Metallica Minerals Ltd · 2011-10-10 · The Company Metallica Minerals listed on the ASX in late...

Annual Report 2011

An Australian Resource Development Company

Metallica Minerals LtdABN 45 076 696 092

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WHAT IS NICKEL?

Nickel (Ni) is element 28 in the periodic table, a high in demand element that when processed, emerges as a hard, silver-white metal with a high melting point (1452°C). It is primarily used in steel alloys in the chemical and aerospace industries. About 60% of the worlds nickel production is used in nickel-steels (particularly stainless steel). Other common alloys, as well as some new super alloys and use in batteries, make up the remainder of the world nickel use, with chemical uses around 3% of production. The bulk of the nickel mined comes from two types of ore deposits. The first type are laterites (shallow weathered and oxidized ultramafic rock) where the principle host minerals are nickeliferous limonite, saprolite and garnierite. The second type are magmatic sulphide deposits where the typical ore mineral is pentlandite. Currently, all of Australia’s nickel mine production is from Western Australia and sourced from both sulphide and laterite ores. Nickel is commonly associated with cobalt, platinum and copper. World production is around 1.6Mtpa and the price is around US$10/lb (or US$22,400/t).

WHAT IS COBALT?

Cobalt (Co) is element 27 in the periodic table, a metal that is hard, lustrous, silver-gray, and normally associated in nature with copper and nickel. Cobalt is used in the preparation of magnetic, wear-resistant and high-strength alloys such as for turbine blades in power stations and jet engines. It is also used as a colouring in ceramics, glasses and inks, has medical applications as a radioisotope and for orthopaedic implants, and increasingly, a key component in lithium batteries, as well as for industrial catalysts and electroplating.

The main sources of cobalt are the Democratic Republic of Congo (DRC) and Zambia. World cobalt production is around 60,000 tonnes per annum and the price is in the range of US$15-20/lb (or US$33,000-44,000/t). As of October 2010, the 3 year and 20 year average prices for 99.8% cathode cobalt are approximately US$26/lb and US$18/lb respectfully.

WHAT IS SCANDIUM?

Scandium (Sc) is element 21 in the periodic table, a silvery-white metallic transition metal, often classified as a rare earth element (REE), together with yttrium and the 15 lanthanides. The positive effects on aluminium alloys were discovered in the 1970’s and its use in such alloys remains it main application. Low levels (5-15g/t) of Sc are not uncommon but it rarely occurs above 30g/t. Mineable deposits averaging 200g/t Sc are scarce. Only three such known resources have been defined globally, two of which are within Metallica’s NORNICO project. Sc is a key ingredient in the new solid oxide fuel cell market and in applications in lighting and aerospace.

The main application of scandium by weight is in aluminium-scandium alloys for select aerospace industry components. These alloys contain between 0.1% and 0.5% of scandium. They were used in the Soviet military aircraft, specifically the MiG-21 and MiG-29 and missiles.

Global usage is small, at around 5tpa. There has been an absence of reliable, secure, stable and long term production which has severely constrained major commercial applications of scandium. Despite this low level of use, scandium offers significant benefits. Particularly promising is the strengthening of aluminium alloys and welded frames with as little as 0.5% scandium. Scandium-stabilized zirconia (SSZ) enjoys a growing market demand for use as a high efficiency electrolyte in solid oxide fuel cells (SOFC).

Some items of sports equipment, which rely on high performance materials, have been made with scandium-aluminium alloys, including baseball bats and bicycle frames and components. Lacrosse sticks are also made with scandium-titanium alloys to take advantage of the strength of titanium. The American gunmaking company Smith & Wesson produces revolvers with frames composed of scandium alloy and cylinders of titanium or carbon steel.

Scandium iodide along with sodium iodide, when added to a modified form of mercury-vapor lamp, produces a form of metal halide lamp. This lamp is a white light source with high colour rendering index that sufficiently resembles sunlight.

WHAT IS ZIRCON?

Zircon is a mineral belonging to the group of nesosilicates. Its chemical name is zirconium (Zr) silicate and its corresponding chemical formula is ZrSiO

4. Zircon is mainly

consumed as an opacifier in the decorative ceramics industry and in refractory brick linings of blast furnaces. It is also the principal precursor to metallic zirconium, although this application is small, and all compounds of zirconium including zirconium oxide (ZrO

2), one of the most

refractory materials known. Zircon is a common accessory to trace mineral constituent of most granite and felsic igneous rocks. Due to its hardness, durability and chemical inertness, zircon persists in sedimentary deposits and is a common constituent of most sands. Zircon forms economic concentrations within heavy mineral sands (HMS) ore deposits, within certain pegmatites, and within some rare alkaline volcanic rocks. In 2010 world production of Zircon was approximately 1.3Mt.

WHAT IS RUTILE?

Rutile is a mineral composed primarily of titanium dioxide, TiO

2. Rutile, when present in large enough quantities in beach

sands, forms an important constituent of heavy mineral sands ore deposits. Miners extract and separate the valuable minerals (typically rutile, zircon, and ilmenite). The main uses for rutile are the manufacture of refractory ceramic, as a pigment, and for the production of titanium metal. In 2010 world production of rutile was approximately 6.4Mt.

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BOARD OF DIRECTORS David K Barwick – Non-Executive Chairman Andrew L Gillies – Managing Director John K Haley – Executive Director/CFO Barry J Casson – Non-Executive Director Shu Wu – Non-Executive Director Tao Li – Alternate Director to Shu Wu

CHIEF EXECUTIVE OFFICERGavin Becker

COMPANY SECRETARYJohn K Haley

PRINCIPAL AND REGISTERED OFFICE71 Lytton Road, East Brisbane QLD 4169 GPO Box 122 Brisbane QLD 4001

Phone (07) 3249 3000 Fax (07) 3249 3001 Email [email protected] Website www.metallicaminerals.com.au

SHARE REGISTERLink Market Services Limited

Level 19, 324 Queen Street, Brisbane QLD 4001

AUDITORBDO Kendalls (QLD)

Level 18, 300 Queen Street, Brisbane QLD 4001

SOLICITORHopgood Ganim

Level 8, Waterfront Place, 1 Eagle Street, Brisbane QLD 4001

STOCK EXCHANGE LISTINGMetallica Minerals Ltd is listed on the Australian Stock

Exchange (ASX).

Home Stock Exchange is Brisbane.

Riverside Centre, 123 Eagle Street, Brisbane QLD 4001

ASX CODEMLM (ordinary shares)

Corporate directory 1

Vision, Mission & Strategic Objectives 2

Project Highlights 3

Corporate Highlights 3

Investment Highlights 4

Chairman’s letter 6

Managing Director’s review 7

Board of Directors 10

NORNICO Nickel-Cobalt and Scandium project 14

Lucky Break project 20

Weipa Zircon-Rutile HMS project 21

Gippsland Zircon-Rutile HMS project 22

Limestone projects 24

MetroCoal Limited 26

Planet Metals Limited 27

Orion Metals Limited 28

Cape Alumina Limited 30

Tenement schedule 32

NORNICO Resource base 35

Top 20 Shareholders 37

Contents

Corporate directory

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The Company

Metallica Minerals listed on the ASX in late 2004 (ASX:MLM) as a progressive multi-minerals explorer and developer, with its flagship asset, the NORNICO nickel-cobalt and scandium project, northwest of Townsville in Queensland.

Metallica currently holds a 100% owned mineral resource project portfolio including nickel-cobalt and scandium (NORNICO project), zircon-rutile (Weipa) and several advanced limestone-lime projects in Queensland. Metallica also has an option to purchase 100% of the Gippsland zircon-rutile project located in Victoria.

The Company’s approximately 2,000 shareholders include China’s second largest nickel producer, the Jilin Nickel

VISION

• Become a highly profitable resource developer & producer

• By 2015 become a long term producer of nickel, cobalt, scandium, zircon and rutile

MISSION

• Deliver high returns for shareholders

• High social, environmental and safety standards

• Complete NORNICO Ni-Co-Sc “Tri-Metal” Feasibility Study

• Targeting Weipa Zircon-Rutile production early-mid 2013

• Progress Gippsland Zircon-Rutile project – a major new Greenfields Zircon-Rutile project

• Targeting Ni-Co & Sc production late 2014

Group (Jein Mining Pty Ltd), (19%), Golden Breed Pty Ltd, (7.3%) and (controlled by Metallica Managing Director, Andrew Gillies), and RCF (Funds III LP & IV LP), (4.3%).

It has currently approximately 132.3M ordinary shares on issue (128.8M as at 30 June) and 9.42M Unlisted Employee, Director and other options. The Top 20 shareholders hold a 54.96% stake in the Company.

At 30 September, 2011, Metallica held approximately A$6.2 million cash at bank, and in the order of $55 million worth of combined investments in four listed ASX exploration companies, MetroCoal (MTE), Cape Alumina (CBX), Planet Metals (PMQ) and Orion Metals (ORM).

STRATEGIC OBJECTIVES

• Generate Cashflow Business (NORNICO, Zircon-Rutile projects & Limestone)

• Become a Ni-Co-Sc metal producer & the world’s major producer of Sc

• Maximise our (4) ASX listed Investment holdings (MTE, CBX, PMQ, ORM)

• Divest non core assets for securing funds and investments without shareholder dilution and applying those proceeds to advance our core mineral assets and business.

• Maintain adequate funding & high quality staff

2 Metallica Minerals Limited Annual Report 2011

The Metallica name

Metallica was named after the definitive classic 16th century mining and metallurgy textbook, De Re Metallica (‘On the Nature of Metals’ or ‘All about Metals’). First published in 1556, it was the best known work of the German scientist and “father of mineralogy”, Georgius Agricola, and remained the authoritative text on mining for 250 years after its publication. De Re Metallica was translated into English in 1912 by one Herbert C. Hoover, a mining engineer who worked in Western Australia and went on to become the 31st President of the United States.

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JUNE 2011

Encouraging Ni-Co & Sc metal extraction results from NORNICO’s Greenvale & Lucknow ores using the High Pressure Acid Leach (HPAL) metallurgical process.

