Significant "Bonus" Discovery Opens Up New Options For Metallica Minerals Limited (ASX:MLM) Expanding Queensland Minerals Projects

Brisbane, May 10, 2010 AEST (ABN Newswire) - A significant "bonus" discovery of high grade scandium mineralisation has been announced by Metallica Minerals Limited (ASX:MLM) following completion of the successful first phase drilling program to expand the Company's Queensland nickel-cobalt project.

Metallica said the scandium discovery - made during drilling at the Company's newly-acquired Lucknow tenements near the former Greenvale nickel mine in North Queensland - has the potential to position Metallica and Australia as the world's major long-term supplier of scandium products.

[Scandium (element 21) is a rare earth metal which has the potential to significantly enhance and possibly revolutionise the "Green Economy". It is currently used in fuel cells, high strength, low weight aluminium alloys, high intensity lamps and structural ceramics. The lack of readily available and reliable long term scandium supply in the market has limited its commercial applications to date.]

"These exceptional scandium (Sc) drill results (see accompanying ASX Release) are a bonus for the Company which also intersected high grade Nickel (Ni) and Cobalt (Co) during the recently-completed Phase 1 drilling program at Lucknow," Metallica's Managing Director, Mr Andrew Gillies, said today.
"When combined with our 80% ownership of the neighbouring Kokomo scandium deposit, the Lucknow drilling success has Metallica ideally placed to achieve its goal of becoming the world's major long-term supplier of scandium products by developing its scandium projects alongside the Company's proposed NORNICO Stage 1 Ni-Co (and Sc) project near Greenvale in Queensland," Mr Gillies said.

"Our initial Sc development focus will be on the production of scandium oxide (99.9% Sc2O3 Scandia) and we will also investigate "value added" scandium product opportunities including scandium aluminium master alloy (ScAl) and Scandia Stabilized Zirconia (ScSZ) which is a key component in Solid Oxide Fuel Cells," he said.

"The Lucknow scandium boost for our existing Kokomo project is particularly significant as it has bulk mineable intercepts of >200g/t Sc and occurs close to or within the Ni-Co ore zones, one drill hole recorded a bonanza scandium intercept of 27m at 882 g/t Sc from surface and is open along strike and we are looking forward to follow-up drilling in a couple weeks."

"This enables us to target not only high Ni & Co ores but also high Ni-Co and Sc bearing ores for exceptionally high plant feed grades, especially in the early years of the proposed operation to maximise revenues and margins."

Mr Gillies said having access to high grade nickel, supported by high cobalt and uniquely scandium ores, could prove to be a major commercial advantage for Metallica.

"We are also very fortunate to have an excellent location, the old Greenvale Mine site close to infrastructure and Townsville acid supply," he said.

Metallica's Lucknow nickel-cobalt (and now Scandium) laterite deposit is located approximately 2km southwest of the Greenvale township and approximately 6km southeast of the Greenvale Nickel Mine site in north Queensland (190km west of Townsville). Metallica Minerals Ltd subsidiary, Greenvale Operations Pty Ltd, owns the two tenements (EPM's 10680 and 10860) that cover the Lucknow Ni-Co-Sc deposit.

Ownership of the Lucknow Ni-Co-Sc project was recently transferred to Metallica late last year when the Company significantly expanded its flagship nickel-cobalt portfolio and planned mining precinct through the purchase of 100% of the Greenvale Mine site tenements.

As well as 100% ownership of the Lucknow scandium rights, Metallica also has 80% of the Kokomo scandium rights.

Joint venture partner, Straits Resources Ltd (ASX:SRL), holds 20% of the Kokomo scandium rights.

Please refer to the following link for the complete Metallica Minerals announcement including an expanded description of the history of scandium, its current use and potential. Also included is a comprehensive question-and-answer (Q & A) section on scandium, details of drill results, figures/plans and the high grade nickel-cobalt intersections also achieved during this latest drilling program.

http://www.abnnewswire.net/media/en/docs/62824-ASX-MLM-220533.pdf

Contact

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