CORPORATE DIRECTORY. Directors Mr Barry J Casson Non Executive Chairman. Legal HopgoodGanim Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4001

Transcription

1 ANNUAL REPORT 2016

2 CORPORATE DIRECTORY Directors Mr Barry J Casson Non Executive Chairman Mr Andrew L Gillies Non Executive Director Dr Shu Wu Non Executive Director Mr Shu Zhang Alternate Director to Dr Shu Wu Chief Executive Officer Mr Simon J Slesarewich Chief Financial Officer & Company Secretary Mr John K Haley Principal Registered Office in Australia Ground Floor, 71 Lytton Road East Brisbane QLD admin@metallicaminerals. com.au Website metallicaminerals.com.au Share Registry Link Market Services Level 15, 324 Queen Street Brisbane QLD Legal HopgoodGanim Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4001 Stock Exchange Listing ASX:MLM Australian Business Number ABN Subsidiary companies NORNICO Pty Ltd ACN Oresome Australia Pty Ltd ACN Oresome Bauxite Pty Ltd ACN Lucky Break Operations Pty Ltd ACN Phoenix Lime Pty Ltd ACN Greenvale Operations Pty Ltd ACN Scandium Pty Ltd ACN Touchstone Resources Pty Ltd ACN Auditor BDO Australia Level 10, 12 Creek Street Brisbane QLD 4000

3 CONTENTS 2016 Achievements & 2017 Goals 4 Chairman & CEO s Letter 6 Cape York Bauxite & HMS Project JV 8 Urquhart Bauxite Project 10 Urquhart Point HMS Project 12 Cape York Regional Exploration 13 Esmeralda Graphite Project 14 SCONI Scandium Cobalt Nickel Project 16 Cape Flattery Silica Sands Project 17 Director & Management Profiles 18 Tenement Tables 20 Resource Tables 24 Top Twenty Shareholders 34 3

4 2016 ACHIEVEMENTS On track Secured EIS EA For bauxite sales in H1 of calendar year 2017 Access and transhipping solution for Urquhart bauxite project Commonwealth government confirms no EIS required for Urquhart bauxite project Lodged Environmental Authority for Urquhart bauxite project with Queensland government JV $1M $500,000 $370,000 of SCONI project preserving value and delivering $250,000 Sale of Boyne limestone project Sale of Ooatan limestone project Sale of Star limestone project $1.8M $316,000 Confirmed Received Raised via successful and early closed Rights Issue Research and Development refund received Attractive grade and metallurgy at Esmeralda graphite project Delivery of HMS processing plant 4

5 2017 GOALS Commence production of direct shipping bauxite (DSB) from Urquhart bauxite project Commence ramp up of Urquhart bauxite production to Mtpa Continue to review bauxite opportunities located in the Pacific Basin Identify and evaluate other value adding projects Continue to identify shallow targets at Esmeralda graphite project near Croydon Review development plans for Urquhart Point HMS project and utilization of the processing plant Continue to realise value from non core assets 5

6 LETTER TO SHAREHOLDERS Dear Metallica shareholders, The 12 months under review has been a period primarily focused on ensuring your Company is better positioned to now make a sustainable transition from minerals explorer and developer to a successful and profitable bauxite miner. This period of review has also been the first full year under the leadership of Simon Slesarewich as Chief Executive Officer and a smaller non executive Board of three led by Barry Casson as Non Executive Chairman. This has placed additional emphasis on streamlined management and experience in development, preparing for operations going forward. That prospect of first production from our Urquhart Bauxite project in far north Queensland is becoming a reality. Your Board and Management team remain confident that we will see first exports of bauxite and positive cash flow in the first half of calendar year The preparedness for this step change was underpinned by the prioritised delivery over of successful outcomes against four key objectives: Firstly, a realistic assessment and review of our then held assets and business strategies against the most likely outcomes for them, if any, over the immediate period ahead Secondly, recognition that on current assets and market outlook, Metallica had to be preferentially positioned as an emerging bauxite producer, not a mixed commodity player Thirdly, the immediate continuation and associated expenditure of evolving (initially) as a heavy mineral sands miner, was not justifiable on current market conditions, and Fourthly, Metallica had to enhance its cash strength via a combination of timely sales of non core assets, minimising shareholder dilution, and appropriate levels of capital raisings that were clearly understood and appreciated by the broader equities market. As a result, the majority of the Company s limestone assets in Queensland were sold during the period, for total net proceeds of just under $2 Million. The Joint Venture with Australian Mines over the SCONI project delivers on the Company s promise to create value from non core assets, as well as preserving Metallica s significant past investment, whilst maintaining an exposure to the continued upside from the development of SCONI. Further non equity funding for the Company was recently successful in terms of a Research and Development refund of $316,000. Our core assets remain Metallica s significant portfolio of bauxite and zircon rutile heavy mineral sands (HMS) resources and exploration interests on Cape York Peninsula, and the unique Esmeralda graphite exploration project near Croydon, also in north Queensland. These projects will underpin our forward business activity in the near term and be supplemented as appropriate with opportunities that are expected to arise going forward. A more detailed explanation of your Company s aspirations around its current projects is contained elswhere in this report. The transition to a successful bauxite producer The decision to prioritise Metallica as an emerging bauxite producer is that we control substantial bauxite resources of sufficient grade and quality to underpin our growing Company. Bauxite as a commodity also includes pricing upside, and our bauxite resources are located adjacent to an ideal deep water export gateway on Cape York, with direct sea routes to key Asian markets at favourable shipping rates, relative to many other exporting nations. In addition, the global bauxite sector is widely tipped to entertain a supply shortfall in the coming 12 months. This window of opportunity continues to deepen due to mining and export restrictions imposed during the year by some of our regional overseas bauxite competitors. Indeed, the global shortfall of low temperature bauxite (the type we will expect to produce at Urquhart) is tipped to rise to 68 million tonnes per annum (Mtpa) by just As such, the decisions of your Board and Management in the past year have been to maximise this window and ready Metallica to grow production towards a target of 5 7 Mtpa of bauxite over the coming 3 to 5 years. This production journey is now very close. No other recently owned or currently owned Metallica assets offer such immediate maiden mining and maiden revenue pathways. Within this push to first mining, your Board acknowledges the valuable and ongoing partnership with our Cape York Bauxite and HMS Project Joint Venture partner, Ozore Resources Pty Ltd. We publicly congratulate Ozore on successfully moving to a 50 interest in the JV during the year. 6

