Quaterra Resources Inc.
TSX VENTURE : QTA

Quaterra Resources Inc.

August 25, 2005 18:00 ET

Quaterra Commences Drilling at Duke Island; Financing Over Subscribed, Issue Increased

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 25, 2005) - Quaterra Resources Inc. (TSX VENTURE:QTA) today announced that a 5,000 foot drilling program has begun on its 100 percent controlled Duke Island ultramafic copper-nickel-PGM prospect in southeast Alaska. At least six 500-1000 foot deep holes will be drilled on the Marquis, Potato Patch and Raven targets identified by recently completed gravity and Mag/EM surveys.

The drill program follows up on surface sampling that returned values ranging from anomalous up to 2.8% Cu, 0.25% Ni and 1 gpt Pt and Pd, and on four earlier widely spaced drill holes that intercepted disseminated semi-massive and massive sulphides over extensive lengths.

The company discovered copper, nickel and platinum group element mineralization at Duke Island in 2001, Quaterra president Dr. Thomas Patton said. The mineralization identified to date is unlike any known Ural - Alaska complex in southeast Alaska's Alexander Platinum Belt. Geochemical, geological and geophysical data suggest the system extends for over 14.5 kilometres along strike and up to 3.8 kilometres across strike with the ultimate dimensions of the mineralized system remaining open to expansion, he said. The company believes that Duke Island has potential to host significant accumulations of copper, nickel and PGE mineralization.

The Duke Island property includes 129 federal and eleven State of Alaska claims located approximately 30 miles southeast of Ketchikan, Alaska. The Duke Island complex consists of two separate, well-exposed, zoned ultramafic bodies: the Judd Harbour body is almost two miles in diameter and the Hall Cove Body is about three and a half miles in diameter. The Judd Harbour and Hall Cove complexes have been interpreted to be parts of the same intrusive body at depth. Both bodies are comprised of a dunite and peridotite core surrounded by concentric zones of olivine clinopyroxenite, hornblende-magnetite clinopyroxenite, and gabbro.

Dr. Patton noted that the Duke Island drill program is to be followed by three additional drill programs at other Quaterra projects in Mexico and Arizona. A September start is planned for a 5,000 metre diamond drill program at the Nieves silver project in Zacatecas, Mexico followed by a 1,500 metre initial drill test at the Los Crestones gold project in the state of Durango, Mexico. The latter is an acid sulphate gold system with vuggy silica that has never been drilled. Surface sampling has defined a strong gold-arsenic-mercury anomaly with a number of samples containing 0.1-1.0 gpt gold including one sample with 7.16 gpt gold.

Additionally, Quaterra as part of its recently announced uranium exploration initiative is planning a first phase fall drilling program to test five to ten solution collapse breccia pipe targets on the Arizona Strip.

The company also reported today that the recently announced non-brokered private placement of 5.0 million units at $0.35 per unit has been over subscribed and the company now plans to issue 7.0 million units at $0.35 per unit to realize $2.45 million.

The units consist of one common share and one-half of one common share purchase warrant. Each full warrant can be exercised for one common share at a price of $0.50 per share for a period of two years. In the event the company's common shares trade at a closing price of greater than $1.00 per share for a period of 20 consecutive days at any time after six months from closing, Quaterra Resources may accelerate the expiry date by providing notice, in which case the warrants will expire 30 days after such notice.

The new financing arrangements are subject to regulatory approval, including payment of finder's fees.

Dr. Thomas Patton is the qualified person responsible for the preparation of this release.

On behalf of the Board of Directors,

Thomas Patton, President

Quaterra Resources Inc.

Expanded information on the company's projects is described on our website at www.quaterraresources.com.

Statements contained in this news release that are not historical facts are forward-looking statements as the term is defined in the private securities litigation reform act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from estimated results. Quaterra relies upon litigation protection for forward looking statements.


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the contents of this news release, which has been prepared by management.

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