“An emerging Queensland multi-commodity resource ...2007/10/23 · METALLICA MINERALS LIMITED ABN 45 076 696 092 1 Potts Street East Brisbane QLD 4169 Tel: 07 3891 9611 Fax: 07

METALLICA MINERALS LIMITED

ABN 45 076 696 092

1 Potts StreetEast Brisbane QLD 4169

Tel: 07 3891 9611Fax: 07 3891 9199

Postal: GPO Box 122, Brisbane QLD 4001Website: www.metallicaminerals.com.au

METALLICA MINERALS LIMITEDABN 45 076 696 092

ANNUAL REPORT2007

“An emerging Queensland multi-commodity resource company with a nickel development focus”

“An emerging Queensland multi -commodity resource company with a nickel development focus”



CORPORATE DIRECTORY BOARD OF DIRECTORS:

David K Barwick Non Executive ChairmanAndrew L Gillies Managing DirectorJohn K Haley Executive Director/Company SecretaryPeter B Nicholson Non Executive DirectorMark J Ashley Non Executive Director

COMPANY SECRETARY & CHIEF FINANCIAL OFFICER:John K Haley

PRINCIPAL & REGISTERED OFFICE:1 Potts StreetEast Brisbane QLD 4169Phone (07) 3891 9611Facsimile (07) 3891 9199Email [email protected]

WEBSITE:www.metallicaminerals.com.au

SHARE REGISTER:Link Market Services LimitedLevel 12, 300 Queen StreetBrisbane, QLD 4001

AUDITORS:BDO Kendalls (QLD)Level 18, 300 Queen StreetBrisbane, QLD 4001

SOLICITORS:Hopgood GanimLevel 8, Waterfront Place1 Eagle StreetBrisbane, QLD 4001

STOCK EXCHANGE LISTING:Metallica Minerals Ltd is listed on the Australian Stock Exchange (ASX). Home Stock Exchange is Brisbane.

Riverside Centre123 Eagle StreetBrisbane, QLD 4001

ASX CODE:MLM (ordinary shares)

COMPANY HISTORY

Metallica Minerals Ltd (Metallica) was incorporated in 1997 and secured various Queensland mineral properties early that year with the acquisition of NORNICO Pty Ltd (previously named QLD Gold Pty Ltd) and Oresome Australia Pty Ltd. The principle asset was the NORNICO nickel project, which initially contained two granted Mining Leases, and three granted Exploration Permits over known nickel laterite deposits north of the historic Greenvale Nickel Mine. As an unlisted entity, the Company was able to progress its mineral portfolio by making timely seed capital raisings, attracting quality joint venture partners. An initial public offering and ASX listing was undertaken in November 2004 which allowed Metallica to fast track the advancement of its projects. Injections of capital from Kagara Zinc, Anegada Metals and RCF, combined with some insightful corporate transactions, have positioned the Company to a stage where its three main projects are at either development or feasibility stage. Metallica’s primary objective and strategy is to achieve low capital cost, high margin and long-life nickel production in the most efficient way.

Page

Corporate Directory (inside front cover)

Company History 1

Company Highlights 2

Chairman’s Letter 4

Managing Directors Review 6

Vision & Strategy 12

Key Objectives for the 2007 - 2008 Year 13

Review of Operations

Nickel Cobalt 14

Bauxite 24

Coal 28

Other Advanced Mineral Exploration Properties 30

Shareholder Information 32

Tenement Schedule 33

CONTENTS

CAPITAL STRUCTURE

As at 30 June 2007, Metallica’s issued capital comprised 102,332,628 fully paid ordinary shares and 18,450,000 unlisted shareholder, employee and Director options. The Company has 1,479 shareholders with the Top 20 shareholders holding 56.8% of the total shares on issue.

CASH POSITION

As at 30 June 2007, the Company was debt free with cash reserves of $5.35 million. The cash position has subsequently increased to approximately $9 million as at the date of this report, being 26 September 2007.

Metallica Minerals LimitedAnnual Report - 2007

1

2

CO

MP

AN

YH

IGH

LIG

HTS

COMPANYHIGHLIGHTS

Exploration and Evaluation

An upgraded Resource of 34.8 mill ion tonnes at 0.71% Ni containing 247,800 tonnes of insitu nickel metal has been estimated for the Company’s f lagship NORNICO nickel project in Nor th Queensland.

A signif icant increase in NORNICO’s resource status has been achieved. Measured and Indicated Resources at the Bell Creek deposits now account for 19.5 mill ion tonnes at 0.74% nickel.

A robust Scoping Study has moved the NORNICO Project into the Bankable Feasibil i ty Stage, which is expected to be completed in early 2008.

Metall ica’s joint venture par tner, MFC, has elected to commence development on the Lucky Break nickel project joint venture (also in Nor th Queensland), with f irst production expected in late 2008. Metall ica is free carried during feasibil i ty and development.

Excellent nickel leaching testwork results were achieved for both the NORNICO and Lucky Break nickel lateri te deposits, confirming the ores are highly amenable to dilute acid leaching for nickel recovery.

Completion of 674 aircore dril l holes on the Wenlock tenement, result ing in a maiden Resource of 54 Mt of insitu bauxite estimated within the Weipa, Queensland, tenements of Cape Alumina Pty Ltd (Metall ica 40%).

Cape Alumina has commenced a Pre-Feasibil i ty Study into the development of a major new bauxite operation.

The strategic, large and high grade Ootann l imestone deposit close to NORNICO has been secured through the purchase of Phoenix Lime Pty Ltd.

Drilling Bell Creek Nickel Project


Corporate

Cash reserves were increased via non-core asset sales and without undue dilution of shareholder equity. As at 30 June 2007, the Company is well funded with no debt and a cash posit ion of $5.35 mill ion. This has subsequently increased to approximately $9 mill ion as at the date of this repor t, being 26 September 2007.

$15 mill ion was added to the value to Metall ica with the sale of two coal subsidiary companies (SE QLD Energy Pty Ltd and SE QLD Coal Pty Ltd) for a mix of cash, shares and royalty.

A 10% shareholding in Cape Alumina was sold for $4.6 mill ion to China’s largest independent alumina-aluminium producer, Chiping Xinfa Huayu Alumina Co Ltd (Xinfa). Metall ica retains a 40% shareholding in Cape Alumina.

The Company welcomes Xinfa as a signif icant Metall ica shareholder, adding to a growing list of leading resource and investment groups on the Company’s Share Register such as Kagara Zinc, Korea Zinc and Resource Capital Funds (RCF). Both Kagara Zinc and RCF increased their shareholdings during the year.

Minerals Are Our Business

CEO Andrew Gillies, Cape Alumina CEO Dr Paul Messenger & Mr Liu Baobin, Director of Cape Alumina visiting Xinfa Aluminium Smelter in Shandong, China.

3


CH

AIR

MA

N’S

LE

TTE

RMetallica Minerals Limited (Metallica) made substantial progress in 2006-07 towards the development of its key mineral projects and its goal of becoming a diversified minerals producer with low capital cost, high margin and long life mining projects.

The past year has been very exciting for Metallica on several fronts, and our corporate and evaluation efforts have continued to add value to the company. This has been reflected in the strengthening of Metallica’s share price.

Evaluation with advanced exploration activities and initiatives on our flagship NORNICO (nickel), Lucky Break (nickel), 40% held Cape Alumina (bauxite) and South-East Queensland coal projects, have considerably advanced and added to Metallica’s inherent value.

The conversion of some of our non-nickel assets, such as the sale of a 10% shareholding in Cape Alumina, and more recently the divestment of our two coal subsidiaries for further cash funds and a share investment, has allowed us to more confidently and aggressively advance the feasibility and development of our nickel projects. Importantly, it has also allowed us to increase our cash reserves without undue dilution of our shareholder equity.

As a result of the initiatives mentioned above, we have broadened our shareholder base in Australia and overseas. On behalf of the Board, I am delighted to welcome Chiping Xinfa Huayu Alumina Co Ltd, (“Xinfa”) of China as a new significant shareholder to the company.

The increasing demand throughout the world for resources and materials such as stainless steel (the major consumer of nickel) will further enhance Metallica’s position to develop its flagship NORNICO nickel project towards commercial nickel production.

Mr Mark Ashley, a Director of Kagara Zinc Limited (Kagara) was appointed a Director of Metallica in November 2006. Kagara increased its shareholding in Metallica by purchasing approximately 1,700,000 shares in November 2006. Mr Brett Smith resigned as a Metallica director to focus on his role as Chief Operating Officer of Ausenco Limited.

I would like to take this opportunity to thank our staff, management and Directors for their hard work and support in what has been another very active and rewarding year.

On behalf of the Board, I invite all shareholders to attend the Annual General Meeting which is scheduled for the 23rd November 2007 to receive an update on the progress made on our nickel, bauxite, coal and other various projects and activities. I also encourage you to read the following detailed review of operations from Metallica’s Managing Director, Andrew Gillies.

D K Barwick

Chairman

CHAIRMAN’S LETTER


Figure 1 - Metallica’s Mineral Portfolio - Queensland Geographic Focus

METALLICA’SMINERAL PORTFOLIO

Metallica’s focus is completing evaluation, test work, environmental impact studies & feasibility for heap leach nickel production from its 100% owned NORNICO Project.


5

MA

NA

GIN

G

DIR

EC

TO

R’S

R

EV

IEW

It is pleasing to report that the 2006-07 financial year saw Metallica Minerals Limited (Metallica) continue its emergence as a Queensland-based multi-commodity resource company with a nickel development focus.

It was another very active and progressive period for Metallica in which the Company’s nickel and bauxite projects were advanced towards our goal of moving from a diversified minerals explorer to a developer and producer.

Corporate advances included an improvement in cash on hand which was predominately funded from the sale of non-core mineral assets.

The Company’s achievements have been reflected in a significant increase in shareholder value over the reporting period. With the continued strong growth in demand for mineral commodities, particularly from rapidly growing China and the platform of resources within Metallica’s portfolio, the future for the Company looks bright.

For the year ended 30 June 2007, Metallica expended approximately $3.66 million on mineral exploration and evaluation while still retaining a healthy $5.35 million cash position, no debt and 102.3 million shares on issue.

The intrinsic value of Metallica was further increased over the year through the culmination of the following achievements and highlights:

MANAGING DIRECTOR’SREVIEW

Drilling at NORNICO Nickel Project


Figure 2 - NORNICO and Lucky Break Project Regional Setting

GREGORY

BRUCE

HWY

DEV.

ROAD

HERVEYS RANGEDEV.

