QUARTERLY REPORT TO 30 SEPTEMBER 2006 CORPORATE. Bell Creek Drilling

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1 ASX Release 26 October METALLICA MINERALS LTD An emerging Queensland focused multi-commodity resource company ASX Code : MLM / MLMO Issued Capital (30/9/2006): 91,620,002 Shares issued 3,921,126 Listed Options 6,000,000 Unlisted Options 4,000,000 Unlisted Options 1,572,750 Escrowed Options 4,850,000 Directors & Management Escrowed Performance Options 3,000,000 Unlisted Directors & Management Options 899 shareholders Top 20 shareholders:- Hold 64 % Directors: Mr David K. Barwick -Chairman Mr Andrew Gillies-Managing Director Mr Peter Nicholson Director Mr Brett Smith - Director Mr John Haley - Director & Company Sec Largest Shareholders: Kagara Zinc Limited 13.10% Anegada Metals Corp. Limited % Golden Breed Pty Ltd 9.24 % Resource Capital Fund III LP 8.73 % Asden Investments P/L 2.86 % Codan Trustees 2.73 % Korea Zinc Australia P/L 2.18 % Cash Balance As at 30 September 2006, MLM s cash balance was approx $3.13 million. QUARTERLY REPORT TO 30 SEPTEMBER 2006 CORPORATE HIGHLIGHTS In August 2006 an option agreement was signed with Chiping Xinfa Huayu Alumina Co Ltd ( Xinfa ), which is believed to be China s largest independent alumina company, for the sale of 10% interest in Cape Alumina (from Metallica s 50% holding) for $4.6M, potentially valuing Metallica s holding in Cape Alumina at $23M. Xinfa is the operator of the Chiping Alumina refinery and aluminium smelter in Shandong Province, China. Xinfa has paid Metallica an option fee of A$250,000. The option must be exercised within 30 days of Cape Alumina achieving an initial bauxite resource statement on the Wenlock bauxite deposit, due by December NICKEL- COBALT (NORNICO & LUCKY BREAK) During the September Quarter Metallica completed drill programmes at the Bell Creek project, continued metallurgical testwork, lodged two heap leach nickel related patent applications, continued environmental studies, and completed the NORNICO Scoping Study with Aker Kvaerner. The Scoping Study for a potential 1.5 Mtpa heap leach operation, to produce in the order of 10,000 tpa of contained nickel metal was positive. Metallica is now progressing the heap leach project to a Pre-feasibility study stage. Metallica has employed Mr Bob Martin, a very experienced mining project developer and operator, to manage the feasibility studies and the ongoing development of the NORNICO Project. Results from ongoing agglomeration and heap leach column testwork on the NORNICO nickel ores has resulted in the continual refinement of a processing strategy and techniques for potential lower cost, high margin and long life nickel production. Metallica has lodged two provisional patent applications with the Australian Government Patents Office on heap leach nickel technology. The first titled Improved Process for Producing Feed Material for a Leaching Process and the second, titled Improved Process and Plant for Producing Nickel is for an innovative process flow sheet. Bell Creek Drilling Metallica completed 139 holes totalling 3,199m of RC drilling at the Bell Creek South Lease, primarily designed at increasing the resource status from Inferred to an Indicated Resource. Thirty two (32) PQ

2 sized core holes were completed on the three Bell Creek prospects for a total of 623m. Drill highlights of the programme include: BCSL % Ni and 0.09% Co from 0m BCDDH % Ni and 0.35% Co from 0m A resource estimate for NORNICO is currently being completed and will include results from 294 RC and diamond holes drilled since the resource was last updated in March Metallurgy Testwork Heap leach nickel testwork on NORNICO ores is ongoing, the most advanced of the column leach testwork is on the Minnamoolka deposit, where the 3m high column of leached laterite ore (~0.8% Ni) was completed. This column recorded 65% nickel extraction in 415 days, with low acid consumption at 264 kg/t ore using very conservative leach testwork parameters of moderate acid concentrations and a low irrigation rate of ~ 5 L/M2/hour. It is expected that nickel extraction and rate would significantly improve with a higher irrigation rate and acidity. Small and large column testwork has been initiated on the Bell Creek nickel ores. Laboratory column leach test (3.5 m height) and a vat leach test (3.4 m height) on Lucky Break ores is ongoing and a series of small column (1m height) tests are currently operating for diagnostic agglomeration and leaching testwork. Baseline environmental sampling and surveying have been completed and conceptual site layouts finalised. Pre-Feasibility Study The