SEPTEMBER 2011 QUARTERLY REPORT HIGHLIGHTS PROJECT DEVELOPMENT Zelica Pre-Feasibility Study Update - Exterra appointed Belminco Pty Ltd to complete a Scoping Study and provide early indications of likely costs and economic analysis as well as identify and source key equipment for the vat leach project. This report is expected to be completed by early November 2011. Regional Tenement Consolidation – As part of its move to expand its resource and tenement base in the Linden region, Exterra has acquired a 100% interest in a prospecting licence surrounding the Company’s existing Zelica tenements. The new prospecting licence provides potential strike extensions of the Zelica mineralised trend. The Company continues to assess strategic opportunities in the region that will add value to the Linden project. RESOURCES AND EXPLORATION New prospect ‘Marloo’ returns excellent results – RC drilling has returned results of [email protected]/t Au, [email protected]/t Au and [email protected]/t Au from shallow drilling at a prospect targeting historical workings. Follow-up drilling is planned. More encouraging results at Wimmera and Linden Star West – Both prospects were identified during drilling in 2010 and the current round of drilling has extended the strike of these prospects. Best results included [email protected]/t Au at Linden Star West and [email protected]/t Au at Wimmera. Second Fortune Strike Length Extended – Shallow drilling to the north and south of the resource area has confirmed the mineralised trend over 600m strike length. The drilling was planned to test the open pit potential along strike with results of [email protected]/t Au, [email protected]/t Au and [email protected]/t Au all to be followed up. RC Program Planned for Zelica – Exterra is planning a 4,000m RC drilling program to commence in early November at Zelica. The program is aimed at increasing the resource confidence below the current open pit as well as infilling the resource area to the north. CORPORATE Current Cash at 30 September 2011 - $2.9m Exterra Resources Limited ACN 138 222 705 ASX Code: EXC www.exterraresources.com.au Issued Capital: Ordinary Shares: 83.6m Options: 23.6m Cash (as at 30 June 2011): $4.1m Directors and Management: Peter Cunningham Non- Executive Chairman John Davis Managing Director Justin Brown Non-Executive Director Gary Morgan Non-Executive Director Peter Cole Non-Executive Director Dennis Wilkins Company Secretary SEPTEMBER 2011 QUARTERLY REPORT For personal use only
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SEPTEMBER 2011 QUARTERLY REPORT HIGHLIGHTS
PROJECT DEVELOPMENT
Zelica Pre-Feasibility Study Update - Exterra appointed Belminco Pty Ltd to complete a Scoping Study and provide early indications of likely costs and economic analysis as well as identify and source key equipment for the vat leach project. This report is expected to be completed by early November 2011.
Regional Tenement Consolidation – As part of its move to expand its resource and tenement base in the Linden region, Exterra has acquired a 100% interest in a prospecting licence surrounding the Company’s existing Zelica tenements. The new prospecting licence provides potential strike extensions of the Zelica mineralised trend. The Company continues to assess strategic opportunities in the region that will add value to the Linden project.
RESOURCES AND EXPLORATION
New prospect ‘Marloo’ returns excellent results – RC drilling has returned results of [email protected]/t Au, [email protected]/t Au and [email protected]/t Au from shallow drilling at a prospect targeting historical workings. Follow-up drilling is planned.
More encouraging results at Wimmera and Linden Star West – Both prospects were identified during drilling in 2010 and the current round of drilling has extended the strike of these prospects. Best results included [email protected]/t Au at Linden Star West and [email protected]/t Au at Wimmera.
Second Fortune Strike Length Extended – Shallow drilling to the north and south of the resource area has confirmed the mineralised trend over 600m strike length. The drilling was planned to test the open pit potential along strike with results of [email protected]/t Au, [email protected]/t Au and [email protected]/t Au all to be followed up.
RC Program Planned for Zelica – Exterra is planning a 4,000m RC drilling program to commence in early November at Zelica. The program is aimed at increasing the resource confidence below the current open pit as well as infilling the resource area to the north.
1.0 ZELICA GOLD PROJECT, Western Australia (100% interest)
Fig 1 – Zelica Project Open Pit and Vat Ponds
1.1 Pre Feasibility Study Underway
Exterra formally appointed Belminco Pty Ltd to provide early indications of likely costs and economic analysis as well as identify and source key equipment. Belminco has previously provided advice and costings to the former owners of the Zelica Project. Due to the strong inherent knowledge of the project, Exterra felt that Belminco was best placed to provide an update in the most cost efficient and timely manner. A key feature of the Belminco study will be the identification and sourcing of key equipment required for the development of the Zelica Project. Where required, Exterra will enter into option agreements to acquire certain pieces of equipment in order to ensure that the project can progress in a timely manner. The study by Belminco is expected to be completed by early November.
1.2 RC Drilling Program Planned
A 4,000m RC drilling program has been planned for the Zelica Project, expected to commence in early November 2011. The drilling
program is aimed at increasing the resource confidence in some areas at depth below the current open pit as well as infill drilling over 1km
strike length to the north of the open pit area.
