Metallica Minerals (ASX:MLM) is pleased to announce the completion of its first formal JORC resource estimates for the Greenvale and Lucknow nickel-cobalt laterite deposits within the southern portion of the Company's wholly-owned NORNICO nickel-cobalt & scandium project northwest of Townsville in North Queensland.

The new nickel-cobalt estimates follow the release by Metallica last month of its first maiden resource - an Indicated and Inferred resource of 6.1 Mt @ 169 g/t Sc - for the scandium mineralisation within Lucknow, which includes a higher grade resource of 4.1Mt @ 205 g/t Sc.

The estimates were prepared by Golder Associates of Brisbane using approximately 22,000 metres of drill data, including results from Metallica's 573-hole campaign on the two deposits between March and June this year.

Greenvale (Remnant Ni-Co Ores on the Greenvale Mine Site)

The Greenvale Resource was estimated using data from 417 Reverse Circulation (RC) holes. Holes GVM 142 to GVM 417 were drilled by Metallica between March 2010 to June 2010 (comprising approximately 9,000m) and holes GVM-001 to GVM 142 were drilled by Straits Resources Ltd (ASX:SRL) (PINK:SRUFF) between May 2007 and August 2008 (comprising approximately 6,000m of drilling). The Greenvale resource has predominantly been drilled out on a 40m by 40m grid with some infill drilling to 20m by 20m. This is sufficient to classify the resource as Indicated. Due to the geological continuity of the Greenvale nickel-cobalt laterite mineralisation (which occurs as semi-continuous layers) it is likely than once Metallica obtains additional Bulk Density data, parts of these resources could then be reclassified as Measured.

The resources quoted above, used data from the drilling programmes completed by Straits and Metallica. The historical drilling by Metal Ex which was used in the Greenvale Resource estimated announced by Straits on the 29th July 2009 has not been included in this estimate as the Metal Ex drilling cannot be verified with the same high degree of confidence as the recent Metallica - Straits drilling.


The combined Indicated and Inferred resource for the Lucknow Ni-Co laterite deposit based on the drilling to date is 2.4Mt @ 0.57% Ni, 0.20% Co (0.97% NiEq) and 96 g/t Sc, at a 0.7% NiEq cut-off grade (COG), including a higher grade zone of 0.57Mt @ 0.70% Ni, 0.30% Co (1.30% NiEq) and 107 g/t Sc, using a 1.1% NiEq COG.

The Lucknow Ni-Co & Sc resource was completed by using data from 298 RC drill holes comprising 7,036m of drilling. The resource has been drilled out on either a 20m (N-S) by 20m (E-W) grid or a nominal 40m (N-S) by 40m (E-W) grid which is sufficient to classify the resource as Indicated. Where the drilling has been completed on a 80m (N-S) by a 40m (EW) grid the resource has been classed as Inferred. It is possible that once additional bulk density data becomes available, the majority of the Indicated Resource may then be classed as Measured.

The scandium resource within the Lucknow laterite deposit is subject to a Joint Venture (JV) agreement with Straits Resources Exploration Limited. Under the terms of the JV, all scandium ore is to be mined or stockpiled separately and kept for later processing by the JV.

Laterite resources are classified as either Ni-Co ore or Sc ore under a formula agreed by the JV. As a result of this, the total Lucknow resource is separated into two exclusive parts.

The scandium ore could either be treated separately or potentially treated by blending with Ni-Co ores using the proposed NORNICO Stage 1 Ni-Co & Sc plant as it will have the capability to extract and recover all three metals from the same ore feed. The Lucknow Ni-Co resource (100% owned by Metallica) is reported using a 0.70% NiEq.

Resource Estimate Methodology

The Scandium ore as defined by the JV is currently owned 80% by Metallica and 20% by Straits. The Scandium resource does contain some small portions of lower grade Ni-Co resources excluded from the Ni-Co resource stated above. The Scandium resource has been estimated using a 70 g/t Sc cut off grade (as reported in an ASX announcement 20th August 2010).

