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Exterra sells Linden project

Exterra sells Linden project

Photo by Bloomberg

13th April 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – ASX-listed gold developer Exterra Resources has agreed to divest of its Linden project, in Western Australia, to Fortuna SL Mining for A$7-million.

The cash consideration would be paid in tranches, and Fortuna would also grant Exterra a 2% gross royalty on the mining property, as well as a 1% gross royalty on the Fortitude tenements, which were currently under an option to purchase agreement.

Furthermore, Fortuna would be liable for a resource and regional drilling programme, to be completed before the end of May, and an updated Joint Ore Reserves Committee-compliant resource for the Second Fortune deposit, by July 15.

Exterra MD John Davis said on Monday that the transaction was in the best interest of shareholders, given the current difficult economic climate.

“It provides the company with cash and allows it to actively explore its remaining exploration projects and seek new opportunities,” Davis said.

He pointed out that while exploration work at the Linden project had indicated that the project was highly prospective for gold mineralisation, there was a range of risks to the owner of the project in developing, mining and processing. These risks were considered to outweigh the potential rewards of the project.

Work to date had revealed that the project would require a significant capital investment, Davis said, compared with the company’s current market capitalisation, and additional capital would need to be raised to fund the project, which would result in significant dilution to shareholders.

Exterra’s focus at Linden had been on the Second Fortune deposit, where a 2014 prefeasibility study revealed that a A$5-million investment could result in the recovery of 56 600 oz, over a mine life of two-and-a-half years.

The divestment would be subject to a number of conditions, including regulatory and shareholder approval.

Edited by Creamer Media Reporter

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