sconi project, north queensland nickel-cobalt …€¦ · the nieq cog has been used to ensure all...

ASX RELEASEMonday 21 October 2013

SCONI PROJECT, NORTH QUEENSLANDNICKEL-COBALT AND SCANDIUM RESOURCE UPGRADE

SCONI Project Nickel (Ni) Cobalt (Co) and Scandium (Sc) Mineral Resourcesupgraded and reported according to the guidelines of the JORC Code 2012

Additional Inferred (10.5 Mt at 0.9% Nickel Equivalent (NiEq*)) and Indicated(0.6 Mt at 1.0% NiEq) Mineral Resources for the SCONI southern depositsfollowing drilling of the old waste rock dumps containing scandium credits and acrusher oversize nickel stockpile at the former Greenvale Nickel Mine respectively

Infill drilling of the previous in-situ Inferred Mineral Resources areas atGreenvale has mostly resulted in an upgrade to Indicated and MeasuredResources categories

Total SCONI southern deposits (Greenvale, Lucknow, Kokomo) MineralResources increased by 19% to 70.7 Mt at 1.20% NiEq (previously 59.5 Mt at1.26% NiEq) using a 0.7% NiEq cut-off grade (COG) – see Table 1.

At a COG of 1.0% NiEq, the total Measured and Indicated Resources for theSCONI Southern deposits is 29.4 Mt at 1.62% NiEq – see Table 2

Resultant increase in the total SCONI Project being the Ni-Co-Sc south area(Greenvale, Lucknow, Kokomo) and the Ni-Co north area (Minnamoolka, BellCreek) Mineral Resources increased to 89.1 Mt at 1.15% NiEq (previously77.9 Mt at 1.19% NiEq) using a 0.7% NiEq COG. Total Measured and IndicatedResources increased by 2.5% to 65.1 Mt at 1.22% NiEq – see Table 4

Total SCONI Scandium Resources (Lucknow and Kokomo) is 12.0 Mt at 162 g/tSc (using 100 g/t Sc COG) containing approximately 2,989 t scandium oxide(Sc2O3) – see Table 5

Australian resource development company, Metallica Minerals Limited (ASX:MLM) is pleased toannounce an increase in the Mineral Resource estimate for its SCandium-CObalt-NIckel (SCONI)Project in North Queensland. The main change from the previous estimate follows the drilling andevaluation of the former Greenvale Mine waste dumps to a new Inferred Resource, the estimation of anew Indicated Resource contained within an old crusher oversize stockpile and the upgrading ofprevious in-situ Inferred Resources to Indicated and Measured Categories.

The accompanying document by Golder Associates provides further details of the resource estimate forGreenvale and the updated Mineral Resource statement for all SCONI deposits according to theguidelines of the JORC Code 2012 edition. This includes definition of the NiEq function, cut-off grades,detailed resource tables, JORC Code 2012 Table 1 information and competent person details.

*NiEq =(Ni + 1.5Co + 0.01Sc). The resources for the Southern Deposits of Lucknow, Greenvale and Kokomo arereported at a COG of NiEq 0.7% (Ni + 1.5Co + 0.01Sc). This NiEq COG formula has been calculated usingcommodity prices of US$10/lb nickel, US$15/lb cobalt and US$1,500/kg scandium oxide, and recoveries of 90% forall three metals.

The NiEq COG has been used to ensure all significant nickel, cobalt and scandium mineralisation isincluded in the resource estimate. Metallica indicates that the metallurgical testwork to date providesreasonable potential for the nickel, cobalt and scandium to be recovered at similar recoveries to thoseachieved in the testwork.

Table 1: Total SCONI Southern deposits Mineral Resources using a COG of 0.7% NiEq (Ni + 1.5Co + 0.01Sc)

Deposit Tonnes(Mt)

Nickel (Ni)%

Cobalt(Co) %

Scandium(Sc) g/t

Ni Metal(kt)

Co Metal(kt)

Sc Metal(t)

Sc Oxide(t)

KokomoMeasured 2.2 0.57 0.11 80 12.2 2.5 173 265Indicated 17.2 0.56 0.09 49 95.8 15.5 843 1,292Inferred 10.2 0.36 0.04 59 36.7 4.5 603 924Total 29.5 0.49 0.08 55 144.8 22.4 1,619 2,483Greenvale In-situMeasured 5.4 0.77 0.06 39 41.7 3.3 208 319Indicated 9.9 0.71 0.05 37 69.9 5.1 369 565Inferred 1.0 0.72 0.05 36 7.3 0.5 36 55Total 16.3 0.73 0.05 38 118.8 8.9 614 942Greenvale dumps and stockpilesIndicated 0.6 0.75 0.05 18 4.5 0.3 11 16Inferred 10.5 0.40 0.03 45 41.6 3.5 473 725Total 11.1 0.42 0.03 44 46.0 3.8 483 740LucknowMeasured 1.7 0.45 0.10 103 7.9 1.8 180 276Indicated 10.6 0.27 0.07 128 28.5 7.2 1,357 2,081Inferred 1.5 0.40 0.07 41 5.8 1.0 60 92Total 13.8 0.31 0.07 116 42.2 10.0 1,597 2,449Combined SCONI South Project ResourceMeasured 9.3 0.66 0.08 60 61.7 7.6 561 860Indicated 38.3 0.52 0.07 67 198.7 28.0 2,580 3,957Inferred 23.2 0.39 0.04 51 91.4 9.6 1,172 1,797Total 70.7 0.50 0.06 61 351.8 45.2 4,313 6,615

