Extorre Gold Mines (TSE:XG) (AMEX:XG) Thursday commented on the proposed acquisition by the Argentine Federal Government of 51 percent of the Argentina oil company, Yacimientos Petroliferos Fiscales (YPF), from Spanish oil company Repsol, and said the deal is completely separate from the mining sector in the country.
According to recent reports, Argentine President Cristina Fernandez
is proposing a bill to nationalize the YPF oil company that is
controlled by Spain’s Repsol.
Spain's Prime Minister Mariano Rajoy has said that he opposes the
takeover, adding that Argentina's nationalization of its
Spanish-controlled leading energy company is unjustifiable and that he
will seek to stop it.
YPF is Argentina's largest company and has been under intense
pressure from Fernandez' government to raise output. The YPF
nationalization has made for an uncertain business climate in Argentina.
Extorre is an emerging gold and silver producer in Argentina, with
its Cerro Moro, Puntudo and Don Sixto projects all in the discovery
Cerro Moro is the company’s flagship gold-silver property, located in the mining-friendly Santa Cruz Province.
The company said it is important to note that there are significant
differences in regulations, tradition, public importance and internal
use of products between the oil and gas sector and the mining industry
in Argentina. Public policy in one sector is not connected with the
Furthermore, Extorre said the Argentinean government initiative
currently under discussion before Congress has been enacted only in
connection with YPF, which has a long Argentinean history.
The company noted that YPF was state-owned from its inception in the
early 1920s until the late 1990s, when it was privatized and a majority
stake was sold to Repsol.
The current re-nationalization process of YPF has not been extended to other oil and gas companies operating in Argentina.
Extorre said there is no reported agenda in the popular press or, to
its knowledge, to extend the nationalization process to any other
company in the oil and gas sector in Argentina or to any other sector of
Additionally, the company said that several mining provinces have
joined an alliance in support of mining with the acknowledgment of the
Argentinean government, and none of the objectives of that alliance
relate to any action or policy similar to the one taken in connection
Extorre said the mining sector has also received explicit public support from the provinces and the Federal Government.
The company further said several other mining companies operating in
Argentina have publicly commented on this situation in terms similar to
Very recent discussions with potential financiers to provide capital
for the potential development of Cerro Moro, it added, have indicated
that the YPF action has not materially affected the finance ability of
On April 2, Extorre announced the results of a Preliminary Economic
Assessment (PEA-3) for a its potential mine development at Cerro Moro.
The study was based on the November 2011, NI 43-101 mineral resource
That study modelled a nine year mine to produce 850,000 ounces gold
and 47 million ounces silver. Extorre said the proposed mine would
produce an average of 248,000 ounces gold equivalent per year for the
first five years at a cash cost of US $303 per ounce gold equivalent.
Exploration with four drills continues at Cerro Moro, a program
designed to increase the total resources on the property and to in-fill
drill certain areas for mine planning purposes.
The company said results from current drilling will be released when available.