Quarterly Report to 31 Dec 2011

Transcription

1 Quarterly Report to 31 Dec 2011 Corporate Highlights Strengthening of cash position through the placement of 15.7 million of its 80 million MetroCoal Limited shares in December-January, raising gross proceeds of approximately $7.85 million. ASX Release 31 January 2012 Metallica Minerals Ltd An Australian resource development company with major project interests in Nickel-Cobalt & Scandium, Zircon-Rutile and Limestone, plus strategic investments in Coal, Bauxite, Gold-Copper and Rare Earth Elements. ASX:MLM Issued Capital (31/12/2011): 132,357,710 shares issued 11,420,000 Unlisted Employee & Director Options 3,000,000 other Unlisted Options 2,147 shareholders Top 20 shareholders: Hold 53.1% Directors: David K. Barwick - Non Exec Chairman Andrew Gillies - Managing Director John Haley - Exec Director & Comp. Sec. Barry Casson - Non Exec Director Shu Wu - Non Exec Director (Tao Li - Alternate Non Exec Director) Senior Management Gavin Becker - CEO Stewart Hagan - GM Industrial Minerals Largest Shareholders: Jien Mining Pty Ltd 19.5% Golden Breed Pty Ltd 7.5% Bondline Limited 3.8% Cash Balance: As at 31 December 2011, MLM s cash balance was approximately $8.44M. As at 31 January 2012, the cash balance increased to approximately $12.1M. MLM well positioned with current cash position of approximately $12.1 million to commence an active 2012 progressing NORNICO and its Zircon-Rutile projects. Listed ASX share investments market value over $36.6 million post sale of MetroCoal shares (see Table 1). Project Highlights NORNICO Ni-Co-Sc Tri-Metal Project 100% MLM Lucknow detailed infill & step out drilling program completed in mid December 2011 Drilling comprising 163 holes (LKRC 311 to 473) for 3,520m All drilling results received - updated Mineral Resource estimate due by mid February 2012 Best intercept this drilling program was 462g/t Sc (inc 627g/t Sc using 400g/t Sc COG) Metallurgical bulk samples for HPAL Pilot Plant ore testwork delivered to SGS Perth Work commenced on NORNICO Environmental Impact Statement (EIS) with various work packages contracted out to sub consultants Base line water sampling and dust monitoring programs commenced at the NORNICO sites Mining Lease Application (MLA) (269 Ha) was surveyed over the Lucknow Sc-Co-Ni resource WEIPA ZIRCON-RUTILE HMS PROJECT 100% MLM 22 targets identified through remote sensing (magnetics & radiometrics) on exploration tenements which cover approximately 2,000km 2 of highly prospective yet under explored region for heavy mineral sand deposits. Ongoing feasibility and environmental impact statement (EIS) studies on the Urquhart Point Project. GIPPSLAND ZIRCON-RUTILE HMS PROJECT MLM option to purchase 100% First drilling program comprising 43 holes (2,290m) was completed in December with maiden JORC resource estimate using over 240 drill holes is expected in March 2012 Due Diligence is well advanced on acquiring project from Rio Tinto Exploration Pty Ltd ABN: y i admin@metallicaminerals.com.au ASX:MLM 71 Lytton Road, East Brisbane QLD 4169 GPO Box 122, Brisbane QLD 4001

2 Project Locations Weipa Weipa 100% QNI Yabulu Nickel Refinery Townsville Zircon-Rutile HMS Project N Queensland Gladstone NORNICO 100% Nickel-Cobalt- Scandium Flagship Project BRISBANE Gold Coast New South Wales ACT SYDNEY Gippsland Option to purchase 100% Zircon-Rutile HMS Project Victoria MELBOURNE Figure 1 : Locations of Metallica s nickel-cobalt, scandium & zircon-rutile HMS Projects 2 Metallica Minerals Limited December Quarterly Report 2011

3 Listed Investment Highlights METROCOAL Ltd ASX:MTE MLM 30.8% (PREVIOUSLY 35.1% POST DADI PLACEMENT) Share placement of 32 million shares of 15.3% of the Company to DADI Engineering Development Group Co. Ltd (DADI) was completed in late November raising a total of $24M. DADI further increased its holding in MetroCoal to 19.6% through off market transactions with Metallica in December & January MetroCoal s combined Total Thermal Coal Resource increased to 3.78 Billion tonnes (Bt) (inclusive of Columboola project JV partner SinoCoal 51% share) (see Resource Table on page 4 in MTE s December Quarterly Report 2011). 230% increase in Bundi Project (EPC 1164 & EPC 1251) Resource to 1,561.8 Mt of thermal coal. Columboola JV Inferred Resource (SinoCoal 51%, MTE 49%) increased from 540 million tonnes to Bt of Thermal Coal. Maiden Inferred resource for Dalby West (EPC1166) stands at 520Mt (see Resource Table on page 4 in MTE s December Quarterly Report 2011). As at 31 December 2011, MetroCoal s cash position was approximately A$23.8M. For more information, see MetroCoal s December 2011 Quarterly Report. ORION METALS LTD ASX:ORM MLM 15.8% 27 hole drilling program completed in October on Killi Killi Hills REE and Gold project (Tanami, WA) Potential for significant discovery, with significant near surface gold intercepts including; KK055: g/t Au (including 7.1g/t Au) KK058: g/t Au KK056: g/t Au in the Killi Killi West target, in an area not previously known to host gold mineralisation. Airborne geophysical survey indicated further target areas for potential REE/gold mineralisation in the Killi Killi area. Initial evaluation visit to Broughton Creek REE Project 30km south-west of Mary Kathleen REE-U mine (NW QLD) to assess the zones of REE mineralisation previously identified by the JV Partner. Appointment of Garry Gill as Chief Operating Officer (COO) As at 30 November 2011, Orion Metals cash position was approximately A$3.1M. For more information, see Orion Metals November 2011 Quarterly Report. PLANET METALS LTD ASX:PMQ MLM 37% 6 hole (1,086m) reverse circulation (RC) drill program was completed at Torchlight gold prospect in December, results expected early February. Expands its tenement position with Farm-in agreement with Callabonna Uranium Limited (ASX: CUU) on three Georgetown Tenements highly prospective for gold. Drummond Gold Limited (ASX: DGO) field work on Mt Cannindah Cu-Au Project is expected to recommence in February. Drummond is required to spend $2.5 million prior to July 2013 to earn 51% in the project. As at 31 December 2011, Planet Metal s cash position was A$5.2M, with Planet Metals also holding 64,322 of Deutsche Rohstoff AG shares with a dollar value of approximately AUD$1.2M. For more information, see Planet Metals December 2011 Quarterly Report. CAPE ALUMINA LTD ASX:CBX MLM 19.1% Exploration drilling results reveal a maiden Inferred Resource of 28.3Mt of insitu, high quality, export grade bauxite at the Bauxite Hills BH1 area, its second major project in the western Cape York bauxite province (see Cape Alumina s ASX Release dated 29 November 2011). Work on environmental studies in the Bauxite Hills project area has commenced with the view to starting the formal Environmental Impact Statement (EIS) process. Community engagement with Traditional Landowners and local Aboriginal people is continuing. Cape Alumina successfully completed a Share Purchase Plan (SPP) in December The SPP was underwritten to 50 per cent by Patersons Securities Limited and raised a total of $1,170,000 from the issue of 9.75 million shares at 12 cents per share. As at 31 December 2011, Cape Alumina s cash position was approximately A$6M. For more information, see Cape Alumina s December 2011 Quarterly Report. Metallica Minerals Limited December Quarterly Report