NORNICO Pre-feasibility study was initiated in late August 2006 following the completion of a positive Scoping Study undertaken by Aker Kvaerner Australia Pty Ltd. The Pre-feasibility study is expected to be completed in the first half of Lucky Break In the September Quarter, Metals Finance Corporation (MFC) has installed and constructed a pilot plant heap leach nickel testing facility, located at Charters Towers. A Cultural Heritage survey over the proposed mining and development site area has been completed. BAUXITE Cape Alumina Pty Ltd completed an initial drilling programme at the Wenlock bauxite deposit in September. In all, 674 shallow aircore drill holes were completed (on a nominal 320m to 160m drill spacing) outlining three separate pisolitic bauxite deposits covering a total area of 21 km 2 which appears to be a continuation of bauxite mineralisation on the nearby Alcan and Comalco mining leases. Samples are currently being analysed and a resource estimate is expected to be completed by December MAJOR WORK PLANNED TO 31 December 2006 Completion of an updated resource estimate for the NORNICO nickel laterite deposits. Complete bauxite resource modelling and a JORC-compliant initial bauxite resource statement on the portion of the Wenlock deposit drilled in MFC continue to undertake field tests of 6 bulk samples ( ~ 5-8 tonnes each), four from Lucky Break and two bulk samples from the Bell Creek nickel projects. Continue Heap Leach nickel metallurgical testwork with Hydrometallurgical Research Laboratories (HRL) on Minnamoolka, Lucky Break and Bell Creek laterite ores. Drilling of 3 EM conductor targets at Bell Creek Northwest and Kokomo (east & west targets). Regional reconnaissance prospecting and geochemical surveys using handheld XRF unit for on the spot simultaneous analysis of up to 20 metal elements. 2

3 FINANCIAL As of 30 September 2006, MLM has 91.6 million shares on issue and cash of approximately $3.13 million. Exploration, development and administration expenditure by Metallica for the Quarter to 30 September 2006 was $1,204,000. Of this, the exploration and development expenditure was $1,020,000. Cape Alumina expended approximately a further $400,000 primarily on bauxite exploration. The estimated expenditure for the December Quarter is $1 million - comprising $800,000 exploration & evaluation work and $200,000 administration. In addition to this, Metallica will also fund approximately $400,000 mainly for bauxite resource drilling analysis, and other items carried forward from the September field programme, under a loan agreement to Cape Alumina Pty Ltd. The company continues to look at opportunities to divest or joint venture its non-core assets to enable further focus on its key assets. Enquiries: - agillies@metallicaminerals.com.au or phone: - (07) or for further information visit A.L. Gillies BSc, M. AusIMM Managing Director 26 October 2006 In accordance with Listing Rules 5.10, 5.12 and 5.1 of the Australian Stock Exchange Limited, technical information contained in this report has also been compiled by Andrew Gillies and Metallica Minerals Ltd, Exploration Manager, Mr Pat Smith MSc. B.Sc (Hons), M.AusIMM, who are competent persons and members of the Australasian Institute of Mining and Metallurgy. Mr Gillies and Mr Smith have relevant experience to the mineralisation being reported on to qualify as Competent Persons as defined by the Australasian Code for Reporting of Minerals Resources and Reserves. Information on Cape Alumina bauxite projects in this report are compiled by Dr Paul Messenger who is a Member of the Australasian Institute of Mining and Metallurgy and has 18 years experience in exploration and mining including a significant time studying bauxite projects. Mr Gillies, Mr Smith and Dr Messenger consent to the inclusion in the report of the matters based on the information in the form and context in which it appears. Cape Alumina Weipa Bauxite Project pisolitic bauxite drill sample Metallica s Project Locations 3