7 Particularly pleasing within our bauxite pursuit was the decision during the review period by the Commonwealth Department of the Environment to determine that the Urquhart Bauxite Project is a Controlled Action. Put simply, this means the regulatory approval process for our proposed bauxite mine will be less onerous, meaning an Environmental Impact Statement (EIS) will not be required, and issues can be addressed in our preliminary documentation covering management plans and how we plan to mitigate the potential impacts of the mine. This determination is a key positive for the project and is a direct result of the significant work and consultation undertaken by the Joint Venture team and its consultants to deliver sustainability for our new mine. We further added to our progress with the signing of the Heads of Agreement to utilise the nearby and recently completed Hey Point bulk storage, loading and barging infrastructure (just 15 km from our mine site and owned by another bauxite miner). This transhipping solution eliminates the need to build our own costly infrastructure to move Urquhart bauxite onto waiting bulk vessels, moored only 3.5 km from the already installed barge loading facility at Hey Point. This was a major achievement in substantially de risking our pursuit to sustainable cash flow. It means Metallica is assured of much lower start up costs for our own mine and we are able to compress the start up schedule. Hey Point was the most viable solution from three logistics and transhipping options considered for Urquhart bauxite and presents your company with a low risk start up operation. With a mining lease application lodged, we will continue to work closely with the Queensland Government and other stakeholders, including Traditional Land Owners, to secure all approvals allowing a mining start in the first half of As a consequence of our focus on delivering Urquhart bauxite, the purpose built processing plant for our co located and planned Heavy Mineral Sands mining project at Urquhart Point, just south of Weipa, has been put on hold for the time being, pending improvement in the mineral sands commodity prices. Your Company continues to monitor the mineral sands market and is encouraged by recent price increases for those commodities contained at Urquhart Point that may deliver value in the future. Promising graphite play Progress on our wholly owned Esmeralda graphite project (graphite in granite, a unique style of mineralisation because of its rarity and general high purity in either flake or crystalline form) was encouraging. The positive drill and metallurgical outcomes from our late in 2015 drill campaign included intersections of significant broad graphite mineralisation. The forward program for this project includes further exploration planned in 2016 and potentially a follow up drill program in However our priority will continue to be sustainable cash flow from Urquhart bauxite. Robust capital outcomes Your Company s capital raising initiatives included a renounceable rights issue that was closed early, with just under $1.8 Million raised. We sincerely thank Metallica shareholders for your loyalty and support for this raising as the proceeds are sufficient to materially advance the Urquhart bauxite project. These capital initiatives saw the Company close out the full year with a robust $2.3 Million cash at bank. Importantly, Metallica remains a company with a tight capital structure and no debt after 12 years as an ASX listed entity. One negative for Metallica during the year, as confronts most of the junior resources space, is the lack lustre share price performance. After a flat two to three year period, equities market sentiment towards junior explorers and developers only recently commenced showing signs of genuine renewed buoyancy. Your Board believes achieving the transition next year to bauxite miner, will attract a positive re rating of the Company. In closing, the current financial year should prove the most important in Metallica s history and elevate the Company from developer to the milestone of producer. While there is still work to be done, your Board and Management team are confident that the correct stepping stones for realisable growth are in place and we invite you to continue to share this exciting time ahead for Metallica. BARRY CASSON Non Executive Chairman SIMON SLESAREWICH Chief Executive Officer 7

8 REVIEW OF OPERATIONS 8

9 CAPE YORK BAUXITE & HMS JV 1,784 Ha 1,200 km 2 Bx & HMS MLM 50 Mining leases and Mining lease applications Exploration tenure Bauxite and Zircon, Rutile, and Titanium metals Manager of Joint Venture with Ozore Resources Pty Ltd holding remaining 50 The Cape York bauxite and HMS project is located on the west coast of Queensland s Cape York Peninsula, and is now held 50 by Metallica Minerals wholly owned subsidiary, Oresome Australia Pty Ltd, who is also the Manager of this JV, with a 50 interest held by a private Chinese investor, Ozore Resources Pty Ltd, pursuant to the Cape York Bauxite and HMS JV entered into in August In accordance with the JV Agreement, Ozore has provided A$7.5 Million (plus additional subsequent Joint Venture cash calls) to develop the Urquhart Point HMS project (currently on hold) and to explore other tenements held within the Cape York region, which led to the discovery of the Urquhart Bauxite project. Since formation, the JV has expended over $8.5 Million with the majority of the funds applied to the manufacture of the HMS processing plant, completed in 2015 and currently stored near Brisbane and more recently the Urquhart bauxite project. The JV project has three separate components; Urquhart bauxite project Urquhart Point HMS project Cape York regional Bauxite & HMS exploration Weipa URQUHART POINT ML Infrastructure ML n URQUHART POINT TENEMENTS GULF OF CARPENTARIA MAPPOON URQUHART POINT AURUKUN VRILYA POINT WEIPA SEISIA BAMAGA CAPE YORK PENINSULA VRILYA POINT VRILYA POINT TENEMENTS AUSTRALIA N n FIGURE 1: Cape York Bauxite and HMS project location 9

