The Directors of Metallica Minerals Limited announced a non cash selective share buyback and transfer agreement between the Company and its second largest shareholder, Resource Capital Funds III and IV.

The agreement, which is subject to Metallica shareholder approval, effectively involves RCF exchanging 7.74 million of its shares in Metallica for approximately 3.9 million shares in Cape Alumina Limited which are currently held by Metallica.

The effect of the agreement will be that;

1. Resource Capital Funds interest in Metallica will be reduced from 12.28% to 6.3%;
2. Metallica’s interest in Cape Alumina Limited will be reduced from approximately 32.9% to 29.9% and
3. Resource Capital Funds interest in Cape Alumina will be increased from 22.1 % to approximately 25.1%.

The 7.74 million shares bought back from RCF by Metallica will be cancelled, reducing Metallica’s issued capital from 121.7 million shares to 113.9 million shares, a reduction of approximately 6.4%.

Metallica says the proposed portfolio adjustment also parallels the Company’s ongoing focus on its flagship NORNICO Ni-Co-Sc project northwest of Townsville in Queensland.

Mr Andrew Gillies MD of Metallica said that “We see this as a good opportunity to preserve Metallica’s share capital, something we have been conscious of since listing more than 5 years ago and to maximize leverage to our shareholders as we progress Metallica’s growth strategy. The buyback has the benefit of ensuring our shareholders can increase their proportion of the total shares on issue without being required to take up more shares. As the consideration for the buy-back is not cash but shares held by Metallica in Cape Alumina, the buyback will not have any impact on Metallica’s cash reserves currently standing at around AUD 8.8 million as at March 31st 2010.”