Exterra Resources : Second Fortune Project Development Update

Exterra Resources Limited

ACN 138 222 705

ASX Code: EXC

www.exterraresources.com.au Issued Capital:

Ordinary Shares: 336.2m

Options: 87.1m

Directors and Management: John Davis

Executive Chairman

Geoff Laing

Executive Director

Justin Brown

Non-Executive Director

Dennis Wilkins

Company Secretary

January 2017

Exterra Resources Limited ("Exterra" or "the Company") (ASX:EXC) is pleased to provide an update of development milestones for the Second Fortune Project.

• DMP approval of the Project Management Plan (PMP) for underground mining activities.
• Completion of cell 1 of the evaporation pond and commissioning of the pit dewatering system.
• Completion of the camp and associated infrastructure.
• Purchase of the mobile crushing and screening plants and all associated conveyor systems.
• Commencement of construction of the ore sorter infrastructure module including air compressor, drier, generator, wash screen and support frame.

The Project Management Plan (PMP), PM-031-220041, in relation to the Major Expansion/Change to Existing Operations at Second Fortune has been approved by the Department of Mines and Petroleum (DMP). Work continues on finalising details of the mining contract with the preferred tenderer.

Construction of the evaporation ponds for dewatering the pit and underground operation is progressing well. The first of the two ponds is complete and work has commenced on the second pond. Commission of the pit dewatering system has commenced.

Site Surface works are at an advanced stage with the completion of the accommodation camp and associated infrastructure. Old process workings have been removed and remaining sheds, pads etc are being modified for use as mining workshops and laydown areas.

Development of the sorting plant is progressing well. The ore sorter has landed in Perth and all associated equipment such as compressors driers, washing screen etc. have been acquired. The sorting plant is being pre-assembled in Perth and will be shipped to site in February. The mobile crushing and screening units have been acquired and will be shipped to site in late January. The plan remains to assemble the plant on site in February and commission it on existing stockpiles at Second Fortune.

Exterra Resources retains a highly prospective land package in the Second Fortune area with numerous advanced exploration targets and projects at both Zelica and Malcolm. Future cash flows from the Second

Fortune mine will provide Exterra the capacity to "self-fund" exploration in the future. Results from the recent drilling campaign at Linden Star will be announced imminently, pending final review of the assay data.

Exterra's Executive Chairman, John Davis said: "The programme is advancing as planned and we are pleased to be able to accommodate development personnel on site in our own camp. We look forward to assembling the process plant on site and getting access to the dewatered pit."

Mr Geoff Laing Executive Director T +61 417178012

E Geoffl@mitchellrivergroup.com

Exterra Resources Limited (ASX:EXC) is a gold exploration and development company based in Perth, Western Australia, with a focus on high grade, high margin gold projects with near term production potential to fund the future growth of the company.

The Company's projects are all located in the Archaean Yilgarn Craton in WA, a world class gold province which has been a prolific producer of gold since the late 1880's and includes the Kalgoorlie "Golden Mile" deposit which has produced over 50 million ounces of gold since discovery in 1893.

Exterra's focus is on the Linden gold project in the North Eastern Goldfields region, within the Laverton Tectonic Zone, which hosts multi million ounce deposits including Sunrise Dam (Anglo Gold) and Granny Smith/Wallaby (Barrick Gold).

The Second Fortune gold mine, at Linden, 220km by road, NNE of Kalgoorlie, is currently the subject of a development study, with all Regulatory approvals received to commence project development of an underground mining operation.

The information in this report that relates to database compilation, sampling processes, geological interpretation and mineralisation, project parameters and costs and overall supervision and direction of Mineral Resource is based on and fairly represents, information and supporting documentation compiled under the overall supervision and direction of John Davis (Member of the Australasian Institute of Mining and Metallurgy and the AIG). Mr Davis has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Davis consents to the inclusion in the release of the statements based on their information in the form and context in which they appear.

Information in this report that relates to estimation, depletion and reporting of Mineral Resources is based on and fairly represents, information and supporting documentation compiled by Mike Job who is a Member of the Australasian Institute of Mining and Metallurgy and a full time employee of QG Consulting Pty Ltd. Mike Job has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mike Job consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

The information in this report that relates to Ore Reserves has been compiled by Stephen O'Grady, Principal of Intermine Engineering Consultants, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr O'Grady has had sufficient experience in Ore Reserve estimation relevant to the style of mineralisation and type of deposit under consideration to qualify as Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Mineral Resources and Ore Reserves. Mr O'Grady consents to the inclusion in this announcement in the form and context in which it appears.

Please note with regard to exploration targets, the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.