10 URQUHART BAUXITE PROJECT The Urquhart bauxite project is situated adjacent to the HMS project and is some 5km southwest of Weipa on Queensland s Cape York Peninsula. Western Cape York is world renowned for its extensive deposits of high quality, export grade pisolitic bauxite. A Heads of Agreement (HoA) was executed by Metallica early in April 2016 with Green Coast Resources Pty Ltd (GCR), the owner and operator of the nearby Hey Point bauxite project, for bauxite logistic services and trans shipping access. This agreement significantly de risks the Urquhart bauxite project and delivers both a very low start up capital requirement and a compressed start up schedule. Under the agreement, direct shipping bauxite (DSB) from the Urquhart bauxite project will be delivered to export vessels via the recently approved nearby Hey Point load out facility, located only 15k m from the Urquhart bauxite project. Through the HoA and the provision of a Short Term Loan to GCR, Metallica has been able to lock in a logistics solution for Urquhart bauxite product. The parties will look to finalise by November 2016, the contract for the transhipping service and access. If a contract is not entered into by that time, GCR is still bound to provide the transhipping services and access to Metallica under the loan agreement, with a cap applied to the rate charged to Metallica. The purpose of the Loan was to assist GCR itself in achieving that company s maiden bauxite shipment which occurred on 19 October The Urquhart bauxite JV has also lodged and progressed Mining Lease Application (MLA) comprising 1,378 Ha covering the Urquhart bauxite resource (Area A and Area B). A detailed drill program was completed in August 2016 that is expected to result in an increase in the resource category confidence and will underpin further studies that are predicted to verify the previously completed Options Study, undertaken internally by Metallica earlier this year, to progress the project as a new Cape York DSB mine and export operation. To date, drilling results, coupled with the completed geological modelling, confirm that the majority of the Urquhart bauxite resource is suitable for DSB. The potential production of DSB expedites permitting and development of the project due to the relatively simple mining truck barge operation with consequentially low capital and operating costs. DSB is planned to be produced at an average production rate of Mtpa. The project s high quality export grade Weipa type bauxite has a high total alumina content (>50 Al 2 O 3 ), which is sought after in the seaborne bauxite market. In May 2015, the JV announced a maiden JORC compliant Inferred bauxite mineral resource for the Urquhart bauxite project. Additional details of the bauxite estimate are provided in Table 1. In Area A, available alumina (AAl) and reactive silica (RSi) were selectively sampled for intervals below a threshold of 15 SiO 2 or above 48 Al 2 O 3. This represents the lower half of the bauxite horizon defined in Area A. Subsequently, this lower section was modelled as a separate domain where the assays for AAl and RSi were available. In comparison, Area B has generally higher SiO 2 and a much smaller and less continuous lower bauxite domain. It has similar chemistry, but currently no AAl or RSi assay results are available to conclusively determine the overall quality of Area B. Estimates for the lower bauxite horizon as a higher grade subset of the 45 Al 2 O 3 cut off resource in Table 1 are provided in Table 2 at an effective cut off grade of 15 SiO 2. The JV holds extensive regional bauxite and HMS tenements along the 300 km sandy coastal belt between Weipa and the tip of Cape York Peninsula. 10

11 TABLE 1: Urquhart DSB Resource statement details at 45 Al 2 O 3 cut off DSB (in situ) Area Kt Al 2 O 3 SiO 2 A 5, B 2, Total 7, TABLE 2: Urquhart DSB Resource statement for the lower Bauxite profile DSB (in situ) Area Kt Al 2 O 3 SiO 2 AAl RSi A 3, B Total 4, NOTES 1. Table 2 tonnages are a subset of those reported in Table 1 11

12 URQUHART POINT HMS PROJECT The Urquhart Point HMS project is located 3 km southwest of Weipa. The JV envisages a simple dry mining (<3m depth) and wet processing operation using standard gravity (spiral concentrators) HMS separation to produce a zircon rutile heavy mineral concentrate (HMC). The modularized HMS processing plant purpose built for the project in South Africa arrived in Australia in December 2015 and is currently stored near Brisbane. Given the continuing low heavy mineral sands prices, the JV has deferred construction of the processing plant to focus on the higher value bauxite project. Following several approaches from third parties, the JV is progressing several HMS options that may deliver value to this asset within the JV. The HMS development plan can be implemented very quickly to deliver production if there is an improvement in commodity prices Hydrex Tank Cup Spirals Unit Water Reticulation Administration and future Ranger Station Trommel Screen Electrical Motor Control Centre Trommel Screen Feed Conveyor Ore Feed Bin Isometric view URQUHART POINT HMS PLANT GENERAL ARRANGEMENT FIGURE 2: Urquhart Point HMS plant 12

13 CAPE YORK REGIONAL EXPLORATION The JV holds extensive regional tenements along the 300 km sandy coastal belt between Weipa and near the tip of Cape York Peninsula that are prospective for bauxite and HMS. The JV did not undertake any field work on its regional bauxite and HMS exploration targets during the year. With a clear focus on the Urquhart bauxite project, regional exploration is currently on hold. Significant areas of coastal bauxite have previously been identified during a review of the Cape York tenement portfolio. The target areas are characterised by low lying, partly dissected and undulating laterite plateaus. Data compilation and desk top studies have outlined eight prospective plateau zones within the tenements where previous exploration drilling encountered bauxite intervals grading in excess of 40 Al 2 O 3 (alumina). An initial combined bauxite exploration target* across the regional Cape York tenements is in the range of 42 Mt 128 Mt (see table on page 26). The JV has consolidated the size of its tenement holding and reduced holding and operational costs by surrendering areas considered unlikely to hold significant areas of mineralisation for development. *EXPLORATION TARGET The potential quantity and grade of the bauxite deposits are conceptual in nature. There is insufficient information at this time to define a mineral resource and there is no certainty that further exploration will result in the determination of a mineral resource in these areas. 13

