Patagonia Cerro Moro | Exeter Resource

PROJECTS - Patagonia

Cerro Moro

In August 2006, Exeter discovered a system of high grade gold-silver veins in the southern part of the large Cerro Moro vein system. For 12 months drilling was focused on a 950 metre long area referred to as the Escondida vein system. Since August, 2007 the drilling emphasis has shifted to testing extensions to the Escondida vein and 22 exploration targets located outside of the initial discovery area.

Please Click here to view the latest 43-101 on Cerro Moro 15.91MB PDF

Ownership

Exeter became the 100% owner of Cerro Moro project in late 2007 with CVSA retaining a 2% net smelter return royalty from production on the project.

In March, 2008 Exeter announced “Heads” for a strategic alliance with Fomicruz the Santa Cruz Provincial Mining Company, whereby that company may hold a 5% equity interest in Cerro Moro, and Exeter may earn an 80% interest (resultsing in a joint venture Fomicruz 20% and Exeter 80%) in a large block surrounding Cerro Moro by spending US$10 million. This new block includes strike extensions of the mineralized Escondida vein.

Location

Cerro Moro is located in north-eastern Santa Cruz Province, approximately 70 kilometers southwest of Puerto Deseado. Access to the project area is via gravel provincial highways with a network of tracks providing reasonable to good access within the project area. The established Cerro Vanguardia gold-silver mine is located 130 kilometres west of the property.

Current Drilling Program:

As at March 2008, one rig is committed to step out and infill drilling on the Escondida vein, where mineralization has now been intersected over a two kilometre strike length and remains open along strike and at depth. A second rig is drilling extensions on other recent high grade vein discoveries, such as Silvia and Gabriela, and a third rig is focused on a “ new discovery oriented” drilling program. A fourth rig is scheduled to commence drilling at Cerro Moro early second quarter.

Further high grade mineralization to the north west along the Escondida vein, and close to the western boundary of the Cerro Moro leases, has recently extended the mineralized strike of the vein to two kilometers ("Heads" of Argeement have recently been initiated for the extensions outside Cerro Moro tenure to the west). Testing for depth extensions in this region continues. Drilling at Escondida is also testing the area between the recently discovered north west extension and the previously defined area, some 400 metres to the south east. The following longsection provides a summary of significant drill intersections released on the Escondida vein.

Escondida Longitudinal Sections to March 2008 (in three parts)

The Company continues to identify and test other viens on the Cerro Moro property. As at March 2008, drill testing of veins with a combined strike length of 11 kilometres is in progress. In excess of 30 kilometres of vein strike length has been identified on the property to date. The Company has prioritized in excess of 20 targets for drilling. Given the extensive gravel cover, additional geophysical surveys are planned to help identify new structures and targets.

Gabriela and Lomo Escondida Longitudinal Sections to March 2008

The high grade veins are typically rich in sulphides and are preferentially eroded. The effect is that the veins have little surface expression, quite unlike the prominent silica-rich veins in the northern section of the property. Furthermore the Escondida veins are generally covered by a thin veneer of recent marine gravels making the use of geophysics a valuable exploration tool for Exeter.

Drilling is continuing at Cerro Moro and resource estimations for a 43-101 resource scheduled to commence in early 2009.

Preliminary Metallurgy

Preliminary metallurgical test work on ore grade samples has been completed with results indicating high gold-silver recoveries. A further extensive metallurgical testing programme, including leaching and grinding testwork, is underway and results will be available from mid 2008. Drilling of large diameter (PQ) diamond core holes for grinding testwork samples will commence in March 2008.

Internal scoping studies will commence in the second half of 2008. Overall, the mineralized gold-silver zones currently under evaluation are close to surface, providing the potential for low cost open pit mining methods, similar to AngloGold's Cerro Vanguardia gold mine. Several high grade shoots remain open at depth, and deeper drilling is planned to test the potential for underground mining.

Geology

The basement geology comprises gently-dipping rhyolitic ignimbrites, felsic flows, acid to intermediate tuffs, tuff breccias and volcaniclastic sediments belonging to the Middle to Upper Jurassic Chon Aike and Matilde Formations. The volcanic rocks are locally overlain by Tertiary basalts and Quaternary gravels and sediments.

Low-sulphidation style epithermal gold and silver mineralization is primarily associated with a number of quartz-bearing veins which strike over distances ranging between 240 and 1250 meters. The silver content of the mineralization is frequently considerable, with many trench and drill holes assaying in excess of 500 g/t silver.

