Metallica Minerals Limited (ASX:MLM) Quarterly Report For The Period Ending 30 September 2009

Brisbane, Nov 2, 2009 AEST (ABN Newswire) - Metallica Minerals Limited (ASX:MLM) is pleased to present its September 2009 quarterly activities report.

As at 30 September 2009, Metallica's consolidated cash was A$14.9 million including interest income of A$227,000 received during the June Quarter.

Exploration and evaluation expenditure totalled A$1.76 million, production A$0.46 million (Ootann) and administration expenditure was A$0.657 million for the quarter to 30 September 2009. The total combined June quarterly expenditure was approximately A$2.4 million.

The estimated exploration and evaluation expenditure by Metallica for the December 2009 quarter is A$1,950,000. Significant additional project expenditure was completed in the September quarter through Metallica's 33% shareholding in Cape Alumina (100% Weipa bauxite project).

No Directors or Management Unlisted Performance Options were issued during the quarter.

The Company's significant cash reserves will be utilised to seek undervalued resource opportunities as well as progress Metallica's key NORNICO nickel-cobalt project, its holdings in coal (MetroCoal 79%) and significant Queensland-based exploration interests in zircon, rutile, gold, scandium, limestone and other minerals.

Metallica intends to support its 76% holding in Planet Metals Ltd (ASX:PMQ), including by underwriting Planet's current rights issue, and its 47.2% holding in Queensland Gold and Minerals (ASX:QGM). Metallica continues to assess attractive corporate and project opportunities that are compatible to the Company's core operations.

Overview

The NORNICO Project is located 32 kilometres south of Mt Garnet, North Queensland; location and access to infrastructure is excellent.

The combined NORNICO resource base of the three deposits of Bell Creek, Minnamoolka and Kokomo is 50Mt @ 0.72% Ni and 0.06% Co (364 Kt Ni and 29 Kt Co contained). Further resource definition and exploration drilling is currently in progress at Kokomo which is expected to increase the size and status of the Kokomo resource.

Key Activities

Undertaken During the September Quarter Included:

- The in-house Scoping/Pre-Feasibility Study based on 1.0 mtpa heated agitated Atmospheric Acid Leaching (AAL) was continued in order to enhance the project economics.

- Kokomo heated agitated AAL testwork was completed.

- Further laboratory metallurgical testwork to develop and optimize the AAL process flowsheet was completed. Flocculent screening and product thickener testwork was also completed.

- Pyrometallurgical testwork at CSIRO was initiated to investigate the suitability of IsaSmelt Technology for recovery of nickel and cobalt from different laterite ore types.

- The detailed dry season flora and fauna studies at Kokomo were completed.

- Site environmental monitoring continued.

- A large 3,600 hectare Mining Lease Application (MLA 10342) was lodged over the Kokomo Ni-Co-Sc deposit in August 2009.

NORNICO Project Studies

Metallica appointed Lycopodium Minerals Pty Ltd as the Feasibility Study Manager for the NORNICO Project in September 2007. The BFS was based on a 1.0 million tpa atmospheric heap leach operation with Ion Exchange, onsite acid and power plant to produce nickel hydroxide product. The engineering component of the BFS was not completed and Lycopodium issued a close out report at the end of June 2009.

In May 2009 it was decided to investigate further possible project enhancements internally with Metallica's in-house process management team assisted by consultants. It was concluded that the preferred option going forward would be for a 1.0 mtpa project based on heated agitated Atmospheric Acid Leach (AAL) and solvent extraction/electrowinning (SX/EW) to produce LME Nickel Metal (~10,000 tpa) and Cobalt (~1,000 tpa) as cobalt sulphide with its own acid and power plant. An internal Scoping Study/Pre-Feasibility was initiated to confirm the process suitability and hopefully to enhance the financial position of the project. This option could enhance the following:

Increase project 1. "in-ground" metal content and value - A heated agitated AAL flowsheet would allow Kokomo resources (cobalt rich nickel laterite) to be directly added to the Bell Creek and Minnamoolka resources, thereby adding higher grade and extended project life (i.e. > 15 years).

2. Improve overall nickel and cobalt recoveries (both plus 90%)

3. Increase metal payment of both Ni & Co

4. Allows some beneficiation of silica box material (i.e. Increased feed head grade)

5. Potential by-products would include electrolytic Manganese Dioxide (EMD) and Scandium Oxide.

These enhancements could possibly be negated by operating and capital cost considerations which have yet to be fully determined.

The completion of the "in house" Scoping/Pre-Feasibility Study has suffered some delays due to the delays in the expanded metallurgical test program but is now planned to be completed at the end of October 2009.

For the complete Metallica Minerals Quarterly Report for the period ending 30 September 2009, please click the link below:

http://www.abnnewswire.net/media/en/docs/61688-ASX-MLM-215419.pdf

Contact

Mr Andrew Gillies Managing Director Metallica Minerals Ltd Tel: +61-7-3891-9611 Mob: +61-416-137-556