ROAD

Herbert

River

Burdekin

RiverKOKOMO

GREENVALENORTH

GREENVALESOUTH

BELL CREEKNORNICOPROJECT AREA

STAR RIVER

KOKOMO SCANDIUM DEPOSIT

SIX MILE PROJECT

Lucky Break

'Gunnawarra'

'Minnamoolka'

'Lake Lucy'

'Valley of Lagoons'

QNI YabuluNickel Refinery

Sun MetalsZinc Refinery(Acid Supplier)

Mareeba

Atherton

Yabulu

Ingham

Innisfail

Charters TowersRavenswood

WoodstockLime Kiln

Mount GarnetRavenshoe

MourilyanHarbour

TOWNSVILLE

Cairns

Former GreenvaleNickel Mine1974 to 1992

GreenvaleNickelProvince

0 100km50

Metallica'sTownsvilleLimestone Projects

The Kokomo Scandium Deposit(JV with Straits Resource)

The Six Mile Gold Project(JV with Straits Resources)

Nickel Laterite Deposits

AUSTRALIA

MINNAMOOLKA

Ootann

Chillagoe

PHOENIX LIME

FUNDING

• The Company is well funded from the sale of some of its non-core mineral assets, 10% of its Cape Alumina holding and its two coal subsidiaries for a combined $9.62 million in cash proceeds. The exercise of the expiring December 2006 listed and unlisted options added a further $2.4 million. In addition, Metallica also holds 25 million shares in ASX listed Cockatoo Coal Ltd (approximately $10 million value) as part of the sale of two of its coal subsidiaries.

• Metallica has been fortunate to remain very active and well funded without undue dilution to our Shareholders. The increase in shares on issue from 91.4 million to 102.3 million during the financial year was due entirely to the exercise of options (expiry December 2006).

NICKEL PROJECTS

NORNICO Nickel Project

• A positive Scoping Study for a proposed 1.5 Mtpa heap leach operation, to provide in the order of 10,000 tpa of contained nickel (Ni) in marketable product, was completed for Metallica’s NORNICO Project in August 2006. The Company is now progressing the project through to the Bankable Feasibility Study stage.

• An upgraded Resource of 34.8 million tonnes at 0.71% Ni (using a 0.45% Ni cut-off) containing approximately 247,800 tonnes of insitu nickel metal has been estimated for the flagship NORNICO nickel project. Within this resource, there has been a major increase in the resource status with the Measured and Indicated Resource at the Bell Creek deposits, now accounting for 19.5 million tonnes at 0.74% nickel.

• Using the estimated 247,800 tonnes of nickel metal in the resource and assuming forecast average long term nickel price of US$7.50/lb Ni (US$16,500/t Ni), the insitu contained nickel metal value is in the order of A$5 billion.

• The NORNICO Resource is currently confined to the two most advanced nickel deposits, Bell Creek and Minnamoolka, and the total drill database now comprises in excess of 1,000 holes with over 19,000 metres drilled.

• In July 2006, Metallica employed Mr Bob Martin, a very experienced mining project developer and operator, to manage the feasibility study and NORNICO’s development.

• Results from ongoing heap leach column testwork on the NORNICO nickel laterite ores has shown the ores to be highly amenable to dilute acid leaching of nickel and cobalt at ambient temperatures. This resulted in the continual refinement of a processing strategy and techniques for potential lower costs, high margin and long life nickel production.

• Drilling has commenced on the Minna-moolka nickel deposit (currently 14 Mt Inferred Resource) with the intention of upgrading a major portion of the Resource with closer spaced drilling.


7

MA

NA

GIN

G

DIR

EC

TO

R’S

R

EV

IEW

Lucky Break Nickel Project

• Joint venture partner, Metals Finance Corporation Limited (MFC), has earned a 40% interest and is financing and managing the Lucky Break nickel project. MFC completed a positive feasibility study in June 2007 and has elected to develop the project with first nickel production expected late in 2008.

• Pilot plant testwork completed by MFC during the year has shown very high nickel extractions and rapid leach times. The forecast nickel extractions are 85% with leach times of around 3 months.

• Lucky Break is designed to process approximately 250,000 tonnes of nickel laterite ore annually through a novel processing method, including vat leaching, iron reduction, IX Resins and nickel precipitation of a clean saleable nickel product. Full year production is forecast to be approximately 1,600 tonnes of nickel per annum contained as an intermediate nickel carbonate product that is marketable to nickel refineries.

MANAGING DIRECTOR’SREVIEW (CONT’D)

• The processing reagent, sulphuric acid, will be trucked to Lucky Break from Sun Metals near Townsville.

• Once in operation, the initial net operating surplus will be distributed 85% MFC and 15% Metallica up until MFC has been reimbursed for its Lucky Break joint venture capital outlays (estimated to be about $20 million) after which time the net operating surplus will be distributed 60% Metallica and 40% MFC.

• A compensation agreement has been executed with the Lucky Break station landowners in relation to the Lucky Break mining lease (ML 10332). The mining lease is expected to be granted in October 2007.

• On the back of the considerable nickel laterite leaching testwork and expertise of the joint venture parties, Metallica has filed four provisional patent applications covering: nickel laterite ore prepara-tion (including agglomeration), Lucky Break process flowsheet (“An Improved Process and Plant for Producing Nickel”), iron reduction in nickel solution and vat leaching nickel laterite ores.

Minnamoolka Nickel Laterite exposure and gravel pit


COAL PROJECTS

• In June 2007, Metallica announced an option agreement ($250,000 option payment) to sell its southeast Queensland coal assets held by two subsidiary companies (SE QLD Coal Pty Ltd and SE QLD Energy Pty Ltd) to Cockatoo Coal Ltd. This option was exercised and settle-ment completed on 27 July 2007. Metallica has received an additional $4.75 million cash plus 25 million shares in ASX-listed Cockatoo Coal, and a 40 cents per tonne royalty on any future coal production from the Kingaroy Coal project (EPC 882) covering a major portion of the Tarong coal basin.

• Six coal tenement applications (EPCA’s 1152, 1159, 1164 to 1167) were made under Metrocoal Limited (MetroCoal) covering nearly 4,000 square kilometres of coal bearing strata in the Surat and Clarence-Moreton Coal Basins. The majority of the coal bearing strata is within 100m to 300m below surface and is considered highly prospective for coal seams suitable for Underground Coal Gasification (UCG) exploitation for power generation and possibly Coal to Liquids (CTL). There is also potential for areas of

shallow coal, which can be explored and evaluated for open pit coal. MetroCoal is a 100% owned Metallica subsidiary and was not part of the recent transaction with Cockatoo Coal.

BAUXITE PROJECTS

• Chiping Xinfa Huayu Alumina Co Ltd, (“Xinfa”) - believed to be China’s largest independent alumina-aluminium company - has purchased a 10% interest in Cape Alumina, from Metallica’s 50% holding for $4.6M. Xinfa is the operator of the Chiping Alumina refinery and aluminium smelter in Shandong Province, China. Metallica retains a 40% shareholding in Cape Alumina.

• A total of 674 aircore drill holes were completed on the Wenlock tenement (EPM 14547), resulting in a maiden resource estimate of 54 Mt of insitu bauxite within the Weipa tenements of Cape Alumina.

Kokomo Nickel Project Exploration Drill Hole KK-49 which recorded 20 metres at 0.77%Ni & 0.93%Co will be followed up with grid drilling

• Cape Alumina Pty Ltd has significantly expanded its bauxite portfolio with the granting of three new tenements on Queensland’s west Cape York Peninsula. The Company’s granted EPMs now include Hey Point (EPM 15054), North Coconut (EPM 15263), Weipa East (EPM 15272) and previously granted Wenlock (EPM 14547). Cape Alumina, which also has 13 EPM applications in the Weipa region targeting bauxite, will commence a major drilling programme at Wenlock in October 2007, comprising approximately 2,000 aircore drill holes.

Grid drilling on the Wenlock Bauxite deposit late 2006


9

MA

NA

GIN

G

DIR

EC

TO

R’S

R

EV

IEW

LIMESTONE PROJECTS

• All future NORNICO limestone-lime requirements have been secured with the purchase of Phoenix Lime Pty Ltd in May 2007. Phoenix Lime is the holder of the Ootann granted mining leases (approximately 240 hectare area) covering a large high grade limestone deposit and operating quarry.

• Two Mining Leases were granted on the Boyne limestone project. Both mining leases contain high quality limestone for crushed limestone and lime products suitable for markets in the Gladstone region.

• Metallica also holds the Star River mining lease near Townsville and the Fairview tenement near Gladstone. Both tenements hold strategic high quality limestone close to existing and proposed limestone markets.

OTHER MINERAL PROJECTS & EXPLORATION

• Through wholly owned subsidiary, Oresome Australia Pty Ltd, Metallica’s joint venture agreement partner Matilda Minerals Ltd (Matilda) can earn up to a 70% interest in the Urquhart Tenement (EPM application 15268), which covers the Urquhart Point high-grade zircon and rutile heavy mineral sand (HMS) deposit approximately 5 km west of Weipa and a large area of prospec-tive strandlines. The four Weipa HMS tenements are currently under application so no fieldwork was completed on the project. Permitting is progressing.

• High grade scandium (a rare earth metal) mineralisation along the margins of the Kokomo nickel-cobalt laterite is being evaluated by our joint venture partner Straits Resources (earning a 70% interest).

• Metallica has identified several new areas of mineralisation for drill testing using the latest technology in handheld field XRF mineral analysers to provide rapid, real-time analysis and position (linked with hand GPS) of a range of metals from soil, sediment, rock or core samples.

Drilling on the Kingaroy Coal Project - Taabinga Coal Deposit

MANAGING DIRECTOR’SREVIEW (CONT’D)


STAFFING

• To acknowledge our dedicated team, we have an active Employee Share Option Plan (ESOP) to ensure our loyal employees share in the rewards and success of the Company. As at year end a total of approximately 3.25 million options were issued to 11 employees.

SINCE YEAR-END

• Metallica has completed the divestment of its two coal subsidiaries to Cockatoo Coal, as described above.

• MFC is proceeding with the development of the Lucky Break nickel project, as described above.

• Metallica has increased the NORNICO nickel resource to approximately 247,800 tonnes of insitu nickel metal and substantially increased the Measured and Indicated Bell Creek Resource.

The Company has also strengthened relationships with key stakeholders including pastoralists, property and traditional landowners, and environmental groups and we will endeavour to maintain a positive working relationship for the mutual benefit of all parties.