14 ESMERALDA GRAPHITE PROJECT 581 km 2 Graphite MLM 100 Exploration tenure Large scale graphite in granite targeting high purity graphite Through subsidiary Touchstone Resources Pty Ltd In July 2015, Metallica Minerals was granted Exploration Permits for Minerals (EPMs) 25779, and 25807, which make up the Esmeralda graphite project. The project, located near Croydon in north Queensland (see Figure 3), covers a combined area of more than 500 km² and is held 100 by Metallica s wholly owned subsidiary, Touchstone Resources Pty Ltd. Metallica has identified significant graphite occurrences within the Esmeralda granites in the project area. These occurrences were first identified in 2006 by Metallica during a drilling program that targeted well defined airborne and ground defined intense electromagnetic (EM) anomalies. At the time, the drilling focused on base metal and gold bearing massive sulphide mineralisation. Instead of sulphides, Metallica identified significant graphite mineralisation. The discovery was unexpected because graphite is rarely associated with igneous rocks, such as granite. Subsequently, a literature review of graphite occurrences in the Esmeralda granites and Croydon volcanics indicated large suites of potentially graphite bearing igneous rocks. Metallica has identified targets where magmatic differentiation or structural controls could concentrate graphite into significantly higher percentages. Previous percussion drilling, including the 2006 Metallica program, recorded significant zones of observable graphite mineralisation (>10 graphite visually) while exploring for metals and other types of mineralisation. Fourteen historic percussion exploration drill holes were identified intersecting significant graphitic granite. Igneous or hydrothermal style graphite deposits, such as Esmeralda, are rare. The more common metamorphic style graphite deposits make up 95 of the world s known graphite deposits. Unlike the metamorphic style deposits, hydrothermal style graphite deposits are typically of high purity graphite in either flake or crystalline form. Examples of this style of mineralisation include the high grade, narrow vein Sri Lankan deposits and the Albany graphite deposit in Canada. The carbon source is non organic and the carbon is thought to be from deep carbon dioxide (CO 2 ) or methane (CH 4 ) gaseous injection into the magma chamber, which later crystallises out as pure or near pure carbon (graphite) crystals. Metallica has developed a hydrothermal mineralisation model for the Esmeralda granite based on work completed by the Bureau of Mineral Resources (BMR) in 1988 and the 2013 discovery of the Albany graphite deposit. The Company mobilised a drill rig to site in October 2015 to carry out an initial drilling program on the project. The assay results confirmed thick graphite (graphitic carbon Cg) mineralised intervals in the first two exploration holes. The core was assayed for graphite content and total carbon. In summary, both drill holes (in a vertical two hole drilling program) intersected significant broad graphite mineralisation (using a 3 Cg cut off) with continuous intercepts of: WD Cg from 71m WD Cg from 71.9m An independent petrology study has also been completed on six representative samples from the mineralised zones. The petrology study identified the same distinctive alteration and mineralisation style present in both holes and which is associated with consistent grades, indicating that the graphite mineralisation may be continuous for 1.2 km or more. 14

15 These results add strong support to the Company s belief that the Warrior deposit, that makes up a part of the Esmeralda graphite project, is very large and would be uniquely amenable to large scale bulk mining. WD001 ended in significant graphite mineralisation (4.1 Cg), with mineralisation open in all directions. Metallurgical results, including those from the Mineral Liberation Analysis, show that 97.8 TC purity product can potentially be even further improved by removing impurities via conventional processing methods, including additional purification stages. The test work followed standard procedures that involved crushing and preparation of representative drill core samples for bench scale floatation testwork. With the addition of standard floatation reagents, a concentrate grade of 91.5 TC (90.6 Cg) was able to be produced at a 91 recovery. program is being analysed to identify walk up drill targets. These targets are planned to be drilled during Metallica remains excited that Esmeralda hosts a very large mineralized system. The project will be developed methodically. However, the Company s priority focus remains on delivering cash flow from the Urquhart bauxite project. WEIPA KARUMBA Esmeralda grapite project COOKTOWN CAIRNS TOWNSVILLE Further purification testwork using an additional single stage caustic bake and wash process, produced an even higher concentrate grade of 97.8 TC. The Company completed an electromagnetic (EM) geophysics program in October 2016 to identify near surface graphite mineralisation for follow up testing. Data from this QUEENSLAND 0 N 200 km FIGURE 3: Esmeralda graphite project location ROCKHAMPTON BUNDABERG BRISBANE 15

16 METALLICA MINERALS ANNUAL REPORT 2016 SCONI SCANDIUM, COBALT & NICKEL PROJECT 2,049 Ha 478 Ha km2 MLM 100 Mining leases Mineral development licenses Exploration tenure Through subsidiaries NORNICO Pty Ltd and Greenvale Operations Pty Ltd The SCONI scandium cobalt nickel tri metal project is located less than three hours drive northwest of Townsville, Queensland. The SCONI project consists of five deposits, Greenvale, Lucknow, Bell Creek, Minnamoolka and Kokomo, with granted mining leases covering all key deposits. Stage 2 Earn In On the 10th of October 2016, Metallica announced that the Company had entered into a Farm in and JV Agreement with Australian Mines Ltd (Australian Mines) (ASX:AUZ) over Metallica s 100 owned SCONI project. Other terms within the Agreement are typical of these type of agreements and include maintaining the tenements, dilution, buy out rights and change of control provisions. Australian Mines is able to earn a further 25 (total 75) in the project after arranging suitable finance to fund the development plan laid out in the DFS within 18 months of completing Stage 1 CAIRNS Mareeba AUSTRALIA N Chillagoe Atherton Innisfail MOURILYAN HARBOUR Ravenshoe Mount Garnet BELL CREEK Greenvale Nickel Province Gunnawarra KEY TERMS OF THE AGREEMENT INCLUDE: Stage 1 Earn In Payment of $250,000 to Metallica on execution of the Agreement (now received) Australian Mines is able to earn 50 of SCONI after completing a Definitive Feasibility Study (DFS) or having expended $10 Million on the DFS within 4 years 16 The JV with Australian Mines over the SCONI Project delivers on Metallica s commitment to create value from non core assets, preserves Metallica s significant past investment, whilst maintaining an exposure to the continued upside from the development of the SCONI project. MINNAMOOLKA Nickel Laterite Deposits KOKOMO SCONI PROJECT AREA GREENVALE FORMER GREENVALE NICKEL MINE Ingham GREENVALE TOWNSHIP QNI Yabulu Nickel Refinery LUCKNOW TOWNSVILLE Sun Metals Zinc Refinery (Acid Supplier) Woodstock LUCKY BREAK NICKEL PROJECT km Charters Towers FIGURE 4: SCONI project location