1.3 RC Tenement Acquisition
Exterra has acquired a 100% interest in a prospecting licence surrounding the Company’s existing Zelica tenements.
The new prospecting licence surrounds the existing Zelica tenement and provides potential strike extensions of the Zelica mineralised trend.
The tenement also provides Exterra with a strategic landholding off strike, which may be used in the future as potential vat or heap leach pad
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Fig 2 – Zelica Acquisition Location Plan
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2.0 LINDEN GOLD PROJECT, Western Australia (100% interest)
The Linden Gold Project, which contains the high grade Second Fortune resource, was acquired from Haoma Mining NL in 2009. The project, which was historically mined for a short period in the late 1980’s, has significant infrastructure in place that will aid the near term development of a new gold mine in the district. This infrastructure includes a 40 person camp, offices, power, water and airstrip. The Linden Gold Project is located in the Laverton Tectonic Zone, a prolific gold endowed belt in Western Australia. There are several multi-million ounce gold projects in the district, including Sunrise Dam, Granny Smith and Wallaby, that highlight the exploration potential of the region. Exterra is focussing on bringing the Second Fortune mine back into production in 2012. Management believes that the combination of high grades, continuous ore zones, existing infrastructure and nearby processing opportunities should result in the development of a profitable gold mine at Second Fortune.
Fig 3 – Linden Project Second Fortune Mine and Infrastructure
2.1 July/August 2011 RC Drilling Program Results
A 39 hole Reverse Circulation (RC) drilling Program was completed at the Linden gold project during August 2011 as an initial test for near surface extension to mineralisation at the Second Fortune deposit and testing exploration potential on other prospects. At Second Fortune, the RC program was designed to test for additional mineralisation along strike which could contribute towards a pit cut back. The other component of the program was to test and extend, new and existing exploration targets identified in a previous RC program during 2010.
The best results were received from a new prospect called Marloo. The drilling returned results of [email protected]/t Au, [email protected]/t Au and [email protected]/t Au from shallow drilling. Marloo was a new target position that was identified on the ground as two lines of shallow workings that has not been previously drill tested. This program concentrated on the main lode structure with the footwall structure yet to be fully tested. Follow-up drilling is planned to extend the strike beyond 125m as well as to test the depth extensions.
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More encouraging results were received from Wimmera and Linden Star West. Both prospects were identified during drilling in 2010 and the current round of drilling has extended the strike of these prospects. Best results included [email protected]/t Au at Linden Star West and [email protected]/t Au at Wimmera. These results correlate with earlier results and although shallow, the company believes that the results reflect a primary source of mineralisation rather than secondary supergene enrichment. Both prospects will be targeted with drilling along strike and at depth to test for extensions.
At Second Fortune, the strike length of mineralisation has been extended to over 600m. Shallow drilling was completed to the north and south of the resource area to test the open pit potential along strike. Whilst none of the narrow high grade ‘Second Fortune’ type grades were encountered, wider medium-grade zones including [email protected]/t Au, [email protected]/t Au and [email protected]/t Au at depths that would be captured within an open pit all require follow up.
Linden RC Drill Results
Prospect Hole id Lease N E RL From To Grade g/t Au
Second Fortune S LNRC094 M39/255 6750062 445274 397 111 114 3m@ 3.25
123 125 2m@ 2.73
135 137 2m@ 3.16
Second Fortune S LNRC095 M39/255 6750060 445272 397 13 14 1m@ 4.63
Second Fortune N LNRC092 M39/255 6750450 445190 397 36 37 1m@ 1.17
Second Fortune N LNRC093 M39/255 6750520 445190 397 19 22 3m@ 1.20
28 31 3m@ 1.83
59 60 1m@ 1.03
Second Fortune N LNRC098 M39/649 6750570 445200 400 13 14 1m@ 1.14
29 30 1m@ 1.33
Linden Star West LNRC106 M39/649 6749821 444706 394 15 20 5m@ 4.02
Linden Star West LNRE108 M39/649 6749848 444693 394 13 14 1m@ 2.66
3.0 EUCALYPTUS PROJECT, Western Australia (80-90% interest, subject to risk of forfeiture)
Exterra has entered into an agreement to assume the rights and interests in a Joint Venture covering the Eucalyptus Gold Project, located just to the north of Exterra’s Zelica Project. Eucalyptus contains a JORC-compliant Inferred Resource of 973,000 tonnes @ 2.73 g/t Au for 88,500 oz. The acquisition is conditional on, amongst others, the resolution of forfeiture action on the tenements. The tenements are subject to application for forfeiture and are therefore at risk of forfeiture. Exterra is not managing the legal action to defend the forfeiture of the Eucalyptus tenements and cannot make any comment about the likelihood of that action being successful.
3.1 Forfeiture Action Update
Exterra has been advised that the Wardens Court has received submissions from both parties and that a date will be set to hear the Exemption applications shortly. Exterra will monitor the Exemption Application and Forfeiture Action proceedings and give technical support as required. It is expected an outcome will be determined early in early 2012.