THE YEAR AHEAD

The Metallica team looks forward to another exciting and productive year ahead as the Company advances its extensive and high quality key projects in nickel, bauxite, and coal as well as its substantial scandium, zircon/rutile, limestone deposits and other advanced mineral explora-tion interests, see Figure 1 and 2.

We look forward to reporting further progress aimed at realising the inherent value that exists within our nickel and multi-commodity portfolio to increase shareholder value.

Andrew Gillies

Managing Director

Xinfa is the operator of the Chiping Alumina refi nery & aluminium smelter in Shandong Province, China.

Metallica Offi ce Team - Paul Messenger, Bob Martin, John Haley, John Cameron, Guoyan Li, Stewart Hagan, Laura Wood,Pat Smith, Tina Moloney, Andrew Gillies & Neil Forbes

Andrew Gillies, Exploration Manager Pat Smith, China Business Development Manager Guoyan Li & a Chinese Company Management Team visiting the NORNICO Nickel Project.


11

2) Maintain a selective and quality acquisi-tion philosophy of being opportunistic, realistic and forward-looking with respect to choosing only those mineral properties, which are considered to have a high prob-ability of becoming a profitable mine.

3) Metallica’s continued strategy of consoli-dating tenements containing existing deposits and prospective areas over its key projects, as seen in its nickel, bauxite and coal interests.

4) To realise intrinsic value from the Company’s exploration and evaluation success by entering into agreements with leading international resource companies.

5) Maintain a policy of divesting non-core assets for the purpose of securing funds and investments without shareholder dilution and using those funds to advance its nickel assets and business opportunities.

Share Price Range - 35c to $1.00

VIS

ION &

STR

ATE

GY

VISION

Metallica’s vision is to be at the forefront of a new generation of mineral producers, employing leading edge technologies to generate high value products in a competi-tive international marketplace, and delivering shareholders value through company profit and growth. The Company’s medium term aim is to become a highly profitable and long term nickel producer whilst maintaining the highest social, environmental and safety standards.

STRATEGY

Metallica has a clear five-tier strategy in pursuit of wealth generation for its shareholders, both in the short and long-term.

1) To generate high margin, long life nickel production (at low capital costs and early capital payback) with minimal shareholder dilution.

VISION& STRATEGY

“SHARE IN THE ACTION”

Nov06

Dec06

Jan 07

Feb 07

Mar07

Apr07

May07

Jun 07

Jul 0

7

Aug07

Sep07

Oct06

26 Sept 2007MLM Daily EMA (25)

0.9

0.8

0.7

0.6

0.5

0.4

Pric

e(D

olla

rs)

MLM SHARE PRICE HISTORY (12 MONTHS TO 26 SEPTEMBER 2007)

Source: BigCharts.com


HOW WILL METALLICA ACHIEVE THIS STRATEGY?

Nickel Production

Development strategy for the Company’s 100% owned flagship NORNICO nickel project has been fast tracked following robust fundamentals from an initial Scoping Study. The NORNICO Resource estimate has been steadily upgraded and currently contains approximately 247,800 tonnes of nickel metal. A Bankable Feasibility Study based on a 1.5 Mtpa heap leaching operation producing approximately 10,000 tpa nickel as a Mixed Hydroxide Product (MHP) is due for completion in early 2008.

First nickel production due late 2008

Initial nickel production, albeit on a smaller scale, is expected to be generated from the Company’s Lucky Break project in late 2008. Metallica is effectively free-carried into the production stage, with its joint venture partner, Metals Finance Corporation (MFC), contributing all development costs. Given this project is expected to generate a cumulative pre-tax cash surplus in the order of $88 million over 4 to 5 years, Metallica is expected to receive a healthy cash boost from its 60% interest (once MFC has received capital payback), which will help partially offset development costs of NORNICO. Lucky Break is expected to also provide enormous operational experience and benefits for NORNICO’s feasibility and development.

Realisation of Exploration and Evaluation Success

To ensure the Company remains focused on its key aim of achieving nickel production in the near and medium term, a regular assessment of its diversified minerals portfolio is undertaken. Mutually beneficial exploration and development relationships are negotiated with leading resource companies in a bid to advance projects to a level which adds intrinsic value to shareholders. Current and recent examples include:

1) Sale of south-east Queensland coal assets to Cockatoo Coal – realisable value of approximately $15 Million as at 26 September 2007 ($5 Million cash and 25 Million Cockatoo shares and future production royalty).

2) Sale of 10% of Cape Alumina to Chiping Xinfa Huayu Alumina Co Ltd – realised value of $4.625M cash. Metallica retains 40% Cape Alumina post sale. In addition Cape Alumina has gained a leading China alumina-aluminium company as an important shareholder.

3) Farm-out of all feasibility, development and management costs of the Lucky Break nickel project to Metals Finance Corporation, effectively providing Metallica with a free-carried 60% interest, while Metallica focuses its resources on NORNICO.

4) Joint Ventures with Matilda Minerals (Weipa HMS), Mega Uranium (Sandy Creek uranium rights) and Straits Resources (Kokomo scandium and Six Mile gold).

Complete Bankable Feasibility Study (within +/-15% accuracy) for NORNICO and progress permitting of the Bell Creek Consolidated Mining Lease in readiness for a development decision after the completion of the Feasibil-ity Study.

Complete sufficient infill drilling on the 14 million tonne Minnamoolka Inferred nickel Resource with the intention of upgrading a major por tion of the Resource to an Indicated category, to be included with the Bell Creek Measured and Indicated Resource and enhance the resource base for the NORNICO Feasibility study.

Work closely with NORNICO Feasibility consultants, Lycopodium Engineering Ltd, and assemble a high quality project team for the NORNICO feasibility and development process.

Suppor t development (by MFC) of the Lucky Break nickel project, with first nickel production expected in the third quar ter of 2008.

KEY OBJECTIVESFOR THE 2007-2008 YEAR

Fur ther suppor t the Company’s 40% owned associate, Cape Alumina Pty Ltd, in progressing and evaluating the Weipa bauxite project and proposed Initial Public Offering.

Extensive drilling and upgrading of bauxite resource estimate for Cape Alumina and completion of Pre-Feasibility Study.

Progress MetroCoal’s six 100% held coal tenement applica-tions towards granting stage, compile and summarise all previous coal drill data to under take exploration and evalu-ation with the aim to add value, divest and/or joint venture this coal project por tfolio.

Continue to progress the Company’s exploration and non-core proper ties in order to realise value through joint venture agreements, outright asset sale or subsequent mineral resource definition, feasibility and development.

13


NIC

KE

L

BACKGROUND

Metallica acquired the key NORNICO tenements (Bell Creek, Minnamoolka and Kokomo) in 1997 at a time where there was lower interest in mineral exploration and development, thus allowing the Company to hand-pick and consolidate the most prospective areas. The North Queensland Nickel Cobalt Project (NORNICO) is situated in the Greenvale nickel province, along strike from the historic Greenvale mine which, between 1974 and 1992, processed 40Mt @ 1.56% Ni and 0.12% Co of nickel laterite ore containing approximately 624,000t Ni and 42,000t Co – worth in the order of A$25 Billion in today’s prices (as at 30 June 2007). In terms of infrastructure, the project is located close to the large Yabulu nickel refinery and has nearby access to main process items such as water, sulphur and limestone supply. Also, Townsville and Cairns are within a few hours drive from site. Metallica has significantly advanced NORNICO in the last few years resulting in the commencement of a Bankable Feasibility Study.

NICKEL

NORNICONICKEL PROJECT(METALLICA 100%)

Located 250km nor th-west of Townsville in the proven Nor th Queensland nickel-cobalt region, along strike of the expired Greenvale nickel mine. NORNICO currently comprises three key deposits (Bell Creek, Minnamoolka and Kokomo) which are expected to provide nickel laterite ore for a long life heap leaching operation. Positive drilling results combined with metallurgical testwork showing the amenability of NORNICO ores to dilute acid leaching and a robust Scoping Study completed during the year have prompted management to commence work on a Bankable Feasibility Study. This is expected to be finalised in early 2008 with first nickel production forecast for early 2010.

REVIEW OF OPERATIONS

Nickel is mainly used in the production of stainless steels, which accounts for approximately two-thirds of all nickel demand. China is the largest consumer and impor ter of stainless steel in the world. The most recognisable stainless steel products include everyday consumer items such as knives, pots and pans, commercial kitchen benches and appliances. In recent times, rising demand has been significantly outpacing the development of new mine capacity. The price of nickel as at 30 June 2007 was US$35,850/tonne, compared with US$22,275/tonne a year earlier and US$14,990/t three years ago (see graph). Given that China’s consumption of stainless steel is still at a very low level per capita, it is expected that demand will continue to be strong in the years and decades ahead.

NICKEL

0

20

40

60

80

100

120

140

160

0

7,000

14,000

21,000

28,000

35,000

42,000

49,000

56,000

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

000 tonnes US$/tonne

LME Stock

3 mo Price

1 tonne = 2204.6 lbs

Source: Wilson HTM & LME

LME NICKEL STOCKPILE & 3 MONTH FWD PRICES


Cree

k

Creek

Bell

Rudd

GunnawarraHomestead

Airstrip

To Mt Garnet (30km)

0 2000m

EPM 14101 “Mt Garnet South”

EPM 14101 “Mt Garnet South”

EPM 11285 “Bell Creek”

To Minnamoolka (20km)

8 020 000mN

8 015 000mN

300 000mE 305 000mE295 000mE

8 010 000mN

Alluvium andCover Sediments

McBride Basalt

Lateritic Soils

LateritisedSerpentinite

Granite

Significant NickelMineralisation

North LeaseML 4187

Bell CreekNorthwest Area

RCRC-02Au-Pt-Pd-ZnRudd Ck Prospect

Bell CreekWest Area

South LeaseML 4188

McBrideBasaltCover

Figure 3 – Bell Creek Tenements and Nickel deposits

SCOPING STUDY

In August 2006, a Scoping Study into the development fundamentals of NORNICO was completed by Aker Kvaerner Australia Pty Ltd. The Study concluded that the project was ‘technically robust’ with average annual production of approximately 10,000 tonnes of nickel and 435 tonnes of cobalt (both as directly saleable intermediate metal products) with a total capital cost estimate of around A$278 million.

The price received for the nickel, as a mixed hydroxide product (MHP), was budgeted as 75% of the contained metal value, with that feedstock being marketed to BHP’s Yabulu nickel refinery near Townsville or other nickel refiners.