Table 2: Total SCONI Southern deposits Mineral Resources using a COG of 1.0% NiEq (Ni + 1.5Co + 0.01Sc)

Deposit Tonnes(Mt)

Nickel (Ni)%

Cobalt(Co) %

Scandium(Sc) g/t

Ni Metal(kt)

Co Metal(kt)

Sc Metal(t)

Sc Oxide(t)

KokomoMeasured 1.5 0.64 0.14 97 9.8 2.2 149 228Indicated 8.7 0.60 0.11 75 52.3 9.8 655 1,004Inferred 3.7 0.42 0.06 83 15.3 2.2 304 466Total 13.9 0.56 0.10 80 77.4 14.2 1,108 1,699Greenvale In-situMeasured 3.5 0.98 0.08 39 33.8 2.7 135 207Indicated 5.4 0.94 0.07 38 51.0 3.8 209 320Inferred 0.6 0.93 0.07 37 5.5 0.4 22 33Total 9.5 0.95 0.07 39 90.3 6.9 365 559Greenvale dumps and stockpilesIndicated 0.6 0.75 0.05 18 4.5 0.3 11 16Inferred 2.0 0.53 0.05 46 10.7 0.9 93 142Total 2.6 0.58 0.05 40 15.1 1.3 103 157LucknowMeasured 1.2 0.44 0.11 139 5.3 1.3 168 257Indicated 8.5 0.26 0.07 149 21.8 5.7 1,265 1,940Inferred 0.4 0.37 0.07 71 1.4 0.3 27 41Total 10.1 0.28 0.07 145 42.2 7.3 1,459 2,237Combined SCONI South Project ResourceMeasured 6.2 0.79 0.10 73 48.8 6.2 451 691Indicated 23.2 0.56 0.08 92 129.5 19.5 2,140 3,282Inferred 6.6 0.49 0.06 67 32.9 3.9 445 682Total 36.1 0.59 0.08 84 211.2 29.5 3,036 4,656

The resources for the Northern Deposits comprising of Bell Creek South, Bell Creek North, Bell CreekNorthwest, The Neck and Minnamoolka (Table 3) are reported at a COG of NiEq 0.7% (Ni + 1.5Co). ThisNiEq COG formula has been calculated using commodity prices of US$10/lb nickel and US$15/lb cobalt,and recoveries of 90% for both nickel and cobalt

Table 3: Total SCONI Northern deposits Mineral Resources using a COG of 0.7% NiEq (Ni + 1.5Co)

Deposit Tonnes(Mt) Ni (%) Co (%) Sc (g/t)* Ni Metal

(kt)Co Metal

(kt)Sc Metal

(t)Sc Oxide

(t)Bell Creek SouthMeasured 7.8 0.96 0.07 - 75.5 5.1 - -Indicated 0.1 0.81 0.05 - 1.2 0.1 - -Bell Creek NorthIndicated 2.0 0.86 0.03 - 16.8 0.5 - -Bell Creek NorthwestIndicated 2.5 0.81 0.05 - 20.1 1.2 - -The Neck (part Bell Creek)Indicated 0.4 0.84 0.03 - 3.5 0.1 - -MinnamoolkaIndicated 4.7 0.82 0.05 - 38.3 2.1 - -Inferred 0.9 0.78 0.04 - 6.7 0.3 - -Total 5.5 0.82 0.04 - 45.0 2.4 - -Combined SCONI Northern deposits ResourceMeasured 7.8 0.96 0.07 - 75.5 5.1 - -Indicated 9.7 0.83 0.04 - 79.9 4.0 - -Inferred 0.9 0.78 0.04 - 6.7 0.3 - -Total 18.4 0.88 0.05 - 162.1 9.4 - -*Note: Northern deposit Sc grade is typically low 5-30 g/t, therefore no Sc resource estimated.

Table 4: Combined SCONI (South and North) Project Mineral Resources using a COG of 0.7% NiEq

Deposit Tonnes(Mt) Ni (%) Co (%) Sc (g/t)* Ni Metal

(kt)Co Metal

(kt)Sc Metal

(t)Sc Oxide

(t)Measured 17.1 0.80 0.07 33 137.3 12.7 561 860Indicated 48.0 0.58 0.07 54 278.6 32.0 2,580 3,957Inferred 24.0 0.41 0.04 49 98.1 9.9 1,172 1,797Total 89.1 0.58 0.06 48 514.0 54.5 4,313 6,615*Note: Northern deposit Sc grade is typically low 5-30 g/t, therefore no Sc resource estimated. Resultant Sc gradefor combined SCONI (South and North) Project is therefore low.

Table 5: Total SCONI (Lucknow & Kokomo) Scandium Resources using a COG of 100g/t Sc

Deposit Tonnes(Mt)

Ni(%)

Co(%)

Sc(g/t)

Fe(%)

Mg(%)

Ni Metal(kt)

Co Metal(kt)

Sc Metal(t)

Sc Oxide(t)

LucknowMeasured 0.7 0.31 0.08 208 31.1 1.8 2.1 0.5 144 220Indicated 6.5 0.22 0.06 174 34.3 1.2 14.6 3.7 1,133 1,736Inferred 0.1 0.11 0.01 116 30.4 0.6 0.1 0.0 14 21Total 7.3 0.23 0.06 176 33.9 1.2 16.9 4.2 1,292 1,980KokomoMeasured 0.6 0.44 0.10 176 33.1 1.4 2.6 0.6 104 159Indicated 3.0 0.44 0.07 139 29.0 2.3 12.9 2.2 410 628Inferred 1.2 0.28 0.04 124 16.6 4.4 3.2 0.4 143 219Total 4.7 0.40 0.07 140 26.5 2.7 18.7 3.2 658 1,008Combined SCONI Scandium ResourceMeasured 1.3 0.37 0.09 193 32.0 1.6 4.7 1.1 249 381Indicated 9.5 0.29 0.06 163 32.6 1.5 27.5 5.9 1,544 2,366Inferred 1.3 0.26 0.03 124 18.0 4.0 3.3 0.4 158 242Total 20.0 0.30 0.06 162 31.0 1.8 35.5 7.4 1,950 2,989

