August 4, 2011 / 11:48 AM / in 6 years

UPDATE 1-Extorre boosts scale, cost projections on Cerro Moro

* Co sees initial and capex costs rising 60 pct

* Cost increases due to larger scale, high material costs (Figures in U.S. dollars, unless noted)

TORONTO, Aug 4 (Reuters) - Extorre Gold XG.TO boosted production expectations for its Cerro Moro gold-silver project in Argentina on Thursday, but it also substantially raised the project’s cost forecast.

The Vancouver-based exploration company said a new study indicates Cerro Moro could produce roughly 495,000 ounces of gold and 26.6 million ounces of silver, over roughly 8 years. This compares with its earlier projected output of 436,000 ounces and 21.4 million ounces, respectively, outlined in last year’s study.

The larger scale will also raise capital expenditures and other costs by 60 percent. Initial capital expenditures will rise to about $209 million, from an earlier projection of $131 million, while Extorre sees capital costs at the site rising to over $50 million, from about $32 million.

Also, while mining costs are projected to be slightly lower than earlier expected, the company sees milling and processing costs rising 76 percent to $67 per tonne.

Extorre said the capital cost increases reflect higher mill throughput, a larger mining fleet, an escalation in material costs and others costs that were not included in the earlier study.

The company said the higher operating costs include higher labor costs and other factors. (Reporting by Euan Rocha; Editing by Derek Caney)

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