17 CAPE FLATTERY SILICA SANDS 54 km 2 Silica Sands MLM 100 Exploration tenure For bulk export shipping Through subsidiary Oresome Australia Pty Ltd The Cape Flattery silica sands project is located approximately 200 km north of Cairns in North Queensland (see Figure 5). The EPM covers part of a large Quaternary sand dune field, a section of which is currently being mined by Cape Flattery Silica Mines Pty Ltd (CFSM), a wholly owned subsidiary of Mitsubishi Corporation. The adjacent CFSM operation has operated since 1967 and is the world s largest silica sand mining operation. The dune field is known to contain high grade silica sands. Metallica will evaluate its potential for development as a silica sand mining and bulk shipping operation. WEIPA KARUMBA Cape Flattery silica sands project COOKTOWN CAIRNS TOWNSVILLE QUEENSLAND ROCKHAMPTON BUNDABERG 0 N 200 km BRISBANE FIGURE 5: Cape Flattery silica sands project location 17

18 DIRECTOR PROFILES BARRY J CASSON NON EXECUTIVE CHAIRMAN ANDREW L GILLIES NON EXECUTIVE DIRECTOR DR SHU WU NON EXECUTIVE DIRECTOR DR SHU ZHANG ALTERNATE NON EXECUTIVE DIRECTOR TO DR SHU WU Mr Casson was appointed Chairman of the Board on 30 June 2015, Barry has been a Non Executive Director since 1 December Barry has more than 40 years experience in accounting, finance, corporate and general management with numerous listed and unlisted companies, primarily in the resources industry since the early 1980 s. He has had extensive international experience in project financing and corporate transactions. He is also a Non Executive Director of Unitywater (a statutory authority) since Mr Gillies was Managing Director of the Company (from listing of the Company in 2004) until 13 July 2015 and now holds the position of Non Executive Director. Andrew graduated from the University of Queensland in 1985 with a Bachelor or Science (Geology), and is a member of Aus.I.M.M. Mr Gillies key strength is mineral resource management and strategic planning specialising in project generation, selection, evaluation and acquisition. Since 1985 he has worked continuously as a geologist in the mining and exploration industry, accruing over 30 years experience across a range of commodities. He has valuable experience in the fields of exploration, feasibility studies, development, open pit and underground mining of mineral deposits and resource company management. Mr Gillies, though his company Golden Breed Pty Ltd and super fund holds 11.1 million shares in Metallica. Dr Wu Shu is a Director of Jien Mining Pty Ltd which holds or 40,099,678 shares in Metallica Minerals Limited. He is Chairman and Director of Jilin Jien Nickel Industry Co. Ltd listed on the Shanghai Stock Exchange (Director since 2003), Director of Liberty Mines Inc. listed on the TSX, Canada (director since 2009). Dr Shu Zhang has over 40 years experience in mining, first as a Miner, then a Mining Engineer, and later an Executive Manager in operations and project development in companies in Australia, China, and Canada. Dr Zhang was one of the key members who played a critical role in the successful development of Sino Gold Mining Limited. Dr Zhang has worked for the Jilin Nickel Group since 2011, and is a Director of Jilin s Canadian subsidiaries, being the unlisted Canadian Royalties Inc., and the TSX listed Northern Sun Mining Corporation (until April 2016). 18

19 MANAGEMENT PROFILES SIMON SLESAREWICH CHIEF EXECUTIVE OFFICER JOHN K HALEY COMPANY SECRETARY & CFO Mr Slesarewich was appointed to the position of Chief Executive Officer on 13 July Simon is a Mining Engineer and registered Senior Site Executive in Queensland, has more than 18 years experience across a range of jurisdictions, including a strong background in operational and executive roles within both mining and contracting entities. He holds a Bachelor of Engineering (Mining) from the University of Queensland and Graduate Diplomas in Administration, as well as Applied Finance and Investment. Mr Haley has over 35 years of senior corporate experience in Canada and Australia. He has a diverse career in a range of industries including mineral exploration and has assisted in the startup of various mineral exploration companies. He is a Director of the Queensland Resources Council. John has previously worked with Coopers & Lybrand and Arthur Andersen & Co., and with listed and unlisted companies in general management, financial reporting and company secretarial positions. Simon is the former CEO of Northern Discovery Limited and Boardwalk Resources Limited and is a renowned bulk commodities and business turnaround specialist. 19

20 TENEMENT TABLES 20

21 TENEMENT TABLES CAPE YORK BAUXITE & HMS JOINT VENTURE 50 ORESOME AUSTRALIA & 50 OZONE RESOURCES PTY LTD BAUXITE & HEAVY MINERAL SANDS Tenement Project Name Holder/Applicant Status Area ML Urquhart Point Oresome Australia P/L Ozore Resources P/L Granted Ha ML Mbung Urquhart Point Extension Oresome Australia P/L Ozore Resources P/L Granted Ha EPM Urquhart Point Oresome Australia P/L Ozore Resources P/L Granted 16 s/b EPM Doughboy Oresome Australia P/L Ozore Resources P/L Granted 13 s/b EPM Jardine Oresome Australia P/L Ozore Resources P/L Granted 29 s/b EPM Jackson River #2 Oresome Australia P/L Ozore Resources P/L Granted 4 s/b EPM Sandman #3 Oresome Australia P/L Ozore Resources P/L Granted 34 s/b EPM Sandman #2 Oresome Australia P/L Ozore Resources P/L Granted 48 s/b EPM Sandman #5 Oresome Australia P/L Ozore Resources P/L Granted 24 s/b EPM Sandman #6 Oresome Australia P/L Ozore Resources P/L Granted 21 s/b EPM Sandman #12 Oresome Australia P/L Ozore Resources P/L Granted 17 s/b EPM Sandman #10 Oresome Australia P/L Ozore Resources P/L Granted 20 s/b EPM Sandman #11 Oresome Australia P/L Ozore Resources P/L Granted 41 s/b EPM Upper Embley Oresome Australia P/L Ozore Resources P/L Application 13 s/b EPM Vrilya East Oresome Australia P/L Ozore Resources P/L Granted 78 s/b ML Urquhart Bauxite Oresome Australia P/L Ozore Resources P/L Application 1372 Ha ML Urquhart Bauxite #2 Oresome Australia P/L Ozore Resources P/L Application 50.5 Ha CAPE FLATTERY SILICA SANDS PROJECT 100 ORESOME AUSTRALIA PTY LTD Tenement Project Name Holder/Applicant Status Area EPM Cape Flattery Oresome Australia P/L Granted 17 s/b 21

