Metallica Minerals Limited has announced 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 million tonnes at 169 grams per tonne Sc, for the scandium mineralization within Lucknow, which includes a higher grade resource of 4.1 million tonnes at 205 grams per tonne Sc. The estimates were prepared by Golder Associates of Brisbane using approximately 22,000 meters 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 combined Indicated & Inferred Greenvale resource stands at 4.5 million tonnes at 1.12% Ni and 0.08% Co using a 0.70% NiEq COG.

Greenvale Ni - Co Resource (Using a 0.70% NiEq COG)

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

Greenvale Ni - Co Resource (Using a 1.40% NiEq COG)

The resources quoted above, used data from the drilling programs 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.

Lucknow
The combined Indicated and Inferred resource for the Lucknow Ni Co laterite deposit based on the drilling to date is 2.4 million tonnes at 0.57% Ni, 0.20% Co (0.97% NiEq) and 96 grams per tonne Sc, at a 0.7% NiEq cut off grade (COG), including a higher grade zone of 0.57 million tonnes at 0.70% Ni, 0.30% Co (1.30% NiEq) and 107 grams per tonne Sc, using a 1.1% NiEq COG. A breakdown of the resource categories for Lucknow is included and grade tonnage data presented.

Global Lucknow Nickel - Cobalt Resource (Using a 0.70% NiEq COG)

The Lucknow Ni Co & Sc resource was completed by using data from 298 RC drill holes comprising 7,036 meters of drilling. The resource has been drilled out on either a 20 meters (N-S) by 20 meters (E-W) grid or a nominal 40 meters (N-S) by 40 meters (E-W) grid which is sufficient to classify the resource as Indicated. Where the drilling has been completed on an 80 meters (N-S) by a 40 meters (E-W) 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.

Global Lucknow Ni-Co Resource - Grade Tonnage Data

The scandium resource within the Lucknow laterite deposit is subject to a 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 and is included as Table 5.

Lucknow Ni - Co Resource - not subject to the Straits JV (Using a 0.70% NiEq COG)

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 presented in Table 6 below has been estimated using a 70 grams per tonne Sc cut off grade.

Lucknow Sc Resource subject to the Straits JV (Using a 70grams per tonne Sc COG)

Modeling technique
The resource estimate was undertaken by Golder Associates of Brisbane using block modeling Ordinary Kriging 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 mineralized envelope was used to constrain the mineralization and grade estimates at Greenvale and a nominal 0.5% NiEq was used at Lucknow. The wire frame was then filled with 10 meters by 10 meters 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. Mineralization was extrapolated a nominal 20 meters 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 180,000 tonnes per annum of high grade Ni Co & Sc ore through a proposed NORNICO Stage 1 processing plant located on the Greenvale Mine Site. This would maximize 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. 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.

Further metallurgical test work will also be undertaken on material from Greenvale and Lucknow to investigate the processing of higher than expected iron levels 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 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 which could significantly increase the contained metal value revenue and operating margins.

Other test work 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 test work 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 3,000 meters of RC drilling and 2,000 meters 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 10 meters 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 test work to investigate the possibility of treating high grade scandium ore (>200 grams per tonne Sc which is significantly higher in iron) in the proposed NORNICO Stage 1 plant

Beneficiation test work 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 nickel and cobalt in the fines fraction.

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