15

NIC

KE

L

SECTION 8011590 mN304300mE 304400mE 304500mE 304600mE 304700mE 304800mE 304900mE 305000mE 305100mE

720

710

700

690

680

670

660

650

720

710

700

690

680

670

660

650

BCSL

-291

BCSL-2

94

BCSL-2

95

BCSL-2

96

BCSL

-329

BCSL

-328

BCSL-3

30

BCDDH-1

10

BCSL-1

02

BCSL-1

12

BCSL-1

04

BCSL

-105

BCSL-1

06

BCDDH-00

2

BCSL-1

07

BCSL-1

08

BCDD

H-031

BCSL-2

48

BCSL

-249BCD

DH-007

[email protected]%Ni









[email protected]%Ni [email protected]%Ni




SECTION 8011400 mN

304300mE 304400mE 304500mE 304600mE 304700mE 304800mE 304900mE 305000mE 305100mE

720

710

700

690

680

670

660

650

720

710

700

690

680

670

660

650

EW

BCSL-1

46

PHD-3

69

BCSL-0

27

PHD-37

3

PHD-3

72

PHD-37

1

PHD-3

70

BCSL-1

45

BCDDH-03

5

BCSL-1

44

BCSL-1

41

BCSL-1

42

BCSL-1

84

BCSL-1

95

BCSL

-246 (N

SR)

BCSL1

43

BCDDH-03

4












SECTION 8011220 mN304300mE 304400mE 304500mE 304600mE 304700mE 304800mE 304900mE

720

710

700

690

680

670

660

650

720

710

700

690

680

670

660

650

BCSL

-220

BCSL

-219

BCSL-2

18

BCSL-1

74

BCSL-1

73

BCSL-1

72

BCSL-1

71

BCDDH-04

2

BCSL-1

70

BCSL-1

69

BCSL

-168

BCSL

-190









Horiz/Vert = 1/3

Vertical Scale

0

10mHorizontal Scale

0 50 100m

Higher Grade Nickel Laterite(> 0.6% Ni)Low Grade Nickel Laterite(0.3% - 0.6% Ni)

Serpentinite / Ultramafics

Granite

PHD/BCSL

BCDDH

RC HoleDiamond Drill Hole

Figure 4 – Bell Creek South Lease Drill Sections

NICKEL RESOURCE

An upgraded Resource of 34.8 million tonnes at 0.71% Ni (using a 0.45% Ni cut-off) containing 247,800 tonnes of contained insitu nickel metal has been estimated at the Company’s 100% owned NORNICO nickel project.

Golder Associates Pty Ltd (Golder) completed the updated Resource estimate using computer block modelling and ordinary kriging techniques for the Bell Creek nickel deposits (see figure 3), which are a major part of the NORNICO Nickel Project, located 30 km south of Mt Garnet in North Queensland.

The total database (including drilling from Minnamoolka) now comprises in excess of 1,000 holes, with over 19,000m drilled. The Bell Creek Resource now stands at 20.7 Mt @ 0.74% Ni and 0.04% Co using a 0.45% Ni cut-off grade containing approximately 153,000 tonnes of nickel insitu. This includes a Measured Resource of 8.25 Mt @ 0.85% Ni, an Indicated Resource of 11.25 Mt @ 0.66% Ni and an Inferred Resource of 1.2 Mt @ 0.7% Ni. In addition, the combined NORNICO Resource includes 14.1 Mt @ 0.7% Ni from Minnamoolka, see Table 1.

NICKEL (CONT’D)

REVIEWOF OPERATIONS


Table 1: NORNICO Nickel Mineral Resource Status (Bell Creek and Minnamoolka Deposits)

Nickel Deposit Tonnes(Mt)

Ni(%)

Co(%)

Fe***(%)

Mg***(%)

Insitu ContainedNi metal*

Bell Creek South

Measured 8.25 0.85 0.05 12.0 7.5 70,000

Indicated 0.43 0.69 0.04 10.3 8.9 3,000

Inferred 1.2 0.7 0.03 9.4 9.0 8,600

Bell Creek North

Indicated 5.64 0.65 0.02 8.2 8.9 36,900

Bell Creek NW

Indicated 5.18 0.67 0.04 14.1 5.3 34,600

Minnamoolka**

Inferred 14.1 0.7 0.02 9.0 12.6 94,800

Totals

Measured 8.25 0.85 0.05 12.0 7.5 70,000

Indicated 11.25 0.66 0.04 11.0 7.9 74,500

Inferred 15.3 0.7 0.02 9.1 12.3 103,400

Overall Total* 34.78 0.71 0.03 10.4 9.5 247,800*

*Variations due to rounding factors ** The Minnamoolka Resource was not updated in this estimate and the data presented is from the 2006 estimate (ASX release dated 23rd November 2006).*** Iron (Fe) and magnesium (Mg) are included to indicate the overall ore quality, as both metals influence acid consumption as well as dissolved Fe, Mg and other metals, which are contaminants to nickel loaded pregnant solution which is treated to produce a marketable nickel and cobalt intermediate product. As a rule, the lower the Fe and Mg in the laterite ore the better metallurgically the ore is suited for heap leach processing.

Table 2: Summary of NORNICO Mineral Resource Estimates based on drilling to June 2007

Project/Deposit Tonnes(Mt)

Ni(%)

Co(%)

Fe(%)

Mg(%)

Insitu Ni metal (tonnes)

Minnamoolka 14.1 0.67 0.02 9.0 12.6 95,000

Bell Creek North 5.64 0.65 0.02 8.2 8.9 36,900

Bell Creek South 9.88 0.82 0.05 11.6 7.7 81,600

Bell Creek Northwest 5.18 0.67 0.04 14.1 5.3 34,600

COMBINED 34.78 0.71 0.03 10.4 9.5 247,800

Note: All estimates are based on a 0.45% Ni cut-off grade.

Due to the shallow nature of the nickel mineralisation and based on current preliminary pit designs, the Company expects that over 90% of the nickel resource will be included within pit shells resulting in very low strip (waste:ore) ratios. At Bell Creek South, the entire resource is within 45m from surface with the majority at less than 20m depth, ensuring a strip ratio of less than 0.5:1 (waste:ore). (See figure 4)

In 2007, further drilling at the Bell Creek nickel deposits was undertaken, with an additional 369 holes completed. This resource drilling is likely to be the final major drill program on the Bell Creek nickel deposits. Further drilling has started at Minnamoolka with the intention of upgrading a major portion of the Inferred Resource to the Indicated category before the end of 2007. In addition there is obvious upside potential from the Kokomo cobalt-rich nickel laterite 40km south of Minnamoolka, as well as several other known nickel laterite prospects in the NORNICO area which are just starting to be evaluated.


17

NIC

KE

L HEAP LEACHING PROCESS

Heap leaching uses dilute sulphuric acid, passing though a stacked heap of crushed and screened nickel laterite ore stockpiled on an impermeable liner (leach pad), to extract metals into a solution from which they are then selectively precipitated or extracted into marketable nickel compounds or metal products (see figure 5). Heap leaching provides greater flexibility, reduced capital costs and a shorter construction and commissioning time than previous commercial nickel laterite treatment processes.

Key advantages of the NORNICO deposits in relation to being amenable to the heap leach process include a low overall clay content, low iron content, low strip ratio, major portion of free silica rich or competent oretypes, low moisture content and low rainfall for most of the year.

METALLURGICAL TESTWORK

Excellent results were recorded from ongoing nickel leaching test work on NORNICO oretypes with both laboratory and pilot plant large column testwork being undertaken. This testwork so far has shown the ores tested to be highly amenable to dilute acid leaching (under both heap and vat conditions) of nickel and cobalt metals at ambient temperature. These results support the target range of nickel extraction rates of 75-85% within 3 to 12 month leach cycles, and acid consumptions ranging between 250-600kg acid/t ore. The average nickel extraction currently being conservatively proposed for NORNICO feasibility studies is 75% after a 6-12 month leaching cycle using 450kg/t sulphuric acid and a nominal 4m heap height.

Further laboratory column testwork, operating three large columns in series has been initiated. Also pilot plant recycle precipitation testwork will be undertaken on the nickel loaded pregnant solutions. The MFC owned pilot testing plant near Charters Towers may be relocated to Bell Creek for ongoing testwork on NORNICO ores.

NICKEL (CONT’D)

REVIEWOF OPERATIONS

Cobalt is a common by-product of nickel ore and is mainly used in iron-based alloys and as a constituent in high performance magnets. It is also used in batteries as well as in the chemical, ceramic, glass and medical industries. Much of the world’s supply comes from China, Zambia and Congo. In recent years Chinese demand has exceeded their internal supply causing shor tages and placing upward pressure on the metal price. The price of cobalt as at 30 June 2007 was US$62,280/tonne, compared with US$33,344/tonne a year earlier and US$57,871 three years ago. The China/India growth story is expected to maintain strong demand for cobalt.

COBALT


Screened and SizedOre Stockpiles

Blending

Imported Sulphur Acid Plant Power, Heat, Electricity

Spent OreDisposal inTails Dam

Heap Leaching

Mining

Screening

AgglomeratedOre

Conveyor

StackerConveyor

Ore, Water, Acid± Binder

Leach Pad

ReturnSolution Pond

IntermediateSolution Pond

PregnantSolution Pond

HeapsAgglomeration

Steam& Air

Belt Filter

LimestoneSlurry

Ph ~ 4.5

Ph ~ 7.5

LimestoneSlurry

U/F - Flocculant

O/F

O/F

U/F

O/F SolutionU/F Solids

U/F Solids

RiverDamsBore FieldTwo (Stage)

Iron RemovalThickener

IronPrecipitate

Waste

Limestoneand Water

MagnesiaSoda Ash

Recycled Additional Water and H2SO4

Acid

Water

2 13

Bleed Pregnant Nickel Solution

Open Pit

± Benefication

ROM

CrusherSizer

Iron Filtercake Waste

Transport to Nickel Refiner

Nickel (MHP) Product

Process Water TankSpent Ore Disposal

in Tailing Dam

See

dR

ecyc

le

Mak

eU

p

O/F

Sol

uti

on

MHP1 Filtration

NickelPrecipitation

Stage 1Thickener Nickel

PrecipitationStage 2

Thickener

NORNICO - Heap Leach Nickel ProjectSimplified Nickel Ore Processing Flowsheet


Figure 5 – NORNICO - Simplifi ed proposed heap leach nickel fl owsheet

Installation of Lucky Break Testing Plant - Late 2006 (showing large unassembled testing columns)

Agglomerated Nickel Laterite Ore in large column (1.6m Diameter by 4m high)

19


NIC

KE

LN

ICK

EL BANKABLE FEASIBILITY STUDY

During the year, it was decided to include the initially proposed Pre-Feasibility Study (PFS) in to a higher ranking and more accurate Bankable Feasibility Study (BFS) to save costs and time in preference to doing a two stage feasibility study approach (i.e. PFS and then BFS). Metallica has appointed Lycopodium Engineering Pty Ltd as feasibility study manager. The BFS will be based on a 1.5 million tpa heap leach operation with onsite power and acid plant to produce approximately 10,000 tpa of combined Ni/Co as a mixed hydroxide product (MHP) over a minimum 15 year life. First production is forecast to be early 2010. The BFS has commenced and is expected to be finalised in early 2008. The summary status of each of the key components of the NORNICO BFS is outlined in the table on the following page.

