Metallica Minerals Limited (ASX:MLM) Updates On Kokomo Nickel Cobalt Scandium Project

Brisbane, Dec 9, 2009 AEST (ABN Newswire) - Metallica Minerals Limited's (ASX:MLM) Kokomo cobalt and scandium rich nickel laterite is one of three established deposits in the Company's flagship 100% NORNICO project in North Queensland.

The Kokomo Nickel (Ni)-Cobalt (Co) & Scandium (Sc) laterite deposit formed on a northeast/ south-west trending ultramafic unit which outcrops for a strike length of 16km. The great majority of drilling has been focused on the widest and thickest portion - the Kokomo Central Plateau.

The latest phase of infill drilling at the Kokomo project has been completed with a further 141 holes (KK-914 to 1,054) for 3,071m drilled. These will be included into the Kokomo drill database which now comprises 1,054 drill holes to be used for the project's revised resource estimate which is now expected late in December. The resource estimate is being undertaken by Golder Associates in Brisbane.

The holes were designed to drill out two separate areas of high grade nickel-cobalt mineralisation (Mona & Blueberry) and a high grade scandium zone (Wild Honey).

Drilling in each of these areas was on a nominal 20m by 20m grid. Cobalt and scandium rich nickel laterite mineralisation predominately occurs along the eastern and western margins of the laterite plateau.

The drilling is aimed at defining predominantly Measured Resources in these high grade areas which can be used for initial mine design, starter pits and scheduling of ore for the current NORNICO pre-feasibility study.

All the assay results have been received, some of the better results are presented below:

Mona Nickel-Cobalt Zone

KK-944, 13m @ 1.36% Ni and 0.52% Co, (2.66 % Ni Eq) from 5m
KK-952, 10m @ 1.27% Ni and 0.22% Co, (1.82 % Ni Eq) from 4m
KK-959, 7m @ 1.61% Ni and 0.27% Co, (2.28 % Ni Eq) from 6m
KK-966, 10m @ 1.43% Ni and 0.21% Co, (1.95 % Ni Eq) from 8m
KK-968, 5m @ 1.37% Ni and 0.46% Co, (2.52 % Ni Eq) from 13m
KK-970, 26m @ 1.24% Ni and 0.18% Co, (1.69 % Ni Eq) from 20m
KK-972, 8m @ 1.16% Ni and 0.61% Co, (2.68 % Ni Eq) from 3m
KK-976, 5m @ 1.52% Ni and 0.32% Co, (2.32 % Ni Eq) from 16m
KK-982, 13m @ 0.97% Ni and 0.93% Co, (3.30 % Ni Eq) from 3m
KK-992, 21m @ 1.11% Ni and 0.18% Co, (1.56 % Ni Eq) from 5m
KK-996, 17m @ 1.60% Ni and 0.21% Co, (2.12 % Ni Eq) from 15m
KK-1044, 14m @ 1.34% Ni and 0.15% Co, (1.71 % Ni Eq) from 10m

Note:- *The Nickel Equivalent (Ni Eq) grade has been calculated using Ni plus 2.5 Co to represent approximate nickel equivalent grade eg US$8/lb Ni and US$20/lb Co (example only) provides. 1Ni : 2.5 Co ratio.

Wild Honey Scandium Zone

KK-1018, 7m @ 257 g/t Sc from 0m, 25m @ 1.57% Ni, 0.20 % Co
KK-1013, 25m @ 292 g/t Sc from 0m, 16m @ 0.54% Ni, 0.10 % Co
KK-1020, 28m @ 438 g/t Sc from 3m,
KK-1022, 25m @ 219 g/t Sc from 0m
KK-1023, 9m @ 338 g/t Sc from 0m
KK-1032, 23m @ 194 g/t Sc from 11m, 23m @ 0.60% Ni, 0.12 % Co
KK-1037, 12m @ 340 g/t Sc from 12m
KK-1043, 17m @ 240 g/t Sc from 2m
KK-1044, 20m @ 249 g/t Sc from 3m, incl 10m@ 1.34% Ni, 0.15% Co
KK-1045, 22m @ 257 g/t Sc from 5m

Kokomo Ni-Co-Sc-Mn Resource Update

The updated resource estimate for the Kokomo nickel-cobalt-scandium laterite deposit was initially expected by late in November.

However, due to the rapid turnaround of samples at the laboratory in Townsville the results from this recently completed infill drilling programme have become available sooner than expected, and can therefore be included in the resource update currently being estimated.

The updated Kokomo resource - including data from 1,054 holes comprising in excess of 28,000m of drilling - is now expected to be available late in December.

Cobalt could be an increasingly valuable product for NORNICO, (currently priced around US$20/lb,) due to its increasing use in long life batteries and super alloys.

Scandium (Sc) is a valuable rare earth/tech metal used in Fuel Cells and as a major enhancer of aluminium alloys and has good potential to become an important "green tech metal" of the future. Metallica owns 80% of the Kokomo Scandium rights, with joint venture partner holding 20% of the scandium rights. Metallurgical test work has shown that in addition to nickel and cobalt, excellent extractions of scandium, being around 90% and there is excellent potential to produce scandium oxide as a valuable by product.

Mining Lease

The 36 sq km Kokomo Mining Lease has been approved for grant by the Land Court pending successful agreements for compensation with the landowners and the Native Title parties. It is envisaged that discussions with the landowners and Native Title claimants will be undertaken early in 2010.

Back ground - NORNICO Project

The Kokomo nickel-cobalt deposit forms an important part of Metallica's 100% owned NORNICO project.

The Kokomo project will be incorporated into NORNICO feasibility studies into developing a heated agitated Atmospheric Acid Leaching (AAL) and solvent extraction/ electrowinning (SX/EW) operation to produce LME grade nickel metal and a cobalt sulphide.

NORNICO so far includes three main deposits: Bell Creek, Minnamoolka and Kokomo. The NORNICO project definition base case is a 1 Mtpa heated agitated Atmospheric Acid Leach (AAL) and solvent extraction/electrowinning (SX/EW) operation sourcing higher grade (i.e >1.2 % Ni Eq) Ni-Co ores from Bell Creek, Minnamoolka and Kokomo deposits, with an onsite acid generation plant and co-generation of power, to produce LME nickel metal and cobalt product over a minimum 15 year life.

Metallica is investigating the possible advantages of staging NORNICO's size, starting with a smaller (but still commercial) very high grade ~100,000 tpa operation - Stage 1, then to full scale ~ 1 Mtpa (with acid & power plant) - Stage 2, at which time the Stage 1 Ni-Co-Sc plant could change to a predominantly Sc oxide plant (+/- Ni+Co by products).

Kokomo will be an important component of the proposed NORNICO Ni-Co operation as it contains high nickel+cobalt grades which will enhance future Ni-Co feed grade and substantially extend project life. Kokomo Ni-Co laterite mineralisation also has potential by-products of manganese and scandium oxides.

Preliminary metallurgical testwork has been very encouraging with results indicating that 90% extraction of both nickel and cobalt are achieved within 6 hours using heated agitated AAL methods. Extractions of scandium have also been around 90%.

NORNICO is in an excellent location, close to markets, fresh water, limestone, infrastructure and port facilities (140km via road) and is safe and in an ideal climate and environment.

Contact

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