ASX ANNOUNCEMENT AND MEDIA RELEASE16 August 2005METALLICA...

ASX ANNOUNCEMENT AND MEDIA RELEASE
16 August 2005
METALLICA MINERALS IN JOINT VENTURE SEARCH WITH
MAJOR FOR NICKEL IN NORTH QUEENSLAND
BHP Billiton Limited has signed a joint venture agreement with Metallica Minerals
Limited and will outlay up to $11.75 million in the search primarily for nickel in
North Queensland.
BHP Billiton can earn up to 75% of the northern half of Metallica Minerals’ (ASX
Code ‘MLM’) North Queensland Nickel Cobalt (NORNICO) North project under
the agreement announced today.
In return, Metallica has an opportunity to earn a stake in any mineral discoveries
and developments in BHP Billiton’s tenements that surround Metallica’s
NORNICO North exploration tenements of more than 1000 square kilometres
immediately south of Mt Garnet.
Metallica Minerals Managing Director, Mr Andrew Gillies, said BHP Billiton’s
decision to team up with Metallica Minerals “is a great vote of confidence in the
prospectivity of our nickel orientated acreage by one of the world’s most
successful and technically skilled mineral explorers and developers”.
“BHP Billiton has advised that an electromagnetic (EM) and magnetic
geophysical survey is expected to be flying within two to three weeks over our
tenements south of Mt Garnet,” Mr Gillies said.
“Targets generated by this aerial survey will be prioritised and drilled, or followed
up with a more detailed ground geophysical survey to fine tune drilling targets.”
Metallica’s NORNICO project already includes three nickel laterite deposits (Bell
Creek, Minnamoolka, Kokomo), which are not part of the joint venture
agreement.
Mr Gillies said a particularly exciting aspect of the agreement was that BHP
Billiton’s search would focus on nickel sulphide deposits - the higher quality and
more exciting form of the nickel metal which often includes platinoids, gold and
copper.
“The entire NORNICO project area has not previously been explored for nickelsulphides
and we very much welcome BHP Billiton’s help and expertise in this
timely search,” he said.
“The joint venture arrangement allows us to focus on the heap leach nickel
evaluation, and potential development, of our current nickel laterite deposits,
while being virtually free carried on the nickel sulphide exploration frontier.
“We believe the area is prospective for nickel-copper-platinoid sulphide deposits,
such as the Russian Norilsk and Canada’s Voisey’s Bay deposits, and BHP
Billiton will bring vast experience and the latest technology to the exploration
effort,” Mr Gillies said.
The BHP Billiton-Metallica Minerals joint venture, which relates to seven
Exploration Permits for Minerals (EPMs), has three stages. BHP Billiton can
earn:
�� 30% of any NORNICO North tenement with expenditure of $750,000 over
two years,
�� 51% with a further $1 million outlay over four years, and
�� 75% with a further $10 million over seven years, or the completion of a
bankable feasibility study.
Metallica has a “once off” opportunity to participate on a 20:80 basis (Metallica-
BHP Billiton) on BHP Billiton’s tenements surrounding the NORNICO North
permits after the resources giant has spent $1 million on exploration.
Metallica is also able to take a 100% stake in any development project, on a sole
risk basis, if BHP Billiton is not interested in developing the discovery.
Finalising the joint venture, which was subject of a Heads of Agreement signed in
December 2004, comes as Metallica receives some promising preliminary results
from “heap leaching” of nickel laterite from the NORNICO project.
Mr Gillies said heap leaching – which uses acid to extract nickel from a ‘heap’ of
ore – could mean that “modest sized nickel laterite deposits may not only be
viable but economically robust”.
Metallica has an advantageous position in regard to refining of any nickel
concentrate with BHP Billiton’s Yabulu refinery near Townsville located only 300
kilometres from the NORNICO project area.
Metallica Minerals’ Exploration Permits for Minerals (EPM) subject to the joint
venture agreement are: EPMs 10235, 10699, 11285, 13663, 14101, 14273 and
14518. BHP Billiton EPMs included are: 14608, 14609, 14610, and 14965.
(See attached location map.)
Media contacts:
Andrew Gillies Peter Gill
Managing Director, Metallica Minerals Ltd Field Public Relations
Ph: (07) 3891 9611, Mob: 0416 137 556 Ph: (08) 8234 9555
Background:
Metallica Minerals Limited was listed on the Australian Stock Exchange in
November 2004 with a diversified portfolio of exploration and mineral assets in
Queensland, ranging from bauxite at Cape York to coal in SE QLD.
The company’s flagship is the NORNICO project based in the Greenvale nickel
province. It contains three nickel-cobalt laterite deposits – Bell Creek,
Minnamoolka, and Kokomo. The Bell Creek South mining lease has Joint Ore
Reserves Committee (JORC) compliant inferred reserves of 6.29 million tonnes
at 1.02% nickel and 0.1% cobalt, or 64,000 tonnes of nickel and 4,400 tonnes of
cobalt.
Further south towards Townsville, the company owns the Lucky Break nickelcobalt
deposit with a “measured and indicated” nickel resource of 566,000 tonnes
at 0.91% nickel and 0.06% cobalt, which it intends to evaluate for a
demonstration heap leach nickel operation producing nickel concentrate.
Metallica Minerals’ other key assets in Queensland include:
Coal: The Kingaroy Coal Project, located 25 kilometres from the Tarong Power
Station, contains ‘measured and indicated’ (JORC complaint) thermal coal
reserves of 180 million tonnes. Metallica also hold tenements over the
Condamine Coal Project SW of Brisbane.
Bauxite: The Company through its 50% holding in Cape Alumina, holds large
tenement applications in the Weipa region which covers extensive known bauxite
mineralisation.
Scandium: Located in the Kokomo nickel-cobalt deposit in North Queensland,
the company has identified a high grade deposit of scandium, a valuable rare
earth metal used in aluminium alloys and fuel cells, is estimated at more than 50
tonnes of scandium metal. Straits Resources is earning a 70% interest in the
scandium project.
Gold: A number of drilling targets have been identified in Metallica’s Six Mile
Creek Project which lies within the NORNICO Project area. Straits Resources in
currently earning up to a 70% interest in the project.
Limestone: Metallica Minerals has two high grade limestone deposits
strategically located near Gladstone and another near Townsville and is currently
evaluating development options.
METALLICA MINERALS - BHP BILLITON NORNICO NORTH JOINT
VENTURE EXPLORATION PERMITS FOR MINERALS
Metallica Minerals (in gold) and BHP Billiton (in white)