4 Corporate and Financial To be read in conjunction with Appendix 5B attached Metallica currently has combined cash and ASX listed investments of around $48.7M or approximately 36.8 cents per share, (see Table 1). Strengthening of cash position through the placement of 15.7 million of its 80 million MetroCoal Limited shares in December-January, raising gross proceeds of approximately $7.85M. In December 6,703,038 MTE shares were placed with RBS Morgans Corporate Ltd at 50 cents each for $3.35M. In January a further 9 million shares were placed with DADI at 50 cents per share for $4.5M. Metallica retains approximately 64.3 million MTE shares or about 30.8%. FINANCIAL As at 31 December 2011, Metallica s cash was approximately $ 8.4M including interest income of $110,000 and R&D tax refund of $229,000 received during the December quarter. A two year $1M loan to MetroCoal was repaid to Metallica in December Exploration, evaluation and development expenditure totalled $1,597,000 and administration expenditure was $689,000 for the quarter to 31 December The total quarterly expenditure was approximately $2,436,000. The planned estimated administration, exploration, evaluation and development expenditure by Metallica for the March 2012 quarter is approximately $4.55M with the largest expenditure category being detailed metallurgical and pilot plant testwork. Metallica currently has 132,357,710 ordinary shares on issue, and there are 11,420,000 unlisted Directors & Employee options and 3 million other options on issue. See attached Appendix 5B for breakdown. The Company intends to actively progress Metallica s key 100% owned NORNICO Tri-Metal nickel-cobalt & scandium flagship project, Weipa Zircon-Rutile and Limestone-Lime projects in Queensland. Metallica also has an option to purchase 100% of the Gippsland Zircon-Rutile project located in Victoria. Metallica continues to assess attractive corporate and project opportunities that are compatible to the Company s core operations. SAFETY & ENVIRONMENT During the December quarter, there were no reportable lost time injuries or safety incidents. Metallica remained compliant with all its environmental obligations during the period. The Company takes environmental responsibility and land care seriously and progressively rehabilitates areas disturbed by exploration activities. COMMUNITY RELATIONS In November, a letter of support for the upgrade of terrestrial mobile phone coverage was provided to the independent review board for Regional Telecommunications. The committee is scheduled to meet in March to decide on which regions of Australia should receive upgraded telecommunications. There is currently no mobile phone coverage in the township of Greenvale and the Gregory Development Road. METALLICA ASSETS As at 31 January 2012, Metallica s combined cash and value of its ASX listed share investments is approximately $48M (see Table 1) compared to Metallica s market capitalisation currently around $39M. Metallica has substantial additional mineral asset value in its flagship NORNICO nickel-cobalt & scandium project in North Queensland, plus advanced zircon-rutile and limestone-lime projects. Table 1: Metallica s ASX Listed Investments and Cash as at COB 31 January 2012 Company & Shares on Issue ASX Code Commodity MLM % Holding Number of Shares held by MLM* Share Price MLM Market Value ($M) MetroCoal (208,883,663) MTE Coal 30.8% 64,300, c Cape Alumina (140,800,900) CBX Bauxite 19.1% 26,867, c 3.36 Orion Metals (79,597,443) ORM REE & Gold 15.7% 12,552, c 0.92 Planet Metals (59,717,114) PMQ Copper & Gold 37% 22,069, c 1.79 Total ASX Listed Investments Approximate Cash at bank Cash and Total ASX Listed Investments MLM Shares on Issue 132,357,710 Metallica Cash & Listed Investments/share 36.8c Share price (COB 31/12/2012) 29.5c *All shares are free trading Market Capitalisation $39.04M 4 Metallica Minerals Limited December Quarterly Report 2011

5 Setting up wide diameter (75cm) drilling rig on Lucknow deposit for collection of large representative ore samples for metallurgical testwork Competent Person s Statement Technical information contained in this report has been compiled by Andrew Gillies B.Sc (Geology) Managing Director of Metallica Minerals Ltd, who is a competent person and Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Gillies has relevant experience to the mineralisation, Exploration Targets and Mineral Resources being reported on to qualify as a Competent Person as defined by the Australasian Code for Reporting of Minerals Resources and Reserves. Mr Gillies consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. Andrew Gillies Managing Director, 31 January 2012 Metallica Minerals Limited December Quarterly Report

6 NORNICO Project Development Nickel-Cobalt & Scandium NORNICO tri-metal Project 100% Our flagship NORNICO project advanced significantly during the quarter. Environmental studies, permitting and Native Title activities, mineable resource studies, large diameter drilling for pilot plant metallurgical testwork, ongoing bench-scale metallurgical testwork and scandium market development initiatives are all progressing strongly. Further infill and step out resource drilling to upgrade the Lucknow resource was also completed during the quarter. Preliminary mining studies are complete, but will require on-going optimisation. These studies were aimed at defining the optimal mineable resource base to underpin a minimum 20+ year mining and processing operation, at a range of 750,000 1,000,000tpa ore feed to the processing plant, with a base case of 750,000tpa ore feed. Nickel-Cobalt & Scandium ores will be treated using the proven technology of High Pressure Acid Leaching (HPAL) together with an acid-power plant, to produce nickel, cobalt and scandium products. There has been significant customer interest and enquiry on Metallica s potential to become a major future reliable scandium producer and we are confident of establishing long term customers requiring scandium for high value aluminium alloys, more efficient solid oxide fuel cells (SOFC) and halogen lighting. Wide diameter drilling was performed at Greenvale and Lucknow during the quarter to acquire representative ore for pilot scale testwork at SGS Lakefield Oretest in Perth, with an initial focus on scandium recovery and purification. This scandium oxide will then be available for evaluation by potential off-takers and equity participants by mid The Greenvale and Lucknow 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) at the Greenvale Ni-Co deposit. This feed 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 (see Figure 2). The NORNICO indicative (±45-50%) estimates of capital (US$491 million) and operating cost (US$220/t ore) prepared by Ausenco Vector as a Venture Analysis in July 2011, were based on a 500,000tpa HPAL operation at Greenvale and unusually high sulphur price (US$220/t FOB Vancouver). The HPAL flowsheet being developed is Figure 2: NORNICO Project Regional Setting highly suited for simultaneous tri-metal processing of Ni, Co and Sc bearing laterite ores. A Scoping Study (~35% accuracy), upgrading and updating the July 2011 Venture Analysis to 750,000tpa will be completed by Jacobs over the next 4 months in parallel with: scandium oxide production and purification from pilot plants in Perth and Brisbane respectively, additional bench scale HPAL ore variability testwork, 6 Metallica Minerals Limited December Quarterly Report 2011

