ACN 138 222 705
ASX Code: EXCwww.exterraresources.com.au Issued Capital:
Ordinary Shares: 275.7m
Options: 45.7m
Directors and Management: John Davis
Managing Director
Justin BrownNon-Executive Director
Peter ColeNon-Executive Director
Dennis WilkinsCompany Secretary
15 August 2016
Exterra Resources Limited ("Exterra" or "the Company") (ASX:EXC) is pleased to provide an update on the development of the Second Fortune Project at Linden. Following execution of the Management and Services Agreement with the Mitchell River Group (MRG), (announced on 1 August 2016), significant progress has been made on optimising the project economics and identifying a funding solution.
Multiple studies are in progress with particular focus on the following:- Ore Sorting test work: in progress with first pass results indicating the potential to significantly upgrade the mined ore bulk grade with an associated reduction in tonnages, thereby reducing haulage and processing costs.
- Treatment of surface stockpiles: Investigation of potential for early cashflow from treatment of surface ore stockpiles utilising the ore sorting technology. Detailed sampling currently in progress to finalise grade and tonnage estimates.
- Mine plan optimisation: Investigation of options for mining the high grade Crown Pillar below the current open pit in early development to bring forward first cashflows, minimise the maximum negative cash position and thereby reduce the up-front funding requirements.
- Mine dewatering: A review of mine dewatering options in order to reduce pre-production capital costs.
- Camp/Site works: A review of the Camp/Site works requirements to maximise the use of existing surface infrastructure and reduce pre- production capital costs.
As announced on 1 August 2016, Exterra and MRG executed a Management and Services Agreement for development of the Second Fortune Gold Mine at Linden, whereby MRG will provide the following:
- Commercial management of the mining contract and processing agreements;
- Technical supervision of the mining contractor and management of the mine plan;
- Supervision of mine geology, grade control and database management;
- Managing financing of capital requirements and working capital; and
- Management of Gold Hedging programmes and agreements.
1http://www.exterraresources.com.au/images/uploads/Second_Fortune_PFS_ASX_Release_July_2014.pdf
Various studies have commenced as part of the project development, resulting in potential positive impacts on the project economics. These studies have been supported by MRG site visits along with other consultants investigating various aspects of the mine development including:
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ORE SORTING TESTWORK
Sorting of the quartz ore from the host gangue material has commenced with initial tests demonstrating that a pre-concentration step may be possible. Ongoing work will focus on variability of the ore and waste, plus ore preparation requirements.
After ore sorter treatment Before ore sorter processing
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ORE STOCKPILE PROCESSING
A number of stockpiles from the Second Fortune open pit, and other proximal historical workings are being evaluated for re-treatment. These stockpiles typically retain grade variability, zones of economically viable material have been identified and as a result a study has been undertaken to quantify the value of this surface material. Ongoing work includes sampling and assaying of the respective stockpiles.
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CROWN PILLAR EXTRACTION
Options are being evaluated with respect to the reduction of early working capital requirements. This process is part of a broader review and update of the underground mine design. The early extraction of the Crown Pillar may facilitate a rapid path to positive cash flow and as such is an important factor with respect to design. The quantity of high grade ore within the Crown Pillar will be quantified along with possible extraction plans. Mine design work will be ongoing for several weeks.
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MINE DEWATERING OPTIONS
Studies currently in progress are primarily to expedite pit access as required for the project schedule. Evaporation dams remain the base case for dewatering while other options are being considered. The reduction of pre development costs is a key factor with respect to the studies.
- CAMP - SITE WORKS UTILISATION
The remaining infrastructure at the Second Fortune site is being evaluated for suitability with respect to the proposed underground mining operation. Certain units from the old camp will potentially be refurbished for the next phase of operations, reducing pre start capital expenditure.
Figure 2: Mitchell River Group, Taylor Collison Analysts and Investors on site at Second Fortune August 2016Exterra Resources Limited published this content on 15 August 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 15 August 2016 01:55:06 UTC.
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