APRIL 2011

HPAL chosen ahead of heated Atmospheric Acid Leach (AAL) as preferred NORNICO processing route

MARCH 2011 Oresome (100% MLM) subsidiary commences approvals process for 2.8Mt Indicated heavy mineral sands (HMS) resource at Urquhart Point near Weipa, Qld

JANUARY 2011

Increase in NORNICO’s Greenvale resource to 8Mt @ 1.04% Ni & 0.08% Co and Lucknow scandium resource also announced resource of 6.24Mt @ 169g/t Sc (see Tables 4 & 6)

DECEMBER 2010

Phase 2 drilling completed at former Greenvale nickel mine within NORNICO

SEPTEMBER 2010

Initial Stage 1 Scoping study (using AAL) makes robust case for NORNICO – start of enhanced scoping study

SEPTEMBER 2010

Maiden nickel-cobalt resource announced for NORNICO’s Greenvale-Lucknow deposits

AUGUST 2010

Maiden scandium resource announced for NORNICO’s Lucknow deposit

JULY 2010

Further high grade scandium assays in Lucknow drilling

Project highlights

Corporate highlights

Metallica Minerals Limited Annual Report 2011 3

AUGUST 2011

Option to explore and purchase (for $8 million) Rio Tinto Exploration’s Gippsland Heavy Mineral Sands (HMS) project

AUGUST 2011

Move to 100% ownership of NORNICO with acquisition of Straits Resources Ltd’s 20% scandium stake

JUNE 2011

Gavin Becker appointed Metallica CEO with specific NORNICO focus

JUNE 2011

Fully underwritten $4.9 million rights issue announced (successfully completed in July)

MAY 2011

EGM approves in-specie distribution of 11.7M Cape Alumina shares to Metallica shareholders

MARCH 2011

Buy-back of non-marketable Metallica share parcels announced

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Investment highlightsMETALLICA HOLDS INVESTMENTS IN FOUR LISTED COMPANIES

METROCOAL LIMITED – 44.4% (45.3% as at 30 June)

SEPTEMBER 2011

Signs $24 million investment agreement with Dadi Engineering Development Group

AUGUST 2011

15Mt export allocation secured at proposed new Gladstone port terminal

JULY 2011

Maiden thermal coal resource of 540Mt announced for Columboola JV

MAY 2011

Increase to 595Mt announced for Bundi thermal coal resource

DECEMBER 2010

$30 million SinoCoal JV funds confirmed for Columboola Project

NOVEMBER 2010

Signs Wiggins Island Coal Export Terminal feasibility funding deed

NOVEMBER 2010

Qld Govt approves Xstrata’s $3 billion Wandoan coal project

OCTOBER 2010

Increase to 381Mt announced for Bundi thermal coal resource

OCTOBER 2010

$10.5 million share placement announced, primarily for Bundi coal project

SEPTEMBER 2010

JV with China National Coal Group Corp (China Coal) over Columboola goes unconditional

AUGUST 2010

Maiden Inferred resource of 156Mt announced for Norwood thermal coal project

JULY 2010

China Government approves China Coal’s (SinoCoal) $30 million JV over Columboola coal tenement

CAPE ALUMINA – 20.8%

JUNE 2011

Raises $1.8 million through convertible notes issue

JUNE 2011

New Managing Director Graeme Sherlock appointed

JUNE 2011

Drill program commences at Bauxite Hills, Weipa

MAY 2011

Milestone agreement reached with Cape York traditional land owners

MARCH 2010

Favourable concept study completed for Bauxite Hills


ORION METALS – 14.7% (previously 17.7% before completion of the MLM rights issue)

SEPTEMBER 2011

September 2011 – Farm-in agreement with Broughton Minerals finalised for U/REE project 30km south of Mary Kathleen

JULY 2011

July 2011 – 2,022m RC drilling program was completed on Killi Killi Hills and Metalbank JV

DECEMBER 2010

30 Hole shallow drilling confirms high levels of REE and gold at Killi Killi Hills.

OCTOBER 2010

$2 million share placement announced to advance Killi Killi Hills rare earths discovery in Tanami WA

SEPTEMBER 2010

Rock chip assays confirm rare earth elements (REE) at Killi Killi Hills

PLANET METALS LIMITED – 37% (previously 76% before completion of the MLM rights issue in July 2011)

MAY 2011

Completes estimated $7 million sale of Wolfram Camp tungsten-moly interests west of Cairns to Germany’s Deutsche Rohstoff AG

DECEMBER 2010

Farm-in agreement signed with Drummond Gold Ltd (ASX DGO) whereby Drummond can earn up to 75% of the Mt Cannindah copper-gold project by spending $6.75 million over a period 4 years and 9 months.

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Weipa

Gladstone

Gold CoastBRISBANE

QNI Yabulu Nickel Refinery

Townsville

N

0 200 400

Queensland

New South Wales

Victoria

ACT SYDNEY

MELBOURNE

Project locations

Figure 1: Metallica‘s Project Locations

Weipa 100%

Oresome Australia Weipa Zircon-Rutile HMS

Project

NORNICO 100%

Nickel-Cobalt-Scandium Flagship Project

Gippsland Option to purchase 100%

Oresome Australia Zircon-Rutile HMS

Project

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the Gippsland region of Victoria.

Your Company’s cash position remains sound. Cash in bank at 30 September was $6.2 million and we have had significant growth in our listed investments, particularly MetroCoal which currently accounts for around $47 million of the combined shareholdings $55 million market value. The fact that the value of these investments generally remains higher than Metallica’s own market capitalisation is an ongoing source of frustration and market curiosity, however it gives us considerable comfort towards supporting our various ongoing funding requirements.

Your Board maintains its belief that your Company is considerably undervalued and we have undertaken to reinforce this position even more strongly in front of equity markets in 2011-2012.

I would also like to acknowledge the contribution made by Peter Nicholson who resigned during the year to focus on his company’s major activities. Barry Casson replaced Peter on the board and has assumed the position of Chairman of the Audit Committee as well as his role as an independent Director of the Company.

In closing, and on behalf of all of our loyal shareholders, I pay personal thanks to our Managing Director, Andrew Gillies, my fellow Directors, our highly motivated management team and our enthusiastic employees and contractors. They have not only reinforced our vision for Metallica with a willing hands-on, best outcome, solution-focused approach, but ensured your Company remains on its well enunciated and preferred pathway of growth.

D K Barwick CHAIRMAN

Dear fellow shareholders,

It is exceptionally pleasing that against uncertain and volatile market conditions, Metallica has emerged from this challenging environment with its business strategy intact, and with measurable momentum progressing the value of our resource projects and investments.

Critically, progress in the year under review delivered the necessary robust financial, resource inventory, commodity mix, technical sophistication, processing options and new market opportunities, on which to now cement the key deliverables this financial year. These will comprise targeted completion late 2012 of the NORNICO feasibility studies, as we move closer to our objective of being a significant Ni-Co producer, and a major supplier of scandium oxide.

During the year we maintained, a regime of project progress based solely on achieving long-term shareholder value and growth. After the purchase of Greenvale and Lucknow tenements early 2010 from our scandium joint venture partner Straits Resources Ltd, Metallica secured 100% ownership of the NORNICO project, which covers all significant Ni-Co & Sc deposits within the Greenvale Nickel province.

This milestone delivers Metallica full control going forward on feasibility studies, development and financing decisions.

This opportunity was further enhanced with the appointment of our first Chief Executive Officer, highly experienced metallurgical engineer and nickel specialist, Gavin Becker, who is tasked specifically with bringing NORNICO to commercial fruition.

The feasibility and permitting of our Weipa Zircon-Rutile project is progressing, with production targeted early-mid 2013. It was extremely pleasing post-balance date, to announce our move via an exploration and option-to-buy agreement, into Rio Tinto’s zircon-rutile heavy mineral sands (HMS) project in

We secured during the year 100% ownership of the NORNICO Ni-Co & Sc project. This milestone delivers Metallica full control going forward on feasibility studies and project development and financing decisions.

Chairman’s letter


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Metallica is an Australian resource development company, owning three core asset groups:

• NORNICO Nickel-Cobalt and Scandium (Flagship project)

• Two zircon & rutile HMS projects (Weipa & option to purchase 100% Gippsland)

• Strong (end of year) balance sheet with over $84 million in listed investments and approximately $7.5 million cash and effectively no debt as at 30 June 2011

The greatest momentum during the year was behind our flagship tri-metal NORNICO nickel, cobalt and scandium project including the completion of major resource drilling, defining attractive Ni-Co & Sc resources, establishing our development pathway using high pressure acid leach (HPAL) processing and gaining 100% of the scandium rights.

We are particularly pleased with the progress we have made on the increasingly important scandium component of NORNICO. Our scandium project is receiving considerable interest from aluminium alloy and fuel cell manufacturers.

In addition to nickel, cobalt and scandium, Metallica has significantly progressed its interests in zircon and rutile.

The feasibility and permitting of our Weipa zircon and rutile project is progressing confidently through 100% owned subsidiary Oresome Australia Pty Ltd, with first production targeted for early-mid 2013. Management like the potential of the projects robust economics and outlook for zircon demand and prices (currently over US$2,000/t) and have been seeking to expand its zircon interests for some time.

In August 2011, Oresome secured an exclusive option to purchase the Gippsland zircon-rutile HMS project with Rio Tinto Exploration Pty Ltd. Oresome has the opportunity to become a

significant player in the zircon-rutile sector.

Metallica is well positioned and progressing confidently as an Australian resource development company on the back of its 100% owned NORNICO Ni-Co & Sc project, its two zircon-rutile HMS projects – Weipa and Gippsland (option to acquire 100%), and has a clear strategy for major growth.

Critically, Metallica enters the current financial year – dominated by the demands of the NORNICO feasibility studies, mining lease applications, mining studies & metallurgical testwork and permitting for NORNICO – as a very tightly held entity.

Our listed investments are currently worth around $55 million (see Table 1), providing a buffer against shareholder dilution. Even a small strategic selldown can deliver substantial millions into our cash reserves and allow Metallica to grow without significantly diluting your shareholding.

It was pleasing during the year to initiate two in-specie distributions to Metallica shareholders from our investment portfolio, these were the Cape Alumina (February 2011) and via the unique and attractively priced Metallica rights issue (in June-July 2011) with two attaching Planet Metals shares to every Metallica share subscribed.

This financial strength and de-risked capital backstop has emerged as real point of difference for Metallica as we progress our resource projects.

Project gains during the year were solid. By the end of 2010, Metallica has completed the major drill out necessary to prove up NORNICO’s Greenvale-Lucknow resource, the principal focus for feasibility and potential development.

Ongoing confirmation of the nickel-cobalt and scandium rich laterite ores within Greenvale-Lucknow has reinforced the substantial revenue and long mine life potential for NORNICO.

Metallica is well positioned and progressing confidently as an Australian resource development company on the back of its 100% owned NORNICO Ni-Co & Sc project, its two zircon-rutile HMS projects Weipa and Gippsland (option to acquire 100%), and has a clear strategy for major growth.