Competent Persons StatementsThe SCONI scandium-cobalt-nickel project Mineral Resource estimate(s) is based upon and accuratelyreflects data compiled, validated or supervised by Mr John Horton, Principal Geologist FAusIMM (CP)who is a full time employee of Golder Associates Pty Ltd. Mr Horton has sufficient experience that isrelevant to the style of mineralisation and the type of deposit under consideration and to the activitywhich he has undertaken to qualify as a Competent Person as defined in the 2012 edition of the‘Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves’. MrHorton has reviewed this document and consents to the inclusion of this information in the form andcontext in which it appears in this release.

Exploration and evaluation data used as the basis for the resource estimate were compiled orcompleted under the supervision of Mr Andrew Gillies who is a Member of the Australasian Institute ofMining and Metallurgy and a full time employee of Metallica Minerals Limited. Mr Gillies has sufficientexperience that is relevant to the style of mineralisation and the type of deposit under consideration andto the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 editionof the ‘Australasian Code for the Reporting of Exploration Results, Mineral Resources and OreReserves’. Mr Gillies has reviewed this document and consents to the inclusion of this information in theform and context in which it appears in this document.

For more information please contact:-

Andrew Gillies, Managing DirectorJohn Haley, Director/CFO

Phone: +61 07 3249 3000 / Email: [email protected]

Golder Associates Pty Ltd

147 Coronation Drive, Milton, Queensland 4064, Australia (PO Box 1734, Milton BC, QLD 4064)

Tel: +61 7 3721 5400 Fax: +61 7 3721 5401 www.golder.com

Golder Associates: Operations in Africa, Asia, Australasia, Europe, North America and South America

A.B.N. 64 006 107 857 Golder, Golder Associates and the GA globe design are trademarks of Golder Associates Corporation.

This document provides an update to the Greenvale Mineral Resource estimate completed by Golder

Associates Pty Ltd (Golder) and includes additional information from the exploration drilling programs

completed by Metallica Minerals Pty Ltd (Metallica) in 2012.

An update to the SCONI Mineral Resource statement is also provided with additional technical information

required to bring the SCONI Mineral Resources into compliance with the Australasian Code for the Reporting

of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012).

The Mineral Resources for the southern deposits of Lucknow, Greenvale and Kokomo are reported at a

nickel equivalent (NiEq) cut-off grade (COG) of 0.7% NiEq and 1.0% NiEq. Nickel equivalence is calculated

using the formula: NiEq = Ni + 1.5Co + 0.01Sc. This NiEq formula has been calculated using commodity

prices of US$10/lb nickel, US$15/lb cobalt and US$1500/kg scandium oxide, with recoveries of 90% for all

three metals. Metallica indicates that the metallurgical test work to date provides reasonable potential for the

nickel, cobalt and scandium to be recovered at similar recoveries to those achieved in the test work.

The Mineral Resources for the northern deposits of Bell Creek South, Bell Creek North, Bell Creek

Northwest, The Neck and Minnamoolka are reported at a COG of 0.7% NiEq (0.7% = Ni + 1.5Co). This NiEq

COG formula has been calculated using commodity prices of US$10/lb nickel, US$15/lb cobalt and

recoveries of 90% for both nickel and cobalt.

1.0 GREENVALE RESOURCE UPDATE

The Mineral Resource estimate for the Greenvale nickel laterite deposit, a former nickel mine, was updated

following:

99 RC/Aircore waste dump drill holes were completed by Metallica in 2012 to provide an initial estimate

for the existing mine waste dumps and one crusher oversize stockpile.

60 RC drill holes completed by Metallica in 2012 to infill and extend existing in-situ resources areas.

The updated resource estimate is now based on the assay results for 945 drill holes available in December

2012, including 141 drilled by the previous owner Straits Resource Exploration Ltd during 2007. Earlier

drilling is not used as it has not been verified and is generally not relevant to the areas estimated.

The estimated Ni-Co-Sc Mineral Resource is reported using a nickel equivalent (NiEq =Ni+1.5*Co+0.01*Sc)

cut-off grade of 0.7%. The basis for this equivalence is described in Section 4.3.7. The estimated (in-ground

or unmined) Mineral Resources include:

5.4 Mt at 0.77% Ni, 0.06% Co and 39 g/t Sc Measured Mineral Resource

9.9 Mt at 0.71% Ni, 0.05% Co and 37 g/t Sc Indicated Mineral Resource

1.0 Mt at 0.72% Ni, 0.05% Co and 36 g/t Sc Inferred Mineral Resource

16.3 Mt at 0.73% Ni, 0.05% Co and 38 g/t Sc Total Mineral Resource

21 Oct 2013 Document No. 117631033-005-Rev0

Metallica Minerals

GREENVALE MINERAL RESOURCE UPDATE &

SCONI JORC CODE 2012 STATEMENT

117631033-005-Rev0

Metallica Minerals 21 Oct 2013

2/36

Details for the in-situ Mineral Resources are provided in Table 1 at 0.7% NiEq and Table 2 at 1.0% NiEq cut-

off. The two tables are inclusive.