7 NORNICO Project Development upgrading of the Lucknow JORC resource base following the recent drilling, on-going environmental studies and permitting activities, and further discussions with product off-takers and potential Joint Venture partners. On successful outcome of the Scoping Study and associated activities, it is our intention to move quickly into a (25% accuracy) Pre-Feasibility Study or a Feasibility Study subject to adequate funding availability and possible Joint Venture participation. Laboratories with SGS Lakefield Oretest located in Perth being the most appropriate tender. Initial focus will be on production of scandium oxide mainly from Lucknow samples for evaluation by potential off-takers and/or JV participants. The main HPAL integrated pilot campaigns are to then be performed on various blends of representative ores to demonstrate chemistry and stability of the proposed flowsheet using a Greenvale and Lucknow ore blend similar to that expected to be mined in the first 10 years of the Mining Plan. Detailed design criteria for Feasibility Studies will be derived from this work. A Calweld wide diameter drill rig with a 870mm cylindrical bucket was used to collect samples with a total of 177m being drilled and 46m being sampled collecting a total of 47t of ore as per the table below. All samples were processed through a splitter into two bulka bags, Sample A being the lighter of the two and Sample B the heavier. Each bulka bag weighed between 400kg 610kg (wet weight). All the A samples (lighter bags, totalling 22t) were transported to SGSLO in Perth by truck. The heavier bags (remainder of the samples totalling 25t) are currently being stored under tarpaulin near the Greenvale mine site. NORNICO Process Studies A number of Process Studies were completed this quarter and others have been initiated as the project moves forward into engineering studies. Scandium Refining Laboratory testwork was performed on Batch HPAL Product Liquor Solution (PLS) produced from testwork performed in the previous quarter at ALS Ammtec Perth. This work showed promising results with >95% Scandium extraction without iron competing for loading as was the issue with previous testwork performed on Atmospheric Leach Product Liquor Solution. There was minimal extraction of all other elements which indicates that high purity scandium oxide product is achievable. The initial Pilot Program with a scandium oxide product focus will occur in the March 2012 Quarter. The feed ore samples for this pilot program were collected during the December quarter. Holes twinned on previous RC Drill holes were selected on the bases of; minimal depth of sample, >0.9% Ni, <5% Mg and Al, high grade Sc content, reasonable variation of lithology and consistency with the expected mining plan (as close as practicable). Deposit No. of Wide Diameter Holes Drilled RC Drill assay analysis was used to select the HPAL Pilot campaign blends with a total of 3t to be prepared for the first campaign and 7-10t to be prepared for the later campaigns. Batch HPAL testwork is being performed in January 2012 on a number of ores with different lithologies to optimize autoclave operating parameters and provide information on variability expected though the life of mine. Testwork is also being planned on comminution, rheology, settling characteristics and beneficiation. Sampled Sample Weight (t) Lucknow 3 (2 at Grant s Gully, 1 at Red Fort) (damp) Greenvale 5 (3 at Powerline, 2 at The Edge) (wet) Total Additional testwork was performed to define operating parameters. A continuous mini-rig solvent extraction Pilot Plant was operated for a 5 hour period with successful production of a scandium rich pregnant Strip Liquor solution. Further mini-rig Pilot runs are planned for the next quarter to refine operating parameters and demonstrate chemical stability of the process. Request for Proposal of a fully integrated HPAL/Scandium Solvent Extraction Pilot Plant Program was issued to three Hydrometallurgical Metallica Minerals Limited December Quarterly Report

8 NORNICO Project Development NORNICO S MINERAL RESOURCES The NORNICO project comprises five key nickel laterite deposits; Greenvale, Lucknow, Kokomo, Minnamoolka and Bell Creek (see Figure 2). The majority of the resource development drilling on the Greenvale and Lucknow deposits required for the preliminary mine planning and scheduling work undertaken during this quarter, was completed during the previous financial year. Additional infill and resource extension drilling was undertaken during this quarter for the Lucknow scandium resource with the aim of expanding and increasing the Measured and Indicated Resource categories for application in further mining studies and forthcoming feasibility studies to be carried out in This drilling campaign comprised a total of 163 Reverse Circulation and Air Core drill holes with a combined total of 3,520m. The Lucknow scandium resource is expected to be considerably increased and upgraded. The best recent drill intersections received are shown in Table 2. Table 2: Best Recent Lucknow Scandium Drill Intersections LKRC320 LKRC323 LKRC328 LKRC330 LKRC365 LKRC369 LKRC399 LKRC423 LKRC424 LKRC427 LKRC436 LKRC437 LKRC441 LKRC g/t Sc from 0m 209g/t Sc from 0m 208g/t Sc from 0m 271g/t Sc from 0m 261g/t Sc from 3m 284g/t Sc from 3m 235g/t Sc from 5m 375g/t Sc from 0m 256g/t Sc from 1m 237g/t Sc from 0m 462g/t Sc from 5m 220g/t Sc from 3m 154g/t Sc from 0m 233g/t Sc from 0m Currently, NORNICO s combined resource base stands 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 (see Table 3 and Appendix 1). Approximately 90% of this NORNICO Ni-Co resource is within the Measured and Indicated category. This resource base remains unchanged from that reported in the September quarter, but will be revised once all the assay results have been received from the latest drilling campaign and an upgraded Lucknow Mineral Resource estimate reported in February Table 3: NORNICO Ni-Co Resource Base (see Appendix 1) Nickel-Cobalt Deposit Million Tonnes (Mt) Ni% Co% Insitu Contained Ni Metal Insitu Contained Co Metal Greenvale ,355 6,573 Lucknow ,990 4,773 Kokomo ,910 19,450 Bell Creek S ,086 6,040 Bell Creek N , Bell Creek NW ,639 1,443 Minnamoolka ,408 2,872 The Neck , TOTAL ,534 41,990 The Measured, Indicated and Inferred Resource for Greenvale is 1.04% Ni and 0.08% Co (see Table 4). The Greenvale scandium values are typically between 10g/t and 80g/t Sc and average around 33g/t Sc in the Greenvale Ni-Co ore zones. Table 4: Greenvale Ni-Co-Sc Resource (Using a 0.70% NiEq COG) Classification Mt Ni% Co% Fe% Sc g/t Measured Indicated Inferred Total The nearby Lucknow deposit, comprises a Ni-Co Measured, Indicated and Inferred Resource of 0.60% Ni, 0.19% Co, 44g/t Sc (see Table 4) or including some internal scandium ore of 0.57% Ni and 0.20% Co and 94g/t Sc at a 0.70% NiEq* COG (see Table 6). Table 5: Lucknow Ni-Co Resource (Using a 0.70% NiEq COG) 1 Classification Mt Ni% Co% Fe% Sc g/t Measured Indicated Inferred Total Note: This Resource Estimate is exclusive of Scandium Resource in Table 7. *Nickel Equivalent (NiEq) where NiEq = Ni + 3Co for all deposits except for Lucknow and Greenvale where NiEq = Ni + 2Co. Scandium (Sc) has not been used in the NiEq equation 8 Metallica Minerals Limited December Quarterly Report 2011

9 NORNICO Project Development Table 6: Lucknow Ni-Co-Sc Resource (Using a 0.70% NiEq COG) 2 Classification Mt Ni % Co % Fe % Sc g/t Measured Indicated Inferred Totals NOTE: This resource estimate includes a small portion of the Scandium Resource Estimate in Table 7. Most importantly, the Lucknow scandium resource stands at 6.24Mt at 169g/t Sc (at a 70g/t Sc COG) (see Table 7). 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 8). This resource remains open predominantly to the southwest, as well as the western and eastern flanks of the current resource, hence the recent drilling campaign, just completed, which has closed off the majority of the boundaries of the resource. Table 7: Lucknow Sc Resource (70g/t Sc COG) 1 Classification Mt Sc g/t Ni% Co% Fe% Mg% Measured Indicated Inferred Total Table 8: Lucknow Sc Resource (Using a 120g/t Sc COG) Classification Mt Sc (g/t) Ni% Co% Fe% Mg% Measured Indicated Inferred Total NORNICO MINING STUDIES During the course of this quarter a series of preliminary mine production schedules were developed for the NORNICO project by external consultants IMC Mining Group Pty Limited. This work consisted of an ore production and stockpiling strategy for a combined Greenvale, Lucknow and Kokomo mining operation and was fed into a mine financial model as part of NORNICO s preliminary business case presented to the Metallica Board. Three main scheduling options were considered a 1Mtpa, a 0.75Mtpa, and a 0.75Mtpa with elevated scandium production throughput. The present value of the production schedules is driven considerably by the scandium production targets, where higher scandium production leads to higher present value schedules. The NORNICO production schedules are generally limited by market imposed scandium production constraints and therefore, there is a requirement for higher grade nickel ore which will drive the development of new mining areas in the first five or so years. 750,000tpa over 20+ years gave the best project returns and will be used as the base case size for future feasibility studies. In addition to Lucknow scandium resource, there is the Kokomo scandium resource of 133g/t Sc (see Table 9) providing for a combined scandium resource of 133g/t Sc (see Table 10). Table 9: Kokomo Sc Resource estimate (Using a 70g/t Sc COG) Classification Mt Sc g/t Ni % Co % Fe % Mg % Measured Indicated Inferred Total *Ni Eq is calculated using Ni+2Co - this is based on a nickel price of US$10/lb and a Cobalt price of US$20/lb, when the resource was estimated in early Scandium (Sc) has not been used in the equivalency equation. Metallica Minerals Limited December Quarterly Report