Managing Director’s review


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Within NORNICO, the two scandium resources at Lucknow and Kokomo contain a combined 15.1Mt at 133g/t Sc (using a 70g/t Sc COG) containing approximately 2,000 tonnes Sc metal or approximately 3,000 tonnes of Sc oxide.

Our scandium project is receiving considerable interest from end users in aluminium alloys, fuel cell developers and strategic metal and rare earth element companies.

As NORNICO is increasingly moving to high level metallurgical testwork (including continuous pilot testwork), more detailed feasibility studies, mine modelling, mineable resource scheduling and eventual mine planning and process plant design options.

Metallica’s focus over the new year will be to attract an increasing number of skilled mining industry personnel adept at range of feasibility study disciplines and project delivery. These skilled personnel will also be important in supporting our General Manager for Metallica’s Industrial Mineral Projects (i.e. Zircon-Rutile & Limestone), Mr Stewart Hagan.

I thank you, our shareholders, for your confidence and patience. It has no doubt been an equally difficult and confronting investment climate for you over the year and we thank you for continuing to be part of the emerging Metallica growth story.

Andrew Gillies MANAGING DIRECTOR

Managing Director’s Review

Company Commodity ASX Code (shares on issue)*

MLM% No. Shares MLM hold

Share Price*

MLM Market Value ($M)

MetroCoal Coal MTE (179,883,663) 44.4% 80,000,000 60c $47.6M

Cape Alumina Bauxite CBX (129,050,803) 20.8% 26,867,621 15c $4.0M

Orion Metals REE & Gold ORM (79,597,443) 15.7% 12,552,686 10c $1.3M

Planet Metals Copper & Gold PMQ (59,717,114) 37.0% 22,069,619 8c $1.8M

*As at 30 September 2011

Total Listed Investments $54.7M

Cash at Bank (30/09/11) $6.2M

Cash & Total Listed Investments $60.9M

Shares on Issue (MLM) 132.3M

MLM Cash & Listed Investments/share 46c

Shareprice @ COB 30/09/11 29c

Market Capitalisation $38.3M

TABLE 1: METALLICA’S COMBINED CASH AND VALUE OF ITS ASX LISTED SHARE INVESTMENTS*

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• As at 30 September 2011, Metallica’s cash position was approximately $6.2 million and effectively no debt. In addition there is a $1 million convertible note loan to be repaid to Metallica in January 2012.

• In addition, Metallica holds approximately $55 million in listed investments (see Table 1).

• Successful completion of fully underwritten (by RBS Morgans) 1:10 Rights Issue, raising $4.9 million gross and distributing 23.4M Planet Metals shares to participating Metallica shareholders as well as issuing a further 11.7M Metallica shares, reducing Metallica’s shareholding in Planet from 76% to 37%.

• Successful completion of in-specie distribution of 11.7M Metallica-owned Cape Alumina shares (~ 30% of our Cape Alumina investment) to Metallica shareholders on a 1:10 basis, also adding liquidity to Cape Alumina which had a small shareholder base. Metallica’s shareholding in Cape Alumina reduced from approximately 30% to 21%

• Metallica provided to Cape Alumina, $300,000 as part of a total $1.8 million convertible note loan arrangement with Cape’s largest shareholders, RCF and Xinfa, for Cape to initiate exploration including a maiden aircore drilling program in Q3 2011 on the Bauxite Hills bauxite project in far north Queensland.

Financial, Investment & Corporate activity

• Appointment of highly experienced metallurgical engineer, particularly with nickel and nickel laterite projects, Mr Gavin Becker, as Metallica’s CEO to lead NORNICO feasibility and development.

• Planet Metals in May 2011 sold its Wolfram Camp Tungsten projects for a total consideration estimated at $7 million, comprising $3.5 million in cash and approximately $3.5 million in Deutsche Rohstoff shares at the time of sale (the buyer is listed on the Frankfurt Stock Exchange).

• The completion of the Metallica Rights Issue in July added 11,707,064 shares to its existing 117,070,645 for a new total of 128,777,710 ordinary shares on issue. There are 5.9M unlisted options on issue, comprising 2.3M employee options, exercisable at 35 cents on or before 12 February 2012, 1.1M options exercisable at 65 cents on or before 28 September 2012 and 2.5M Director options exercisable at 35 cents on or before 31 May 2012.

• After the completion of the acquisition of Straits Resources Ltd’s 20% interest in NORNICO’s scandium rights in August 2011 for consideration of 3.4M Metallica shares and options, which resulted in a new total of approximately 132.3M shares on issue (as at 30 September 2011).

• There have been no reportable lost time injuries or safety incidents through the year and Metallica remains compliant with its environmental obligations

It was pleasing during the year to initiate two in-specie distributions to Metallica shareholders from our investment portfolio, these were the Cape Alumina and via the unique and attractively priced Metallica rights issue with two attaching Planet Metals shares to every Metallica share subscribed.

Metallica has three core asset groups:

1. NORNICO Project Nickel-Cobalt & Scandium

2. Weipa & Gippsland Zircon-Rutile HMS Projects

3. Strong balance sheet (cash, listed investments & effectively no debt)

Full financial statements for the year to June 30, 2011, are available at www.metallicaminerals.com.au.

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DAVID K. BARWICKChairman

MLM Board of Directors

In his capacity as Chairman, Managing Director and or President, Mr Barwick has played a significant role in successfully funding and bringing into production, four mining projects throughout his career in both Australia and Canada. He has considerable expertise in the restructure and financing of entities.

An accountant by profession, Mr Barwick has more than 37 years experience in the management and administration of publicly listed companies in both Australia and North America. As a director, he has managed over thirty publicly listed companies, using his strong skills in strategic planning to successfully restructure these and give them a solid financial base from which to operate.

He has experience in preparing prospectuses and ensuring companies meet the necessary compliance standards for listing on both the Australian and Canadian Securities Exchanges.

In addition to being Chairman of Metallica Minerals, David is also Chairman of Manaccon Corporation Limited, MetroCoal Limited, Planet Metals Limited and Orion Metals Limited.

ANDREW L. GILLIESManaging Director

Mr Gillies graduated from the University of Queensland in 1985 with a BSc (Geology), is a member of the Aus.I.M.M. and is also a Director of the Queensland Resources Council. Mr Gillies’ key strength is mineral exploration, resource management and strategic planning specialising in project generation, selection and acquisition. He has acquired a considerable database and significant knowledge of mineral deposits in Queensland. Since 1985 he has worked continuously as a geologist in the mining and exploration industry, accruing over 24 years experience across a range of commodities.

During this period he gained valuable experience in the exploration, feasibility, development, open pit and underground mining of mineral deposits.

He has been a company geologist with BHP Gold Mines Ltd, Perseverance Corporation Ltd and Cracow Mining Venture and as a consulting geologist for various exploration companies until his full time role with Metallica as a founding director in 1997.

In addition, he has considerable experience in the preparation of prospectuses, listing and management of resource companies.

Mr Gillies is also a Non-Executive director of MetroCoal Ltd, Cape Alumina Ltd, Orion Metals Ltd and Planet Metals Ltd.

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MLM Board of Directors

JOHN K. HALEYExecutive Director, Company Secretary & CFO

Mr Haley brings almost thirty years of senior corporate experience from positions in Australia and Canada to the board of Metallica Minerals. He has a diverse career in a range of industries including mineral exploration and has participated as a seed capitalist in a number of mineral exploration companies.

With extensive experience in the preparation of prospectuses, he has had significant involvement in the listing of companies in Australia and Canada. He has previously worked with Coopers & Lybrand and Arthur Andersen & Co and in Australia in general management, financial reporting and company secretarial positions.

Mr Haley holds a B. Com and MBA University of Queensland, GradCert (Marketing) Queensland University of Technology, Grad. Dip. CSP, FCA and FTIA.

Mr Haley is also Non-Executive Director of MetroCoal Ltd, alternate Non-Executive Director of Cape Alumina Ltd and Company Secretary of both MetroCoal Ltd and Planet Metals Ltd.

BARRY J. CASSONNon-Executive Director

Non-executive Director since 1 December 2010. Mr Casson has more than 40 years experience in accounting, finance and general management with several listed and unlisted companies, primarily in the resources industry.

He has had extensive international experience in project financing and corporate transactions.

He is a Member of the Institute of Chartered Accountants and the Australian Institute of Company Directors. Mr Casson is currently a nonexecutive Director of Archipelago Metals Limited (an unlisted Public Company) and Finance Director/Company Secretary of Cloncurry Metals Limited (ASX-CLU).

Barry acts as Independent Chairman of the company’s Audit and Risk Committee.F

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SHU WUNon-Executive Director

Mr Wu Shu is a Director of Jilin Jien Nickel Industry Co. Ltd (Jilin Nickel) (SHA:600432), and a Director & CEO of Jilin HOROC Nonferrous Metal Group Co. Ltd.

Jilin Nickel is the parent company of Jien Mining Pty Ltd, the largest shareholder in Metallica.

Mr Wu was previously a Director, Company Secretary, Deputy CEO and CFO of Jilin Jien Nickel Industry Co. Ltd, and a Director of Jilin Nickel Industry Group (renamed in January 2006 as Jilin HOROC Nonferrous Metal Group Co. Ltd).

Mr Wu was instrumental in Jilin Nickel’s successful IPO in Shanghai stock market in 2003. His extensive experience in management and finance has enhanced Jilin Nickel’s overseas strategic investment and expansion significantly.

Mr Wu holds an MBA, CPA (Certified Public Accountant-China).

TAO LIAlternate Non-Executive Director to Shu Wu

Dr Li is a specialist in geotechnical and mining engineering and he provides commercial, technical and corporate strategic advice to Australian, Canadian, and Chinese mining companies.

He previously worked for 7 years in the Chinese mining industry and for the past 23 years he has been a trusted advisor to the Australian mining industry as an engineer, manager and group manager for organisations such as Mount Isa Mines, WMC Resources, Gold Fields and Newcrest Mining. His extensive experience with project evaluations, mergers, acquisitions, Chinese business development, corporate structuring, equity raising, EPCM and supply solutions provide a wealth of knowledge for Metallica to draw upon.

His project and operational skills range from design, evaluation, risk assessment and management, due diligence, review and audit, as well as project and human resource management. He has initiated, developed and implemented a number of innovative solutions and improvements to a number of mines and projects.

Dr Tao Li represents one of our major shareholders, Jien Mining Pty Ltd, a wholly owned subsidiary of Jilin Jien Nickel. He is also a Director of Orion Metals Limited and of Liberty Mines listed on the TSX.