Additional Mineral Resources for each waste dump were estimated and are presented in Table 3. Dumps are

currently reported on a whole dump basis with no selectivity assumed until further work can confirm a basis

for selective reporting of material. The reporting cut-off is applied to each dump. At 0.7% NiEq cut-off all the

dumps are included due to higher than expected scandium grade. The waste dump and stockpile material at

Greenvale includes:

External waste1 dumps. These are now mostly drilled out at 100 m spacing and are estimated and

defined as an Inferred Mineral Resource. Only relatively small thin areas are not currently defined by

drilling. A conservative in-situ bulk density is assumed at this stage.

Internal mine back fill material covers most of the Greenvale mine site. Definition of this material is

complicated by the variable pit floor and difficulty in distinguishing mined and remnant in-situ laterite

material. Though intersected by some drilling, internal backfill is not currently estimated.

Oversize stockpiles adjacent to the previous run of mine crusher and staging pad has been sampled by

18 surface pits and 28 RC drill holes at 50 m spacing. The drilling has defined an Indicated Mineral

Resource of higher grade material rejected by size from past mine ore feed with the test pits confirming

density and grade. There are indications that only half the reject stockpile area has been defined

providing scope for further exploration.

The waste dump and stockpile Mineral Resources at a 0.7% NiEq cut-off include:

0.6 Mt at 0.75% Ni, 0.05% Co and 18 g/t Sc Indicated Mineral Resource

10.5 Mt at 0.40% Ni, 0.03% Co and 45 g/t Sc Inferred Mineral Resource

11.1 Mt at 0.42% Ni, 0.03% Co and 44 g/t Sc Total Mineral Resource

Details of the waste dump and stockpile Mineral Resource are provided in Table 3. No cut-off grade is

applied for reporting the waste dump as individual block selectivity is not considered appropriate at this

stage. There is some potential for mine planning to define broad zones of higher grade material based on the

dump construction. Until selectivity can be demonstrated only the entire dump is selected for reporting.

Table 1: Greenvale in-situ Mineral Resource for a 0.7% NiEq cut-off

Classification Mt Density

t/m3

NiEq %

Ni %

Co %

Sc g/t

Fe %

Mg %

Measured 5.4 1.60 1.25 0.77 0.062 39 25.0 3.1

Indicated 9.9 1.61 1.15 0.71 0.051 37 22.2 3.6

Inferred 1.0 1.57 1.16 0.72 0.052 36 22.2 4.2

Total 16.3 1.60 1.19 0.73 0.055 38 23.1 3.5

Table 2: Greenvale in-situ Mineral Resource for a 1.0% NiEq cut-off

Classification Mt Density

t/m3

NiEq %

Ni %

Co %

Sc g/t

Fe %

Mg %

Measured 3.5 1.58 1.48 0.98 0.078 39 25.1 3.4

Indicated 5.4 1.56 1.43 0.94 0.069 38 23.4 3.8

Inferred 0.6 1.54 1.40 0.93 0.069 37 23.4 4.3

Total 9.5 1.57 1.45 0.95 0.072 39 24.0 3.7

1 Waste as defined during previous mining was determined for a different higher cost processing method and did not consider the recovery of scandium. This material is now

recognised as low grade mineralisation.

117631033-005-Rev0


3/36

Table 3: Greenvale waste dump mineral resources

Classification Dump Area

Code* Mt

DBD t/m

3

NiEq %

Ni %

Co %

Sc g/t

Fe %

Mg %

Inferred

01 1.2 1.0 0.92 0.35 0.030 52 38.7 0.3

03 1.1 1.0 1.04 0.44 0.040 54 35.0 0.5

04 0.3 1.0 1.09 0.68 0.075 30 20.0 1.4

05 0.8 1.0 0.86 0.38 0.030 44 38.7 0.5

06 0.7 1.0 0.97 0.47 0.024 46 39.9 0.8

07 4.2 1.0 0.80 0.32 0.028 43 29.5 0.4

08 0.7 1.0 0.89 0.36 0.028 48 30.6 0.4

09 0.9 1.0 0.98 0.50 0.049 41 24.1 1.8

10 0.6 1.0 1.11 0.64 0.046 40 27.5 3.0

Sub-total 10.5 1.0 0.90 0.40 0.033 45 31.8 0.7

Indicated 11 0.6 1.75 1.01 0.75 0.054 18 12.1 4.6

Total 11.1 1.02 0.90 0.42 0.035 44 30.7 0.9

*refer to Figure 1

All waste dump and oversize dump resource estimates represent new Mineral Resources for 2013. The in-

situ Mineral Resources were estimated and reported in 2011. The additional drilling included in the current

estimate is largely infill drilling at the Powerline deposit and to a lesser degree at Moonscape and Edge

South deposits (Figure 1). Some extensions at Powerline into lower grade regions have increased the total

Mineral Resource marginally, see Table 4. Improvements in drill spacing have resulted in an increase in

Measured and Indicated and a decrease in Inferred Mineral Resource.

Table 4: Greenvale in-situ Mineral Resource comparison at 0.7% NiEq cut-off

Class 2013 Resource Model 2010 Resource Model*

Mt Ni % Co % Sc g/t Mt Ni % Co % Sc g/t

Measured 5.39 0.77 0.06 38.6 4.83 0.78 0.06 38.5

Indicated 9.94 0.70 0.05 37.2 9.48 0.71 0.05 38.0

Inferred 1.01 0.72 0.05 35.9 1.89 0.71 0.05 34.3

Total 16.34 0.73 0.05 37.6 16.20 0.73 0.05 37.7

*as per ASX announcement dated 19 Jan 2011 which used a different cut-off grade formulae that did not include Sc

The Greenvale Mineral Resource (in-situ) estimate is appropriate for a selective open pit mining scenario.