4.0 EGERTON GOLD PROJECT (100% interest)
The Egerton Project is located in the Gascoyne Province of Western Australia. The main prospect, Hibernian, contains a JORC-compliant Measured, Indicated and Inferred Resource of 116,300t @ 6.4 g/t Au for 23,811oz. High grade intercepts within Hibernian Resource include 2m @ 147.0 g/t Au, 5m @ 78.90 g/t Au and 5m @ 96.7 g/t Au in quartz veins. The deposit is only shallowly tested to 70 metres below surface, with potential for additional resources in repeated shoots below this level and along strike. The Hibernian Shear Zone is over 15km in length and sparsely tested.
4.1 Aeromagnetic Survey
Exterra propose to carry out an aeromagnetic survey during 2011 to support ongoing exploration and to commence exploration drilling early 2012 to expand the Hibernian resource and test other exploration targets.
5.0 GIANT WELL GOLD PROJECT (100% interest)
The Giant Well Project is a grassroots exploration target located to the east of Leonora in Western Australia. The project comprises of one granted exploration lease. Exterra is planning to carry out geological mapping to support interpretation of available drilling information.
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6.0 RESOURCE SUMMARY
Exterra’s JORC-compliant resources are tabulated below.
1.1 Receipts from product sales and related debtors
- -
1.2 Payments for (a) exploration & evaluation
(b) development
(c) production
(d) administration
(552)
-
-
(455)
(552)
-
-
(455)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature
received
39 39
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - - 1.7 Other (provide details if material) 9 9
Net Operating Cash Flows (959) (959)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects
(b)equity investments
(c) other fixed assets
-
-
(4)
-
-
(4)
1.9 Proceeds from sale of: (a) prospects
(b) equity investments
(c)other fixed assets
-
-
-
-
-
-
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other (provide details if material) - -
Net investing cash flows (4) (4)
1.13 Total operating and investing cash flows (carried forward) (963) (963)
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+ See chapter 19 for defined terms.
Appendix 5B Page 2 17/12/2010
1.13 Total operating and investing cash flows
(brought forward) (963) (963)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - -
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings - -
1.18 Dividends paid - -
1.19 Other (provide details if material) Share issue
transaction costs
(227) (227)
Net financing cash flows (227) (227)
Net increase (decrease) in cash held
(1,190) (1,190)
1.20 Cash at beginning of quarter/year to date 4,104 4,104
1.21 Exchange rate adjustments to item 1.20 - -
1.22 Cash at end of quarter 2,914 2,914
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities Current quarter
$A'000
1.23
Aggregate amount of payments to the parties included in item 1.2 103
1.24
Aggregate amount of loans to the parties included in item 1.10 -
1.25
Explanation necessary for an understanding of the transactions
Item 1.23 includes aggregate amounts paid to directors including salary, directors’ fees, consulting
fees and superannuation.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated
assets and liabilities but did not involve cash flows
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the
reporting entity has an interest
Financing facilities available Add notes as necessary for an understanding of the position.
Amount available
$A’000
Amount used
$A’000
3.1 Loan facilities
Nil Nil
3.2 Credit standby arrangements
Nil Nil
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Estimated cash outflows for next quarter $A’000
4.1 Exploration and evaluation
350
4.2 Development
-
4.3 Production
-
4.4 Administration
150
Total
500
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as
shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Current quarter
$A’000
Previous quarter
$A’000
5.1 Cash on hand and at bank 66 94
5.2 Deposits at call 2,848 4,010
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22) 2,914 4,104
Changes in interests in mining tenements Tenement
reference Nature of interest (note (2))
Interest at beginning
of quarter
Interest at end of
quarter
6.1 Interests in mining
tenements relinquished,
reduced or lapsed
6.2 Interests in mining
tenements acquired or
increased
P39/4566 Acquisition Nil 100%
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Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
Appendix 5B Page 4 17/12/2010
Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number quoted Issue price per
security (see note
3) (cents)
Amount paid up per
security (see note 3)
(cents)
7.1 Preference +securities(description)
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns of
capital, buy-backs,
redemptions
7.3 +Ordinary
securities
83,581,566 58,981,566
7.4 Changes during
quarter
(a) Increases
through issues
(b) Decreases through returns of
capital, buy-backs
7.5 +Convertible debt
securities(descripti
on)
7.6 Changes during
quarter
(a) Increases through issues
(b) Decreases
through securities
matured, converted
7.7 Options(descriptio
n and conversion
factor)
3,600,000
500,000
8,500,000
11,000,000
-
-
-
-
Exercise price
20 cents
20 cents
25 cents
30 cents
Expiry date
30 September 2013
20 May 2016
31 December 2014
31 December 2014
7.8 Issued during
quarter
7.9 Exercised during
quarter
7.10 Expired during
quarter
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)
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Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable
to ASX (see note 5).
2 This statement does /does not* (delete one) give a true and fair view of the matters
disclosed.
Sign here: Date: 27 October 2011
(Company secretary)
Print name: Dennis Wilkins
Notes 1 The quarterly report provides a basis for informing the market how the entity’s
activities have been financed for the past quarter and the effect on its cash position.
An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in
mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent
which will change its percentage interest in a mining tenement, it should disclose the
change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in
items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of AASB 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International
Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.