1. Excellent Location – close to markets, fresh water, infrastructure, ideal climate & environment and safe.2. Simple processing and mining – oretype is highly amenable to heap or vat dilute acid leaching and the nickel resources are at or near surface.3. Near term Nickel production (as intermediate product): • Lucky Break forecast third quar ter 2008 at approximately

1,600 tpa nickel • NORNICO targeting early 2010 at approximately 10,000 tpa nickel

(subject to Feasibility Study)

WHY IS METALLICASO CONFIDENTWITH OURNICKEL PROJECT?

NICKEL (CONT’D)

REVIEWOF OPERATIONS

Collecting one metre drill samples on a NORNICO Nickel Laterite Project

Bob Martin, General Managerof NORNICO Project


STATUS OF KEY COMPONENTS OF BANKABLE FEASIBILITY STUDY

To date, Metallica has identified no major impediments or fatal flaws preventing the permitting, evaluation or feasibility towards its base case develop-ment plans for NORNICO.

Resource A combined Measured, Indicated and Inferred Resource of 34.8 million tonnes at an average grade of 0.71% Ni and 0.03% Co for a contained insitu nickel content of 247,800 tonnes has been estimated. Drilling has commenced on the Minnamoolka Inferred Resource to upgrade a major portion to the Indicated Resource category.

Metallurgy Initial results are highly encouraging and meeting expectations with nickel recoveries exceeding 75% within a 9 month leach cycle. Further laboratory and pilot plant testwork is continuing to fine tune processing performance and subsequent process design.

Mining Studies The nickel resource is shallow and can be excavated freely without the use of blasting. Studies will be based on a contract mining operation. Sterilisation/condemnation drilling & geotechnical studies over the proposed leach pad area, processing and acid plant areas and the infrastructure sites is planned in late 2007.

Mining Lease -Permitting

A Mining Lease application (MLA 20549) over the Bell Creek Nickel deposits, mineral processing site, associated infrastruc-ture and land buffers has been lodged with the Department of Mines and Energy. The MLA is over 2,145 hectares (21.1 km2) of freehold land.

Nickel Product Marketing

Enquiries have been received from nickel refineries for future nickel offtake rights for a base case Mixed Hydroxide Product (end product of NORNICO heap leach process). Negotiations with BHP Billiton (owner of the Yabulu nickel refinery near Townsville) and other nickel refining and marketing companies for a nickel product offtake agreement are progressing. Metallica controls 100% of NORNICO’s offtake and marketing.

Power Supply A 42km, 132kV transmission line is proposed. Negotiations have commenced with landowners along the surveyed route and a review of environmental factors has been completed.

Water Supply A study of water supply options has been completed with the Herbert River (8km east) being the main source of water for most of the year, combined with a large on-site storage dam. Local groundwater sources will serve as a back-up supply with drilling confirming good aquifers are located within 6 km of the proposed plant site. Both river and bore water quality is excellent.

Transport/ Road Initial discussions with the Herberton Shire Council and Main Roads regarding project logistics and road conditions have commenced.

Acid Plant Proposals have been received regarding a 2,000 tonne/day sulphur burning sulphuric acid plant with heat recovery system and power generation.

Environmental Most environmental baseline studies have been completed for dry and wet seasons with no major issues or impediments identified. An Environmental Impact Study (EIS) will commence in late 2007.

Landowner Negotiations with the landowners have been initiated with the intent to have an access and compensation agreement signed by end 2007.

Cultural Heritage The Cultural Heritage Management Plan (CHMP) has been agreed with the traditional landowners, the Warrungnu people. Site clearance surveys has been undertaken and further clearances are proposed to identify any significant cultural heritage sites as part of Metallica’s duty of care. The underlying land tenure is freehold.

Sulphur Discussions have commenced with Northern Queensland Port Authorities for the importation of sulphur. Metallica has also initiated marketing studies for the long term purchase of sulphur.

Limestone Long term supply of limestone-lime has been secured with the acquisition of Phoenix Lime. A pre-feasibility study for burnt/quick lime manufacture has been initiated.


21

NIC

KE

L

BACKGROUND

Metals Finance Corporation (MFC) has participated in the project since late 2005. The project has a combined resource of 1.02 million tonnes at 0.80% Ni and 0.05% Co using a 0.35% Ni cut-off for approximately 8,195 tonnes of contained nickel metal, across two separate deposits. Measured resources comprise nearly 60% of this combined figure. This resource was based on 226 drill holes. All development costs shall be borne solely by MFC. MFC will retain ownership of the plant until the capital is repaid. Metallica remains the 100% holder of the Lucky Break project tenements. Once in operation, the initial net operating surplus will be distributed 85% MFC and 15% Metallica up until MFC has been reimbursed for its Lucky Break joint venture capital outlays, after which time the net operating surplus distribution will be 60% Metallica and 40% MFC.

NICKEL (CONT’D)

LUCKY BREAKNICKEL PROJECT(METALLICA 60% - MFC 40% INTEREST)

Located 140km west of Townsville (see figure 6), development of this project has commenced with first nickel production expected in late 2008. Metals Finance Corporation (MFC) funded the feasibility study during the year and will fund all development costs as par t of its earn-in agreement. Metallica is free carried and will receive its share of the operating surplus once the project is in operation.

REVIEWOF OPERATIONS

Drilling & sampling on a NORNICO Nickel Laterite Project


FEASIBILITY STUDY

The feasibility study completed in June 2007 highlighted a robust, albeit relatively small, high margin project which is forecast to produce a cumulative cash surplus of approximately A$88 million (before tax) over 4-5 years.

Key parameters are:

• Annual processing rate of 250,000 tonnes of nickel laterite feed for combined vat and heap leach nickel extraction facility. The vat leach ponds and heap leach pads will be re-usable.

• Forecast nickel extractions of 85% with rapid leach times of around 3 months based on detailed metallurgical testwork. This was achieved using a purpose-built heap leach pilot plant with 1m to 4m high and 1.6m diameter wide columns, a much better simulation than laboratory bench-tests.

• Annual average production of 1,600 tonnes of contained nickel in a carbonate intermediate product (containing ~ 40% Ni metal).

• Local acid supply from Sun Metals with average acid consumption estimated at 425kg/t ore.

GREGORY

BRUCE

HWY

DEV.

ROAD

ROAD

River

Burdekin

QNI Yabulu Nickel RefineryBHP Billiton

Yabulu

Ingham

Charters TowersRavenswood

DEV.

RANGEHERVEYS

0 50km

TOWNSVILLE

Former Greenvale Nickel Mine1974 to 1992

AUSTRALIA

Sun Metals- Korea ZincRefinery & Acid Supply

LUCKY BREAKNICKEL LATERITE PROJECT

• Minimum life of 4 years based on the Dingo Dam and Circular Laterite nickel deposits, which contain approximately 8,200 tonnes of nickel metal to a maximum depth of 35m.

In effect the project is being developed and brought into nickel production at no extra cost to Metallica and hence does not dilute shareholder equity, whilst yielding cashflow at minimal risk. The other key advantage is that it provides the Company with invaluable operational experience, ahead of the larger scale NORNICO development.

MINE DEVELOPMENT

Mine development has commenced with the initiation of engineering, procurement and construction management (EPCM) and MFC has begun procuring tenders for major production plant items as well as ordering long lead time equipment. Negotiations with mining contractors and acid suppliers are underway and potential off-take agreements are being finalised as final metallurgical testwork results are received. Production of first nickel is expected in late 2008.

Figure 6 - Lucky Break Project Location & Setting

Loading agglomerated ore into a large test column


23

BA

UX

ITE

BAUXITE

BACKGROUND

Through Cape Alumina, Metallica in early 2004 saw the opportunity to consolidate the second tier bauxite deposits outside the Comalco and Alcan mining leases which were first surveyed in the early 1960’s.

In 2005, Metallica entered in to an arrangement with Anegada Metals Corp. Ltd whereby Anegada invested in both Cape Alumina and Metallica and vended in a bauxite project for a 50% interest in Cape Alumina. Anegada subsequently sold a 25% interest in Cape Alumina to Bondline and later its remaining 25% Cape Alumina interest and Metallica shareholding to RCF and Xinfa.

During the year, Metallica sold a 10% share in Cape Alumina to Chiping Xinfa Huaya Alumina Co Ltd (Xinfa) for $4.625 million. Xinfa owns and operates coal mines and power stations, as well as an alumina refinery and aluminium smelter in Shandong Province, China. It is also believed that Xinfa is the biggest bauxite importer in China, with an expected bauxite demand of 8Mt this year, mainly sourced from Indonesia.

As at 30 June 2007, the ownership structure of Cape Alumina was Metallica 40%, Bondline 25%, Xinfa 17.5% and Resource Capital Funds 17.5%.

CAPE ALUMINAPTY LTD(METALLICA 40%)

Metallica’s 40% owned associate, Cape Alumina Pty Ltd, holds 100% of the Weipa Bauxite project on Queensland’s Cape York Peninsula (see figure 7). This project covers approximately 2,500 km2 of exploration tenure within the extent of the world class Weipa Bauxite Province and is adjacent to the larger mining leases held by Alcan Inc. and Comalco Ltd (par t of Rio Tinto). Significant advancements were made during the year including the release of a maiden resource of 54 Mt of insitu bauxite estimated to yield 34 Mt of washed bauxite on a dry basis. Due to positive results, the shareholders of Cape Alumina have decided to progress to the Pre-Feasibility Study stage in to the development of a major new bauxite operation. It is currently planned for Cape Alumina to under take an Initial Public Offer (IPO) and stock exchange listing in 2008 to fund completion of the Feasibility Study.

BAUXITE RESOURCE

An initial resource of 54 Mt of insitu bauxite estimated to yield 34 Mt of washed pisolitic bauxite on a dry basis was announced during the year (see table 3). This was based on 674 aircore drill holes completed within the Wenlock tenement (EPM 14547) in late 2006. The resource has an average washed grade of 52.9% total Al2O3 and 12.8% total SiO2 and is predomi-nantly free-digging, gibbsite-rich pisolitic bauxite, averaging 2.4 m thick at Wenlock and is less than 1m below the surface.