The estimate does not account for mining dilution or mining losses. Key features of the project are:

Detailed topography was derived from recent WorldView-2 satellite imagery.

Collars of holes drilled by Metallica were surveyed by independent contractors in 2010 and 2012.

Data collated by Straits Resource Exploration Ltd (Straits) in local grid were converted to MGA using

local and AMG coordinates surveyed by Straits. The Straits topography and drilling were lowered by

approximately 4 m RL as part of the grid conversion to best match the Metallica survey locations.

Drill holes used for resource estimation were drilled by Straits (141 holes in Aug 2007) and Metallica

(804 holes from 2010 to Dec 2012).

All drill holes used for resource estimation were drilled vertically. Visual inspection of some drill holes

indicated no significant down-hole deviations. Due to the relatively shallow nature of the drilling (98.5%

of holes ≤60 m) it is unlikely that significant drill hole deviations would have occurred.

Sample recovery in the mineralised zone by Metallica is believed to be good to excellent, including the

RC drilling of the waste dump areas.

117631033-005-Rev0


4/36

Metallica’s in situ resource drilling was by face-sampling RC and the waste dump drilling predominantly

by face sampling air core. Straits’ drill holes were predominantly RC and some air core drilling.

Drill holes were sampled predominantly over 1 m intervals. Some 3 m intervals are present in

overburden and non-mineralised material.

Metallica used both riffle splitter and spear sub sampling methods at the drill rig for RC sample. Straits

used a grab sample approach due to the wet puggy nature of their samples.

ALS Chemex and SGS Laboratories (SGS) in Townsville were used for assaying Metallica and Straits

drill holes respectively. Both ALS Chemex and SGS used a four acid digest method with an Inductively

Coupled Plasma (ICP) finish.

The QAQC programs for Straits and Metallica drilling involved intra-laboratory pulp duplicates and blind

field duplicates and some certified reference material. The QAQC results reviewed in 2010 indicated

that the assays for both the Straits and Metallica drilling programs were adequate for resource

estimation purposes.

The mineralisation has a surface expression that was observed in places during a field visit by Mr

Horton. There has also been substantial mining at Greenvale. The In-situ areas estimated by Golder

appear to be remnant laterite blocks that have not been mined. The waste dump areas are all above

pre-mining topography and exclude in-pit waste.

Golder undertook basic validation checks of the drill hole database.

Drill hole data was composited to 1 m as this was the dominant sample interval in the mineralised

material.

Key features of the in-situ resource estimates include:

Appropriate high-grade top-cuts to nickel, cobalt and scandium outlier values were applied on a zone by

zone basis.

A wireframe of the paleo-laterite (enrichment) horizon between drill holes was constructed based on

sectional interpretations. A nominal 0.8% Ni was the underlying basis of a nickel mineralised wireframe.

A nominal 0.05% or 0.1% Co was the underlying basis of a cobalt mineralised wireframe depending of

the tenor of mineralisation within an area. Laterite profile wireframes were also constructed to constrain

major material types based on either geochemistry or logging.

The in-situ mineralised envelope wireframes include a nominal 20 m horizontal extrapolation from the

drill holes at the margins of the mineralised zone.

Nickel, cobalt, iron, magnesium, manganese, aluminium, calcium, chrome, copper and scandium were

estimated by ordinary kriging using a three pass search strategy with a maximum of 12 composites. A

maximum of 3 composites were selected from any one drill hole. A minimum of 10, 8, and 1 samples

were used for Passes 1, 2, and 3 respectively.

Hard boundaries were used between the mineralised envelopes and the laterite domains for nickel and

cobalt. All other elements used hard boundaries between different laterite horizons.

Unfolding methods were employed during variogram analysis and block grade estimation to adequately

represent the paleo-laterite (enrichment) horizon.

Internal dilution has been included and no dilution at the margins of the mineralised wireframe.

In majority of the resource areas, drilling was mostly on an approximately regular pattern of 20 m by

20 m or 20 m by 40 m (Measured) and 40 m by 40 m (Indicated). Inferred Mineral Resources were

mostly drilled on an approximately regular pattern of 80 m (NS) by 40 m (EW), with some small areas at

irregular spacing due to access issues.

117631033-005-Rev0


5/36

Dry bulk densities (DBD) were assigned to blocks according to nearest neighbour estimates of lithology.

Bulk density values applied were derived from 137 samples from Greenvale and other results from the

SCONI project.

Metallica advises that the 0.7% NiEq (Ni+1.5*Co+0.01*Sc) cut-off grade is considered appropriate for

large-scale mining based on ongoing feasibility studies for the combined SCONI nickel laterite project.

The suitability of this cut-off grade is to be confirmed by an economic evaluation and metallurgical test

work as part of feasibility study at Greenvale. Metallica have indicated that it is likely that initial small-

scale mining will be at a higher NiEq cut-off grade, in the order of 1.0% NiEq.

Resource classification is based on target drill spacing of 20 m by 20 m (or around 20 m by 40 m in the

Power Line area of the deposit, adjacent to the central historic mining area and where strong geological

and grade continuity exists) for Measured, 40 m by 40 m for Indicated and larger or irregular for Inferred

Mineral Resources. This classification is based on the continuity of the principal nickel and cobalt

mineralisation.

