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Exeter Resource Corp. Rises on 8.7 Million Ounce Gold Resource

MidasLetter.com
Tuesday, April 14, 2009

Exeter Resource Corp. (TSX.V: XRC, NYSE Alternext: XRA) burst onto the global gold mining stage two weeks ago with the announcement of a National Instrument 43-101 report that puts 8.7 million ounces of gold and 2.1 billion pounds of copper into an interim resource estimate. The focus here is on ‘interim’ because since this resource calculation, the company has realized some truly stellar gold intercepts that are not included in the data for this interim estimate. The will, however, be included in the final estimate due out in September.

How stellar?

Well, how ‘bout 1,214 metres grading 0.9 grams per tonne gold? That includes a 716 metre length that assayed 1.22 grams per tonne – probably some of the most gold-rich core in terms of length ever drilled in South America or even the World.

The stock of the company has doubled since the release of the resource estimate, and there is every reason to believe that the fantastic drill results will continue, as the deposit remains open at depth and to the west and south. The company has drills operating on the property since the beginning of the year and they will continue drilling until the end of May when the Chilean winter will shut down operations until later in the year.

Exeter’s Chairman, Yale Simpson, stated “The 8.73 million ounce gold resource increases by 45% or 3.92 million ounces to 12.65 million gold equivalent ounces, when the 2.09 billion pounds of copper is taken into consideration. The conversion to gold equivalent ounces assumes $1.50 per pound for the contained copper, and a conversion to gold using an $800 per ounce gold price. A metallurgical recovery of 100% is assumed for both metals in the conversion. The estimated content of the copper represents a 45% increase over the estimated gold resource content.*

“The near surface oxide resource has been almost totally depleted in copper making it potentially amenable to heap leaching for gold, as is common industry practice for such deposits. The sulphide material at depth would require a gold-copper flotation recovery path. Four internationally recognized engineering groups and metallurgical laboratories are currently conducting metallurgical testwork and infrastructure studies that will be included on our website when the reports become available.

“Current drilling has added 4,500 metres of data to the interim resource database. It is important to consider that some crucial assay data, including drill hole CSD032 with 1,214 metres at 0.9 grams per tonne (“g/t”) gold and 0.33% copper (see news release dated February 25, 2009) is yet to be factored into a resource estimate. We believe the additional data from holes drilled outside the interim resource shell will add significantly, both to the size and to the grade of the target deposit, as shown by the section diagram below.

“Following our recent financing, we can now extend drilling well beyond the current season. Our budget to September 2010 provides for a further $16 million in expenditures. The budget includes drilling to further expand the resource and in-fill drilling of the high grade area to “indicated resource” status. Infrastructure and metallurgical studies are also within the budget.

“The company’s ultimate intension with regard to Caspiche is to negotiate a transaction with a major mining company, which will enable us to realize all or part of the value of the Caspiche discovery for the benefit of shareholders”.

Caspiche isn’t the company’s only major project.

In Argentina, Exeter controls over 1,000 square kilometers of ground in Patagonia, a relatively unexplored region in the south of the country. The land package contains 39 distinct exploration tenements that Exeter has the right to earn into 100% ownership of through an agreement Cerro Vanguardia S.A. (CVSA), an Argentinian company controlled 92.5 percent by AngloGold Ashanti Ltd. (NYSE: AU). Under the terms of the deal, Exeter can earn a 100% interest in all of the properties by expending $3 million in exploration of five years.

After completing a 10,000 metre drill program on Cerro Moro, one of the 39 properties, Exeter had earned its 100% interest subject to a 2 percent Net Smelter Royalty in favor of CVSA.

When Exeter drills 10,000 metres on any of the four projects, CVSA has the right to back into a 60% interest in that project by paying Exeter 2.5 times Exeter's expenditures on that project and carrying Exeter to the completion of a bankable feasibility study. CVSA may earn an additional 10% project interest (to bring its total interest to 70%) by financing Exeter's share of mine development costs (to be repaid at an agreed rate). Should CVSA not elect to back into a project, its interest will convert to a 2% net smelter return (NSR) from production on that project.

The Cerro Moro property is a system of polymetallic gold-silver mineralisation of a low sulphidation epithermal vein type. Individual prospects vary from simple, single veins to complex vein systems with spur and cymoid loop structures. Limited quartz stock-work veinlets are also present around the main veins.

There are 21 distinct known structures on the Cerro Moro, ranging in strike length from 300 metres to as much as 1.8 kilometres, though the limits of these structures have not been conclusively determined, and most of them remain open for expansion.

Exeter has drilled a total of 29,000 metres across the entire project, but the Escondida structures have apparently demonstrated the largest potential in terms of grade and scope. Highlights of the drill program there include:

• 7.53 metres grading 33.2 grams per tonne gold and 2,219 grams per tonne silver, including a 2.76 metre length grading 86.7 grams per tonne gold and 5,915 grams per tonne silver.
• 6.8 metres grading 22.2 grams per tonne gold and 1,555 grams per tonne silver;
• 10.4 metres of 11.6 grams per tonne gold and 777 grams per tonne silver.

Exeter is clearly in a position to become a major vendor of advanced stage exploration properties with 43-101 resources to major mining companies operating in Chile and Agentina. MidasLetter subscribers are advised that we intend to accumulate this company’s stock up to $7.00 before we review our strategy again for Exeter in May.