MLM Board of DirectorsF

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MLM Staff & Management

METALLICA MINERALS STAFFBack Row Left to Right: Kevin Pery, David K Barwick, John Haley, Barry Casson, Andrew Gillies, Gavin Becker, Tao Li, Stewart Hagan, Peter Mason, Michael Tyndall Front Row Left to Right: Tina Moloney, Laura Wood, Lesley Edmonds, Guoyan Li, Maddison Chaesling

Metallica is a primarily Queensland focused mineral resource developer with 100% owned interests in nickel, cobalt & scandium, zircon-rutile and limestone-lime. Metallica also has an option to purchase 100% of the Gippsland zircon-rutile project located in Victoria.

Through its investments in four listed companies, Metallica has indirect interests in coal, bauxite, copper, gold, and rare earth elements.

BILL STACEYSite Manager - Greenvale Office

SHANE MARDON Project Geologist

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The NORNICO indicative capital and operating cost estimates being prepared by Ausenco Vector, based on a 500,000tpa HPAL operation at Greenvale, were recently completed. The Greenvale, Lucknow and Kokomo mining and pit optimisation studies are ongoing and continue to be refined in parallel with changes in the projects requirements (i.e. Process throughput, ore scheduling etc.).

The process plant study considered a 500,000tpa (base case) ore treatment rate, with capacity to produce in the order of 6,000tpa nickel as cathode, 500tpa cobalt as sulphide and 40,000-75,000kg pa scandium oxide. However there is considerable scope to increase the proposed base case plant size and current mine scheduling studies which will include a range of production scenarios.

Metallica has partnered with a Brisbane based innovative metallurgical research company, Canopean Pty Ltd, to provide the technology for the recovery of high purity nickel, cobalt and scandium (99.9% Sc oxide) products. The HPAL flowsheet being developed is highly suited for simultaneous tri-metal processing of Ni, Co and Sc bearing laterite ores.

Importantly, our current studies have included a 700tpa sulphuric acid plant (SAP), from which there is expected to be some excess acid for sale to the local market and/or for use by other potential future add-on NORNICO atmospheric, tank or heap leach nickel operations to increase nickel production. High pressure steam will be available from the SAP and will be used for HPAL heating and power generation.

The expected shortfall of power will either be sourced from the local grid and/or from a gas-fired on-site power plant.

TRADITIONAL OWNERS

As part of its ongoing preparation of a mining lease applications over Greenvale, Lucknow and Kokomo, Metallica is continuing fruitful Indiginous Land Use Agreement (ILUA) negotiations with the Gugu Badhun traditional landowners. These have been undertaken in an environment of mutual respect, cooperation and recognition.

PROJECT TEAM

Since the appointment of Gavin Becker as CEO, Metallica has been building the NORNICO Project Team including the following recent appointments

• Geology Manager (Michael Tyndall)

• Process Manager (Kevin Pery)

• Site Manager (Bill Stacey)

Our flagship NORNICO project progressed significantly during the year under review. It has now entered a 12 month period of more detailed feasibility studies, permitting, mineable resource studies, ongoing detailed metallurgical testwork and scandium market development. Mining studies are focused on defining the optimal mineable resource base to underpin a 20 year mining and processing operation, currently envisaged to be in the 500,000 – 1,000,000tpa range.

There has been significant customer interest and enquiry on Metallica’s potential to become a major long-term reliable scandium producer and we are confident of establishing long term customers requiring scandium for the most highly efficient high value aluminium alloys, solid oxide fuel cells (SOFC) and halogen lighting.

A key development was the decision in April to change NORNICO’s development strategy from a 180,000tpa heated Atmospheric Acid Leach (AAL) processing to more conventional and efficient High Pressure Acid Leach (HPAL) processing with its own acid-power plant at greatly increased feed rates.

This delivers economies of scale, lower operating costs, improved recoveries, reduces commercial and technical risk due to benefits from a self owned on-site acid plant providing secure local acid, heat and power.

HPAL allows all iron rich laterite ores to be co-treated, particularly the high scandium, high iron Lucknow and Kokomo ores, ensuring scandium output emerges as a major competitive advantage for the NORNICO project.

Most encouragingly, high nickel, cobalt and scandium extraction test results and comparatively low acid consumption have already been achieved from initial HPAL metallurgical testwork undertaken at Ammtec in Perth on representative ore from the Greenvale and Lucknow deposits (see Table 2). These ore bodies are targeted for NORNICO’s initial mining and processing.

It is proposed that feed material be sourced from selectively mined higher grade Ni & Co ores (while stockpiling medium and lower grade ores) primarily sourced from the Greenvale Ni-Co deposit will be blended with supplementary high grade cobalt and scandium rich nickel laterite ores trucked from the Lucknow deposit (6km away). Additional ores from the Kokomo Ni-Co-Sc deposit (55km away) can be treated in later years.

Pit optimisation studies will also include options for trucking high Ni-Co ores from the Bell Creek South deposit for supplementary feed and trucking acid from the proposed Greenvale acid plant to Bell Creek for a potential future AAL operation there, as the AAL process is more suited for treating the deposit’s lower iron nickel laterite ore types in the northern part of the NORNICO project area.

NORNICO Tri-Metal ProjectNICKEL-COBALT-SCANDIUM - 100% MLM

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and Inferred resource for Greenvale now stands at 8.0Mt @ 1.04% Ni and 0.08% Co (see Table 4). The Greenvale scandium values are typically between 10-80g/t Sc and average around 34g/t Sc in the Greenvale Ni-Co ore zones.

At the nearby Lucknow deposit, new resource estimates prepared during the year from 298 RC holes totalling approximately 7,000 metres, defined a Ni-Co Measured, Indicated and Inferred resource of 2.42Mt @ 0.57% Ni and 0.20% Co and 94g/t Sc at a 0.70% NiEq* COG (see Table 5).

In addition, and most importantly, the Lucknow scandium resource stands at 6.24Mt at 169g/t Sc (at a 70g/t Sc COG) (see Table 6) and remains open predominantly to the south. Using a higher cut-off grade of 120g/t Sc, there is a higher grade scandium resource of 4.12Mt at 206g/t Sc, containing more than 1,200,000kg of scandium oxide (see Table 7).

It is from within these significantly higher grade scandium resources that we would initially be selectively mined for blending with the higher grade Greenvale Ni-Co ores to maximise start-up revenues.

Shortly after balance date, Metallica acquired from Straits Resources Limited, the 20% ownership of the scandium rights that it had not previously held, giving Metallica for the first time, full ownership not just of the scandium resource, but the total NORNICO project – a critical milestone.

TABLE 2: INITIAL HPAL TEST RESULTS ON NORNICO Ni-Co & Sc ORES (GREENVALE & LUCKNOW)

ProjectGreenvale Ni-Co Ore Lucknow Ni-Co & Sc Ore

Powerline Powerline + Edge Red Fort Grants Gully

Ore Type Ni-Co Ni-Co Sc Sc-Ni-Co

Sample Head Grade

% Ni 1.24 1.53 0.20 0.89

% Co 0.09 0.09 0.11 0.24

g/t Sc 48 36 264 144

% Fe 32.1 22.7 33.0 29.5

Extraction %

Ni 82.8* 91.9 91.6 94.1

Co 89.2* 94.2 94.6 94.1

Sc 72.2* 79.4 96.8 87.1

HPAL testwork was completed by AMMTEC Perth. Leaching was done under pressure at 255C for 60 minutes with an acid addition of 265Kg/t ore. *NOTE: Acid depleted, hence full extraction not possible in this instance.

*NiEq is calculated using Ni + 2Co when the resource was estimated in early 2011. Scandium (Sc) has not been used in the equivalency equation.

These new senior staff, together with specialist consultants as necessary will see the NORNICO Project Feasibility Studies, EIS studies and market development progressed through 2011-12.

NORNICO’S UPGRADED RESOURCES

The great majority of NORNICO’s resource drilling on the Greenvale and Lucknow deposits required for feasibility studies and mine planning and scheduling, was completed during the last financial year – a major achievement. Some additional infill drilling is being planned for the Lucknow scandium resource to convert the Inferred category to Measured and Indicated category suited for mining studies.

The NORNICO project comprises five key nickel laterite deposits; Greenvale, Lucknow, Kokomo, Minnamoolka and Bell Creek (see Figure 2).

By year’s end, NORNICO’s combined resource base stood at 49Mt at 0.81% Ni, 0.09% Co, using a 0.7% Ni Eq* cut off grade, containing approximately 400,000 tonnes Ni and 42,000 tonnes Co. Approximately 90% of this NORNICO Ni-Co resource is within the Measured and Indicated category (see Table 3).

From some 23,000 metres of drilling (779 Reverse Circulation (RC) and Aircore holes), the Measured, Indicated

NORNICO Tri-Metal ProjectNICKEL-COBALT-SCANDIUM - 100% MLM

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TABLE 3: NORNICO Ni-Co RESOURCE BASE

Nickel-Cobalt Deposit

Million Tonnes Mt

Ni %

Co %

In situ Ni Metal

In situ Co Metal

Bell Creek S 9.12 0.97 0.07 88,086 6,040

Bell Creek N 2.30 0.83 0.03 19,090 621

Bell Creek NW 3.07 0.77 0.05 23,639 1,443

The Neck 0.84 0.84 0.03 7,056 218

Minnamoolka 7.08 0.80 0.04 56,408 2,872

Kokomo 16.20 0.67 0.12 107,910 19,450

Greenvale 8.00 1.04 0.08 83,355 6,573

Lucknow 2.43 0.58 0.20 13,990 4,773

TOTAL 49.04 0.81 0.09 399,534 41,990

*Note – using 0.7% NiEq (Ni+2Co) COG

The resource conforms to JORC guidelines for the reporting of mineral resources, the resources have been classed as either Measured, Indicated or Inferred based on geological continuity, sample intervals and drill hole spacing. The Measured and Indicated resource is sufficient for preliminary pit design and scheduling. The Mineral resource estimate is appropriate for a selective open pit mining scenario, but does not account for mining dilution or mining losses.

TABLE 4: GREENVALE Ni-Co RESOURCE (USING A 0.70% NiEQ* COG)

Classification Mt Ni % Co % Fe % Sc g/t

Measured 2.63 1.08 0.09 22.0 33

Indicated 4.47 1.03 0.08 21.0 33

Inferred 0.90 0.99 0.07 19.0 30

Total 8.00 1.04 0.08 21.0 33

The resource estimates conform to JORC guidelines for the reporting of mineral resources, the resources have been classed as either Measured Indicated or Inferred based on geological continuity, sample intervals and drill hole spacing. The Measured and Indicated resource is sufficient for preliminary pit design and scheduling. The Mineral resource estimate is appropriate for a selective open pit mining scenario, but does not account for mining dilution or mining losses.