Mineral Resources were estimated for out-of-pit waste dumps as follows:

Waste dump boundaries were derived from recent air photography and one taken towards the end of

mining where dumps were move evident. The boundaries were registered to the current topography to

form the boundary of the out-of-pit waste dumps.

Drill assays defined the base of the out-of-pit dumps as the underlying material is generally not

mineralised. Pre-mining topography was available to define the base of the dump. Where available

drilling interpretation was taken in preference to pre-mining topography. Both drilling and the pre-mining

topography displayed good correlation.

The waste and oversize dump material estimation used inverse distance weight to a one half power and

a one to five flattening anisotropy unfolded to the base of the dump. This approach provides some

definition within a moving window without presuming excessive selectivity.

Each dump was estimated separately and for resource reporting block by block selectivity is not

considered appropriate. Hence only entire waste dumps should be reported or excluded for resource

reports. This does not preclude mine planning from defining broad zones of sub-grade and grade

material confirmed by mine designs and which conform to the apparent method of dump construction.

Most dumps were drilled by Metallica are on a 100 m square grid pattern, altered to fit drill rig access.

This is considered suitable for Inferred classification on the basis of reporting the entire dump. The

oversize dump drilled to 40 m spacing is confirmed with higher grade surface test pits and some density

measurements. This dump is considered suitable for Indicated classification on the basis of reporting

the entire dump.

Additional out-of-pit dumps can be derived from scattered early drilling the pre-mining topography and

indicate an additional 11% more dump volume which is not yet adequately drilled for resource reporting.

Half of this is neighbouring the existing oversize dump and is likely to comprise more oversize material.

No in-pit-dump material is estimated at this stage although there are considerable areas of pit backfill at

Greenvale.

Both dump and in-situ estimates were compiled into a single resource block model with common features

including:

The block model was constructed by filling the mineralised wireframes with 10 m by 10 m by 1 m

blocks. Surrounding blocks were included at topography and base of drilling as well as peripheral to

mineralisation to permit open pit optimisation. Sub-blocking was not employed, with whole blocks

assigned to mineralised and geological domains on a maximum proportion basis.

Ordinary kriged in-situ and inverse distance weight dump estimates are combined into a single set of

grade fields.

117631033-005-Rev0


6/36

New 2012 drill collars in black and previous drill collars in grey

Figure 1: Greenvale Mineral Resources: in-situ (solid) and dumps (stippled)

117631033-005-Rev0


7/36

2.0 SCONI PROJECT

2.1 Resource statement

Table 5 shows the SCONI Mineral Resource has been updated with the additions and changes to the

Greenvale estimates listed.

The Mineral Resource estimates are presented in two groups. The northern deposits have insufficient

scandium assays for estimation and are all generally low in scandium content (5 to 30 g/t Sc). The limited

scandium assay data available for these deposits indicates that scandium will not be a significant economic

element. The southern deposits are higher in scandium and have been assayed routinely for scandium,

allowing scandium to be included in the resource statement and the equivalence calculation.

The Ni-Co-Sc Mineral Resource at a nickel equivalent cut-off grade of 0.7% NiEq (Ni+1.5*Co+0.01*Sc) is

listed in Table 5 and at 1.0% NiEq in Table 6. The basis for this equivalence is described in Section 4.3.7.

The Lucknow and Kokomo deposits have the potential to be developed as a high-grade scandium

processing option. Table 7 and Table 8 provide equivalent cut-offs for scandium at 70 g/t Sc and 100 g/t Sc

cut-off respectively. These tables are inclusive of the material presented in Table 5 and Table 6, providing

the higher grade scandium subset. Note Greenvale is lower in scandium and while a potentially important Ni-

Co co-product, it does not contribute to the high grade scandium material reported in Table 7 and Table 8.

The Mineral Resource estimate is based on information and responsibilities as follows:

Exploration and resource drilling were completed by Metallica.

Description of the geology and mineralisation, data analysis and Mineral Resource estimation were

completed by Golder.

A description of the SCONI project and setting is provided in Section 3.0. Additional technical details are

presented in Section 4.0 in the form and order of JORC 2012 Table 1.

2.2 Competent Person statement

The SCONI scandium-cobalt-nickel project Mineral Resource estimate(s) is based upon and accurately

reflects data compiled, validated or supervised by Mr John Horton, Principal Geologist FAusIMM (CP) who is

a full time employee of Golder Associates Pty Ltd. Mr Horton has sufficient experience that is relevant to the

style of mineralisation and the type of deposit under consideration and to the activity which he has

undertaken to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for the

Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Horton has reviewed this

document and consents to the inclusion of this information in the form and context in which it appears in this

release.

Exploration data used as the basis for the resource estimate were compiled or completed under the

supervision of Mr Andrew Gillies who is a Member of the Australasian Institute of Mining and Metallurgy and

a full time employee of Metallica. Mr Gillies has sufficient experience that is relevant to the style of

mineralisation and the type of deposit under consideration and to the activity which he has undertaken to

qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for the Reporting of

Exploration Results, Mineral Resources and Ore Reserves’. Mr Gillies has reviewed this document and

consents to the inclusion of this information in the form and context in which it appears in this release.