REVIEWOF OPERATIONS

Cape Alumina CEO Dr Paul Messenger infront of exposure of high quality pisolitic

bauxite in the Weipa Bauxite Project.Metallica Minerals LimitedAnnual Report - 200724

Table 3: Mineral Resource for Wenlock & Catfish Creek bauxite deposits (both within EPM 14547)

Location Resource Category

In-situ Dry Tonnes (Mt)

Dry Beneficiated Tonnes (Mt)

Beneficiated Bauxite Qualities

Total Al2O3 (%)

Total SiO2 (%)

Fe2O3 (%)

TiO2 (%)

LOI (%)

Recovery (%)

Wenlock Indicated 32 20 53.2 12.8 6.4 2.2 25.2 64.0

Inferred 17 11 53.2 13.0 6.1 2.2 25.3 64.0

Wenlock Total 49 31 53.2 12.8 6.3 2.2 25.2 64.0

Catfish 1 Inferred 2 1 51.5 13.4 6.3 2.5 26.0 64.8

Catfish 2 Inferred 3 2 49.7 12.2 12.2 2.3 25.3 60.0

All Total 54 34 52.9 12.8 6.5 2.2 25.3 63.8

Note: The dry Beneficiated Mineral Resource is based on beneficiated samples using a 1.2 mm mesh size, a minimum mining thickness of 0.5m, and a dry global bulk density of 1.6 t/m3. Definition of the bauxite horizon was based upon geological information and geochemical constraints of Total SiO2 <15% and Total Al2O3 >48% respectively. The reported Mineral Resource represents all material defined by the bauxite horizon, hence there will be occasional internal dilution included within the bauxite horizon. The Indicated Mineral Resource is typically defined by HQ size aircore drilling on a 160 m x 160 m grid and the Inferred Mineral Resource is typically defined by HQ size aircore drilling on a 320 m x 320 m grid.

POTENTIAL BAUXITE RESOURCE UPGRADE

The above resources are based on drilling to date at the Wenlock and Catfish deposits within the Wenlock tenement. However, significant potential exists within the adjoining Wenlock North tenement application to materially increase the global bauxite resource. Fieldwork and drilling will commence at Wenlock North as soon as the tenement is officially granted, which is expected to be in late September 2007. Based on drilling by CRA Exploration Pty Ltd in 1971 and detailed desk-top mapping by Cape Alumina, it is believed that Wenlock North has potential to contain an additional 60 - 80Mt of insitu bauxite which will compliment the current 54 Mt insitu bauxite Indicated and Inferred resource.

Exploration plans include completing approximately 2,000 shallow aircore drill holes and several bulk sample pits. The drilling will focus on exten-sions of the Wenlock mineralisation onto the adjoining Wenlock North tenement application. Based on this intensive drill program, a revised resource estimation should be completed in the first quarter of 2008.

Upgrades to the resource are also expected to be achieved from the Weipa Satellites project, which comprises a number of modest size bauxite deposits within 5-30km distance of the Weipa shipping channel. It is estimated that these deposits have potential for 20-30Mt of pisolitic bauxite. In particular, drilling at the Hey Point tenement in late 2007 will target 3-5 Mt of export quality bauxite which could form part of an integrated development plan for the larger Wenlock Project.

EEPPMMAA1155337766

EEPPMM1144554477

EEPPMMAA1155227788

EEPPMMAA1155227722

EEPPMMAA1155001122

EEPPMMAA1144111100

EEPPMMAA1155001199

EEPPMMAA1155007777

EEPPMMAA1155337755

EEPPMMAA1155117733

EEPPMM1155227777

EEPPMM1155005544

EEPPMMAA1155998844

EEPPMMAA1155337766

EEPPMMAA1155337744

EEPPMMAA1155226699EEPPMMAA1155226633

EEPPMMAA1155998855

AURUKUNBAUXITE

AREA

ALCAN

COMALCO

COMALCO

COMALCO

WEIPA

Aurukun

Vrilya Point

310 000mE

8 700 000mN

8 600 000mN

8 500 000mN

GULF

OF

CARPENTARIA

Albatross Bay

Port Musgrave

Skardon River

EPMA 15278

EPM 14547

EPMA 15985

EPMA 15012

EPMA 15019

EPM 15263EPMA 15269

EPMA 14110

EPMA 15173

EPMA 15077

EPM 15054

EPMA 15376

EPM 15272

EPMA 15277

EPMA 15374

EPMA 15375

EPMA 15984

CapeAlumina PTY LTD

0 50km

100km2

Government Mapped Bauxitewithin Cape Alumina controlledEPMA's

Government Mapped Bauxite withinAurukun Bauxite Area

Government Mapped Bauxite withinComalco & Alcan Mining Lease's

Mining Lease -Aluminum Companies

Cape Alumina PL Weipa ProjectEPMA Tenements

Figure 7 - Cape Alumina Bauxite tenement holdings in Weipa Bauxite Province - Cape York Peninsula


25

BA

UX

ITE

BAUXITE (CONT’D)

REVIEWOF OPERATIONS

CAPE ALUMINA’S BAUXITE QUALITY

There are three main forms of bauxite – gibbsite, bohemite and diaspore. Gibbsite can be treated at low temperatures (<150°C) whereas the other forms require higher temperatures for digestion, which leads to higher energy costs. Due to the high gibbsite/bohemite ratio (early tests estimate 95% of the available alumina is present as gibbsite), Cape Alumina’s Wenlock bauxite deposits appear to be suited to a low-temperature Bayer refinery process that is currently used in a number of recently built Chinese refineries.

LAND ACCESS AGREEMENT SIGNED

A signed Land Access Agreement provides the consent and support of the Mapoon Trustees and sets out the terms under which Cape Alumina will conduct bauxite exploration on the Wenlock North and Port Musgrave tenements. This includes extensions of the Wenlock and Catfish Creek bauxite resources. The agreement also sets out the principal terms under which the parties may negotiate a future mining agreement. The signing followed more than one and a half years of consulta-tion and negotiation between Cape Alumina, Mapoon Aboriginal Council, the Trustees and community members.

CHINESE BAUXITE IMPORT DEMAND

Demand for bauxite from China has increased dramatically in recent years, growing from approximately 1 Mt in 2004 to an expected 18-20 Mt in 2007. The majority of these imports are sourced from Indonesia which can be susceptible to quality control and security issues. During a Chinese marketing tour undertaken by Cape Alumina manage-ment, strong expressions of interest in future bauxite purchases were received from three separate refineries. At planned capacity, these three refineries are expected to import ~20Mt of bauxite per annum. The Company’s representatives also visited Xinfa’s Chiping alumina refinery with further discussions regarding offtake. This refinery is believed to be the biggest bauxite importer in China and is expected to import ~8Mt of bauxite during this year alone. The fact that Xinfa acquired a significant stake in Cape Alumina during the year is evidence that reliable bauxite supply is a key issue among Chinese refineries.

Cape Alumina exploration camp near Wenlock River.


COMMENCEMENT OFPRE-FEASIBILITY STUDY

Excellent drilling results and a positive scoping study released during the year have encouraged Cape Alumina to proceed with an IPO and stock exchange listing (proposed for 2008), which will fund completion of a Pre-Feasibility Study. A preliminary environment report was completed over the Wenlock project area, including the proposed port site at Port Musgrave. This study highlighted issues to be addressed in a voluntary environmental impact study which will be conducted in conjunction with the forthcoming resource drilling program. The 2,000 hole drill program is expected to be completed in late 2007 with a final resource estimate model due in the first quarter of 2008. The Pre-Feasibility Study is expected to be completed by the end of 2008. Indicative bauxite production estimates are 5 Mt to 7 Mt per year.

BAUXITE /ALUMINAThe principal source of aluminium metal is bauxite, which contains high concentrations of the oxide alumina (Al2O3). Bauxite is a natural product of weathering bedrock and is best formed in tropical areas over porous and permeable rocks. Alumina is extracted from bauxite through a refining process with the refined product smelted to produce aluminium metal. In general terms, it takes about 4-6 tonnes of bauxite to produce 2 tonnes of alumina which, in turn, will produce just 1 tonne of aluminium metal. Aluminium has a very high strength-to-weight ratio and is commonly used in the building construction, transpor tation and packaging industries. Demand for the metal has increased significantly over the last few years, largely due to insatiable Chinese demand and strong world economic growth. China’s bauxite impor ts have grown considerably since 2001.

Bauxite Ore, Alumina, Aluminium Metal

Signing of the Exploration Agreement for EPM15278 & EPM15984. From left - William Busch Mapoon Shire Council, Paul Messenger Cape Alumina, Sylvester Blanco Chairman of the Old Mapoon DOGIT & Edwin Woodley Mapoon Trustee

Xinfa, Metallica & Cape Alumina signing on completion of shareholding purchase

Bagged drill samples of Pisolitic Bauxite


27

CO

AL

COAL

COCKATOO COAL LIMITED INVESTMENT (ASX - COK)

Metallica has sold two of its coal subsidiaries (SE QLD Coal and SE QLD Energy Pty Ltd) to Cockatoo Coal Limited for a mix of cash, equity and a royalty. These assets included the Kingaroy, Condamine, Surat and Injune coal projects and joint ventures with Cougar Energy Ltd for Under-ground Coal Gasification (UCG), and Eastern Mining Corporation Pty Ltd evaluating a Coal to Liquids (CTL) project.

The sale proceeds received by Metallica were $5 million cash, 25 Million Cockatoo Coal shares (escrowed for 12 months), and a royalty of 40 cents per tonne on any future coal production from the Kingaroy tenement (which includes the Taabinga coal deposit) and additional Cockatoo Coal shares up to a value of $1 million upon commencement of production from any of the tenements sold.

As at 26 September 2007, Cockatoo Coal shares were trading at around $0.40, which values Metallica’s shareholding in Cockatoo at around $10 million. Accounting for the $5 million cash component, the effective sale value was around $15 million. This significant share investment in Cockatoo Coal provides Metallica with excellent further exposure to coal project exploration success and development by a well managed and cashed up coal-focused company.

COAL ASSETSThe Company’s coal portfolio changed significantly shortly after year end with the sale of its two coal subsidiary companies for $5 million cash as well as listed securities to the value of approximately $10 million and a potential royalty.

Metallica retained its 100% held subsidiary MetroCoal which acquired six new coal tenement applications covering approximately 4,000 km2 of coal bearing strata within the Surat and Moreton Coal Basins.