10 Table 10: NORNICO Scandium Resource (Lucknow & Kokomo) Project Tonnes (Mt) Sc Grade (g/t) Sc Metal (kg) Lucknow Measured ,840 Indicated ,570 Inferred ,150 Total ,051,560 Kokomo Measured ,800 Indicated ,800 Inferred ,400 Total ,000 Combined Total ,019,560 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 Fellow 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. Note: Using 70/g/t Sc cut off grade It is from these significantly higher grade scandium resources that we would initially selectively mine material for blending with the higher grade Greenvale Ni-Co ores to maximise start-up revenues, however scandium production will be deliberately restrained to match the expected demand or off take for scandium oxide in Bulka bags with collected metallurgy sample at Lucknow Sc-Ni-Co project The Greenvale and Lucknow Mineral Resource classification is calculated using a 0.70% nickel equivalent (NiEq) (i.e. Ni + 2Co) cut-off grade. Scandium (Sc) has not been used in the nickel equivalency equation. For a detailed breakdown of the Mineral Resource classification see Appendix 1. The Mineral Resource estimates conform to JORC guidelines for the reporting of Mineral Resources and have been classified as Measured, Indicated and Inferred based primarily on geological continuity, sample intervals and drill hole spacing. The Measured and Indicated Resources are 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. For further information see Metallica ASX release dated 19th January Metallica Minerals Limited December Quarterly Report 2011

11 Lucknow main access track Metallica Minerals Limited December Quarterly Report

12 Lucknow Drilling Update ScANDIUM & NiCKEL-CoBALT Project November December 2011 Drilling Results Lucknow detailed infill and step out drilling programme completed over a 1.5km by 400m area in mid- December 2011 Drilling comprising 163 holes (LKRC 311 to 473) for 3,520m (see Figure 3) Updated Mineral Resource estimate due by mid February 2012 Metallica completed its detailed infill and step out drilling programme at the high grade scandium Lucknow deposit in mid-december. A total of 163 Reverse Circulation (RC) and Aircore holes were drilled on an approximate 40m x 40m grid pattern for a total of 3,520m from November to December 2011 (see Figure 3). The aim of the drilling programme was to: more fully and accurately define the high grade scandium resource boundaries; and enhance the existing Lucknow scandium and nickel-cobalt Mineral Resource categories (see Tables 5-8) for further detailed mine planning and preliminary plant feed scheduling studies. It is expected that an upgraded Lucknow scandium resource estimate will be published by mid-february However, early indications are that most of the current Inferred Mineral Resource is expected to be upgraded to an Indicated Mineral Resource and that the current Indicated Mineral Resource will extend between the Grant s Gully and Red Fort areas and beyond the current Inferred Mineral Resource boundary on the south western and eastern edges. All significant mineralisation is within 35m from surface. Drill hole locations for the previous drilling and latest infill and step out drilling, together with the current Mineral Resource outline are presented in Figure 3. All the drill holes have been accurately surveyed and all assay results have been received. Work has commenced on updating the Lucknow Mineral Resource using the new drill data. The new Mineral Resource estimate will then be used to update the preliminary pit designs and initial mining studies which were undertaken in the fourth quarter of Lucknow scandium drill result highlights from latest holes LKRC311 to LKRC473 are: Grant s Gully area LKRC423 LKRC424 LKRC427 LKRC436 LKRC437 LKRC441 LKRC444 Red Fort area LKRC320 LKRC323 LKRC328 LKRC330 LKRC365 LKRC369 LKRC g/t Sc from 0m 256g/t Sc from 1m 237g/t Sc from 0m 462g/t Sc from 5m 220g/t Sc from 3m 154g/t Sc from 0m 233g/t Sc from 0m 274g/t Sc from 0m 209g/t Sc from 0m 208g/t Sc from 0m 271g/t Sc from 0m 261g/t Sc from 3m 284g/t Sc from 3m 235g/t Sc from 5m A full list of the 163 drill hole results summary is in Appendix 2. Lucknow MLA Greenvale Operations Pty Ltd, a wholly owned subsidiary of Metallica, lodged a Mining Lease Application (MLA) to the Department of Employment, Economic Development and Innovation (DEEDI) in Charters Towers on the 15th November The MLA (MLA 10366) covering an area of ha was pegged over the Lucknow deposit to incorporate the current Mineral Resource areas and possible subsequent extensions to the resource, but also to provide sufficient area for the inclusion for possible forthcoming mining related activities, should the project s feasibility studies be successful (see Figures 3 & 4). The target commencement date for production is Preliminary mining studies already undertaken in October- November 2011, suggest that a typical nickel laterite-type, shallow, open cast mining operation will take place at Lucknow, where extracted higher grade material will be trucked to the nearby Greenvale mine site for stockpiling, blending and HPAL processing. It is also envisaged that certain extracted lower grade material of various potentially economic Ni, Co or Sc values will be stockpiled for future consideration. The environmental impact of these activities will also be contained within the MLA boundary. The granting of the Mining Lease is also subject to successful Indigenous land use negotiations and land owner compensation agreements. Chip tray Drill hole LKRC436 which recorded 23m (5m 462g/t Sc 12 Metallica Minerals Limited December Quarterly Report 2011

13 Lucknow Drilling Update Figure 3: Lucknow Drillholes, Nickel-Cobalt & Scandium Resource Categories (early 2011) & Nov-Dec 2011 Infill & Extension Drilling 7,895,500mN ( ML10366 (Application) ( ( ( ( ( ( ( ( LADY AGNES 7,895,000mN EPM ,894,500mN 7,894,000mN ( 284,500mE ( ( ( ( ( ( ( ( (((((( ( (((((( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (((((( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (((((( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (((((( ( ( ( ( ( ( ( ( (((((( ( (((((( ( ( ( ( 285,000mE ( ( RED FORT ( ( ( (((((( ( ( ( ( ( ( GRANT'S GULLY RESOURCE CATEGORIES (2010 Drilling) Inferred Ni-Co and Sc Resource Indicated Ni-Co and Sc Resource ( Drill Holes (Metallica 2010) ( Measured Ni-Co and Sc Resource Drill Holes (Metallica Nov - Dec 2011) 285,500mE 0 N 200m Detailed Lucknow Nickel-Cobalt-Scandium Deposit Phase 3 Drilling results - holes LKRC311 to LKRC473 - are available Appendix 2. Metallica Minerals Limited December Quarterly Report

14 7,898,000mN Figure 4: Lucknow Mining Lease Application & Resource Location Gregory Development Road GREENVALE TOWNSHIP 7,897,000mN 7,896,000mN ML10366 (Application) LADY AGNES Lucky Springs Road 7,895,000mN GRANT'S GULLY LEGEND ML Application boundary Mineral Resource (2010 Drilling) 7,894,000mN RED FORT Additional Mineralisation (2011 Drilling) Edge of Nickel Laterite 7,893,000mN N 0 1 Km 284,000mE 285,000mE 286,000mE 287,000mE 288,000mE 14 Metallica Minerals Limited December Quarterly Report 2011