117631033-005-Rev0


8/36

Table 5: SCONI Mineral Resource at a 0.7% NiEq cut-off

Deposit Class-

ification Mt

Ni (%)

Co (%)

Sc* (g/t) Fe (%)

Mg (%)

Ni Metal (Kt)

Co Metal (Kt)

Sc Metal (t)

Bell Creek

South

Measured 7.8 0.96 0.07 - 12.4 7.4 75.5 5.1 -

Indicated 0.1 0.81 0.05 - 9.5 9.0 1.2 0.1 -

Inferred - - - - - - - - -

Total 8.0 0.96 0.06 - 12.4 7.4 76.7 5.2 -

Bell Creek

North

Measured - - - - - - - - -

Indicated 2.0 0.86 0.03 - 8.6 7.6 16.8 0.5 -

Inferred - - - - - - - - -

Total 2.0 0.86 0.03 - 8.6 7.6 16.8 0.5 -

Bell Creek

Northwest

Measured - - - - - - - - -

Indicated 2.5 0.81 0.05 - 15.5 5.4 20.1 1.2 -

Inferred - - - - - - - - -

Total 2.5 0.81 0.05 - 15.5 5.4 20.1 1.2 -

Bell Creek

The Neck

Measured - - - - - - - - -

Indicated 0.4 0.84 0.03 - 9.8 5.8 3.5 0.1 -

Inferred - - - - - - - - -

Total 0.4 0.84 0.03 - 9.8 5.8 3.5 0.1 -

Minnamoolka

Measured - - - - - - - - -

Indicated 4.7 0.82 0.05 - 12.0 10.3 38.3 2.1 -

Inferred 0.9 0.78 0.04 - 10.3 10.2 6.7 0.3 -

Total 5.5 0.82 0.04 - 11.8 10.3 45.0 2.4 -

Combined

SCONI

North Resource

Measured 7.8 0.96 0.07 - 12.4 7.4 75.5 5.1 -

Indicated 9.7 0.83 0.04 - 12.1 8.3 79.9 4.0 -

Inferred 0.9 0.78 0.04 - 10.3 10.2 6.7 0.3 -

Total 18.4 0.88 0.05 - 12.1 8.0 162.1 9.4 -

Kokomo

Measured 2.2 0.57 0.11 80 26.4 3.1 12.2 2.5 173

Indicated 17.2 0.56 0.09 49 25.9 2.8 95.8 15.5 843

Inferred 10.2 0.36 0.04 59 16.2 4.8 36.7 4.5 603

Total 29.5 0.49 0.08 55 22.6 3.5 144.8 22.4 1 619

Greenvale

In-situ

Measured 5.4 0.77 0.06 39 25.0 3.1 41.7 3.3 208

Indicated 9.9 0.71 0.05 37 22.2 3.6 69.9 5.1 369

Inferred 1.0 0.72 0.05 36 22.2 4.2 7.3 0.5 36

Total 16.3 0.73 0.05 38 23.1 3.5 118.8 8.9 614

Greenvale

dumps and stockpiles

Measured - - - - - - - - -

Indicated 0.6 0.75 0.05 18 12.1 4.6 4.5 0.3 11

Inferred 10.5 0.40 0.03 45 31.8 0.7 41.6 3.5 473

Total 11.1 0.42 0.03 44 30.7 0.9 46.0 3.8 483

Lucknow

Measured 1.7 0.45 0.10 103 27.1 2.0 7.9 1.8 180

Indicated 10.6 0.27 0.07 128 33.1 1.2 28.5 7.2 1 357

Inferred 1.5 0.40 0.07 41 37.1 1.0 5.8 1.0 60

Total 13.8 0.31 0.07 116 32.8 1.3 42.2 10.0 1 597

Combined

SCONI

South Resource

Measured 9.3 0.66 0.08 60 25.7 2.9 61.7 7.6 561

Indicated 38.3 0.52 0.07 67 26.7 2.6 198.7 28.0 2 580

Inferred 23.2 0.39 0.04 51 24.8 2.7 91.4 9.6 1 172

Total 70.7 0.50 0.06 61 26.0 2.7 351.8 45.2 4 313

Combined

SCONI Resource

Measured 17.1 0.80 0.07 33 19.6 5.0 137.3 12.7 561

Indicated 48.0 0.58 0.07 54 23.8 3.7 278.6 32.0 2 580

Inferred 24.0 0.41 0.04 49 24.3 3.0 98.1 9.9 1 172

Total 89.1 0.58 0.06 48 23.1 3.8 514.0 54.5 4 313

* Scandium for Bell Creek, Minnamoolka (Northern deposits) and not estimated as Sc content generally low (5 to 30 g/t). For the

purpose of combined or total resource, the Sc value is considered as nil.

117631033-005-Rev0


9/36

Table 6: SCONI Mineral Resource at a 1.0% NiEq cut-off

Deposit Class-

ification Mt

Ni (%)

Co (%)

Sc* (g/t) Fe (%)

Mg (%)

Ni Metal (Kt)

Co Metal (Kt)

Sc Metal (t)