4 DETAILED REPORT CORPORATE In August 2006, Metallica sold an option to China s largest independent alumina refinery to acquire a strategic 10% stake in Metallica s 50% owned Cape Alumina Pty Ltd. Under the non-transferable option agreement with Chiping Xinfa Huayu Alumina Co Ltd (Xinfa), Xinfa paid Metallica an option fee of A$250,000 for the right to purchase 10% of Cape Alumina from Metallica s shareholding for a total price of A$4,625,000. Xinfa ownes and operates the Chiping Alumina refinery and aluminium smelter in Shandong Province, China. If exercised, the agreement will reduce Metallica s direct interest in Cape Alumina to 40%. The option must be exercised within 30 days of Cape Alumina achieving a JORCcompliant resource statement due by December 2006 on the Wenlock bauxite deposit, approximately 60 km NE of Weipa on Cape York. For further information see ASX release dated 24 August EXPLORATION & EVALUATION ACTIVITIES 1. NICKEL-COBALT PROJECTS NORNICO (North Queensland Nickel Cobalt) Project Activities undertaken during the September Quarter included: Completed the NORNICO Heap leach Nickel Scoping Study with Aker Kvaerner. On going heap leach nickel testwork with Minnamoolka, Lucky Break and Bell Creek South Lease laterite ores. Drilling at the Bell Creek Project with 139 RC holes (BCSL-036 to BCSL-174) and 32 PQ diamond core holes (BCDDH-017 to BCDDH- 048) completed totalling 3,199m and 623m respectively. Heap Leach Processing Patent Applications. NORNICO Scoping Study In August 2006, Metallica announced it was moving to a Pre-feasibility Study of the Company s 100% held NORNICO Heap Leach Nickel Project in North Queensland after Aker Kvaerner found the project was technically robust. The Pre-feasibility study is expected to be completed by early The Scoping Study found that a NORNICO project producing an average of approximately 10,000 tonnes of nickel and 435 tonnes of cobalt per year would have an approximate direct and indirect capital cost of AUD$278 million with annual operating costs of AUD$71 million. The Scoping Study report indicates that the development of a relatively simple and lower cost laterite heap leaching process and a treatment plant to produce a nickel hydroxide precipitate would be technically robust and commercially positive on the basis of a life of mine nickel price assumption of US$5/lb LME (currently nickel price is around US$12/lb), a US$12/lb cobalt price and a US$/A$ exchange rate of Based on these assumptions, management have concluded the project has potential to generate average revenues of about AUD$120 million a year and an average operating surplus of around 4

5 AUD$50 million a year, or approximately an AUD$35 per tonne operating margin of treated heap leach feed. Metallica is continuing to carry out detailed work, including drilling programs, to increase and upgrade its resource base status to support a project life of around years, as well as provide higher nickel grades in the early years of operation to maximize margins early and enhance the project economics. The proposed NORNICO Heap leach operation would be sited adjacent to Metallica s Bell Creek nickel deposits, located approximately 30 kilometres south of Mt Garnet in North Queensland. The Scoping Study was based on the first 10 years of a heap leach nickel operation using a base case that assumed a heap leach processing rate averaging 1.42 million tonnes a year of upgraded (via simple screening) nickel laterite feed to the heap leach pads averaging 1.0% nickel and 0.05% cobalt. A nickel recovery rate from the heaps of 70% (cobalt 50%) was used to produce an average of approximately 10,000 tonnes of nickel and 435 tonnes of cobalt annually as mixed hydroxide product (MHP). The nickel resource is shallow and can be extracted freely without the use of blasting. Higher nickel grades of leach feed would be made available during the early years of operation. The production of high quality mixed (nickel-cobalt) hydroxide precipitate product would be suited, for example, as feedstock to BHP Billiton s Yabulu nickel refinery near Townsville. The Scoping Study was based on the current NORNICO (JORC-compliant) resource statement which has an estimated Inferred Resource of approximately million tonnes at 0.78% nickel and 0.04% cobalt at a 0.5% nickel cut-off grade containing approximately 161,000 tonnes nickel and 8,000 tonnes cobalt. Using recent nickel prices, the contained nickel metal value of this resource is over AUD$5.5 billion using a nickel price of US$26,000/t (US$12/lb). This February 2006 resource statement was based on drilling on the Bell Creek and Minnamoolka (about 30 kilometres south of Bell Creek) nickel deposits up until late An updated NORNICO resource statement is expected to be completed in November Metallica Minerals has now progressed to a Pre-feasibility study on the NORNICO nickel project, with a base case development timetable targeting nickel-cobalt mixed hydroxide product (MHP) concentrate production in Mr Bob Martin, a qualified metallurgist with extensive experience in project management, feasibility studies, mine development and operations, including many heap leach operations, has been appointed as Metallica s General Manager Project Developments, with specific responsibility