15 Scandium Element 21 Market Opportunity Scandium (Sc) has unique properties that will enhance our future. It is envisaged that once a long term reliable supply of significant quantities of scandium (say >40,000kg pa scandium oxide Sc 2 O 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 the first major long-term reliable scandium producer. The properties of Sc-strengthened alloys and scandia or scandium oxide (Sc 2 O 3 ) stabilized zirconia materials are particularly promising. Demand for scandium is expected to grow dramatically once long-term reliable supply is established, particularly for solid oxide fuel cells (SOFCs) (for cleaner and more efficient natural gas generated electricity and heat) and aluminium-scandium alloys (Sc-Al) in the transport, aerospace, aviation, marine and sporting industries. Scandium is lighter and has a higher melting point than aluminium and is the most potent grain-refining element known for aluminium, which makes it the best known additive metal for strengthening aluminium structures, but there has never been enough scandium supply available for widespread use. Scandium is a spice metal, used in small quantities (e.g. 0.3 to 0.5% wt) with aluminium alloys, gives a number of superior properties to the alloy, including higher strength, superior weldability, reduces heat cracking which results in better plasticity, better thermal resistance, better corrosion resistance and longer durability. To date, the principal applications of the Al-Sc alloys are for high-end or niche sporting equipment and military demand. For example, scandium alloys are applied in premium bicycle frames and in military aircraft 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. Airbus estimates that aircraft made from welded Al-Sc-Zr alloy would be 15% lighter (with consequent fuel savings) and 15% cheaper to build compared to present construction methods. World scandium production and consumption is currently small (estimated to be around 5 tonnes per year), but its use and growth has been severely restricted by its scarcity and lack of reliable supply. Given the emergence of the green economy, new technologies in fuel cells and the global expansion of natural gas usage and gas infrastructure, there is much interest in SOFC technologies where scandia-stabilized zirconia (SSZ) is used as a high conductivity cathode material. SSZ has extremely high oxygen-ion conductivity for use as a high efficiency electrolyte in SOFCs. The applications for scandium are increasing because of its specific mechanical and chemical properties are superior to many other metals, and hence there is a growing demand. Scandium is used in high intensity stadium lighting, and scandia iodide mercury vapour lights are used on film sets to recreate natural sunlight. Scandium is widely dispersed in the earths crust at low levels, typically 5 to 15g/t but very rarely enriched. Worldwide, high grade (>100g/t Sc) scandium deposits are scarce. In fact there have only been four significant scandium resources defined to date (all in eastern Australia). All are within laterites over ultramafic rocks that uniquely happen to have extraordinarily elevated scandium levels which have been enriched further (up to ten times) by the laterisation process. Metallica has been serendipitous in defining of these two large high grade scandium resources associated with Ni-Co laterite resources, to substantially support a Tri-metal project and therefore maximise revenue. Having three metals (using the same extraction process) is a much better proposition for project development than a situation of just a start-up standalone scandium (or a nickel-cobalt only) project. Through the development of the NORNICO Tri-metal project, subject to feasibility, Metallica is uniquely positioned to produce a long-term reliable supply of scandium oxide in significant quantities of between 40,000kg pa to >100,000kg pa. Scandium is one of the more valuable of the so called 17 Rare Earth Elements (REEs), with scandium oxide priced over US$1,500/kg (99.9% purity). While China produces approximately 95% of most of the other 16 REEs, it is not known to have any significant scandium resources, or scope to produce scandium in significant quantities. Metallica believes there is an excellent opportunity for us to be the fundamental building block in the realisation of a new strategic scandium market that s waiting for reliable scandium delivery. Scandium- Aluminium Alloy Metallica Minerals Limited December Quarterly Report

16 Lucky Break Nickel Project MFL 50% Metallica 50% Joint Venture The Lucky Break nickel project, located 140km west of Townsville, north Queensland (see Figure 4) is in a joint venture between Metals Finance Ltd (MFL) (ASX:MFC) and Metallica. Metallica holds two granted Mining Leases (ML and 10332). Under the Lucky Break joint venture agreement, MFL is responsible for funding, developing and managing the Lucky Break project, if it proceeds. A limited recourse loan will be created from MFL 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 MFL until this loan is repaid. After this, the cash flow surplus will be shared 50:50. The development of the Lucky Break project would provide Metallica with significant hydrometallurgical operational experience and know-how, ahead of the proposed much larger scale NORNICO development at Greenvale (approximately 100km north of Lucky Break). Figure 4: Lucky Break Nickel Project Location and Regional Setting PROJECT STATUS MFL continues to progress the Lucky Break Nickel Project towards implementation and development. On 28 November 2011 a significant milestone was reached with the issuing of a new Environmental Authority for the project based on recently upgraded environmental protection requirements from the Department of Environment & Resource Management. The previously announced Letter of Intent (LOI) with Dow Chemical (Australia) has progressed to the Final Agreement stage, with signoff expected early in first quarter Studies into the provision of an innovative solar thermal heating capability for the process plant, plus the use of a solar/hybrid power system for the mine offices, accommodation camp and managers residence were all completed in quarter four. Payback periods of less than three years are expected through the savings in diesel usage, and the contribution from Renewable Energy Credits (REC s) which these facilities will attract. The potential for a full scale 1MW solar/ hybrid power supply continues to be explored through Australian based manufacturers, and based on recent positive government feedback regarding the concept; an Expression of Interest (EOI) for Federal Government funding will be submitted during first quarter Engineering design work continued throughout quarter four A close working relationship has been developed with the new DEEDI Spyglass Beef Research Facility Resident Manager, and promises to deliver significant benefits to both parties as the project progresses. Subject to financing, commissioning of the Lucky Break Nickel project is now expected during the second quarter of PLANNED (MFL) ACTIVITIES FOR THE DECEMBER 2011 QUARTER In response to the new Environmental Authority a three year Plan of Operations (PoO) will be finalised and submitted to DERM for approval. The PoO will cover construction, commissioning, operation and further exploration activities at the Circular Laterite deposit. Submit an EOI for Federal Government funding of a solar/hybrid power system. Renew the Landowner compensation agreement for the project water supply from the Burdekin River. Continue mechanical/civil/structural engineering design of the processing plant. UPON FULL FUNDING Execute a Memorandum of Understanding with Sun Metals to guarantee acid supply to the project. Finalise design and issue tender and purchase order for supply of site buildings and accommodation modules. Issue contract for the initial pit design. 16 Metallica Minerals Limited December Quarterly Report 2011

17 Drilling Ni-Co & Sc laterite Metallica Minerals Limited December Quarterly Report

18 Weipa Zircon & Rutile HMS Project METALLICA 100% Through its wholly owned subsidiary Oresome Australia Pty Ltd, Metallica holds 100% of the Cape York Heavy Mineral Sands Project (HMS). At this stage the project consists of 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 deposit approximately 5km south west of Weipa (see Tenement Schedule). Exploration on the project is targeting rutile and zircon in sand dunes and strandlines along the coast line near Weipa and north to the tip of Cape York Peninsula. Oresome currently holds approximately 2,000km 2 of highly prospective yet under-explored ground for zircon-rutile mineral sand deposits. Oresome intends to ground truth 22 targets identified through remote sensing (predominantly radiometrics) as part of this year s exploration program in Cape York. These targets compare favourably with the Urquhart Point resource. The recently signed Conduct and Compensation Agreement with the Apudthama Land Trust paves the way to begin exploration on a large portion of this ground. Urquhart Point, contains an Indicated Resource of 7.0% Heavy Mineral Sand (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, (see Figure 5). Project development is progressing satisfactorily with the Environmental Impact Statement (EIS), bankable feasibility study and metallurgical development test work well underway. Indications to date are that zircon recovery after Wet High Intensity Magnetic Separation (WHIMS) is very high at 94.8%. Processing the heavy mineral concentrate through the Magnetic/Gravity Concentration Circuit produced a non-magnetic concentrate product containing 27.1% ZrO 2 and 47.3% TiO 2, 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 and a premium market price is expected. The valuable heavy mineral sands (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. There is a further nine kilometres of coastline still to be tested within the Urquhart Point tenement alone (EPM15268). Discussions are underway with all key stakeholders related to the MLA 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. 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 in mid Figure 5: Urquhart Point Heavy Mineral Sands Project Zircon prices are currently over US$2,000/t zircon and the demand supply outlook for the next few years appears excellent with considerable shortfalls in zircon supply being forecast thereby ensuring strong zircon prices WILL SEE: Submission of the EIS, currently underway over the Urquhart Point mineral sands project area (ML20669 application) within EPM15268; Preparation of work progams for recently granted regional EPM s that relate to the agreement with the Apudthama Land Trust; Continued exploration work on granted regional EPM s, the results of which have the potential to considerably enhance the life of the project; and ` ` Completion of the Bankable Feasibility Study (BFS) currently well underway. 18 Metallica Minerals Limited December Quarterly Report 2011