REVIEWOF OPERATIONS

Coal drilling on the Kingaroy Coal Project - Taabinga Coal Deposit


METROCOAL’S COAL TENEMENT APPLICATIONS

Six new coal tenement applications were made under Metrocoal Limited covering nearly 4,000 square kilometres of coal bearing strata in the Surat and Moreton Coal Basins (see figure 8).The majority of the known coal bearing strata is within 100m to 300m below surface and is considered highly prospective for coal seams suitable for UCG exploitation resulting in potential power generation and possibly CTL. Portions of the tenements will also be investigated for shallow (<120m depth) open pittable coal deposits. MetroCoal and its coal tenement applications are 100% held by Metallica and were not subject to the Cockatoo Coal purchase agreement.

Drilling by Joint venture partner EMC – Ambre Energy on the Felton North Coal Prospect within the Condamine Coal Project (now held by Cockatoo Coal Limited).

Millmerran Power Station

Tarong Power Station

Kogan Creek Power Station

MEANDU

ACLAND

COMMODORE

WILKIE CREEK

KOGAN CREEK

Stanthorpe

Caboolture

Tenterfield

Ballina

Noosa

Gatton

Beaudesert

Oakey

Murwillumbah

TOOWOOMBAIPSWICH

Nanango

Gympie

Dalby

Warwick

Chinchilla

Nambour

Caloundra

Lismore

Kingaroy

Maroochydore

Casino

BRISBANE

Beenleigh

GOLD COASTTweed Heads

Murgon

Taroom

Wondoan

St George

Dirranbandi

Surat

Roma

Miles

Mitchell

EPCA 1159 INJUNE CREEK

EPCA 1165 COLUMBOOLA

EPCA 1167 ROMA NORTH

EPCA 1166 DALBY WEST

EPCA 1152 LOCKYER VALLEY

EPCA 1164 WANDOAN WEST

Proposed Rail Link to Gladstone

SwanbankPower StationSwanbankPower StationSwanbankPower Station

0 100km

M E T R O C O A L L T D

MetroCoal Tenements

AUSTRALIAFigure 8 - MetroCoal’s Coal Tenement Applications.


29

OTH

ER P

RO

PE

RTIE

S

LIMESTONE

Metallica owns four strategically located, high quality limestone projects comprising Ootann (near NORNICO, see figure 2), Star (near Lucky Break & Townsville), Boyne and Fairview (both near Gladstone see figure 9). Limestone (CaCO3) and burnt lime (CaO) are key inputs for many manufacturing and chemical processes as well as building materials for construction.

In May 2007 Metallica exercised its option to purchase Phoenix Lime Pty Ltd, which holds 240 hectares of mining leases covering the large Ootann high grade limestone deposit. Ootann is located approximately 130 km via road from the proposed NORNICO processing site at Bell Creek with the deposit expected to satisfy NORNICO’s entire lime and limestone requirements as well as selling product to external customers. Limestone is used in the NORNICO process to raise the pH level during chemical precipitation to remove contaminants in the acid leaching solution. In June 2007 Phoenix Lime’s concept document for the construction of a new lime kiln at the Ootann limestone quarry operation was completed and is expected to be upgraded to Pre-Feasibility status in November 2007. This will also be a component in the NORNICO Funding Feasibility Study.

At the Fairview limestone project, a drill program is proposed to define the economic boundaries of the deposit with a view to applying for a mining lease in late 2007. Gladstone Pacific Nickel, which is forecasting the requirement of approximately 1 million tonnes of limestone each year, has requested further information regarding specifications of the Fairview limestone product.

At the Boyne Limestone Project, ML 80131 “Boyne NE” on Santa Glen Station and ML 80132 “Boyne SW” (52 hectares) on Milton Station were granted in April and September 2007 respectively. Both mining leases contain high quality limestone for crushed limestone and lime products suitable for markets in the Gladstone region.

OTHER ADVANCEDMINERAL EXPLORATIONPROPERTIES

OTHER PROPETIES

REVIEWOF OPERATIONS

Photo of high quality limestone at Ootann Limestone quarry.


AUSTRALIAFigure 9 - Location of Fairview & Boyne Limestone Projects.

High grade rutile and zircon heavy mineral sand exploration.

SCANDIUM

Kokomo Scandium project (Straits Resources earning up to 70%)

Little work was conducted on this project during the year. At year end, Straits Resources had earned a 20% interest in the project. Scandium is a valuable rare earth metal mainly used to significantly enhance aluminium alloys, but is also used in lighting and in the expanding fuel cell industry.

PROSPECT PROJECT (MLM - 100%)

A four hole (787m) RC drill program was conducted during the year to test two EM conductor targets under cover sediments. No zones of economic precious or base metal mineralisation were intersected.

Albatross Bay

0 5km

Tertiary Sediments

Estuarine Sediments

Strand PlainHolocene & Pleistocene sands

Heavy Mineral Deposit

AUSTRALIA

WEIPAURQUHART POINTHEAVY MINERAL DEPOSIT 8 600 000mN

8 590 000mN

580 000mE 590 000mE

ML7024(Comalco)

EPM 15268

URANIUM

Sandy Creek Uranium JV (Mega Uranium earning 80% of the Uranium rights only)

Limited work on uranium exploration was conducted by the joint venture partners Mega Uranium (previously Glengarry Resources Ltd) during the year. Metallica is planning a detailed ground XRF geochemical survey in late 2007 to evaluate areas of potential nickel laterite mineralisation over Government mapped weathered serpentinite/ultramafic rocks within the Sandy Creek tenement (EPM 14987).

MINERAL SANDS

Weipa Heavy Minerals Sands (HMS) project (Matilda Minerals earning-in)

Matilda Minerals can earn up to a 70% interest in the Urquart Point project (EPM 15268), which covers a high grade zircon and rutile HMS deposit approximately 5km west of Weipa (see figure 10). Through subsidiary Oresome Australia Pty Ltd, Metallica holds four tenement applications (see Tenement Schedule) targeting rutile and zircon in sand dunes and strandlines. The tenements are currently under application and permitting is progressing. Metallica and Matilda Minerals believe the western Cape York region has excellent potential to host both additional significant high grade and large tonnage low grade zircon and rutile rich HMS deposits.

Figure 10 - Urquhart Point (EPM15268) Zircon & Rutile Geology & Tenement


31

SH

AR

EH

OLD

ER

INFO

RM

ATIO

N

SHAREHOLDERINFORMATION

TWENTY LARGEST SHAREHOLDERS

The names of the twenty largest shareholders (as at 12 September 2007), in each class of security are:

RANK INVESTOR CURRENT BALANCE

% ISSUED CAPITAL

1. Kagara Zinc Limited 13,718,730 13.39

2. Resource Capital Fund III LP 9.473,290 9.25

3. Golden Breed Pty Ltd 8,600,000 8.4

4. Bondline Limited 4,910,966 4.79

5.Codan Trustees<The Mount Cotton Account>

2,500,000 2.44

6. Asden Investments Pty Ltd 2,418,474 2.36

7. Korea Zinc Australia Pty Ltd 2,000,000 1.95

8. China Xinfa Group Corporation Limited 1,964,386 1.92

9. Roderick William Siller 1,500,000 1.46

10. Resource Capital Fund IV LP 1,473,290 1.44

11. Robert John Gillies 1,372,429 1.34

12. Judith Emily Ruwolt 1,249,411 1.22

13. Transmere Pty Ltd 1,200,000 1.17

14. Minnelex Pty Ltd 1,147,668 1.12

15.Mr Paul Dostal + Mrs Jennifer Maria Dostal <Dostal Super Fund A/C

1,081,342 1.06

16. Select Resources Pty. Ltd 1,007,410 .98

17. Mr. Anthony Bruce Perkins 769,540 .75

18. ANZ Nominees Limited 753,183 .74

19. Mrs Mandalay Perkins 750,000 .73

20. Mr Robert Charles Pyper 750,000 .73

TOTAL 58,640,119 57.25


TENEMENT SCHEDULE (AS AT 30TH JUNE 2007)

Nickel – Cobalt Projects

Tenement Project Name Holder/ Applicant

Status (Expiry date)

No. Sub Block

Commodity Targeted

Min. Annual Expenditure

ML 4187 Bell Creek North Lease NORNICO Pty Ltd Granted (29/2/2020) 71.35 Ha Ni , Co N/A

ML 4188 Bell Creek South Lease NORNICO Pty Ltd Granted (29/2/2020) 98.11 Ha Ni , Co N/A

ML 10324 Dingo Dam NORNICO Pty Ltd Granted (28/02/2026) 36.17 Ha Ni , Co N/A

MLA 10332 Lucky Break NORNICO Pty Ltd Application 241.7 Ha Ni, Co N/A

MLA 20549 Bell Ck Consolidated NORNICO Pty Ltd Application 2,145 Ha Ni, Co N/A

EPM 10235 Minnamoolka NORNICO Pty Ltd Granted (8/9/2008) 5 Ni , Co $80,000

EPM 10699 Kokomo NORNICO Pty Ltd Granted (21/8/2008) 21 Ni , Co, Sc, Au $60,000

EPM 11285 Bell Creek NORNICO Pty Ltd Granted (27/8/2008) 8 Ni , Co $60,000

EPM 13663 Minnamoolka Ext. NORNICO Pty Ltd Granted (12/6/2008) 3 Ni , Co $30,000

EPM 14066 Greenvale South NORNICO Pty Ltd Granted (22/08/2009) 68 Ni , Co, PGE $40,000

EPM 14070 Greenvale North NORNICO Pty Ltd Granted (22/08/2009) 100 Ni , Co, Cu, Au $50,000

EPM 14101 Mt Garnet South NORNICO Pty Ltd Granted (22/12/2008) 125 Ni , Co, Au, PGE $40,000

EPM 14181 Lucky Downs NORNICO Pty Ltd Granted (22/08/2009) 18 Ni , Co, Cu $30,000

EPM 14273 Moonmyata NORNICO Pty Ltd Granted (22/12/2007) 8 Ni , Co, Au , PGE $20,000

EPM 14381 Greenvale South 2 NORNICO Pty Ltd Granted (14/12/2009) 62 Ni , Co, Cu $40,000

EPM 14392 Lucky Break NORNICO Pty Ltd Granted (29/6/2009) 43 Ni , Co $40,000

EPM 14518 Mt Garnet South #2 NORNICO Pty Ltd Granted (7/3/2010) 150 Ni , Co, Au, Cu $40,000

