Exterra Resources Ltd (ASX:EXC) has commenced the construction phase of its recently approved Second Fortune gold mine, which is part of the Linden Project and located 220 kilometres by road from Kalgoorlie.
Construction will take four to six weeks after which time the open pit and underground workings will be dewatered.
The company’s recent $4 million capital raising ensures that funding for the pre-production activities is in place.
Future cash flows from the Second Fortune mine will provide Exterra the capacity to self-fund exploration in the future.
John Davis, executive chairman, commented: “The development program is advancing as planned and we are very pleased to be able to move into this pre-production phase on the back of the recently completed capital raising.”
Exterra’s projects are all located in the Archaean Yilgarn Craton of Western Australia, a world class gold province which includes the Kalgoorlie Golden Mile deposit, which has produced over 50 million ounces of gold.
The company is currently undertaking a development study on the Second Fortune gold mine, which is part of the Linden Project and positioned 220 kilometres by road north northeast of Kalgoorlie.
The Second Fortune underground mine feasibility study highlighted the low cost entry to gold production.
Study details include:
- 131,000 ounces at 8.5 g/t gold JORC Resource at Second Fortune;
- 56,300 ounces at 9.7 g/t gold JORC Reserve at the Main Lode only;
- $97 million revenue to 300vm on Main Lode over 30 months;
- $34 million net cash flow (at A$1700 an ounce gold price); and
- +/-A$5 million pre-production capital.
Exterra has executed a management and services agreement with the Mitchell River Group (MRG).
MRG brings the requisite skills to the Linden Project on a cost plus basis to ensure a smooth development pathway for the Second Fortune mine.
Exterra is on track to become a gold producer within the next 6 months.
With the AUD gold price trading at A$1,670 per ounce, this is a favourable period to be making the transition into gold production.
Recent ore sorting test work has proven successful at Second Fortune resulting in an average grade uplift of 2.6 times.
This will have a positive impact on both the economics of the operation and also lead to an increase in the mineable reserve.
Furthermore, opportunity exists to extend the resource at depth and along strike providing potential to extend the mine life.
Shares in Exterra are trading up 7 times year to date, currently priced at $0.07.