19 Competent Person s Statement (Urqhuart Point HMS Project) 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. Metallica Minerals Limited December Quarterly Report

20 Gippsland Zircon-Rutile HMS project Metallica (though oresome Australia Pty ltd) has an option to acquire 100% 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 (Rio Tinto) 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 option to purchase and the 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$8M (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 620km 2 ; 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 % total heavy mineral (THM), of which a significant portion is zircon and rutile. Oresome s Exploration Target* for the two defined areas are: Exploration Target* of 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. Exploration Target* of Mossiface area (~55km east) 25 to 35Mt of mineralised sand with an average of % 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. Oresome completed its first drilling program in the Glenaladale and Mossiface areas on 3rd January This drilling program comprised of 43 holes, for a total of 2,290 meters. Once R.J. Robbins and Associates complete assay and process evaluation of the Gippsland heavy mineral sand samples, Oresome will have AMC Consultants Pty Ltd prepare a maiden resource estimate for the project. We are on track to achieve this in March This program which as part of Oresome s acquisition due diligence over the Gippsland tenements, was designed to both test data supplied by Rio Tinto, and Oresome s own drilling Exploration Target* will see: Continued meetings with specific interested and affected parties as part of the due diligence over the project The completion of metallurgical and process test work on sand from target areas A Maiden resource to JORC standard based on a combined drill database of over 240 holes. *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. Competent Person Statement 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. 20 Metallica Minerals Limited December Quarterly Report 2011

21 Low impact air core drilling at Glenaladale Gippsland, Victoria Metallica Minerals Limited December Quarterly Report

22 Limestone Lime Projects Metallica 100% Metallica owns seven strategically located, high quality limestone projects 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 of Metallica) 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 approximately 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 (revenue received from Limestone and crushed rock sales is reported in Appendix 5B). The drill and blast program completed in September resulted in a further 20,000 tonne of crushed rock on the ground to begin a crushing campaign in October. This material has been used in the maintenance of local roads. BLUE ROCK This limestone deposit is conveniently located between NORNICO s Minnamoolka and Kokomo nickel deposits, and approximately 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 2012 in order to have this deposit available for Metallica s NORNICO Project. FAIRVIEW Fairview is being developed to supply limestone into the expanding industrial market of Gladstone when the opportunity arises. In December 2010, ML80162 was granted. This lease covers hectares within Fairview Station. Compensation agreements are in place with landowners in readiness for future development. BOYNE The two Boyne mining leases contain large, high quality limestone deposits suitable for lime and limestone markets in the Gladstone region. Proposed activities include a drilling program for the purpose of defining a limestone resource within the Boyne tenements. STAR RIVER The high grade limestone deposit at Star River occurs as a slightly elevated mostly exposed limestone deposit with little or no overburden and is only 105km from Townsville. No field work or activities have been undertaken recently. MOUNT PODGE The project is located 80km west of Townsville near the Herveys Range Road and close to the Star River mining lease. The final report encompassing results of recent drilling campaigns and a full assessment of the potential of the project is nearing completion. CRAIGIE Phoenix Lime has applied for EPM18253 covering 16 sub-blocks in an area highly prospective for high quality limestone. If successful, this will further underpin the limestone requirements of Metallica s NORNICO Project. Craigie is approximately 60km southwest of the proposed Greenvale nickel operation. Ootann Limestone Deposit and Limeworks 22 Metallica Minerals Limited December Quarterly Report 2011

23 Ootann Limeworks Metallica Minerals Limited December Quarterly Report

24 NORNICO Project Ni-Co Resource Table Appendix 1 Nickel Deposit Million Tonnes (Mt) Ni Co Fe Mg In situ contained Ni metal In situ contained Co metal Greenvale Mine Site Measured ,404 2,367 Indicated ,041 3,576 Inferred , Totals ,355 6,573 Lucknow* Measured ,676 1,462 Indicated ,264 1,886 Inferred ,050 1,425 Totals ,990 4,773 Kokomo Measured ,530 2,210 Indicated ,220 14,040 Inferred ,160 3,200 Totals ,910 19,450 Bell Creek South Measured ,845 5,930 Indicated , Inferred Totals ,086 6,040 Bell Creek North Measured Indicated , Inferred Totals , Bell Creek Northwest Measured Indicated ,639 1,443 Inferred Totals ,639 1, Metallica Minerals Limited December Quarterly Report 2011

25 NORNICO Project Ni-Co Resource Table Appendix 1 Nickel Deposit Million Tonnes (Mt) Ni Co Fe Mg In situ contained Ni metal In situ contained Co metal Minnamoolka Measured Indicated ,360 2,605 Inferred , Totals ,408 2,872 The Neck Measured Indicated , Inferred Totals , Combined NORNICO Resource Measured ,455 11,969 Indicated ,911 24,500 Inferred ,168 5,522 Totals ,534 41,990 Notes: 1. Above categories all calculated using a 0.70% NiEq cut-off grade, where NiEq = Ni + 3Co for all deposits except for LuckNow and Greenvale where NiEq = Ni + 2Co. 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. 5. Kokomo NiEq resource includes a small portion of the Sc resources stated in Table 9 totalling approximately 1.1Mt, refer to ASX release dated 27/1/2010. * The Lucknow Ni-Co Resource estimate includes a small portion of the scandium ore, see Table 6 (without portion of scandium resource) and Table 7 (with portion of scandium resource). 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 Fellow 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. Metallica Minerals Limited December Quarterly Report

26 Lucknow Nickel-Cobalt-Scandium Deposit Phase 3 Drilling (Nov-Dec 2011) APPENDIX 2 Hole Number Easting Northing Depth From LKRC NSR LKRC NSR LKRC NSR LKRC NSR LKRC NSR LKRC NSR LKRC NSR LKRC NSR To Intercept LKRC LKRC LKRC LKRC LKRC LKRC LKRC LKRC NSR LKRC NSR LKRC LKRC inc LKRC inc LKRC LKRC LKRC and LKRC inc LKRC inc LKRC LKRC Inc LKRC and LKRC and inc LKRC and and LKRC inc LKRC Sc (g/t) Ni Co Fe Mg 26 Metallica Minerals Limited December Quarterly Report 2011 NSR (No Significant Results No Intercepts Greater than 1% Ni or 0.10% Co or 100 g/t Sc over a 2m interval)

27 Lucknow Nickel-Cobalt-Scandium Deposit - Phase 3 Drilling Appendix 2 Hole Number Easting Northing Depth From To Intercept and inc LKRC inc LKRC LKRC and LKRC and LKRC inc LKRC LKRC NSR LKRC inc LKRC and LKRC inc LKRC LKRC and inc LKRC inc LKRC inc LKRC NSR LKRC inc LKRC LKRC inc LKRC and LKRC NSR LKRC NSR LKRC and LKRC inc LKRC and LKRC Sc (g/t) Ni Co Fe Mg NSR (No Significant Results No Intercepts Greater than 1% Ni or 0.10% Co or 100 g/t Sc over a 2m interval) Metallica Minerals Limited December Quarterly Report

