Extorre Gold adopts shareholder rights plan

Gold explorer Extorre Gold Mines (AMEX:XG) (NYSE MKT:XG) (TSE:XG) said Friday its board has approved a shareholder rights plan, effective today.
However, the plan is subject to shareholder ratification within six months in order to remain in place.
The plan is designed to protect shareholders and provide them with adequate time to consider and evaluate any unsolicited bid made for the company.
The rights will become exercisable only if a person, together with its affiliates, associates and joint actors, acquires or announces its intention to acquire beneficial ownership of shares which when aggregated with its current holdings total 20 per cent or more of the company's outstanding common shares, other than by a "Permitted Bid", Extorre said.
The rights would entitle the holder to purchase Extorre common shares at a substantial discount to their then prevailing market price.
Permitted bids under the plan must be made by way of a take-over bid circular prepared in compliance with applicable securities laws, and be made to all shareholders of the company for all common shares, and must remain open for a minimum of 60 days.
The company said it plans to hold a shareholders' meeting to approve the plan within six months.
Last week, Extorre said it was “encouraged by many of the early results” as it intersected more high-grade drill targets at its Cerro Moro project in the Santa Cruz province of Argentina.
Significant results from in-fill holes that the company completed at the Zoe target include hole MD1552, which intersected 5.00 metres at 54.0 grams per tonne (g/t) gold and 7,155 g/t silver (197.1 g/t gold equivalent), including 2.45 metres at 109.3 g/t gold and 13,561 g/t silver (380.5 g/t gold equivalent).
In early April, Extorre announced the results of a preliminary economic assessment for potential mine development at Cerro Moro.
The study, which was based on a NI 43-101 mineral resource estimate from November, modelled a nine year mine to produce 850,000 gold ounces and 47 million ounces of silver.
This proposed mine would produce an average of 248,036 ounces gold equivalent per year for the first five years, at a cash cost of US$303 per gold equivalent, with a 1,300 tonne per day throughput.
In this scenario, the mine has a 24-month payback period and pretax internal rate of return of 63 percent and a pretax net present value, at a five percent discount, of $737.4 million.
At Cerro Moro, exploration with four drills is ongoing. The program is designed to boost total resources and to in-fill some areas for mine planning.
The November 2011 resource estimate for Cerro Morro gives indicated resources of 1.35 million ounces gold equivalent, comprising 2.42 million tonnes (Mt) at 7.4 grams per tonne (g/t) gold and 498 g/t silver, for a gold equivalent grade of 17.4 g/t.
In the inferred category, the new estimate consists of 1.05 million ounces gold equivalent, comprising 4.74 Mt at 3.5 g/t gold and 172 g/t silver for a gold equivalent grade of 6.9 g/t gold.