A combined total consideration of A$1.65 million will go to Straits Resources Ltd (Straits) and Resource Mining Corporation (RMI) to acquire all of their joint venture ownership of the three Greenvale tenements, EPMs 11223, 10680 and 10866 which comprise the historic Greenvale nickel mine and its immediate surrounds - Metallica's 100% owned subsidiary Greenvale Operations Pty Ltd will hold 100% of the Greenvale tenements.
The Greenvale acquisition price totals A$650,000 cash and 3.33 million Metallica ordinary shares at a deemed price of A$0.30 per share.
The Greenvale assets are immediately south of Metallica's Kokomo deposit which together with the Minnamoolka and Bell Creek deposits to the north, comprise the Company's advanced NORNICO nickel-cobalt project.
Because of existing mining, infrastructure in the region and the upside of near surface remnant and stockpiled nickel mineralisation at the Greenvale Nickel mine, the Company believes the acquisition presents the option to move to nearer-term maiden production of high grade Ni-Co ore through a modest-scale commercial plant at the Greenvale Mine.
The Greenvale tenements cover both the Greenvale mine site and the nearby Lucknow nickel-cobalt (Ni-Co) deposit just a few kilometres west of the Greenvale township.
The Greenvale mine operated for 18 years from 1974 to 1992, mining ore from a 3 km2 area, that produced 40 million tonnes (Mt) of nickel laterite ore grading 1.56% Ni and 0.12% Co, making it the largest high grade nickel laterite mine in Australia.
The Greenvale mine had previously transported the high grade nickel ore by a specially built rail line, for processing at the nearby coastal Yabulu nickel-cobalt refinery near Townsville.
Metallica's Managing Director, Mr Andrew Gillies, said: "This is a significant consolidation and enhancement of our resource base, exploration and mining potential at NORNICO as the Greenvale project contains a very strategic and significant remnant nickel mine resource.
"This resource will considerably add to Metallica's 100%-owned NORNICO project Ni-Co deposits immediately to the north and potentially provide high grade feed for an initial production start-up as well as being an excellent mining and processing site for future NORNICO operations.
"The site is one we have been keen on for quite some time, as the mine area is well served by sealed roads, close proximity to the Greenvale township and associated water and power infrastructure and is only 2.5 hours drive from Townsville.
"Our feasibility and development team is currently assessing the opportunity for a modest size atmospheric acid leaching (AAL) operation as NORNICO Stage 1 - something in the order of 100,000 to 150,000 tonnes per annum (tpa) on the Greenvale mine site.
"This operation would source very high grade nickel-cobalt ore blended from Greenvale as well as cobalt and scandium-rich nickel ores trucked from the Kokomo project 55km northeast of Greenvale. Acid used in the processing would be trucked from Townsville.
"We envisage that after a few years of NORNICO Stage 1 operations, Metallica would be commissioning the planned much larger NORNICO Stage 2 operation (in the order of 1.0 to 0.75Mtpa) which would have its own acid and power plant.
"The flow sheet for this plant is designed to source high grade Ni-Co ores from all NORNICO deposits - including Greenvale - at which point the Stage 1 Greenvale plant processing could conceivably revert to predominantly scandium-rich nickel laterite ores for Scandium Oxide production with some Ni-Co bi-products."
Mr Gillies said the inclusion of the Greenvale project now cemented NORNICO's excellent location and access to high grade Ni-Co ores - factors that set it apart from other nickel laterite projects and provided an environment to maximise returns.
Background - Drilling & Resources
The Straits and RMI joint venture undertook Reverse Circulation (RC) drilling on the Greenvale mine site to define the extent of the remnant nickel resource.
Between May 2007 and July 2008, Straits drilled 141 RC holes for 5,935m, with approximately 25% of the holes drilled intersecting Ni grades greater than 1% over a 5m interval.
The Straits drilling identified three areas which were either un-mined or where mining was limited.
Two main areas of high grade nickel laterite have been identified by the Straits drilling and are referred to by Metallica as the Greenvale Mine Central and Southern Areas.
Outside these two areas, hole (GVN-015) drilled in the Greenvale Mine North area intersected 15m @ 1.69% Ni from surface and it is possible that additional resources will be identified in this area.
There are also likely to be large tonnages of lower grade nickel-cobalt laterite within the mined stockpile dumps on the old mine site.
An Inferred and Indicated Resource for Greenvale of 38Mt @ 0.80% Ni and 0.05% Co was announced by Straits Resources Ltd (see ASX release dated 29th July 2009) using a cut off grade of 0.5% Ni. It is highly likely that high grade zones of +1% Ni will be identified within this resource and Metallica will be targeting these zones as highest priority with a drilling campaign early in 2010.
The Lucknow tenement is located immediately south of Greenvale and is a lateritised ridge which has high cobalt values, the higher grade zones will be drilled in detail at first opportunity after the completion of the Greenvale mine site drilling.
It is highly likely that high grade zones of +1% Ni will be defined within this resource.
Metallica is planning a drilling campaign for the first quarter of 2010 to increase the resource categories at Greenvale and to define a high grade zone of nickel laterite mineralisation.
Metallica has an initial Exploration Target* of between 10Mt to 15Mt grading between 1.0% and 1.4% Ni of remnant mineralisation on the Greenvale mine site.
Metallica will evaluate the Lucknow tenement which is located immediately south of Greenvale and is a lateritised ridge which has high cobalt values, the higher grade zones will be drilled in detail at first opportunity after the completion of the Greenvale drilling.
*With regards to Exploration Targets - The potential quantity and quality or grade is conceptual in nature, and that there is insufficient exploration to define a Mineral Resource and that it is uncertain if future exploration will result in the determination of a Mineral Resource.
For the complete Metallica Minerals ASX Announcement, Tables and Figures, please click the link below:
About Metallica Minerals Limited
Metallica Minerals Limited (Metallica) (ASX:MLM) was incorporated in 1997 by Founding and Managing Director Andrew Gillies. Metallica was established with the primary objective of creating opportunity and wealth for its shareholders through the evaluation and development of mineral projects in Queensland. Metallica was listed on the Australian Stock Exchange November 2004 (ASX:MLM). Metallica's focus and flagship project is its North Queensland Nickel Cobalt (NORNICO)
Metallica Minerals Limited
Greenvale Mining Nl