Modelling technique

The resource estimate was undertaken by Golder Associates of Brisbane using block modelling Ordinary Kriging (OK) techniques. The estimate was completed using unfolding techniques to make a wire framed model to represent the paleo-laterite surfaces between drill holes, and was further refined by incorporating data from sectional interpretations of the considered logged geology and scandium, nickel, cobalt, iron, magnesium and manganese assays. A nominal 0.80% Ni-only mineralised envelope was used to constrain the mineralisation and grade estimates at Greenvale and a nominal 0.5% NiEq was used at Lucknow. The wireframe was then filled with 10m by 10m by 1m blocks, with the grades of the various elements estimated by ordinary kriging using a three pass search strategy and a maximum of 3 composites selected from any one drill hole. Mineralisation was extrapolated a nominal 20m from drill hole intercepts, depending on supporting information. Further details of how the Greenvale and Lucknow Resources were estimated are listed at the back of this report.

Future work

As previously announced, Metallica is continuing to investigate the processing of a minimum of 180,000tpa of high grade Ni-Co & Sc ore through a proposed NORNICO Stage 1 processing plant located on the Greenvale Mine Site. This would maximise margins by recovering the three metals together. The proposed operations resource base will be from Greenvale, Lucknow and possibly supplemented in later years from high grade zones within the Kokomo deposit north of Greenvale and within the southern NORNICO project area (see Kokomo Resource Update ASX Release 27th January 2010). However, to ensure that there will be sufficient high grade Ni - Co material for the proposed operation to process and to possibly increase throughput, additional drilling is being scheduled. A plan showing where the additional drilling to upgrade and expand the Ni-Co Greenvale Resource is included.

Further metallurgical testwork will also be undertaken on material from Greenvale and Lucknow to investigate the processing of higher than expected iron levels (>25% Fe) before committing to a full feasibility study. Both high cobalt and scandium ores are most commonly associated with higher iron. The added benefit of being able to treat higher iron ores, either Ni-Co (with some Sc) and Sc ore (high iron bearing) laterite ore feed through the proposed NORNICO Stage 1 plant is to take advantage of any significant rises in either the cobalt or scandium price (when the scandium market develops) which could significantly increase the contained metal value revenue and operating margins.

Other testwork will include investigating the likelihood of screening out coarse material from the numerous low grade dumps on the Greenvale mine site to determine the quantity of any high grade nickel associated with the fines.

Initial beneficiation testwork on the Greenvale ore types has so far indicated there is good potential to upgrade the Ni-Co grade of the ore by around 20%.

Remaining 2010 work program

A list of activities planned for the next four months to progress the NORNICO Stage 1 project, is detailed below:-

- Drilling 6 PQ diamond drill holes at Greenvale and Lucknow for metallurgical, geological and bulk density purposes.

- Additional 3,000m of RC drilling and 2,000m of shallow Aircore drilling which is designed to increase the resource base, convert the Indicated and Inferred resources to Measured and Indicated status and to identify shallow high grade resources (in the top 10m of the laterite profile) which can be processed in the early years of the planned NORNICO Stage 1 Ni-Co-Sc processing plant.

- Additional metallurgical testwork to investigate the possibility of treating high grade scandium ore (>200 g/t Sc which is significantly higher in iron) in the proposed NORNICO Stage 1 plant.

- Beneficiation testwork on PQ core to further investigate and confirm the expected upgrade of the nickel and cobalt content of the Greenvale ores by simple screening.

- Screening work on the large Greenvale low grade waste dumps to determine the proportion of any high grade nicke and cobalt in the fines fraction.

The NORNICO Stage 1 Scoping Study and financial model has been completed, with a summary being currently prepared.

For the complete Metallica Minearals announcement including figures and tables, please refer to the following link:

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)



Andrew Gillies
Managing Director
Metallica Minerals Limited
Tel: +61-07-3249-3000

Link: Metallica Minerals Limited (ASX:MLM) Maiden High Grade Ni-Co Resource For Nornico Greenvale-Lucknow Projects In North Queensland

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