for NORNICO s feasibility and development. It is the Company s vision to build a highly profitable and long-life heap leach nickel cobalt operation, producing nickel (initially as MHP) at a rate of around 10,000 tonnes per annum for a project life of around years. For further information see ASX release dated 23 rd August 2006 Bell Creek South Lease Prospect August-September Drilling Results In July and August 2006 Metallica completed 139 holes (BCSL-036 to BCSL-174) totalling 3,199m of RC drilling at the Bell Creek South Lease within a 1.2km by 800m area. The drilling programme was primarily aimed at increasing the resource status of the Bell Creek South Resource from Inferred to an Indicated Resource status as part of Metallica s Pre-Feasibility study for the NORNICO Heap Leach Nickel Project. The holes were drilled on a nominal 30m by 30m grid to infill areas where previous drilling on a wider 60m by 60m grid intersected zones of nickel mineralisation. Holes were also drilled on the edge of the deposit to close off zones of previously intersected mineralisation. High-Grade Highlights include:- BCSL-048, 1.45% Ni and 0.04% Co from 0m BCSL-107, 2.07% Ni and 0.09% Co from 0m BCSL-122, 1.48% Ni and 0.02% Co from 0m BCSL-130, 1.54% Ni and 0.23% Co from 3m BCSL-143, 1.51% Ni and 0.06% Co from 5m 5

6 In addition to the RC drilling, thirty-two (32) PQ diamond core holes were completed at the Bell Creek Northwest, North and South prospects (BCDDH-017 to BCDDH-048) for a total of 623m. These holes were designed to provide additional geological information on each of the Bell Creek deposits, provide samples for on-going metallurgical testwork and additional bulk density data for the deposits. Results from the diamond drilling are inline with, and in some cases exceeded, expectations. The higher grade intercepts are listed below. BCDDH-028, 1.53% Ni and 0.35% Co from 0m BCDDH-032, 2.15% Ni and 0.05% Co from 1m BCDDH-043, 1.40% Ni and 0.04% Co from 8m BCDDH-048, 2.14% Ni and 0.04% Co from 1m For further details refer to ASX release dated 3 rd October Heap Leaching Nickel Metallurgical Testwork Considerable diagnostic testwork has been completed on a variety of Bell Creek South Lease and Lucky Break ore types to optimise the agglomeration and nickel extraction characteristics and techniques. Recent work has focused on the Lucky Break ores as these will be the first to be targeted for feasibility, see Lucky Break section of this report for additional information. Samples from the PQ diamond drilling completed at Bell Creek in August are currently being processed and will be incorporated into a new 3m column(s) in October. Heap Leach Nickel Patent Applications In September, Metallica lodged two provisional patent applications with the Australian Patents Office (IP Australia). The first, titled Improved Process for Producing Feed material for a Leaching Process, is focused on the agglomeration stage and leaching for enhancing the extraction of nickel in to solution (i.e. front-end aspect of the heap leach process). The second, titled Improved Process and Plant for Producing Nickel, is for an innovative process flow sheet mainly for recovering nickel from solution in to a saleable nickel product (i.e. back-end aspect the heap leach process). The nickel recovery circuit has been designed to avoid some of the more costly and difficult steps included in nickel flow sheets being used and under examination by other companies. It has been designed to maximise acid usage and recovery, and to avoid cost and complexities generally inherent in other flow sheets using solution purification and metal recovery by selective neutralisation and precipitation. Although the process circuit is novel, it is based on well established technologies which have been in use in the industry for many years. Pre-feasibility Study Initiated The NORNICO Pre feasibility study was initiated in late August 2006 following the completion of a positive Scoping Study undertaken by Aker Kvaerner Australia Pty Ltd. Infill drilling on the Bell Creek South deposit was completed in September These results will be incorporated in an updated resource model currently being undertaken by Golders Associates. An aerial survey of the entire project area has been completed. Environmental baseline studies have commenced and it is planned to formally submit the Initial Advise Statement (IAS) to the EPA prior to year end. Further diagnostic laboratory column leach testwork has been initiated at Hydrometallurgical Laboratories (HRL) in Brisbane using a fresh Bell Creek sample from the recent drilling programme. A bulk 30 tonne sample of Bell Creek nickel laterite material will also undergo pilot plant column leach testing at Charters Towers. A commitment to further more detailed process design and full engineering studies has been deferred until early next year until further updated metallurgical data becomes available. Project definition continues particularly with the updating of the services details and infrastructure items using in house expertise and via a services agreement with Aker Kvaerner. 6