TABLE 5: LUCKNOW Ni-Co RESOURCE (USING A 0.70% NiEQ* COG)

Classification Mt Ni % Co % Sc g/t Fe %

Measured 0.86 0.66 .017 64 24.3

Indicated 0.82 0.52 0.23 107 22.5

Inferred 0.75 0.54 0.19 115 23.1

Totals 2.42 0.57 0.20 94 23.5

TABLE 6: LUCKNOW Sc RESOURCE (70G/T Sc COG)

Classification Mt Sc g/t Ni % Co % Fe % Mg %

Measured 0.72 194 0.24 0.05 30.6 1.93

Indicated 2.67 170 0.19 0.04 35.3 0.94

Inferred 2.85 159 0.20 0.04 35.0 0.80

Total 6.24 169 0.20 0.04 34.6 0.99

NORNICO Nickel-Cobalt and Scandium projectF

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TABLE 7: LUCKNOW Sc RESOURCE (120g/t Sc COG)


Measured 0.51 239 0.25 0.06 21.8 0.37

Indicated 1.77 209 0.20 0.05 35.4 0.31

Inferred 1.84 194 0.21 0.05 36.1 0.31

Total 4.12 206 0.21 0.05 35.2 0.32

TABLE 8: KOKOMO Sc RESOURCE ESTIMATE (USING A 70g/t Sc COG)


Measured 0.7 154 0.22 0.03 36 0.6

Indicated 3.8 121 0.32 0.05 29 2.1

Inferred 4.4 91 0.18 0.02 13 6.0

Total 9.0 109 0.24 0.03 22 4.0

TABLE 9: SCANDIUM RESOURCE (LUCKNOW & KOKOMO)

Project Tonnes Mt

Sc Grade g/t

Sc Metal kg

Lucknow

Measured 0.72 197 141,840

Indicated 2.67 171 456,570

Inferred 2.85 159 453,150

Total 6.24 169 1,051,560

Kokomo

Measured 0.7 154 107,800

Indicated 3.8 121 459,800

Inferred 4.4 91 400,400

Total 8.9 109 968,000

Combined Total 15.14 133 2,019,560

Note: Using 70/g/t Sc cut off grade

Competent Person’s Statement

The NORNICO project Mineral Resource estimate(s) is based upon and accurately reflects data compiled, validated or supervised by Mr John Horton, Principal Geologist, who is a Member of the Australasian Institute of Mining and Metallurgy and a full time employee of Golder Associates Pty Ltd. Mr Horton has sufficient experience that is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Horton consents to the inclusion of this information in the form and context in which it appears in this document.

NORNICO Nickel-Cobalt and Scandium projectF

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NORNICO Nickel-Cobalt and Scandium project

Figure 2: NORNICO Project location

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Scandium is one of the more valuable of the 17 Rare Earth Elements (REEs), with scandium oxide priced over US$1,500/kg (99.9% purity). While China produces around 95% of most, if not all of the other 16 REEs, China is not known to have any significant scandium resources and scope to produce scandium in significant quantities.

Metallica believes there is an excellent opportunity to create a whole new strategic metal market with scandium.

Current applications of scandium are for aerospace, high-end sporting goods (e.g. bicycle frames), hand guns and specialised lighting. There is much interest in solid oxide fuel cell (SOFC) technologies where scandia-stabilized zirconia (SSZ) is used as a high conductivity cathode material.

Via NORNICO, Metallica is uniquely positioned to produce a long-term reliable supply of scandium oxide in significant quantities of >30,000kg pa to >100,000kg pa.

MARKET OPPORTUNITY - SCANDIUM

It is envisaged that once a long term reliable supply of significant quantities of scandium (say >40,000kg pa Sc

2O

3) becomes available for the first time, the market for

scandium is expected to grow substantially. As the demand for scandium increases, a higher percentage of NORNICO scandium ore would then be incorporated in to NORNICO’s plant feed in future years to increase NORNICO’s scandium oxide production.

There is considerable benefit in having three metals (Ni-Co & Sc) to blend, so that when there are higher prices for any one or more metals, the processing options of Ni, Ni-Co, Ni-Co-Sc, Sc-Co and Sc ore blends, can be relatively easily scheduled to maximise revenues.

There continues to be significant customer interest and enquiry on Metallica’s potential to become a major long-term reliable scandium producer.

Demand for Scandium is expected to grow dramatically once long-term reliable supply is established, particularly for SOFC’s (for cleaner natural gas generated electricity and heat) and Sc-Al alloys in the transport, aerospace, aviation and sporting industries.

Scandium is well known as a powerful grain refining element for aluminium. The properties of Sc-strengthened alloys and Scandia or Scandium oxide (Sc

2O

3) stabilized Zirconia (Zr0

2)

materials are particularly promising. The Al-Sc alloys (e.g. 0.5% Wt) have a number of superior properties including light weight, high strength, superior weldability, good thermal resistance, corrosion resistance and long durability. The principal applications of the Al-Sc alloys are for sporting equipment and military demand. For example, scandium alloys are applied in premium bicycle frames and in fighters and missiles. Such enhanced aluminium alloys were first developed and used by the USSR for MIG fighter aircraft and missile structural components in the 70’s and 80’s.

World scandium usage is currently small (~5tpa), its use and growth has therefore been severely restricted by scandium’s scarcity and lack of reliable supply.

Scandia-stabilised zirconia has extremely high oxygen-ion conductivity for use as a high efficiency electrolyte in solid oxide fuel cells. The applications of scandium are increasing because of its specific mechanical and chemical properties over other metals, and hence there is a growing market demand.

Worldwide, high grade (>100g/t Sc) scandium deposits are very rare and Metallica has been fortunate in defining two large high grade scandium resources associated with Ni-Co resources to substantially support a Tri-metal project and therefore maximise revenue. Having three metals is a much better proposition for project development than a situation of just a stand alone scandium or a nickel-cobalt project.

NORNICO Nickel-Cobalt and Scandium project

Scandium-aluminium alloy frame

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The development of the Lucky Break project would provide Metallica with significant hydrometallurgical operational experience and know-how, ahead of the proposed larger scale NORNICO development at Greenvale (approximately 100km north of Lucky Break).

Metals Finance is continuing to progress Lucky Break towards implementation and development. Subject to project financing by MFL, it is expected to commence commissioning during the third quarter of 2012.

The Lucky Break nickel project, 140km west of Townsville in north Queensland (see Figure 3), is a joint venture between Metals Finance Ltd (ASX:MFC) and Metallica.

Metallica holds two granted Mining Leases (ML 10324 and 10332).

Under the JV, Metals Finance is responsible for funding, developing and managing the Lucky Break project if it proceeds.

A limited recourse loan will be created from Metals Finance to a Metallica subsidiary for 50% of the project costs.

The project, with a minimum planned mine life of just under six years with nickel recoveries of 85% and average grades of 1.3% Ni, is to be developed and brought into production at no cash cost to Metallica.

Upon implementation, 100% of cash flow surplus will be directed to repayment of the loan from Metals Finance until this loan is repaid. After this, the cash flow surplus will be shared 50:50.

Figure 3: Lucky Break Nickel-Laterite project

Lucky Break nickel project 50:50 METALLICA – METALS FINANCE JOINT VENTURE

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Weipa Zircon-Rutile HMS projectMETALLICA (THROUGH ORESOME AUSTRALIA PTY LTD) 100%

Through its wholly-owned subsidiary, Oresome Australia Pty Ltd, (Oresome) Metallica holds 100% of the Cape York Heavy Mineral Sands (HMS), Project a footprint of ~2,000km2 of highly prospective yet under-explored ground for zircon-rutile HMS deposits.

The project currently comprises four granted Exploration Permits for Minerals (EPMs) (Urquhart Point, Jardine, Doughboy and Jackson River 2), ten EPM Applications and one Mining Lease Application that covers the Urquhart Point HMS deposit approximately 5km southwest of Weipa (see Figure 4).

The Urquhart Point zircon-rutile HMS project has been progressing satisfactorily towards development, with work on permitting, evaluation, Environmental Impact Statement (EIS) and bankable feasibility progressing as planned. The BFS work has been contracted to Brisbane-based Calder Maloney Engineering, whilst the EIS is being prepared by VDM Group.

Based on results to date, there is excellent potential to establish a modest size high grade zircon and rutile project with relatively low capital cost to produce a zircon and rutile concentrate, with first production targeted early-mid 2013.

Zircon prices are currently more than US$2,000/t and the demand supply outlook for the next few years appears excellent with considerable shortfalls in supply forecast to maintain upward pressure on pricing.

Test work to date has produced zircon concentrate of high quality, having low levels of uranium and thorium. Zircon recovery rates after Wet High Intensity Magnetic Separation (WHIMS) are as high as 94.8%.

Oresome is continuing with exploration on site together with regional targeting of rutile and zircon in sand dunes and strandlines along the coast line near Weipa and north to the tip of Cape York Peninsula. In September 2011, Oresome entered into a Conduct and Compensation agreement with the Aputhama Land Trust (representing the relevant Traditional Landowners), the first step towards preparing an exploration program for some of the northern tenements.

Urquhart Point itself contains an Indicated Resource of 2.8Mt @ 7% HMS with a high proportion of zircon and rutile to a maximum depth of three metres, with a further nine kilometres of coastline still to be tested to the south within the Urquhart Point tenement (EPM15268) (see Figure 4).

Processing the heavy mineral sand concentrate through the Magnetic/Gravity Concentration Circuit produced a non-magnetic concentrate product containing 27.1% ZrO

2 and

47.3% TiO2, equating to a calculated zircon grade of 41.7%.

Produced zircon products are of high quality, and of note are the low levels of uranium and thorium within the concentrate calculated at 245ppm. A premium market price is expected.

The valuable HMS suite is dominated by zircon and rutile, typically greater than 40% combined. The strandlines are characterised with an extremely low slimes content and minimal overburden – both highly favourable attributes towards simple and lower cost zircon and rutile sand recovery.

Discussions are underway with all key stakeholders related to the MLA 20699 over Urquhart Point. Management is working closely with the Traditional Owners and the Aurukun Shire Council to ensure this project delivers positive outcomes to all parties.