22 TENEMENT TABLES SCONI PROJECTS NORTH & SOUTH & LUCKY BREAK 100 METALLICA MINERALS LTD NICKEL COBALT PROJECT NORTH Tenement Project Name Holder/Applicant Status Area ML Bell Creek Consolidated Nornico P/L Granted Ha MDL 387 Minnamoolka Nornico P/L Granted 343 Ha MDL 515 Bell Creek Nornico P/L Granted Ha NICKEL COBALT SCANDIUM PROJECT SOUTH Tenement Project Name Holder/Applicant Status Area ML Lucknow Nornico P/L Granted Ha ML Greenvale Greenvale Operations P/L Granted 1088 Ha EPM Greenvale Lucknow #2 Greenvale Operations P/L Granted 13 s/b ML Kokomo Nornico P/L Granted 419 s/b EPM Kokomo Nornico P/L Granted 10 s/b EPM LUCKY BREAK NICKEL PROJECTS Greenvale Lucknow Nornico P/L Granted 13 s/b Tenement Project Name Holder/Applicant Status Area ML Dingo Dam Nornico P/L Granted Ha ML Lucky Break Nornico P/L Granted Ha 22

23 TENEMENT TABLES PHOENIX LIMESTONE PROJECTS & ESMERALDA GRAPHITE PROJECT 100 METALLICA MINERALS LTD PHOENIX LIMESTONE PROJECTS Tenement Project Name Holder/Applicant Status Area EPM Fairview Phoenix Lime P/L Granted 5 s/b EPM Fairview #1 Phoenix Lime P/L Granted 1 s/b ESMERALDA GRAPHITE PROJECT Tenement Project Name Holder/Applicant Status Area EPM Warrior Touchstone Resources P/L Granted 19 s/b EPM Esmeralda West Touchstone Resources P/L Granted 80 s/b EPM Esmeralda East Touchstone Resources P/L Granted 80 s/b NOTES All tenements are 100 owned unless expressed otherwise EPM Exploration Permit for Minerals MDL Mineral Development License ML Mining Lease S/B Sub blocks Ha Hectares 23

24 RESOURCE TABLES 24

25 RESOURCE TABLES URQUHART DSB RESOURCE STATEMENT DETAILS 45 Al 2 O 3 COG DSB in situ Screened 1.2mm Area Kt Al 2 O 3 SiO 2 Kt^ Yield Al 2 O 3 SiO 2 A 5, , B 2, , Totals 7, , URQUHART DSB RESOURCE STATEMENT FOR THE LOWER BAUXITE PROFILE DSB in situ Screened 1.2mm Area Kt Al 2 O 3 SiO 2 AAI RSi Kt^ Yield Al 2 O 3 SiO 2 A 3, , B Totals 4, , NOTES 1. Tonnages are a subset of those reported in the table above 2. ^ Recovered tonnage (tonnes x yield) for the same DSB cut off grade and DSB in situ dry tonnage 3. AAI = Available alumina Al RSi = Reactive Silica SiO 2 5. The information in the table above is summarised from the JORC 2012 Mineral Resource in the ASX Release dated 11 May

26 RESOURCE TABLES CAPE YORK BAUXITE AND HMS JOINT VENTURE REGIONAL BAUXITE EXPLORATION TARGETS Project Permit Discrete Targets Insitu mineralisation Total Al tonnage range 2 O 3 Total SiO 2 Mt Vrilya EPM to insufficient data 1 Vrilya EPMA to Vrilya East EPMA to insufficient data 1 TOTALS to 128 Within Cape York Bauxite and HMS Joint Venture s 1,257 km² exploration tenement portfolio in Western Cape York bauxite province, Far North Queensland includes coastal bauxite targets near Vrilya Point 160 km north of Weipa (see Figure 1) Metallica has identified 13 priority highly prospective bauxite zones within Oresome s tenement package near Urquhart and Vrilya Point adjoining Rio Tinto s mining leases, (which cover substantial good quality bauxite deposits) see Figure 1. *EXPLORATION TARGET The potential quantity and grade of the bauxite deposits are conceptual in nature. There is insufficient information at this time to define a mineral resource and there is no certainty that further exploration will result in the determination of a mineral resource in these areas. 1. previous exploration reports SiO 2 data incomplete 2. range based on measured areas of target plateaus, minimum thickness of >0.5 m bauxite, estimated average thickness of 1.5 m from previous exploration data and bulk density value of based on screened sample assay results The information in the table above is summarised from the JORC 2012 Mineral Resource in the ASX Release dated 11 July THE INFORMATION IN THIS REPORT THAT RELATES TO EXPLORATION RESULTS AND EXPLORATION TARGETS IS BASED ON INFORMATION COMPILED BY JOHN CAMERON (A GEOLOGIST OF OVER 25 YEARS EXPERIENCE), AND A COMPETENT PERSON WHO IS A MEMBER OF THE AUSTRALASIAN INSTITUTE OF MINING AND METALLURGY AND A CONTRACT CONSULTANT TO METALLICA MINERALS LTD. MR CAMERON HAS SUFFICIENT EXPERIENCE WHICH IS RELEVANT TO THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO THE ACTIVITY BEING UNDERTAKEN TO QUALIFY AS COMPETENT PERSON AS DEFINED IN THE 2012 EDITION OF THE AUSTRALASIAN CODE FOR REPORTING OF EXPLORATION RESULTS, MINERAL RESOURCES AND ORE RESERVES. MR CAMERON CONSENTS TO THE INCLUSION OF THIS INFORMATION IN THE FORM AND CONTEXT IN WHICH IT APPEARS IN THIS REPORT. 26