7 An initial Cultural Heritage management plan is currently being formulated for surveys over the proposed Bell Creek mining and heap leach operations sites. NORNICO - Key Work Planned to 30 December 2006 Complete an updated resource estimate on the NORNICO Nickel laterite deposits incorporating results from all drilling completed at these deposits since March Continue Metallurgical / Atmospheric heap leach testwork on representative samples from Bell Creek and Minnamoolka nickel laterite projects using Hydrometallurgical Research Laboratories (HRL) in Brisbane. Initiate testwork on bulk samples from Bell Creek South and Bell Creek North at the Charters Towers pilot plant site which is also testing ore from the Lucky Break Nickel Laterite deposit. Drill testing ground EM conductor anomalies at Bell Creek Northwest, Kokomo east and west. Discussions with the Native Title claimants on a Cultural heritage management plan for the Bell Creek Area. Continuation of the NORNICO Pre-Feasibility study with additional environmental and engineering studies planned. Progress permitting and landowner negotiation towards a Mining Lease application over the proposed Bell Creek mining and processing area. LUCKY BREAK NICKEL PROJECT In the September Quarter, MFC completed construction of a heap leach pilot plant and test facility located near Charters Towers. The plant will test an approximate tonne bulk sample from Lucky Break as well as samples from Bell Creek. Laboratory column leach test (3.5 m height) and a vat leach test (3.4 m height) on Lucky Break ores is ongoing and a series of small column (1m height) tests are currently operating for diagnostic agglomeration and leaching testwork. Knowledge gained from the Lucky Break laboratory metallurgical testwork and the large sample pilot leach programme currently being conducted, will form a major part of Metallica s knowledge base and experience towards the NORNICO heap leach nickel testwork, understanding, new techniques and pre-feasibility study. Baseline environmental sampling and surveying have been completed and conceptual site layouts finalised. An EM plan is currently being prepared and will be lodged with a second Mining Lease Application in the December Quarter. In the September Quarter the only exploration field work completed at Lucky Break was a soil XRF survey over areas which have been identified as possible plant and waste dump sites in order to sterilise these areas. Lucky Break JV - Heap Leach Test Facility Metals Finance Corp. (MFC) has completed construction of a fully integrated pilot leach and nickel recovery test facility at a site near Charters Towers in North Queensland, and has commenced comprehensive bulk testing of ore from the Metallica Minerals Limited Lucky Break nickel laterite project. The test facility, and the programme that will be undertaken over the next three months, have been designed to provide a thorough assessment of all of the process steps that may be required in the establishment of a commercial nickel laterite treatment facility for the Lucky Break project. In parallel to the test programme, MFC will complete a project feasibility study, targeted at assessing the viability of establishment of a commercial heap leach operation at a treatment rate of ,000 tpa and nickel recovery project at Lucky Break. Subject to feasibility the Lucky Break operation is currently scheduled to start during

8 The facility is based on a detailed technical review and scoping study completed by Metals Finance in February of 2006, and on laboratory scale leach tests conducted at Hydrometallurgical Research Laboratories (HRL) in Brisbane over the past 6-12 months. The primary nickel extraction method is agglomeration followed by heap leaching, with alternate methodologies also being assessed during the test programme. Setting up large 4m high column leach facility (August 2006). The nickel recovery circuit has been planned to avoid some of the more costly and difficult steps included in nickel flow sheets under examination by other companies. It has been designed to maximise acid usage and recovery, and to avoid cost and complexities generally inherent to solution