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Exterra Resources Ltd Raises $1.5M At Premium To Develop Gold Mine

Exterra Resources Ltd (ASX:EXC) has received commitments to raise A$1.5 million through the placement of 37.5 million shares at $0.04 per share, a premium of 11% to the last traded price.

Shares were placed to professional and sophisticated investors with $500,000 worth going to the Mitchell River Group (MRG), a mining investment partnership and technical services consultancy.

Exterra and MRG have also executed a term sheet which contemplates the parties entering into a management agreement to development the Second Fortune gold mine.

Second Fortune, 220 kilometres by road north northeast of Kalgoorlie, is currently the subject of a development study, with all regulatory approvals received to commence project development of an underground mining operation.

Both the funds and the partnership with MRG will ensure Second Fortune progresses smoothly towards production in the near term.

Placement details

The placement was made to new investors and existing shareholders to raise A$1.5 million by the issue of 37,500,000 ordinary fully paid shares at $0.04 per share.

Shares came with a one for four attaching option with an exercise price of A$0.06 per option and a 36 month expiry.

MRG have committed to take $500,000 worth of the total issued shares and subject to shareholder approval receive two tranches of 17.85 million incentive options for nil consideration, subject to vesting conditions.

MRG provides seed funding and management for projects to move through feasibility stages into production.

MRG have supported the establishment of a number of substantial project development companies and mining operations including Exco Resources Ltd, Anova Metals Ltd (ASX:AWV), African Energy Resources Ltd (ASX:AFR) and Panoramic Resources Ltd (ASX:PAN).

Analysis

The placement being completed at a premium shows the strong market support for the transaction from existing and new shareholders.

A partnership with MRG exemplifies the quality of the Second Fortune gold mine and creates a development pathway to gold production.

Year to date, the stock is trading up 330% as Exterra maintains its dual-exploration focus on gold and lithium, ensuring strong news flow in the near-term.

The 4,000 metre drill program at the Linden Gold project is due to complete this week with first results due shortly.

Follow up exploration is currently being planned at the company's Moolyella Lithium project where phase 1 of exploration returned assay results grading up to 1.25% lithium.

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