Competent Person Statement

The Urquhart Point resource estimate has been prepared by Mr Roger Hobbs B. App. Sc. (Geophys & Geol), MAusIMM, who was previously a Director of Matilda Minerals Ltd (Oresome’s former joint venture partner), who has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which is to be undertaken to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Hobbs consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Figure 4: Urquhart Point Heavy Mineral Sands Project

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Oresome’s Exploration Target* for the two defined areas are:

• Stockdale – Glenaladale area: 500 to 800Mt of mineralised sand with an average of 3-4% HMS, with the HMS containing approximately 14-18% Zircon, 5-7% Rutile and 35-55% Titanium Minerals

• Mossiface area (~55km east): 25 to 35Mt of mineralised sand with an average of 2.5-3.0% HMS, with the HMS containing approximately 25-30% Zircon, 8-10% Rutile and 36-44% Titanium Minerals

Additional areas of untested potential exist on the recently granted exploration licences. No major environmental or community issues are currently evident.

Oresome has begun the due diligence process and will continue to meet with landowners, government bodies and other interested parties over the coming year. We hope to begin a drilling campaign shortly to confirm and enhance the work Rio Tinto has completed to date.

Oresome will aggressively initiate infill exploration of the Rio drilling to establish a maiden HMS resource to JORC standards.

In line with its growth strategy, Oresome now has the opportunity to enlarge its portfolio of activity with HMS and become a significant player in the zircon-rutile HMS market sector.

*Exploration Target

The potential quantity and grade is conceptual in nature, that there has been insufficient exploration drilling and sampling density to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.


Technical information contained in this report has been compiled and/or supervised by Mr Andrew Gillies B.Sc (Geology) MAusIMM Managing Director of Metallica Minerals Limited, who is a competent person and member of the Australian Institute of Mining and Metallurgy (MAusIMM). Mr Gillies has relevant experience to the mineralisation, exploration results and targets being reported on to qualify as a Competent Person as defined by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Gillies consents to the inclusion of this information in the form and context in which it appears in this report.

In August 2011, Oresome Australia Pty Ltd (Oresome), entered into a Right to Explore and Option to Purchase Agreement with Rio Tinto Exploration Pty Ltd under which Oresome has the exclusive right to explore certain exploration licences which comprise the Gippsland Heavy Mineral Sands (HMS) Project in Victoria’s south east (see Figure 1).

KEY TERMS OF THE AGREEMENT INCLUDE:

After an exclusivity payment to Rio Tinto of A$40,000, Oresome has the exclusive right to explore the exploration licences comprising the Gippsland HMS Project for 12 months (the Option Period). Key Terms are:

• Oresome will spend at least A$250,000 during the Option Period.

• Oresome can purchase a 100% interest in the exploration licences at anytime during the Option Period for a purchase price of A$8.0M (Rio Tinto retains a net smelter royalty of 2.5%).

The Gippsland HMS Project lies in south-east Victoria and consists of nine granted exploration licences covering a total area of approximately 620km2; all held 100% by Rio Tinto.

The tenements cover fossil strandlines of the Miocene-Pliocene shallow marine sand units of the Boisdale Formation which on lap the Palaeozoic basement at the southern margin of the eastern Australian Highlands.

HMS exploration to date has included surface sampling, significant drilling (12,697.5m of reverse circulation (RC) air core drilling for 232 holes) undertaken in 2004, 2005 and 2008 and eight (8) drill bulk samples at various locations in the project area. These samples were subjected to gravity separation and metallurgical test work at the Downer-EDI facility at Carrara on the Gold Coast, Queensland. An understanding of the characteristics of the zircon, rutile and ilmenite components of the Gippsland HMS deposits was developed from this work.

Two well defined areas of significant HMS concentration have been identified; these being the Stockdale-Glenaladale area, about 35km west of the town of Bairnsdale, and the Mossiface area, which lies 20km ENE of Bairnsdale.

Significant HMS deposits containing zircon and rutile (at a moderate strip ratio) have been identified by drilling in the two areas. Based on previous RC drilling (180 exploration drill holes), the expected average grade of these deposits is between 2.8 – 3.7% total heavy mineral (THM), of which a significant portion is zircon and rutile.

Gippsland Zircon-Rutile HMS project METALLICA (THOUGH ORESOME AUSTRALIA PTY LTD) HAS AN OPTION TO ACQUIRE 100%

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Metallica holds 2 Zircon-Rutile HMS

projects

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MOUNT PODGE

The project is 80km west of Townsville near the Herveys Range Road and close to the Star River mining lease. A full assessment of the potential of the project was nearing completion at the time of preparing this report.

CRAIGIE

Phoenix Lime has applied for EPM18253 covering 16 sub-blocks in an area ~60km southwest of the proposed Greenvale nickel mine and highly prospective for high quality limestone. If successful, this will further underpin the limestone requirements of NORNICO.

Metallica owns seven strategically located, high quality limestone projects in Queensland (see Figure 5) comprising Ootann (near NORNICO), Star and Mt Podge (near Lucky Break & Townsville), Boyne and Fairview (both near Gladstone), the Blue Rock deposit (between Minnamoolka and Kokomo) and the Craigie limestone project, 60km south west of Greenvale.

OOTANN

Phoenix Lime Pty Ltd (a wholly owned subsidiary) holds 240 hectares of mining leases covering a large, high grade limestone deposit suitable for calcining and underpinning NORNICO’s lime and limestone requirements.

Ootann is located ~130km via road from the proposed NORNICO Greenvale processing site. This site is currently operational, manufacturing crushed rock and limestone products for sale into the local market.

BLUE ROCK

This limestone deposit is conveniently located between NORNICO’s Minnamoolka and Kokomo nickel deposits, and ~60km from the proposed NORNICO nickel operation at Greenvale.

It is Phoenix’s intention to peg a mining lease encompassing this outcrop and survey access roads in 2011 in order to have this deposit available for Metallica’s NORNICO project.

FAIRVIEW

Fairview comprises 692.8 hectares within Fairview Station and is being developed to supply limestone into the expanding industrial market of Gladstone as opportunities arise.

BOYNE

The two Boyne mining leases contain large, high quality limestone deposits suitable for lime and limestone markets in the Gladstone region. Further resource definition drilling is planned.

STAR RIVER

The high grade limestone deposit at Star River occurs as a slightly elevated, mostly exposed limestone deposit with little or no overburden only 105km from Townsville.

Figure 5: Phoenix Lime project locations

Limestone projectsPHOENIX LIME PTY LTD (MLM 100%)

Ootan Limeworks

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Ootan Limestone Operations

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and adjacent Xstrata’s Wandoan project areas. Norwood is also due west of MetroCoal’s Bundi JORC resource area, MetroCoal increased the Bundi thermal coal resource several times to 595Mt. Permitting for the mining development of both the Bundi and Norwood projects is underway.

Critically, all of MetroCoal’s high priority coal tenements are outside of the strategic cropping land protection zones proposed during the year by the Queensland Government.

MetroCoal participated in key Surat Basin infrastructure developments to help ensure optimal coal supply-chain outcomes from mine to port. These included committing $2 million for the feasibility study for stage 2 of the Wiggins Island Coal Export Terminal (WICET) development and securing an opportunity for up to 15Mtpa of capacity in a proposed new Tenement to Terminal coal terminal at the Port of Gladstone.

MetroCoal raised $10.5 million in a placement in late 2010.

The Queensland Government has given conditional approval for the associated Surat Basin rail project – a vital link in expanding the region’s coal export infrastructure and one that has attracted capital backing by a US based energy fund.

Post year end on 6 September MetroCoal secured a $24 million placement with one of China’s leading coal service groups, Dadi Engineering Development Group Co Ltd.

10% of these funds have been received with the remaining 90% going through the government approval process. This is expected to be settled on 30 November 2011.

MetroCoal is an Australian-based emerging thermal coal exploration and resource development company focused on its thermal coal projects in the Surat Basin in southeast Queensland. Its primary focus is ongoing evaluations towards exporting thermal coal from underground mining and where possible, open cut mining in the Surat Basin.

The Company holds extensive coal exploration tenements in the Surat Coal Basin covering ~4,000km². These tenements are down-dip of well known resources, including Wandoan, Elimatta, Cameby Downs and Worri. MetroCoal’s total resource now exceeds 1 billion tonnes (see Table 10).

MetroCoal has had significant success in its principle areas of operation, the Bundi (100% MTE) and Columboola joint venture projects located in Queensland’s world class Surat Basin coal precinct.

Based on geological information from historic drilling and its own drilling results, MetroCoal expects over the near-term that it will meet its Exploration Targets* of between 2.5 and 3.5 billion tonnes of thermal coal, generally targeted for conventional underground mining.

It secured a $30 million joint venture agreement with China National Coal Group for a 51% stake in the exploration and development of EPC 1165, the Columboola project, in the Surat Basin. During the year, the JV has already proved up a maiden resource of 540Mt of thermal coal.

MetroCoal established a maiden Inferred resource of 156Mt for its Norwood thermal coal project in EPC 1167 near Roma

MetroCoal Limited ASX:MTE – MLM 44.4% | METALLICA CURRENTLY HOLDS 80M SHARES IN MTE

TABLE 10: METROCOAL LIMITED THERMAL COAL RESOURCES

Resource

Norwood1 Underground Coal

(UG)

Bundi1 UG

Juandah1 UG/UCG

Columboola2 UG

MetroCoal Resources UG

Total Resources UG

Inferred 156Mt 595Mt 149Mt 540Mt3 1,165Mt 1,440Mt

Indicated 23Mt 265Mt3 23Mt 23Mt

Total 156Mt 595Mt 172Mt 540Mt3 1,188Mt 1,463Mt

Refer to MetroCoal’s June 2011 Quarterly Report, released on 28 July 2011

1. See MTE ASX Announcement 12/05/11 – Bundi Coal Resource Increases 56% to 595Mt 2. See MTE ASX Announcement 7/7/11 – Columboola JV Announces Maiden Resource of 540Mt 3. MTE Columboola JV share = 49%

* Exploration Target

The potential quantity and quality is conceptual in nature, and that there has been insufficient exploration to define a Mineral Resource or Ore Reserve and that it is uncertain if further exploration will result in the determination of a Mineral Resource or Ore Reserve.


The information that relates to the Compilation and Exploration Results is based on information compiled by Mr Neil Mackenzie-Forbes who is a Member of the Australian Institute of Geoscientists (Membership No 2035). Mr Mackenzie-Forbes is currently the General Manager – Columboola JV and a full time employee of MetroCoal Ltd. Mr Mackenzie-Forbes has sufficient experience which is 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 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Mackenzie-Forbes has consented in writing for inclusion in this announcement the matters based on the information in the form and context it appears.

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The total consideration was $7 million (estimated), comprising approximately $3.5 million in cash and $3.5 million in Deutsche Rohstoff shares at the time of sale (the buyer is listed on the Frankfurt Stock Exchange).

