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Exterra Resources Ltd Ratchets Up Lithium Exploration In WA

Exterra Resources Ltd (ASX:EXC) has recorded further rock chip sample results from its recently optioned Moolyella Lithium Project within the Archean Pilbara Craton of Western Australia.

A review of historical rock chip sampling in 2011/12 over an area of 2 square kilometres included the presence of lithium in a significant number of samples analysed.

The best results include the previously recorded sample of 1.82% lithium (Li2O), 1.06% Li2O and 0.63% Li2O.

These confirm the potential of the Moolyella Lithium project to host significant lithium bearing pegmatites.

Lithium is recovered from both mineral deposits, largely from the mineral spodumene (Li2O.Al2O3.4SiO2) and from salts, largely from lithium-rich brines in salt lakes.

The majority of exploration to date at Moolyella has focussed on the tin and tantalum potential. It is not until recently that the lithium potential in the Pilbara region has been investigated to any level.

The lithium grades found in limited exploration for lithium at Moolyella of up to 1.82% Li2O compares favourably against advanced lithium projects at Pilgangoora, 100 kilometres to the west of Moolyella.

Where, most notably Pilbara Minerals Ltd's (ASX:PLS) lithium resource of 80.2 million tonnes of mineralised spodumene pegmatites grading 1.26% Li2O and Altura Mining Ltd's (ASX:AJM) lithium Resource of 35.7 million tonnes of mineralised spodumene pegmatites grading 1.05% Li2O are notable lithium discoveries.

The Moolyella lithium, tin and tantalum project has similar geological and mineralogical characteristics to the Pilgangoora district.

They contain spodumene (Li2O) bearing pegmatites, which have not been subject to any systematic exploration to date.

This provides a strong case for Exterra to ratchet up exploration for lithium at Moolyella.

John Davis, Exterra's managing director was Senior Mine Geologist/Geological Superintendent for Greenbushes Tin NL at the Greenbushes Minesite during 1984-86, when the lithium (spodumene) zone was recognised and first production commenced, commented:

"Indications from the initial review of the geology and early stage lithium analyses, along with the broad distribution of anomalous lithium mineralisation from first pass exploration, it is clear that there is potential for significant lithium mineralisation in the Moolyella Li/Ta/Sn mineral field."

Next steps at Moolyella

A number of historic reverse circulation drillholes have also been identified by Exterra that targeted pegmatite occurrences at Moolyella exploring primarily for tin and tantalum and were not assayed for lithium.

Next up, Exterra will investigate the availability of sample pulps and or drill cuttings on site to determine whether lithium assays can be undertaken at minimal cost.

From the available drill logs, broad intersections of up to 13 metres downhole were logged as pegmatites.

Therefore the drilling appears to have intersected significant widths of lithium prospective rocks and re-logging and re-assaying for the holes may provide a very cost effective way to advance the project.

The Moolyella Project

The project is located 23 kilometres east north east of Marble Bar and consists of one exploration licence application ELA 45/4462 covering 86 square kilometres.

This is located within one of the most prolific historical tin and tantalum producing districts of the Archaean Pilbara Craton. Tin/Tantalum mining operations have been carried out on the Moolyella tin field from their discovery in 1898 until 1986.

Exterra has an option to purchase a 90% interest in the Moolyella Lithium Project.

Second Fortune gold mine

Exterra's flagship is the Second Fortune underground gold mine within Exterra's 100% owned Linden Gold Project, 220 kilometres NNW of Kalgoorlie in Western Australia.

A recent update on a Pre-Feasibility Study (NYSE:PFS) to bring the mine into production revealed that with projected pre-production capital expenditure of just A$5 million and C3 total cash operating costs of A$1,015 an ounce, the project would earn net cash flow of A$34 million after capital and State Royalties.

The projected highly profitable mine could be brought into production quickly as it is fully permitted and under a profit share agreement with Pit n Portal Corporate Services.

Analysis

The current market cap of Exterra at circa $5 million certainly does not take into account a near term gold production and cash flow potential at Second Fortune, nor the unfolding lithium story at the Moolyella Project.

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