Previous Exploration

A significant amount of exploration (including trenching and diamond and percussion drilling) had been conducted on the Cerro Moro Project prior to Exeter’s involvement, making it the most advanced of the package of projects optioned through the CVSA Agreement. Gold-silver mineralized veins occur over a large 100 square kilometer area which is extensively blanketed by shallow surficial cover.

Early exploration located 16 vein structures and 6 areas of stockwork or disseminated mineralization. No previous geophysical surveys were known to have been conducted at Cerro Moro prior to the Exeter programs, and all drilling by previous explorers was targeted at outcropping vein systems.

Of the 22 targets identified by CVSA, 11 of the targets were tested with 2 or 3 diamond and/or reverse circulation percussion drill holes. With one exception, drill hole spacings were in the order of 150 to 250 meters. Nineteen shallow diamond drill holes, totalling 1005 meters, were completed on seven prospects. The average diamond drill hole length was 53 meters to achieve an average vein intersection depth of only 30 metres below surface. Fifteen reverse circulation percussion holes, totalling 1577 meters, were drilled on 6 prospects, to an average down hole depth of 105 meters.

Exeter management believed that the limited, wide-spaced drilling undertaken on the individual prospects was not an effective test of the extensive mineralized system at Cerro Moro. Significant potential remained to locate extensions of existing veins and new veins below the thin marine gravel cover.

Exeter Exploration Program

Prior to mid 2006, Exeter completed 2066 meters of reverse circulation drilling, essentially to test prominent outcropping quartz veins in the northern part of the vein system. This program had mixed success, finding generally low to moderate grade gold-silver mineralization in veins of limited width.

In mid 2006, Exeter commenced drilling on a poorly exposed sulphide-rich vein referred to as the Carla Vein. One drill hole returned a wide, high grade gold-silver intersection and encouraged our exploration team to prospect, trench and expose further sulphide-rich veins within the Escondida and Esperanza South vein systems. These veins are also characterized by high-sulphide mineralization and high grade gold-silver values.

Exeter used two geophysical methods to define targets on the property. The first was a very detailed ground magnetometry survey to define geological structures (total survey coverage 2339 line kilometres). The initial survey took 18 months to complete and was oriented east-west to define northerly trending vein systems. When it was determined that the important Escondida and Carla vein systems generally have an easterly trend (sub-parallel to the original survey lines), additional surveying on a north-south grid was completed.

Commencing in April 2008, the Company is extending coverage of the detailed ground magnetometry survey, using its own geophysical crew and equipment.

The second geophysical method was induced polarisation/resistivity surveying to measure sulphides and/or the silica content of structures (total survey coverage 375 line kilometres). Additionally different host rocks have different resistivity responses. When host rocks are displaced by faulting a sharp contact is observed in the resistivity response and these faults often contain mineralised veins. The resistivity data from this survey has been very effective when combined with the magnetometry data. Additional resistivity surveying wil commence in April 2008, following the completion of extensive geological mapping.

The geophysical surveys are credited with the identification of numerous drilling targets, particularly those under marine sedimentary cover. Where outcrop is available Exeter is able to use rock chip sampling, soil geochemistry and trenching data to refine targets for drilling.

Three drill rigs are on site in March, 2008, collectively drilling around 3000 metres per month. Two of the rigs are combination RC/diamond rigs, with a third diamond rig. The company uses RC drilling for its discovery drilling programme, and where practical drills RC pre-collars on step out and infill drilling on discovered veins, while coring through the mineralized veins.. A fourth rig is scheduled to arrive in the second quarter, 2008.

The northwest strike extension to the Escondida vein, some 400 metres along strike from the areas previously drilled on the structure, was under 30 to 40 metres of marine gravels and low grade mineralisation. This suggests the mineralized body has not been eroded. Drilling is continuing to test for depth extensions at the far west portion of Escondida, as well as testing the 400 metre vein strike length between the far west discovery area and the previously drilled western zone.

A very useful detailed structural-geological report on the mineralisation with implications for further exploration discoveries at Cerro Moro has been drafted by epithermal-structural expert, Dr. Greg Corbett in December, 2007, following his field examination in November; please click here to read.

Exeter Cerro Moro Report - Dr. Greg Corbett, November, 2007 (2.3MB)

Further information on Dr. Corbett may be obtained from his website, (http://www.corbettgeology.com).

Drilling Results to date can be viewed through the following links:

43-101 Report:

April, 2008 (Details 7.7 MB - PDF)

Nov, 2007 (Details 7 MB - PDF)

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