27 RESOURCE TABLES URQUHART POINT HMS RESOURCE ESTIMATE GLOBAL MINERAL RESOURCE 0 HM COG Resource Category Tonnes t HM HM tonnes OS Slimes Zircon Rutile Ilmenite Measured 1,945, , Indicated 1,365, , Totals 3,310, , MINERAL RESOURCE CONSTRAINED BY MINING LEASE & ENVIRONMENTAL BUFFERS 0 HM COG Resource Category Tonnes t HM HM tonnes OS Slimes Zircon Rutile Ilmenite Measured 1,882, , Indicated 1,345, , Totals 3,228, , MINERAL RESOURCE CONSTRAINED BY MINING LEASE & ENVIRONMENTAL BUFFERS 2 HM COG Resource Category Tonnes t HM HM tonnes OS Slimes Zircon Rutile Ilmenite Measured 1,781, , Indicated 1,305, , Totals 3,087, , The information in the table above is summarised from the JORC 2012 Mineral Resource in the ASX Release dated 20 May

28 RESOURCE TABLES URQUHART POINT HMS RESERVE ESTIMATE ORE RESERVE ESTIMATE 0.90 (Zr Rt Il) COG Head Grade HM Tonnage & Mineral Assemblage Ore Resource Category Tonnes kt HM OS Slimes Zr Rt Il HM kt Zr of HM Rt of HM Il of HM Proved Provable Totals 1, NOTES 1. The Ore Reserves are based on the following forecast long term FOB prices: Zircon $1,500/t, Rutile US$1,200/t and Ilmenite US$200/t. 2. Ore Reserves are based on a Zircon Equivalent cut off grade of Zircon Equivalent = Zircon x Rutile x Ilmenite. Recoveries used in the equivalence calculation are 98.2, 98.0 and 95.8 for Zircon, Rutile and Ilmenite respectively. 4. The HMS Reserves have been independently estimated by consultants IMC Mining Pty Ltd. 5. For further information see ASX Release on Maiden Independent Ore Reserve for Urquhart Point HMS project dated 24 June The information in the table above is summarised from the JORC 2012 Mineral Resource in the ASX Release dated 24 Jan

29 RESOURCE TABLES SCONI SOUTHERN DEPOSITS NI CO & SC RESOURCE STATEMENTS COG NICKEL EQUIVALENT = 0.7 (Ni Co Sc) Description KOKOMO Tonnes Mt Ni Co Sc g/t Ni Metal kt Co Metal kt Sc Metal t Equivalent Sc Oxide t Measured Indicated ,292 Inferred Totals ,619 2,483 GREENVALE INSITU, DUMPS AND STOCKPILES Measured Indicated Inferred Totals ,097 1,682 LUCKNOW Measured Indicated ,357 2,081 Inferred Totals ,597 2,449 COMBINED SOUTHERN DEPOSITS COG NICKEL EQUIVALENT = 0.7 (Ni Co Sc) Measured Indicated ,580 3,957 Inferred ,172 1,797 TOTALS ,313 6,615 SCONI SOUTHERN DEPOSITS NI CO & SC RESOURCE STATEMENTS COG NICKEL EQUIVALENT = 1.0 (Ni Co Sc) COMBINED SOUTHERN DEPOSITS Measured Indicated ,140 3,282 Inferred TOTALS ,036 4,656 29

30 RESOURCE TABLES SCONI NORTHERN DEPOSITS NI CO RESOURCE STATEMENTS COG NICKEL EQUIVALENT = 0.7 (Ni Co) Description Tonnes Mt Ni Co Ni Metal kt Co Metal kt BELL CREEK SOUTH Measured Indicated Totals BELL CREEK NORTH Indicated Totals BELL CREEK NORTHWEST Indicated Totals THE NECK Indicated Totals MINNAMOOLKA Indicated Inferred Totals COMBINED NORTHERN DEPOSITS Measured Indicated Inferred TOTALS NOTE 1. Variations in totals may be due to rounding factors 30

31 RESOURCE TABLES COMBINED SCONI DEPOSITS NI CO & SC RESOURCE STATEMENTS COG NICKEL EQUIVALENT = 0.7 (Ni Co Sc) Description Tonnes Mt Ni Co Sc g/t Ni Metal kt Co Metal kt Sc Metal t Equivalent Sc Oxide t KOKOMO Totals ,619 2,483 GREENVALE INSITU Totals GREENVALE DUMPS AND STOCKPILES Totals LUCKNOW Totals ,597 2,449 COMBINED SCONI SOUTH DEPOSITS RESOURCE Measured Indicated ,580 3,956 Inferred ,172 1,798 TOTALS 70.7 w ,313 6,615 BELL CREEK SOUTH Totals BELL CREEK NORTH Totals BELL CREEK NORTHWEST Totals THE NECK Totals MINNAMOOLKA Totals COMBINED SCONI NORTHERN DEPOSITS RESOURCE Measured Indicated Inferred TOTALS Combined SCONI Southern and Northern Deposits Resource Measured Indicated ,580 3,956 Inferred ,172 1,798 TOTALS ,313 6,615 NOTE 1. In the Northern nickel deposits the Sc grade is typically very low (5 30g/t Sc), therefore no Sc Resource estimated. Resultant Sc grade for combined SCONI (South and North) Project is therefore low. Variations in totals may be due to rounding factors. 31