EPM 14608 Pinnerendi NORNICO Pty Ltd Granted (16/6/2010) 28 Ni $40,000

EPM 14658 Yellow Jack NORNICO Pty Ltd Granted (26/6/2010) 50 Ni , Co $40,000

EPM 14987 Sandy Creek NORNICO Pty Ltd Granted (8/11/2010) 70 Ni , Co, Au, U. $30,000

EPM 15198 Kinrara NORNICO Pty Ltd Granted (26/9/2008) 100 Ni , Co, PGE, Cu $30,000

EPMA 15802 Kokoma West NORNICO Pty Ltd Offered for grant 15 Ni, Cu, PGE, Au $25,000

EPM 15924 Gunnawarra NORNICO Pty Ltd Granted (7/12/2011) 10 Earthy Dolomite, Ni $13,000

Note: - NORNICO Pty Ltd previously named QLD Gold Pty Ltd

TENEMENTSCHEDULE

“Title is Vital”


33

COAL PROJECTS



No. Sub Block

Commodity Targeted


EPC 882 Kingaroy Coal SE QLD Energy Pty Ltd Granted (26/9/2009) 51 Open Cut Thermal Coal $60,000

EPC 935 Condamine Coal SE QLD Coal Pty Ltd Granted (23/5/2010) 114 Open Cut Thermal Coal $60,000

EPC 936 Allora Coal SE QLD Coal Pty Ltd Granted (3/5/2010) 130 Open Cut Thermal Coal $80,000

EPC 963 Killarney Coal SE QLD Coal Pty Ltd Granted (21/6/2010) 40 Open Cut Thermal Coal $60,000

EPC 1017 Bymount Coal SE QLD Coal Pty Ltd Granted (2/2/2011) 44 Open Cut Thermal Coal $30,000

EPC 1018 Injune Coal SE QLD Coal Pty Ltd Granted (2/2/2011) 60 Open Cut Thermal Coal $30,000

EPC 1041 Miles Coal SE QLD Coal Pty Ltd Granted (12/6/2011) 137 Open Cut Thermal Coal $50,000

EPC 1130 Killarney South SE QLD Coal Pty Ltd Granted (1/5/2012) 28 Open Cut Thermal Coal $30,000

EPCA 1135 Chinchilla SE QLD Coal Pty Ltd Application 278 Open Cut Thermal Coal $60,000

EPCA 1136 Dalby SE QLD Coal Pty Ltd Application 222 Open Cut Thermal Coal $60,000

EPCA 1152 Lockyer Valley MetroCoal Limited Application 150 Open Cut Thermal Coal & UCG $50,000

EPCA 1159 Injune Creek MetroCoal Limited Application 237 Open Cut Thermal Coal & UCG $50,000

EPCA 1164 Wandoan West MetroCoal Limited Application 215 Thermal Coal & UCG $50,000

EPCA 1165 Columboola MetroCoal Limited Application 294 Thermal Coal & UCG $50,000

EPCA 1166 Dalby West MetroCoal Limited Application 97 Thermal Coal & UCG $50,000

EPCA 1167 Roma North MetroCoal Limited Application 289 Thermal Coal & UCG $50,000

Note:- SE QLD Coal Pty Ltd and SE QLD Energy Pty Ltd were subject to sale agreement with Cockatoo Coal Limited. Both companies were sold to Cockatoo Coal in July 2007. MetroCoal Limited is owned 100% by Metallica Minerals Limited.

BAUXITE PROJECTS (HELD THROUGH 40% OWNED CAPE ALUMINA PTY LTD)

Tenement Project Name Holder/ Applicant Status (Expiry date)

No. Sub Block

Commodity Targeted


EPM 14547 Wenlock Cape Alumina Pty Ltd Granted (19/4/2011) 48 Bauxite $50,000

EPMA 15012 Mappoon Bauxite Cape Alumina Pty Ltd Offer on hold 37 Bauxite-Kaolin $50,000

EPMA 15019 Aurukun Bauxite Cape Alumina Pty Ltd Offer on hold 11 Bauxite $20,000

EPM 15054 Hey Point Bauxite Cape Alumina Pty Ltd Granted (29/4/2012) 4 Bauxite $18,000

EPMA 15077 Worbody Bauxite Cape Alumina Pty Ltd Application 15 Bauxite N/A

EPMA 15173 Duyfken Point Baux Cape Alumina Pty Ltd Offered for grant 19 Bauxite $20,000

EPM 15263 North Coconut Baux Cape Alumina Pty Ltd Granted (29/4/2012) 12 Bauxite $15,000

EPMA 15269 Aurukun North Baux Cape Alumina Pty Ltd Application 55 Bauxite N/A

EPM 15272 Weipa East Bauxite Cape Alumina Pty Ltd Granted (29/4/2012) 73 Bauxite $15,000

EPMA 15277 Wenlock South Baux Cape Alumina Pty Ltd Offered for grant 64 Bauxite $25,000

EPMA 15278 Wenlock North Baux Cape Alumina Pty Ltd Offered for grant 53 Bauxite $35,000

EPMA 15374 Dulhunty Cape Alumina Pty Ltd Application 105 Bauxite N/A

EPMA 15375 Vrilya Cape Alumina Pty Ltd Application 107 Bauxite N/A

EPMA 15376 Ducie River Cape Alumina Pty Ltd Application 32 Bauxite N/A

EPMA 15984 Port Musgrave Cape Alumina Pty Ltd Application 4 Bauxite N/A

EPMA 15985 Penefather Cape Alumina Pty Ltd Application 45 Bauxite N/A

EPMA 14110 Lower Archer Bauxite Sigma Kaolin Limited Application 100 Bauxite N/A

TENEMENTSCHEDULE (CONT’D)


LIMESTONE PROJECTS



No. Sub Block

Commodity Targeted

Min. AnnualExpenditure

ML 10276 Star River Limestone Metallica Minerals Ltd Granted (30/4/2023) 18.54 Ha Limestone N/A

ML 80131 Boyne Limestone NE Metallica Minerals Ltd Granted (30/4/2027) 54.40 Ha Limestone N/A

MLA 80132 Boyne Limestone SW Metallica Minerals Ltd Application 52.70 Ha Limestone N/A

EPM 13423 Boyne Limestone Metallica Minerals Ltd Granted (1/1/2008) 6 Limestone $35,000

EPM 13756 Fairview Limestone R.W. Siller Granted (10/12/2006)*+ 2 Limestone $50,000

EPM 14042 Fairview Extended R.W. Siller Granted (23/10/2007)*+ 4 Limestone $30,000

ML 4788 Crotty 1 Phoenix Lime Pty Ltd Granted (31/1/2026) 2.023 Ha Limestone N/A

ML 4789 Crotty 2 Phoenix Lime Pty Ltd Granted (31/1/2026) 2.023 Ha Limestone N/A

ML 5079 Crotty Phoenix Lime Pty Ltd Granted (30/4/2025) 25.95 Ha Limestone N/A

ML 5372 Crotty 3 Phoenix Lime Pty Ltd Granted (31/1/2013) 210 Ha Limestone N/A

GOLD, HEAVY MINERALS SANDS (HMS), PRECIOUS & BASE METALS, OTHER PROJECTS

Tenement Project Name Holder/ Applicant Status (Expiry date)

No. Sub Block

Commodity Targeted


EPM 13873 Six Mile NORNICO Pty Ltd Granted (10/12/2007) 51 Gold, Copper $70,000

EPM 14406 Prospect Oresome Australia Pty Ltd Granted (19/12/2009) 24 Gold, base metals, PGE $40,000

EPM 14477 Texas North Oresome Australia Pty Ltd Granted (22/08/2009) 50 Gold, silver $40,000

EPMA 15268 Urquart Point Oresome Australia Pty Ltd Offered for grant 24 Rutile, Zircon, HMS $30,000

EPMA 15370 Jackson River Oresome Australia Pty Ltd Application 17 Rutile, Zircon, HMS $15,000

EPMA 15371 Doughboy Oresome Australia Pty Ltd Application 16 Rutile, Zircon, HMS $15,000

EPMA 15372 Jardine Oresome Australia Pty Ltd Application 45 Rutile, Zircon, HMS $15,000

EPMA 15848 Tondoon Oresome Australia Pty Ltd Offered for grant 18 Bauxite, Gold. $17,000

Note:- ( * ) In Renewal

(+) Assignment to Metallica Minerals Limited pending

PGE = Platinum Group Elements, HMS = Heavy Mineral Sands,

Sc = Scandium, Au = Gold,

U = Uranium, Cu = Copper

UCG = Underground Coal Gassification

All tenements 100% held unless expressed otherwise

NORNICO Pty Ltd previously named QLD Gold Pty Ltd

DME = Department of Mines and Energy

EPM = Exploration Permit for Minerals

EPMA = EPM Application

EPC = Exploration Permit for Coal

EPCA = EPC Application

ML = Mining Lease

MLA = ML Application.


35

NO

TE

S

NOTES


CORPORATE DIRECTORY BOARD OF DIRECTORS:

David K Barwick Non Executive ChairmanAndrew L Gillies Managing DirectorJohn K Haley Executive Director/Company SecretaryPeter B Nicholson Non Executive DirectorMark J Ashley Non Executive Director

COMPANY SECRETARY & CHIEF FINANCIAL OFFICER:John K Haley

PRINCIPAL & REGISTERED OFFICE:1 Potts StreetEast Brisbane QLD 4169Phone (07) 3891 9611Facsimile (07) 3891 9199Email [email protected]

WEBSITE:www.metallicaminerals.com.au

SHARE REGISTER:Link Market Services LimitedLevel 12, 300 Queen StreetBrisbane, QLD 4001

AUDITORS:BDO Kendalls (QLD)Level 18, 300 Queen StreetBrisbane, QLD 4001

SOLICITORS:Hopgood GanimLevel 8, Waterfront Place1 Eagle StreetBrisbane, QLD 4001

STOCK EXCHANGE LISTING:Metallica Minerals Ltd is listed on the Australian Stock Exchange (ASX). Home Stock Exchange is Brisbane.

Riverside Centre123 Eagle StreetBrisbane, QLD 4001

ASX CODE:MLM (ordinary shares)


ABN 45 076 696 092

1 Potts StreetEast Brisbane QLD 4169

Tel: 07 3891 9611Fax: 07 3891 9199

Postal: GPO Box 122, Brisbane QLD 4001Website: www.metallicaminerals.com.au

METALLICA MINERALS LIMITEDABN 45 076 696 092

ANNUAL REPORT2007





Documents

“An emerging Queensland multi-commodity resource ...2007/10/23 · METALLICA MINERALS LIMITED ABN 45 076 696 092 1 Potts Street East Brisbane QLD 4169 Tel: 07 3891 9611 Fax: 07