28 Lucknow Nickel-Cobalt-Scandium Deposit - Phase 3 Drilling Appendix 2 Hole Number Easting Northing Depth From To Intercept inc LKRC inc LKRC inc LKRC and inc LKRC LKRC NSR LKRC NSR LKRC LKRC NSR LKRC NSR LKRC NSR LKRC LKRC LKRC inc LKRC and LKRC NSR LKRC and inc LKRC and LKRC and LKRC and inc LKRC and LKRC inc LKRC NSR LKRC and and LKRC and LKRC LKRC Sc (g/t) Ni Co Fe Mg 28 Metallica Minerals Limited December Quarterly Report 2011 NSR (No Significant Results No Intercepts Greater than 1% Ni or 0.10% Co or 100 g/t Sc over a 2m interval)

29 Lucknow Nickel-Cobalt-Scandium Deposit - Phase 3 Drilling Appendix 2 Hole Number Easting Northing Depth From LKRC NSR To Intercept LKRC inc and LKRC and and LKRC and and and LKRC and LKRC inc inc LKRC LKRC NSR LKRC LKRC NSR LKRC LKRC NSR LKRC NSR LKRC LKRC inc and LKRC and and inc LKRC and LKRC LKRC NSR LKRC NSR LKRC NSR LKRC and LKRC LKRC and inc and Sc (g/t) Ni Co Fe Mg NSR (No Significant Results No Intercepts Greater than 1% Ni or 0.10% Co or 100 g/t Sc over a 2m interval) Metallica Minerals Limited December Quarterly Report

30 Lucknow Nickel-Cobalt-Scandium Deposit - Phase 3 Drilling Appendix 2 Hole Number Easting Northing Depth From To Intercept LKRC inc LKRC inc LKRC and and inc LKRC LKRC NSR LKRC inc LKRC inc and LKRC LKRC LKRC inc LKRC and LKRC LKRC LKRC LKRC LKRC LKRC LKRC LKRC inc LKRC and LKRC and LKRC LKRC LKRC and inc LKRC inc and inc LKRC Sc (g/t) Ni Co Fe Mg 30 Metallica Minerals Limited December Quarterly Report 2011 NSR (No Significant Results No Intercepts Greater than 1% Ni or 0.10% Co or 100 g/t Sc over a 2m interval)

31 Lucknow Nickel-Cobalt-Scandium Deposit - Phase 3 Drilling Appendix 2 Hole Number Easting Northing Depth From To Intercept LKRC inc inc and LKRC inc LKRC and LKRC and and LKRC NSR LKRC NSR LKRC NSR LKRC NSR LKRC and LKRC and LKRC and LKRC LKRC LKRC inc LKRC inc LKRC NSR LKRC LKRC NSR LKRC LKRC NSR LKRC LKRC NSR LKRC NSR LKRC NSR LKRC and LKRC LKRC NSR LKRC NSR LKRC NSR LKRC NSR Sc (g/t) Ni Co Fe Mg NSR (No Significant Results No Intercepts Greater than 1% Ni or 0.10% Co or 100 g/t Sc over a 2m interval) Metallica Minerals Limited December Quarterly Report

32 Tenement Schedule (as at 31 December 2011) NORNICO Nickel-Cobalt Project North (100%) Tenement ML 4187 ML 4188 MDLA Project Name Bell Creek North Lease Bell Creek South Lease Bell Creek Consolidated Holder/Applicant Status (Expiry date) No. Sub Block Commodity Targeted Min. Annual Expenditure NORNICO Pty Ltd Granted (29/2/2020) Ha Ni, Co N/A NORNICO Pty Ltd Granted (29/2/2020) Ha Ni, Co N/A NORNICO Pty Ltd Application 2145 Ha Ni, Co N/A MDL 387 Minnamoolka NORNICO Pty Ltd Granted (30/6/2013) Ha Ni, Co $50,000 EPM Minnamoolka NORNICO Pty Ltd Granted (8/9/2011)* 5 Ni, Co $10,000 EPM Bell Creek NORNICO Pty Ltd Granted (27/8/2011)* 8 Ni, Co $10,000 EPM EPM Mt Garnet South Mt Garnet South #2 NORNICO Pty Ltd Granted (22/12/2012) 37 Ni, Co, Au, PGE $10,000 NORNICO Pty Ltd Granted (7/3/2012)* 19 Ni, Co, Au, Cu $10,000 NORNICO Nickel-Cobalt-Scandium Project South (100%) Tenement EPM EPM Project Name Lucknow North Lucknow South Holder/Applicant Status (Expiry date) No. Sub Block Greenvale Operations Pty Ltd Greenvale Operations Pty Ltd MLA Lucknow Greenvale Operations Pty Ltd EPM Dinner Creek Greenvale Operations Pty Ltd Commodity Targeted Min. Annual Expenditure Granted (31/12/2015)* 3 Ni, Co, Sc $60,000 Granted (31/12/2015)* 4 Ni, Co, Sc $60,000 Application Ha Ni, Co, Sc N/A Granted (31/12/2015) 7 Ni, Co $61,000 MLA Kokomo NORNICO Pty Ltd Application Ha Ni, Co, Sc N/A EPM Kokomo NORNICO Pty Ltd Granted (21/8/2013) 21 Ni, Co, Sc, Au $100,000 EPM EPM Greenvale South Greenvale North NORNICO Pty Ltd Granted (22/08/2011)* 26 Ni, Co, PGE $10,000 NORNICO Pty Ltd Granted (22/08/2011)* 20 Ni, Co, Cu, Au $10,000 EPM Lucky Downs NORNICO Pty Ltd Granted (22/08/2011)* 11 Ni, Co, Cu $10,000 EPM Greenvale South #2 NORNICO Pty Ltd Granted (14/12/2011)* 8 Ni, Co, Cu $10,000 EPMA Lockup Well NORNICO Pty Ltd Application 1 Ni, Co $15,000 EPMA EPM Broken River South Pinnacles Consolidated NORNICO Pty Ltd Offered for grant 3 Ni, Co $20,000 NORNICO Pty Ltd Granted (22/2/2015) 13 Ni, Co $10, Metallica Minerals Limited December Quarterly Report 2011

33 Tenement Schedule Lucky Break Nickel Project (100%) subject to 50/50 joint venture with mfc Tenement Project Name Holder/Applicant Status (Expiry date) No. Sub Block Commodity Targeted Min. Annual Expenditure ML Dingo Dam NORNICO Pty Ltd Granted (28/02/2026) Ha Ni N/A ML Lucky Break NORNICO Pty Ltd Granted (30/11/2027) Ha Ni N/A Gold & Base Metals (100%) Tenement Project Name Holder/Applicant Status (Expiry date) No. Sub Block Commodity Targeted EPM Six Mile NORNICO Pty Ltd Granted (10/12/2011)* 19 Tungsten, Molybdenum, Gold, Copper Min. Annual Expenditure $15,000 Limestone Projects (100%) Tenement ML ML ML EPM Project Name Star River Limestone Boyne Limestone NE Boyne Limestone SW Boyne Limestone EPM Craigie Phoenix Lime Pty Ltd Holder/Applicant Status (Expiry date) No. Sub Block Commodity Targeted Min. Annual Expenditure Metallica Minerals Ltd Granted (30/4/2023) Ha Limestone N/A Metallica Minerals Ltd Granted (30/4/2027) Ha Limestone N/A Metallica Minerals Ltd Granted (30/9/2027) Ha Limestone N/A Metallica Minerals Ltd Granted (1/1/2011)* 4 Limestone $15,000 Granted (25/7/2016) 16 Limestone $20,000 EPM Fairview Metallica Minerals Ltd Granted (21/10/2016) 6 Limestone $10,000 MDL 394 Fairview Metallica Minerals Ltd Granted (31/8/2014) Ha Limestone Nil ML Fairview Metallica Minerals Ltd Granted (31/12/2035) Ha Limestone N/A ML 4788 Crotty 1 Phoenix Lime Pty Ltd ML 4789 Crotty 2 Phoenix Lime Pty Ltd ML 5079 Crotty Phoenix Lime Pty Ltd ML 5372 Crotty 3 Phoenix Lime Pty Ltd EPM Mt Podge Phoenix Lime Pty Ltd EPMA Khartum Phoenix Lime Pty Ltd Granted (31/1/2026) Ha Limestone N/A Granted (31/1/2026) Ha Limestone N/A Granted (30/4/2025) Ha Limestone N/A Granted (31/1/2013) 210 Ha Limestone N/A Granted (12/2/2014) 4 Limestone $25,000 Application 3 Limestone $20,000 Metallica Minerals Limited December Quarterly Report