32 RESOURCE TABLES COMBINED SCONI DEPOSITS Ni Co & Sc RESOURCE STATEMENTS COG NICKEL EQUIVALENT = 1.0 (Ni Co Sc) Description Tonnes Mt Ni Co Sc g/t Ni Metal kt Co Metal kt Sc Metal t Equivalent Sc Oxide t KOKOMO Totals ,108 1,699 GREENVALE INSITU Totals GREENVALE DUMPS AND STOCKPILES Totals LUCKNOW Totals ,459 2,238 COMBINED SCONI SOUTH DEPOSITS RESOURCE Measured Indicated ,140 3,281 Inferred TOTALS ,036 4,656 BELL CREEK SOUTH Totals BELL CREEK NORTH Totals BELL CREEK NORTHWEST Totals THE NECK Totals MINNAMOOLKA Totals COMBINED SCONI NORTHERN DEPOSITS RESOURCE Measured Indicated Inferred TOTALS COMBINED SCONI SOUTHERN AND NORTHERN DEPOSITS RESOURCE Measured Indicated ,140 3,282 Inferred TOTALS ,036 4,656 NOTE 1. In the Northern nickel deposits the Sc grade is typically very low (5 30g/t Sc), therefore no Sc Resource estimated. Resultant Sc grade for combined SCONI (South and North) Project is therefore low. Variations in totals may be due to rounding factors. 32

33 NOTES TO RESOURCE TABLES 1. Scandium is typically sold as an oxide product. Hence the equivalent scandium oxide has been calculated at times contained scandium metal. 2. The Mineral Resources for the Southern Deposits of Lucknow, Greenvale and Kokomo are reported at a cut off grade (COG) of NiEq 0.7 (Ni Co Sc). This NiEq COG formula has been calculated using commodity prices of US$10/lb nickel, US$15/lb cobalt and US$1,500/kg scandium oxide, and recoveries of 90 for all three metals. Metallica indicates that the metallurgical testwork to date provides reasonable potential for the nickel, cobalt and scandium to be recovered at similar recoveries to those achieved in the testwork. 3. The Mineral Resources for the Northern Deposits of Bell Creek South, Bell Creek North, Bell Creek Northwest, Minnamoolka and The Neck are reported at a COG of NiEq 0.7 (Ni Co). This NiEq COG formula has been calculated using commodity prices of US$10/lb nickel and US$15/lb cobalt, and recoveries of 90 for both nickel and cobalt. 4. No scandium content was estimated in the Northern deposits as Sc assays are generally not available. From limited data there is good indication the Northern deposits are relatively low in Sc (generally between 5 and 30g/t Sc). 5. Variations in totals may be present due to rounding factors. 6. The information in the tables above is summarised from the JORC 2012 Mineral Resource Upgrade in the ASX Release dated 21 October GOVERNANCE OF MINERAL RESOURCES The Company engages external consultants and competent persons to prepare and calculate Mineral Resources estimates. These estimates and underlying assumptions are reviewed by the Board and Management for reasonableness and accuracy. The results of the Mineral Resource estimates are then reported in accordance with the JORC codes and other applicable rules. Where material changes occur during the year to a project, including project s size, title or exploration results or other technical information, then previous resource estimates and market disclosures are reviewed for completeness. The Company reviews it Mineral Resources annually. Where a material change has occurred in the assumptions or data used in previously reported Mineral Resources, a revised resource estimate will be prepared as part of the Annual review process. MINERAL RESOURCES AND ORE RESERVES STATEMENTS NOTES Tonnages, grades and contained metal have been rounded to reflect the accuracy of the calculations. Rounding errors may occur. Mineral Resource are completed in accordance with JORC (2012) Australasian Code for Reporting of Exploration Results, Mineral Resources sand Ore Reserves. The information provided in this report is summarised from the latest Mineral Resource statements as referenced in each case. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements, and in the case of estimates of Mineral Resources that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person s findings are presented have not materially changed from the original market announcement CAUTION REGARDING FORWARD LOOKING STATEMENTS Certain statements made in this report contain or comprise certain forward looking statements. Although Metallica believes that the estimates and expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in commodity prices and exchange rates and business and operational risk management. Metallica undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after today s date or to reflect the occurrence of unanticipated events. 33

34 TOP 20 SHAREHOLDERS Rank Name Shares 1 JIEN MINING PTY LTD 40,099, ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD <CUSTODIAN A/C> 10,746, GOLDEN BREED PTY LTD 9,000, PLAN 1 PTY LTD 5,333, BONDLINE LIMITED 4,910, MINNELEX PTY LTD <PYPER FAMILY A/C> 3,352, J P MORGAN NOMINEES AUSTRALIA LIMITED 3,004, ASDEN INVESTMENTS PTY LIMITED <ASDEN P/L STAFF S/F A/C> 2,745, CODAN TRUSTEES <THE MOUNT COTTON ACCOUNT> 2,500, MR ANDREW LANGHAM GILLIES + MRS KAREN GILLIES <ANDREW GILLIES S/F A/C> 2,140, PURE WATER SYSTEM (AUST) PTY LTD <PURE WATER SYSTEMS S/F A/C> 2,000, CHINA XINFA GROUP CORPORATION LIMITED 1,964, MR JIMMY FAUSTO CAFFIERI + MRS LUCIA CAFFIERI <CAFFIERI FAMILY A/C> 1,916, JAMESBURY HOLDINGS PTY LTD <SUPERANNUATION FUND ACCOUNT> 1,700, MBM CORPORATION PTY LTD 1,700, ARMSTRONG ENERGY SERVICES PTY LTD 1,670, AUSTRALIAN EXPORTS & INDUSTRIALISATION SUPER PTY LTD <BUCK FAMILY SUPER FUND A/C> 1,500, LATSOD PTY LTD <DOSTAL SUPERFUND A/C> 1,500, MAHE INVESTMENTS PTY LTD 1,377, ROBERT JOHN GILLIES 1,342, M2 ASSETS PTY LTD 1,216, BUNTER 46 PTY LTD 1,200, MR PAUL DOSTAL 1,200, TOTALS 104,118, BALANCE OF REGISTER 123,192, TOTAL SHARES ON ISSUE* 227,311, *As at 30 September

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