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Exterra Resources’ successful drilling holds promise for Zelica Gold Project restart

Exterra Resources (ASX: EXC) has intersected gold down dip and along strike in a reverse circulation drilling program that was aimed at expanding mineralisation at the Zelica Gold Project.

The drilling program was designed to confirm mineralisation below the current pit at Zelica and to extend and infill mineralisation over 400 metres to the north of the pit, where previous drilling was intermittent.

Of the 41 holes drilled, 34 recorded intercepts of greater than 1 gram per tonne (g/t) gold.

These grades support previous drill results, and are relatively high for a vat leach style of project.

Assays from the recent program include:

- 7 metres at 4.9g/t gold from 26 metres;
- 4 metres at 5.35g/t gold from 11 metres; and
- 5 metres at 2.95g/t gold from 37 metres.

Significantly, results from the drilling program indicate good continuity of mineralisation both below the pit and over the 400 metres strike to the north, where mineralisation remains close to the surface.

Exterra is interpreting the results alongside previous drilling at the project, with the aim of providing an updated geological and resource model to identify future drilling targets.

Zelica has an existing JORC Resource of 1.187 million tonnes at 2.24g/t gold for total contained gold of 85,664 ounces.

Exterra is aiming to confirm the resource in order to recommence mining activities at Zelica, subject to regulatory approvals.

The company has already applied to convert the existing exploration licence to a mining lease.

This conversion has progressed through the Native Title process and is expected to be granted during the March quarter of 2012.

Building on previous work

Previous activities at Zelica involved ground work including pre-strip on a 300 metre open pit mine, grade control drilling at the base of the open pit, construction of two vat leach ponds and drilling of water bores.

This preparatory work provides a strong foundation for Exterra to restart mining operations at Zelica.

Metallurgical test work at Zelica has displayed a 92% recovery at leach.

Zelica Gold Project

Exterra acquired the Zelica project in Western Australia in February 2011, three months prior to listing on the ASX.

The project was originally operated by a private company which planned to operate the mine as a vat leach operation.

A preliminary draft Scoping Study on the project, based on data available prior to the most recent drilling program, shows potential for a solid project based on new plant and equipment.

Exterra will incorporate data from the drilling program into the model and re-optimise the results.

At the same time, the company has struck up a conversation with an international engineering group that is keen to investigate a Build-Own-Operate concept for the construction and operation of a processing plant at Zelica.

This method would reduce capital and share risk for Exterra.

Linden Gold Project

At the Linden gold project, 20 kilometres south of Zelica, Exterra is planning to start a 10 hole diamond drilling program at the Second Fortune gold mine in the March quarter of 2012.

Second Fortune has a JORC Inferred Resource of 207,000 tonnes at 7.9g/t gold for 52,000 ounces contained gold.

The diamond drilling program is aimed at extending and upgrading this resource, which will support the start of Scoping Studies into re-developing the mine.

Exterra has an exploration target for Second Fortune of 1.5-2.6 million tonnes at 6-10g/t gold.