The Wolfram Camp sale proceeds provided Planet Metals with a much enhanced balance sheet and a platform for future growth and potential acquisitions in 2012.

The structure of Metallica’s rights issue completed in July 2011, resulted in the distribution of approximately half its shareholding in Planet to Metallica’s existing shareholders, adding ~700 new shareholders to Planet Metals’ register.

TABLE 11: MOUNT CANNINDAH RESOURCE – AS AT MARCH 2008

CategoryMillion

TonnesCu %

Au g/t

Ag g/t

Measured 5.57 0.95 0.41 16

Inferred 1.9 1.0 0.3 14

Total 7.47 0.97 0.38 15

At 0.5% copper cut off


Technical information contained in this report relating to the Mount Cannindah project has been compiled and/or supervised by Mr Andrew Border and Dr Andrew Richmond, both of whom are members of the Australian Institute of Mining and Metallurgy (AusIMM). Dr Richmond, a full time employee of Golder Associates Pty Ltd was responsible for the resource block model and estimation. Mr Border was a full time employee of Planet Metals Limited and was responsible for all other aspects of the mineral resource estimate. Both Mr Border and Dr Richmond have sufficient experience that is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which they have undertaken to qualify as Competent Persons as defined by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Border and Dr Richmond consent to the inclusion of this information in the form and context in which it appears in this report.

Planet Metals is an ASX-listed gold and copper exploration and resource development company whose Queensland projects comprise the Mount Cannindah copper-gold project, 100km south of Gladstone, and a new acquisition, the Mount Borium gold project, 20km north of Kidston.

Mount Cannindah is a large gold-bearing porphyry copper system with significant depth potential and Measured resources of 5.6Mt @ 0.95% Cu and 0.4g/t Au (see Table 11). The great majority of the Mount Cannindah Cu-Au resource is open pitable. Drilling is currently underway to test for extensions as well as for discovery of new zones of Cu-Au mineralisation outside the established resource.

The project was advanced during the year with a 3,000m drill program undertaken by Planet’s farm-in partner, Drummond Gold Limited. This farm-in agreement, signed in December 2010, ensures that Planet is potentially free-carried through the first $6.75 million of exploration expenditure, assuming Drummond elects to earn up to 75% of the project.

Drummond is currently assessing the results of its drilling with a review of the existing resource estimate likely in the short term.

Mount Borium is highly prospective for gold in an area between the historic Kidston gold and Einasleigh copper mines. Limited exploration has been conducted on the project to date, with several historical drill holes known to have ended in anomalous gold mineralisation at less than 100m depth.

The Kidston gold mine, which has historically produced more than 3Moz of gold, is just 24km south of Planet’s key prospect within the Mount Borium project area. Similarly, the tenements that contain the Einasleigh copper project are directly adjacent Planet’s ground-holding to the north.

Planet Metals successfully completed the sale to Deutsche Rohstoff AG of its 100% owned subsidiary, Wolfram Camp Mining Pty Ltd, which owned 85% of the Wolfram Camp tungsten-molybdenum project west of Cairns.

Planet Metals LimitedASX:PMQ – MLM 37% | METALLICA CURRENTLY HOLDS ~22M SHARES IN PMQ

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mineral concentrations in streams draining radiogenic granites.

During the financial year, Newmont Exploration having completed an exploration programme testing the best targets with less than expected results elected to withdraw from the Malcolm Creek gold project, 80km south Georgetown. After which Orion also decided to surrender the project.

Orion also has the Top Camp gold and copper project 40km south of Cloncurry and featuring newly discovered magnetite bodies in an alluvial goldfield with hard rock gold and copper prospects.

Orion is adequately funded with approximately $3.7 million cash as at 31 August 2011 and effectively no debt.

Orion Metals is a well capitalised gold and rare earth elements (REE) explorer, discovering Rare Earths at Killi Killi Hills in the Tanami Desert region of Western Australia in September 2010 (see Figure 6).

The 17 rare earth elements are critical components for many new technologies, with extensive uses in renewable energy and zero emission vehicles. Orion has acquired a number of exploration permits in the Tanami desert region of Western Australia, as well as North Queensland that are likely to host concentrations of rare earth elements (REE).

These acquisitions included a farm-in agreement with a Brisbane based private prospecting company, Broughton Minerals Pty Ltd, which owns a newly discovered REE and uranium prospect at Broughton Creek, 30km south of the historic Mary Kathleen Uranium and REE mine near Cloncurry in Queensland. Broughton holds 278km2 in five EPMs; 16209, 17143, 17974, 18075 and 19011.

ORM is paying $150,000 cash in compensation for past exploration expenses including an airborne geophysical survey. Orion will have the right to earn up to 90% equity in the project by an expenditure initially of $2 million for a 50% interest over 5 years and then an additional $1 million for each incremental increase of 10% equity.

Broughton had completed a 1,700 line km aerial survey over EPM16209 and produced high resolution data demonstrating that the prospective zones are extensive and never explored for REE mineralisation.

A geophysical survey over the Killi Killi Hills tenement area, 200km southeast of Halls Creek and covering E80/4029, E80/4197, E80/4558, E80/4559 & E80/4596, was completed towards the end of the 2010/2011 year with survey data being reviewed for geophysical anomalies and interesting features for ground checking and drill target selection.

Extensive exploration is planned for the Killi Killi discovery area and additional REE and gold targets in the regional tenements and a significant exploration budget has been assigned for this work.

An aircore/RC drilling program has been undertaken on the Metal Bank Limited’s (ASX:MBK) Coyote EL4212 (subject to Joint Venture with Orion).

Orion also negotiated a farm-in with Oklo Resources Ltd to allow Orion to incorporate Oklo’s EL25454 in the Northern Territory bordering the Killi Killi East property into a regional airborne geophysical survey aimed at generating high resolution radiometric and magnetic data over in excess of 600km2 of tenement package.

Orion’s other projects include 580km2 of REE interests at the Fulford-Bonnor Creeks project northeast of Mt Surprise and southeast of Chillagoe and which feature heavy

Orion Metals LimitedASX:ORM – MLM 15.7% | METALLICA CURRENTLY HOLDS ~12.5M SHARES IN ORM


WESTERN AUSTRALIA

SOUTH AUSTRALIA

NORTHERN TERRITORY

QUEENSLAND

NEW SOUTH WALES

VICTORIA

TASMANIA

Perth

Darwin

Sydney

Melbourne

Brisbane

Killi Killi Project

Fulford & Bonner’s Creek

Adelaide Canberra

Hobart

Broughton

Figure 6: Orion Metals Tenements

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Killi Killi Hills REE & Gold Project

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Brisbane-based Cape Alumina is an Australian pure-play bauxite company with 1,900km² of exploration tenements on western Cape York, Queensland.

The Company has the largest tenement holdings outside Rio Tinto Alcan’s (RTA) mining leases in the world-renowned Weipa bauxite province. Cape Alumina has international support from Chinese alumina majors including Xinfa, one of China’s largest aluminium producers, and has strong ties with the local Cape York community. A new Managing Director, mining engineer, Mr Graeme Sherlock, a former Rio Tinto and Mitsubishi Development executive, was appointed in July.

Cape Alumina is presently advancing the second of its major projects - the Bauxite Hills mine and port project, located 95km north of Weipa and 5km south of the Skardon River on western Cape York and for which a mining application has been lodged (see Figure 7). The mine and port received, during the year in review, in-principle support from the Queensland Government.

Access agreements have been successfully negotiated with traditional land owners through the Apudthama Land Trust.

During the September 2011 Quarter, a new 8,000m aircore

Cape Alumina LimitedASX:CBX – MLM 20.8% | METALLICA CURRENTLY HOLDS ~26.9M SHARES IN CBX


Figure 7: Cape Alumina Tenements

drilling program is being undertaken to establish an initial JORC resource estimate at the Bauxite Hills project.

Concept studies completed during the year found that subject to confirmation of resources, a 15 year mine could be established in the area based around production of 100 million tonnes of dry, export grade bauxite product.

The study encompassed areas within Cape Alumina’s wholly owned Exploration Permit Minerals (EPMs) 15376, 15374 and 16899.

Cape Alumina has mandated Austock Corporate Finance to determine fund raising options for the Company and this project. Cape, towards the end of the 2010-11 year, raised $1.8 million from three of its largest shareholders to advance the Bauxite Hills exploration work.

Cape Alumina is also evaluating the now longer term development of the Pisolite Hills project i.e. Post the proposed development of the Bauxite Hills project. If developed, these projects could position Cape Alumina among the top 10 bauxite producers in the world and one of the major suppliers of bauxite (ore of aluminium) to the rapidly expanding markets in the Asia-Pacific region.

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Drilling bauxite Cape Alumina

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Tenement scheduleAS AT 30 JUNE 2011

NORNICO NICKEL-COBALT PROJECT – NORTH (100%)

Tenement Project Name

Holder/Applicant Status (Expiry date)

No. Sub Block

Commodity Targeted

Min. Annual Expenditure

ML 4187 Bell Creek North Lease

NORNICO Pty Ltd Granted (29/2/2020) 71.35 Ha Ni, Co N/A

ML 4188 Bell Creek South Lease

NORNICO Pty Ltd Granted (29/2/2020) 98.11 Ha Ni, Co N/A

MLA 20549 Bell Creek Consolidated

NORNICO Pty Ltd Application 2145 Ha Ni, Co N/A

MDL 387 Minnamoolka NORNICO Pty Ltd Granted (30/6/2013) 654.26 Ha Ni, Co $100,000

EPM 10235 Minnamoolka NORNICO Pty Ltd Granted (8/9/2011) 5 Ni, Co $100,000

EPM 11285 Bell Creek NORNICO Pty Ltd Granted (27/8/2011) 8 Ni, Co $50,000

EPM 14101 Mt Garnet South

NORNICO Pty Ltd Granted (22/12/2010) 80 Ni, Co, Au, PGE

$60,000

EPM 14518 Mt Garnet South #2

NORNICO Pty Ltd Granted (7/3/2012) 56 Ni, Co, Au, Cu $60,000

NORNICO NICKEL-COBALT-SCANDIUM PROJECT – SOUTH (100%)


