenue from future operations.

Exeter’s recently announced $35- million private placement will help pay for all that, plus the rest of the company’s exploration projects in Chile and Argentina. A group of underwriters led by Canaccord Capital and BMO Capital Markets has agreed to purchase 7.78 million special warrants for $4.50 apiece. Each special warrant can be exchanged for one common share.

The Formicruz agreement would significantly expand Exeter’s land package around Cerro Moro, which management believes adds considerable exploration upside to a project that is still expanding.

The main vein at Cerro Moro is Escondida. In January, Exeter extended Escondida’s strike length to 1,600 metres with several bonanza intercepts along the strike extension. For example, hole MD216 cut 7.5 metres grading 33.2 grams gold and 2,219 grams silver from 94 metres depth and hole MD218 returned 3.4 metres grading 53.3 grams gold and 3,403 grams silver from 152 metres down-hole.

Some 500 metres north of Escondida sits the Loma Escondida vein, a more recent discovery. Drill results in early February extended its strike length to 400 metres, including 0.7 metre grading 57.5 grams gold and 5,226 grams silver from a depth of 40 metres. Exeter now plans to probe the 400-metre-long gap that remains untested between the Loma Escondida structure and the main Escondida vein system.

In December, Exeter announced its discovery of two new mineralized vein sets at Cerro Moro. The Silvia vein system, 2 km east of Escondida, returned 3 metres grading 10 grams gold per tonne and 159 grams silver from 24 metres depth in hole MRC155. The Gabriela vein system, predominantly a silver discovery, is located 3 km northeast of Escondida. The 800-metre-long structural zone returned 9.9 metres grading 1.2 grams gold and 229 grams silver from 75 metres downhole in hole MD181 and 2.1 metres grading 3.6 grams gold and 610 grams silver from 34 metres downhole in hole MD163.

Exeter currently has three drill rigs turning at Cerro Moro, with a fourth rig due to arrive on site next month. Metallurgical test work is under way and the company plans to start infrastructure studies in the second half of the year.

Exeter acquired Cerro Moro when it signed an agreement to acquire all of AngloGold Ashanti (AU-N, AGD-L) subsidiary Cerro Vanguardia S. A.’s (CVSA) exploration projects, except those surrounding CVSA’s gold mine in Patagonia. Cerro Moro is the most advanced of the epithermal gold-silver properties in the agreement.

CVSA had the right to back in for a 60% interest after Exeter completed 10,000 metres of drilling, but in October decided not to exercise that right. As such Exeter now owns the property outright, with CVSA retaining a 2% net smelter royalty.

Exeter recently traded at around $4.40 in a 52-week range of $1.70- 5.92. The company has 41.3 million shares issued, excluding the latest financing.