purification (primarily iron removal) and metal recovery (as nickel hydroxide) by selective neutralisation and precipitation. Although the circuit is novel in its process steps, it is based on well established technologies which have been in use in the industry for many years. Approximately 30 tonnes of ore from the Lucky Break project is being leached in a series of four metre high columns, operated in a similar fashion to individual panels in a large scale heap leach. Solutions are being recycled from column to column, with a proportion being led to downstream processing. Individual steps in the recovery plant are progressively being commissioned, with a view to carrying out a series of formal continuous plant trials during November The results of the nickel production trials will be utilised to obtain formal equipment quotes form respective suppliers, for incorporation into the feasibility study. Considerable data have already been generated from the first three weeks operation of the leach plant and the downstream process commissioning trials. External assay data are awaited before formal modelling of the results are carried-out and definitive recoveries calculated. However early results have been extremely satisfactory and indicate that nickel recovery from the first two leach columns already significantly exceeds the level predicted from the laboratory trials carried out in Brisbane. Key Work Planned to 30 September 2006 Metallica and MFC intend to: Complete field large column leach trials on a bulk sample of the Dingo Dam ore in the December Quarter which will test the ore through all the steps of the proposed flow sheet. MFC will complete field tests of 4 bulk samples (~ 5-8 tonnes each using 1.6 m diameter by 4 m high columns) from the Lucky Break and 2 bulk samples for the NORNICO heap leach nickel project. Apply for another mining lease adjacent to the Dingo Dam ML for an adjoining heap leach development site and to include the Circular Laterite nickel resource. Complete (Environmental Management) EM Plan for the Lucky break project to be lodged in conjunction with the new mining lease (ML) application. Prepare for a more detailed Feasibility Study based on the results of the field trials. This work will be undertaken in the next 4 to 6 months and the results from the bulk sample field test will be used to design the Lucky Break Heap Leach Nickel flow sheet and in the feasibility design of the much larger 1.5 Mt per annum NORNICO heap leach operation. Assuming success from the ongoing feasibility studies and testwork, the targeted commissioning for the Lucky Break heap leach nickel operation is mid-late

9 2. BAUXITE PROJECTS A total of 674 shallow aircore holes were completed on EPM in September This drilling identified three separate deposits of pisolitic bauxite which cover a combined area of 21 square kilometres. The drilling was completed on a 320m by 320m grid with more detailed drilling at a 160m by 160m spacing in the southern portion of the Wenlock deposit. The bauxite mineralisation is up to 5.5m thick in places and appears to be a continuation of the nearby Alcan and Comalco mining leases. In two of the three areas bauxite mineralisation is still open to the west and north and extends into Cape Alumina s adjoining EPMA Samples are currently being processed by ALS Laboratories in Brisbane and results should be available shortly. For further information see ASX Release dated 28 th September

10 3. COAL PROJECTS Work on Metallica s coal projects over the last and current quarter has concentrated on literature reviews and data compilation of past coal exploration drilling. All historical drill hole data is being compiled into a database to enable Metallica and its JV partner Cougar Energy (who are assessing the deposits for their Underground Coal Gasification (UCG) potential) to better assess the coal deposits within the tenements and target drilling. For further information see ASX releases dated 4 July 2006 and 25 October Metallica s SE Queensland Coal portfolio tenement holding 4. SCANDIUM PROJECT (in JV with Straits Resources Ltd earning up to 70%) No field work was completed on the Kokomo Scandium project in the September Quarter. 5. LIMESTONE PROJECTS Two landowner compensation agreements were negotiated and signed for the two mining lease applications (ML and 80132) in the Boyne tenement and the grant of these tenements is expected in the near future. No field work was completed on the Fairview Limestone project or the Star River Limestone Mining lease during the September Quarter. 6. OTHER PROJECTS Prospect Project A ground EM survey was completed over two airborne EM conductor anomalies in August The survey confirmed the existence of two very strong EM conductors. A 4 hole RC programme totalling 787m, and a down-hole EM survey was completed at Prospect in late September - early October The holes intersected strongly altered grano-diorites with associated pyrite-pyrrhotite and graphite alteration, which most likely explain the EM anomalies. No economic zones of base metal mineralisation were observed in the holes. Base metal and precious metal assay results are pending. For further information see ASX release dated 16 August