Holder/Applicant Status (Expiry date) No. Sub Block

Commodity Targeted


EPM 10680 Lucknow North

Greenvale Operations Pty Ltd

Granted (31/12/2010)* 3 Ni, Co, Sc $60,000

EPM 10866 Lucknow South

Greenvale Operations Pty Ltd

Granted (31/12/2010)* 4 Ni, Co, Sc $60,000

EPM 11223 Dinner Creek Greenvale Operations Pty Ltd

Granted (31/12/2010)* 7 Ni, Co $61,000

MLA 10342 Kokomo NORNICO Pty Ltd Application 3593.07 Ha Ni, Co, Sc N/A

EPM 10699 Kokomo NORNICO Pty Ltd Granted (21/8/2013) 21 Ni, Co, Sc, Au $50,000

EPM 14066 Greenvale South

NORNICO Pty Ltd Granted (22/08/2011) 48 Ni, Co, PGE $70,000

EPM 14070 Greenvale North

NORNICO Pty Ltd Granted (22/08/2011) 35 Ni, Co, Cu, Au $70,000

EPM 14181 Lucky Downs NORNICO Pty Ltd Granted (22/08/2011) 18 Ni, Co, Cu $40,000

EPM 14381 Greenvale South #2

NORNICO Pty Ltd Granted (14/12/2011) 8 Ni, Co, Cu $50,000

EPMA 17892 Lockup Well NORNICO Pty Ltd Application 1 Ni, Co N/A

EPMA 17893 Broken River South

NORNICO Pty Ltd Offered for grant 3 Ni, Co N/A

EPM 18175 Pinnacles Consolidated

NORNICO Pty Ltd Granted (22/2/2015) 21 Ni, Co $50,000For

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Tenement schedule

LUCKY BREAK NICKEL PROJECT (100%) – SUBJECT TO 50/50 JOINT VENTURE WITH MFC



Commodity Targeted


ML 10324 Dingo Dam NORNICO Pty Ltd Granted (28/02/2026) 36.17 Ha Ni N/A

ML 10332 Lucky Break NORNICO Pty Ltd Granted (30/11/2027) 241.7 Ha Ni N/A

GOLD & BASE METALS (100%)



Commodity Targeted


EPM 13873 Six Mile NORNICO Pty Ltd Granted (10/12/2011) 31 Tungsten, Molybdenum, Gold, Copper

$70,000

LIMESTONE PROJECTS (100%)



Commodity Targeted


ML 10276 Star River Limestone

Metallica Minerals Ltd

Granted (30/4/2023) 18.54 Ha Limestone N/A

ML 80131 Boyne Limestone NE



ML 80132 Boyne Limestone SW



EPM 13423 Boyne Limestone


Granted (1/1/2011) 4 Limestone $15,000

EPMA 18523 Craigie Phoenix Lime Pty Ltd

Offered for grant 16 Limestone N/A

EPMA 18761 Fairview Metallica Minerals Ltd

Offered for grant 6 Limestone N/A

MDL 394 Fairview Metallica Minerals Ltd

Granted (31/8/2014) 776.6 Ha Limestone Nil

MDLA 440 Fairview Metallica Minerals Ltd

Application 692.8 Ha Limestone Nil

MLA 80162 Fairview Metallica Minerals Ltd


ML 4788 Crotty 1 Phoenix Lime Pty Ltd




ML 5079 Crotty Phoenix Lime Pty Ltd



Granted (31/1/2013) 210 Ha Limestone N/A

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Tenement schedule

MINERAL SANDS: ZIRCON-RUTILE (100%)



Commodity Targeted


MLA 20669 Urquhart Point

Oresome Australia Pty Ltd

Application 366.07 Ha Rutile, Zircon, HMA

N/A

EPM 15268 Urquhart Point


Granted (24/10/2012) 24 Rutile, Zircon, HMS

$30,000

EPMA 15370 Jackson River Oresome Australia Pty Ltd

Offered for grant 3 Rutile, Zircon, HMS

N/A

EPM 15371 Doughboy Oresome Australia Pty Ltd


$20,000

EPM 15372 Jardine Oresome Australia Pty Ltd


$20,000

EPM 18015 Jackson River #2



N/A

EPMA 18377 Sandman #1 Oresome Australia Pty Ltd

Offered for grant 63 Rutile, Zircon, HMS

N/A


Application 126 Rutile, Zircon, HMS

N/A



N/A



N/A



N/A



N/A



N/A



N/A



N/A

Note: All tenements 100% held unless expressed otherwise (*) Renewal pendingPGE = Platinum Group ElementsHMS = Heavy Mineral SandsEPM = Exploration Permit for MineralsEPMA = Application for Exploration Permit for MineralsML = Mining LeaseMLA = Application for Mining LeaseMDL = Mineral Development LicenceMDLA = Mineral Development Licence ApplicationMFC = Metals Finance Ltd

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Nickel Deposit

Million tonnes (Mt)

Ni % Co % Fe % Mg %In situ

Contained Ni Metal

In Situ Contained

Co Metal

BELL CREEK SOUTH

Measured 8.85 0.97 0.07 11.70 7.50 85,845 5,930

Indicated 0.27 0.83 0.04 8.50 9.10 2,241 111

Totals 9.12 0.97 0.07 11.61 7.55 88,086 6,040

BELL CREEK NORTH

Indicated 2.3 0.83 0.03 8.60 7.70 19,090 621

Totals 2.3 0.83 0.03 8.60 7.70 19,090 621

BELL CREEK NORTHWEST

Indicated 3.07 0.77 0.047 15.70 5.20 23,639 1,443

Totals 3.07 0.77 0.05 15.70 5.20 23,639 1,443

THE NECK

Indicated 0.84 0.84 0.026 8.80 6.50 7,056 218

Totals 0.84 0.84 0.03 8.80 6.50 7,056 218

MINNAMOOLKA

Indicated 5.92 0.8 0.044 11.30 10.60 47,360 2,605

Inferred 1.16 0.78 0.023 8.90 10.20 9,048 267

Totals 7.08 0.80 0.04 10.91 10.53 56,408 2,872

KOKOMO

Measured 1.3 0.81 0.17 20.40 4.60 10,530 2,210

Indicated 11.7 0.66 0.12 21.90 3.20 77,220 14,040

Inferred 3.2 0.63 0.1 19.10 3.00 20,160 3,200

Totals 16.2 0.67 0.12 21.23 3.27 107,910 19,450

GREENVALE MINE SITE

Measured 2.63 1.08 0.09 22.00 3.90 28,404 2,367

Indicated 4.47 1.03 0.08 21.00 4.50 46,041 3,576

Inferred 0.90 0.99 0.07 19.00 5.50 8,910 630

Totals 8.0 1.04 0.08 21.10 4.42 83,355 6,573

LUCKNOW

Measured 0.86 0.66 0.17 24.30 2.20 5,676 1,462

Indicated 0.82 0.52 0.23 22.50 2.10 4,264 1,886

Inferred 0.75 0.54 0.19 23.10 2.10 4,050 1,425

Totals 2.43 0.58 0.20 23.32 2.14 13,990 4,773

COMBINED NORNICO RESOURCE

Measured 13.64 0.96 0.09 15.31 6.20 130,455 11,969

Indicated 29.39 0.77 0.08 17.46 5.57 226,911 24,500

Inferred 6.01 0.70 0.09 17.62 4.65 42,168 5,522

Totals 49.04 0.81 0.09 16.88 5.63 399,534 41,990

*Please see notes on page 35

NORNICO Ni-Co resource baseF

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NOTES

1. The above categories all calculated using a 0.70% NiEq (Ni+2Co) cut-off grade.

2. Block models for the above resources estimates were constructed by filling wire frame surfaces representing nickel laterite mineralisation boundary with 10m by 10m by 1m blocks. Nickel (Ni) grades were estimated by ordinary kriging using various search radius, depending on the drill spacing of the deposit. A minimum of 4 and a maximum of 15 composites were used to estimate each block, with a maximum of 3 composites from any 1 drill hole. Therefore, at least 3 drill holes were used to estimate block grade values. At Bell Creek South, Minnamoolka and Kokomo a nominal 0.3% Ni mineralised envelope was used as a hard boundary for Ni and Co block grade estimation. Hard boundaries were also used between the laterite and basement zones.

3. Variations due to rounding factors.

4. Iron (Fe) and magnesium (Mg) are included to indicate the overall ore quality, as both metals influence acid consumption as well as dissolved Fe, Mg and other metals, which are contaminants to nickel loaded pregnant solution which is treated to produce a marketable nickel and cobalt intermediate product. As a rule, the lower the Fe and Mg in the laterite ore the better metallurgy and the ore is more suited to heap leach processing.

Lucknow Drilling

NORNICO Ni-Co Resource Base NotesF

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Top 20 shareholders

Rank Name Total Units% of Issued

Capital

1 JIEN MINING PTY LTD (Investor Group) 25,139,908 18.99

2 GOLDEN BREED PTY LTD (Investor Group) 9,647,000 7.29

3 RESOURCE CAPITAL FUND III LP (Investor Group) 5,703,114 4.31

4 BONDLINE LIMITED 4,910,966 3.71

5 STRAITS MINERAL INVESTMENT PTY LTD 4,700,000 3.55

6 CODAN TRUSTEES <THE MOUNT COTTON ACCOUNT> 2,500,000 1.89

7 ASDEN INVESTMENTS PTY LIMITED <ASDEN P/L STAFF S/F A/C> 2,243,274 1.69

8 VICTORIAN FERRIES PTY LTD 2,105,407 1.59

9 CHINA XINFA GROUP CORPORATION LIMITED 1,964,386 1.48

10 JP MORGAN NOMINEES AUSTRALIA LIMITED <CASH INCOME A/C> 1,828,686 1.38

11 UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD 1,456,500 1.10

12 MR PAUL DOSTAL 1,425,000 1.08

13 ROBERT JOHN GILLIES 1,342,164 1.01

14 MINNELEX PTY LTD <PYPER FAMILY A/C> 1,307,434 0.99

15 K E BRYAN NO 2 PTY LTD <K E BRYAN NO 2 A/C> 1,200,000 0.91

16 MISS JUDITH EMILY RUWOLT 1,191,911 0.90

17 MR GEORGE CHIEN HSUN LU + MRS JENNY CHIN PAO LU 1,131,000 0.85

18 MR SHANE COLIN MARDON 1,000,000 0.76

19 SELECT RESOURCES PTY LTD 1,000,000 0.76

20 TREGANTLE PTY LTD <TREGANTLE A/C> 950,000 0.72

TOTAL FOR TOP 20 72,746,750 54.96%

CAPITAL STRUCTURE

Total shares on issue as at 30 September 2011 was 132,357,710, and the Company has approximately 2,119 shareholders.For

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Metallica Minerals LtdABN 45 076 696 092

71 Lytton RoadEast Brisbane QLD 4169

GPO Box 122Brisbane QLD 4001

Tel: +61 7 3249 3000 Fax: +61 7 3249 3001

ABN: 45 076 696 092 | ASX:MLM

www.metallicaminerals.com.au

A clear strategy for major growth

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