34 Tenement schedule Mineral Sands: Zircon-Rutile (100%) Tenement MLA EPM Project Name Urquhart Point Urquhart Point Holder/Applicant Status (Expiry date) No. Sub Block Oresome Australia Pty Ltd Oresome Australia Pty Ltd EPMA Jackson River Oresome Australia Pty Ltd EPM Doughboy Oresome Australia Pty Ltd EPM Jardine Oresome Australia Pty Ltd EPM Jackson River #2 Oresome Australia Pty Ltd EPMA Sandman #1 Oresome Australia Pty Ltd EPMA Sandman #3 Oresome Australia Pty Ltd EPMA Sandman #2 Oresome Australia Pty Ltd EPMA Sandman #4 Oresome Australia Pty Ltd EPMA Sandman #5 Oresome Australia Pty Ltd EPMA Sandman #7 Oresome Australia Pty Ltd EPMA Sandman #6 Oresome Australia Pty Ltd EPMA Sandman #9 Oresome Australia Pty Ltd EPMA Sandman #8 Oresome Australia Pty Ltd Commodity Targeted Application Ha Rutile, Zircon, HMA Granted (24/10/2012) 24 Rutile, Zircon, HMS Offered for grant 3 Rutile, Zircon, HMS Granted (28/9/2014) 16 Rutile, Zircon, HMS Granted (28/9/2014) 45 Rutile, Zircon, HMS Granted (18/10/2015) 14 Rutile, Zircon, HMS Offered for grant 63 Rutile, Zircon, HMS Offered for grant 97 Rutile, Zircon, HMS Offered for grant 96 Rutile, Zircon, HMS Offered for grant 98 Rutile, Zircon, HMS Offered for grant 31 Rutile, Zircon, HMS Offered for grant 31 Rutile, Zircon, HMS Offered for grant 28 Rutile, Zircon, HMS Application 29 Rutile, Zircon, HMS Application 32 Rutile, Zircon, HMS Min. Annual Expenditure N/A $40,000 $15,000 $30,000 $30,000 $20,000 N/A 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 pending PGE = Platinum Group Elements HMS = Heavy Mineral Sands EPM = Exploration Permit for Minerals EPMA = Application for Exploration Permit for Minerals ML = Mining Lease MLA = Application for Mining Lease MDL = Mineral Development Licence MDLA = Mineral Development Licence Application MFC = Metals Finance Ltd 34 Metallica Minerals Limited December Quarterly Report 2011

35 Metallica is an Australian resource development company with major project interests in Nickel-Cobalt, Scandium, Zircon-Rutile and Limestone. Plus strategic investments in Coal, Bauxite, Gold-Copper & Rare Earth Elements. Metallica Minerals Limited December Quarterly Report Quarterly December Report

36 Appendix 5B Mining Exploration Entity Quarterly Report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity Metallica Minerals Limited ABN Quarter ended ( current quarter ) December 31, 2011 Consolidated statement of cash flow Cash flows related to operating activities Current quarter $A 000 Year to date (6 months) $A Receipts from product sales and related debtors Payments for (a) exploration and evaluation (b) development (c) production (d) administration (465) (1,132) (150) (689) (686) (1,882) (196) (1,366) 1.3 Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid Income taxes paid Other (provide details if material) - - Net Operating Cash Flows (2,097) (3,729) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets , (100) , Loans to other entities 1.11 Loans repaid by other entities - MetroCoal Ltd 1,000 1, Other (provide details if material) - - Net investing cash flows 4,330 4, Total operating and investing cash flows 2, Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. - 4, Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material) - Share buy back - - Net financing cash flows (carried forward) - 4, Metallica Minerals Limited December Quarterly Report 2011

37 Appendix 5B Net financing cash flows (brought forward) - 4,600 Net increase (decrease) in cash held 2,233 5, Cash at beginning of quarter/year to date 6,208 3, Exchange rate adjustments to item Cash at end of quarter 8,441 8,441 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item 1.10 Nil 1.25 Explanation necessary for an understanding of the transactions - Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Current quarter $A 000 Nil Nil Financing facilities available Add notes as necessary for an understanding of the position Amount available $A 000 Amount used $A Loan facilities Nil Nil 3.2 Credit standby arrangements Nil Nil Estimated cash outflows for next quarter $A Exploration and evaluation Development 3, Production Administration 530 Total 4,550 Note: $4,440,000 received from sale of equity investments in January 2012 (not included in December 2011 cash balance) Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows Current quarter $A 000 Previous quarter $A Cash on hand and at bank 5, Deposits at call 3,000 6, Bank overdraft Other (provide details) - - Total: cash at end of Quarter (item 1.22) 8,441 6,208 Metallica Minerals Limited December Quarterly Report

38 Appendix 5B Changes in interests in mining tenements Tenement reference Nature of interest (note 2) Interest at beginning of quarter Interest at end of quarter 6.1 Interests in mining tenements relinquished, reduced or lapsed MDLA 440 MDLA MDLA None 6.2 Interests in mining tenements acquired or increased MLA MLA None MLA Issued and quoted securities at end of current quarter Total number Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) 7.1 Preference +securities (description) Nil 7.2 Changes during quarter (a) Increases through issues Nil (b) Decreases through returns Nil of capital, buy-backs, redemptions Ordinary securities 132,357, ,957, Changes during quarter (a) Increases through issues Escrow Release (b) Decreases through returns of Nil Nil capital, buy-backs Convertible debt securities (description) Nil 7.6 Changes during quarter (a) Increases through issues Nil (b) Decreases through securities Nil matured, converted 7.7 Options (description and conversion factor) Exercise price Expiry date 2,320,000 Nil 35 cents 12 February ,500,000 Nil 35 cents 31 May ,100,000 Nil 65 cents 28 September ,000 Nil 35 cents 29 July ,000,000 Nil 50 cents 3 August ,000,000 Nil 70 cents 3 years from date of announcement of decision to mine Kokomo or Lucknow Scandium Deposits 38 Metallica Minerals Limited December Quarterly Report 2011

39 Appendix 5B Total number Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) 400,000 Nil 46 cents 31 August ,000 Nil 52 cents 28 February ,000,000 Nil 38 cents 17 November Issued during quarter 5,000,000 Nil 38 cents 17 November Exercised during quarter Nil 7.10 Expired during quarter Nil 7.11 Debentures (totals only) Nil 7.12 Unsecured notes (totals only) Nil Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here:...date: 31 January, (Director/Company secretary) Print name: JOHN KEVIN HALEY Notes 1 The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2 The Nature of interest (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. Metallica Minerals Limited December Quarterly Report

40 A mineral resource development company ASX:MLM Subsidiary companies: NORNICO Pty Ltd ACN Oresome Australia Pty Ltd ACN Lucky Break Operations Pty Ltd ACN Phoenix Lime Pty Ltd ACN Greenvale Operations Pty Ltd ACN Scandium Pty Ltd ACN ABN: y i admin@metallicaminerals.com.au ASX:MLM 71 Lytton Road, East Brisbane QLD 4169 GPO Box 122, Brisbane QLD 4001