11 Urquart Point Mineral Sands Project (in JV with Matilda Minerals Ltd) The Urquart Point heavy mineral sands (HMS) tenement contains a high grade zircon and rutile deposit approximately 5 km west of Weipa and large area of prospective strandlines. The tenement is currently under application so no fieldwork was completed on the project in the September Quarter, permitting is progressing. For further information, see ASX release dated 1 June Six Mile & Kokomo Gold Projects (in JV with Straits Resources Ltd) During June and July 2006 Straits completed a 12 hole RC programme totalling 1,386m at 3 areas previous identified as being prospective for gold mineralisation. In all cases the targets were considered to have been tested with the potential for near surface (i.e. less than m) bulk mineable deposits being identified eliminated. Significant mineralisation was only intersected in one hole, BNRC004 which intersected 1.03 g/t Au, 43.4 g/t Ag and 1.76% Pb. Kokomo East - EM conductor target Ground EM surveys were completed over 2 airborne EM (AEM) anomalies in August 2006, the surveys confirmed the existence of the conductors and provided additional information for modelling. A downhole EM survey was completed on hole EMRC-001 which was drilled to a depth of 184m in June 2006 and intersected weak copper mineralisation. The results from the down-hole survey indicate that the EM anomaly was not tested and that the conductor lies below the existing hole. A second drill hole will be completed in the December quarter to fully test the Kokomo East EM conductor and geochemical anomaly. Silver Hills Base metals Prospect The Silver Hills prospect is located within the Greenvale North tenement (EPM 14070). A geochemical survey using a hand XRF unit was completed over a 3.5 km by 2 km area in September with in excess of 1,900 readings taken. The survey has highlighted a 900m by 200m wide coincident lead zinc anomaly (i.e. + 1,000ppm Zn and +500ppm Pb) which is coincident with a sub-cropping gossan that outcrops intermittently for 900m. Rock Chip sampling of this gossan has returned values to 10.6% Zn, 4.49% Pd, 292 g/t Ag and 0.66 g/t Au. The Silver Hills geochemical anomaly and gossans are located approximately 20 km east of the Balcooma Cu-Zn mine. Further reconnaissance work is planned at Silver Hills for the December quarter. Sandy Creek - Uranium (in JV with Glengarry Resources Ltd) No exploration work was completed over this tenement in the September quarter by Metallica. A weak Uranium soil anomaly identified earlier in the year by a soil sampling programme completed by Glengarry was field checked. It was noted that the area where the soil anomaly occurs is underlain by shallow alluvial sediments and there is no obvious source for the uranium anomalism. Glengarry plan to complete a series of costeans to expose the underlying bedrock to determine the source of the anomaly in the December quarter. Texas North Au-Ag project No field work was completed on the project in the September Quarter. 11

12 TENEMENT SCHEDULE (as at 30 th September 2006) Nickel Cobalt Projects Tenement Project Name Holder/ Applicant Status (Expiry date) No. Sub Block Commodity Targeted Min. Annual Expenditure ML 4187 Bell Creek North Lease QLD Gold Pty Ltd Granted (29/2/2020) Ha Ni, Co N/A ML 4188 Bell Creek South Lease QLD Gold Pty Ltd Granted (29/2/2020) Ha Ni, Co N/A MDL 312 Dingo Dam QLD Gold Pty Ltd Granted (31/12/2006) Ha Ni, Co N/A ML Dingo Dam QLD Gold Pty Ltd Granted (28/02/2026) Ha Ni, Co N/A EPM Minnamoolka QLD Gold Pty Ltd Granted (8/9/2006)* 5 Ni, Co $70,000 EPM Kokomo QLD Gold Pty Ltd Granted (21/8/2006)* 21 Ni, Co, Sc, Au $60,000 EPM Bell Creek QLD Gold Pty Ltd Granted (27/8/2006)* 8 Ni, Co $60,000 EPM Minnamoolka Ext. QLD Gold Pty Ltd Granted (12/6/2008) 3 Ni, Co $30,000 EPM Mt Garnet South QLD Gold Pty Ltd Granted (22/12/2008) 125 Ni, Co, Au, PGE $40,000 EPM Moonmyata QLD Gold Pty Ltd Granted (22/12/2007) 8 Ni, Co, Au, PGE $20,000 EPM Greenvale South QLD Gold Pty Ltd Granted (22/08/2009) 68 Ni, Co, PGE $40,000 EPM Greenvale North QLD Gold Pty Ltd Granted (22/08/2009) 100 Ni, Co, Cu, Au $50,000 EPM Lucky Downs QLD Gold Pty Ltd Granted (22/08/2009) 18 Ni, Co, Cu $30,000 EPM Greenvale South 2 QLD Gold Pty Ltd Granted (14/12/2009) 62 Ni, Co, Cu $40,000 EPM Mt Garnet South #2 QLD Gold Pty Ltd Granted (7/3/2010) 193 (150) Ni, Co, Au, Cu $40,000 EPM Lucky Break QLD Gold Pty Ltd Granted (29/6/2009) 43 Ni, Co $40,000 EPM Yellow Jack QLD Gold Pty Ltd Granted (26/6/2010) 50 Ni, Co $40,000 EPM Sandy Creek QLD Gold Pty Ltd Granted (8/11/2010) 70 Ni, Co, Au, U. $25,000 EPMA Kinrara QLD Gold Pty Ltd Granted (27/9/2006) 100 Ni, Co, PGE, Cu $30,000 EPM Pinnerendi QLD Gold Pty Ltd Granted (16/6/2010) 28 Ni $120,000 EPMA Kokoma West QLD Gold Pty Ltd Application 15 Ni, Cu, PGE, Au N/A Coal Projects Tenement Project Name Holder/ Applicant Status (Expiry date) No. Sub Commodity Targeted Min. Annual EPC 882 Kingaroy Coal SE QLD Energy Pty Ltd Granted (26/9/2009) 64 Open Cut Thermal Coal $60,000 EPC 935 Condamine Coal SE QLD Coal Pty Ltd Granted (23/5/2010) 114 Open Cut Thermal Coal $60,000 EPC 936 Allora Coal SE QLD Coal Pty Ltd Granted (3/5/2010) 130 Open Cut Thermal Coal $60,000 EPC 963 Killarney Coal SE QLD Coal Pty Ltd Granted (21/6/2010) 40 Open Cut Thermal Coal $30,000 EPC 1017 Injune Coal SE QLD Coal Pty Ltd Granted (2/2/2011) 44 Open Cut Thermal Coal $20,000 EPC 1018 Bymount Coal SE QLD Coal Pty Ltd Granted (2/2/2011) 60 Open Cut Thermal Coal $20,000 EPC 1041 Miles Coal SE QLD Coal Pty Ltd Granted (12/6/2011) 137 Open Cut Thermal Coal $50,000 12

13 Bauxite Projects (Held through 50% owned Cape Alumina Pty Ltd) Tenement Project Name Holder/ Applicant Status (Expiry date) No. Sub Commodity Targeted Min. Annual Expenditure EPM Weipa Bauxite Cape Alumina Pty Ltd Granted (19/4/2011) 48 Bauxite $40,000 EPMA Mappoon Bauxite Cape Alumina Pty Ltd Offered for grant 82 Bauxite-Kaolin $50,000 EPMA Aurukun Bauxite Cape Alumina Pty Ltd Offered for grant 11 Bauxite $20,000 EPMA Hey Point Bauxite Cape Alumina Pty Ltd Offered for grant 4 Bauxite $18,000 EPMA Worbody Bauxite Cape Alumina Pty Ltd Application 15 Bauxite N/A EPMA Duyfken Point Baux Cape Alumina Pty Ltd Offered for grant 19 Bauxite $20,000 EPMA North Coconut Baux Cape Alumina Pty Ltd Offered for grant 12 Bauxite $15,000 EPMA Aurukun North Baux Cape Alumina Pty Ltd Application 55 Bauxite N/A EPMA Weipa East Bauxite Cape Alumina Pty Ltd Offered for grant 73 Bauxite $15,000 EPMA Wenlock South Baux Cape Alumina Pty Ltd Offered for grant 156 Bauxite $35,000 EPMA Wenlock North Baux Cape Alumina Pty Ltd Application 53 Bauxite N/A EPMA Dulhunty Cape Alumina Pty Ltd Application 105 Bauxite N/A EPMA Vrilya Cape Alumina Pty Ltd Application 107 Bauxite N/A EPMA Ducie River Cape Alumina Pty Ltd Application 32 Bauxite N/A EPMA Lower Archer Bauxite Sigma Kaolin Limited Application 100 Bauxite N/A Limestone Projects Tenement Project Name Holder/ Applicant Status (Expiry date) No. Sub Block Commodity Targeted Min. Annual Expenditure ML Star River Limestone Metallica Minerals Ltd Granted (30/4/2023) Ha Limestone N/A N/A ML Boyne Limestone NE Metallica Minerals Ltd Application Ha Limestone N/A ML Boyne Limestone SW Metallica Minerals Ltd Application Ha Limestone Limestone $35,000 EPM Boyne Limestone Metallica Minerals Ltd Granted (1/1/2008) 6 Limestone $30,000 EPM Fairview Limestone R.W. Siller Granted (10/12/2006) 2 Limestone $30,000 EPM Fairview Extended R.W. Siller Granted (23/10/2007) 4 Gold, Precious & base metals, Other Projects Tenement Project Name Holder/ Applicant Status (Expiry date) No. Sub Block Commodity Targeted Min. Annual Expenditure EPM Six Mile QLD Gold Pty Ltd Granted (10/12/2007) 100 Gold, Copper $70,000 EPM Prospect Oresome Australia Pty Ltd Granted (19/12/2009) 24 Ti, Au,PGE $40,000 EPMA Prospect #2 Oresome Australia Pty Ltd Offered for grant 17 Ti, Au,PGE $20,000 EPM Texas North Oresome Australia Pty Ltd Granted (22/08/2009) 72 Au, Ag $40,000 EPMA Urquart Point Oresome Australia Pty Ltd Application 24 Rutile, Zircon, HMS N/A EPMA Jackson River Oresome Australia Pty Ltd Application 17 Rutile, Zircon, HMS N/A EPMA Doughboy Oresome Australia Pty Ltd Application 16 Rutile, Zircon, HMS N/A EPMA Jardine Oresome Australia Pty Ltd Application 45 Rutile, Zircon, HMS N/A EPMA Prospect #3 Oresome Australia Pty Ltd Application 100 Nickel Sulphide N/A EPMA Tondoon Oresome Australia Pty Ltd Application 18 Au, basemetals, N/A Bauxite Note:- ( * ) In Renewal PGE = Platinum Group Elements, HMS = Heavy Mineral Sands, Au = gold, Cu = copper, Ag = silver, Ni = nickel, Co = cobalt, Ti = titanium, Sc = scandium, U = uranium. All tenements 100% held unless expressed otherwise 13