Bell Creek

South

Measured 3.6 1.21 0.08 - 13.7 7.5 43.0 3.0 -

Indicated 0.03 1.04 0.09 - 10.3 8.3 0.3 0.0 -

Inferred - - - - - - - - -

Total 3.6 1.20 0.08 - 13.6 7.5 43.3 3.0 -

Bell Creek

North

Measured - - - - - - - - -

Indicated 0.4 1.16 0.04 - 9.0 7.3 4.8 0.1 -

Inferred - - - - - - - - -

Total 0.4 1.16 0.04 - 9.0 7.3 4.8 0.1 -

Bell Creek

Northwest

Measured - - - - - - - - -

Indicated 0.4 1.05 0.06 - 16.2 6.0 4.5 0.3 -

Inferred - - - - - - - - -

Total 0.4 1.05 0.06 - 16.2 6.0 4.5 0.3 -

Bell Creek

The Neck

Measured - - - - - - - - -

Indicated 0.1 1.17 0.03 - 10.1 5.5 0.9 0.0 -

Inferred - - - - - - - - -

Total 0.1 1.17 0.03 - 10.1 5.5 0.9 0.0 -

Minnamoolka

Measured - - - - - - - - -

Indicated 0.9 1.07 0.08 - 14.3 9.2 9.9 0.7 -

Inferred 0.1 1.04 0.07 - 14.1 8.9 1.0 0.1 -

Total 1.0 1.07 0.08 - 14.3 9.2 11.0 0.8 -

Combined

SCONI

North Resource

Measured 3.6 1.21 0.08 - 13.7 7.5 43.0 3.0 -

Indicated 1.9 1.09 0.06 - 13.4 7.9 20.4 1.2 -

Inferred 0.1 1.04 0.07 - 14.1 8.9 1.0 0.1 -

Total 5.5 1.16 0.08 - 13.6 7.7 64.5 4.3 -

Kokomo

Measured 1.5 0.64 0.14 97 26.8 3.2 9.8 2.2 149

Indicated 8.7 0.60 0.11 75 26.4 2.9 52.3 9.8 655

Inferred 3.7 0.42 0.06 83 18.3 3.9 15.3 2.2 304

Total 13.9 0.56 0.10 80 24.3 3.2 77.4 14.2 1 108

Greenvale

In-situ

Measured 3.5 0.98 0.08 39 25.1 3.4 33.8 2.7 135

Indicated 5.4 0.94 0.07 38 23.4 3.8 51.0 3.8 209

Inferred 0.6 0.93 0.07 37 23.4 4.3 5.5 0.4 22

Total 9.5 0.95 0.07 39 24.0 3.7 90.3 6.9 365

Greenvale

dumps and stockpiles

Measured - - - - - - - - -

Indicated 0.6 0.75 0.05 18 12.1 4.6 4.5 0.3 11

Inferred 2.0 0.53 0.05 46 30.7 1.3 10.7 0.9 93

Total 2.6 0.58 0.05 40 26.4 2.1 15.1 1.3 103

Lucknow

Measured 1.2 0.44 0.11 139 29.3 1.9 5.3 1.3 168

Indicated 8.5 0.26 0.07 149 33.7 1.3 21.8 5.7 1 265

Inferred 0.4 0.37 0.07 71 35.2 1.0 1.4 0.3 27

Total 10.1 0.28 0.07 145 33.3 1.3 28.4 7.3 1 459

Combined

SCONI

South Resource

Measured 6.2 0.79 0.10 73 26.3 3.1 48.8 6.2 451

Indicated 23.2 0.56 0.08 92 28.0 2.6 129.5 19.5 2 140

Inferred 6.6 0.49 0.06 67 23.4 3.0 32.9 3.9 445

Total 36.1 0.59 0.08 84 26.9 2.7 211.2 29.5 3 036

Combined

SCONI Resource

Measured 9.8 0.94 0.09 46 21.7 4.7 91.9 9.2 451

Indicated 25.1 0.60 0.08 85 26.9 3.0 149.9 20.7 2 140

Inferred 6.7 0.50 0.06 66 23.3 3.1 33.9 3.9 445

Total 41.6 0.66 0.08 73 25.1 3.4 275.7 33.8 3 036

* Scandium for Bell Creek, Minnamoolka (Northern deposits) and not estimated as Sc content generally low (5 to 30 g/t). For the

purpose of combined or total resource, the Sc value is considered as nil.

117631033-005-Rev0


10/36

Table 7: SCONI Mineral Resource at a 70 g/t Sc cut-off

Deposit Class-

ification Mt

Ni

(%)

Co

(%)

Sc

(g/t)

Fe

(%)

Mg

(%)

Ni Metal

(Kt)

Co Metal

(Kt)

Sc Metal

(t)

Lucknow

Measured 0.9 0.32 0.08 183 30.3 2.0 2.8 0.7 160

Indicated 8.2 0.22 0.05 157 34.5 1.2 17.7 4.2 1 278

Inferred 0.3 0.14 0.02 99 32.5 0.8 0.4 0.0 27

Total 9.3 0.22 0.05 157 34.0 1.2 20.9 5.0 1 464

Kokomo

Measured 1.0 0.45 0.10 140 31.5 1.8 4.4 1.0 137

Indicated 5.0 0.42 0.07 117 27.6 2.5 21.1 3.4 582

Inferred 4.7 0.22 0.03 91 13.9 5.9 10.1 1.3 430

Total 10.7 0.33 0.05 108 21.9 3.9 35.6 5.6 1 149

Combined SCONI South Resource

Measured 1.9 0.39 0.09 160 30.9 1.9 7.2 1.7 297

Indicated 13.2 0.29 0.06 141 31.9 1.7 38.8 7.6 1 860

Inferred 5.0 0.21 0.03 92 14.9 5.6 10.5 1.3 456

Total 20.0 0.28 0.05 131 27.5 2.7 56.5 10.6 2 613

Table 8: SCONI Mineral Resource at a 100 g/t Sc cut-off

Deposit Class-

ification Mt

Ni

(%)

Co

(%)

Sc

(g/t)

Fe

(%)

Mg

(%)

Ni Metal

(Kt)

Co Metal

(Kt)

Sc Metal

(t)

Lucknow

Measured 0.7 0.31 0.08 208 31.1 1.8 2.1 0.5 144

Indicated 6.5 0.22 0.06 174 34.3 1.2 14.6 3.7 1 133

Inferred 0.1 0.11 0.01 116 30.4 0.6 0.1 0.0 14

Total 7.3 0.23 0.06 176 33.9 1.2 16.9 4.2 1 292

Kokomo

Measured 0.6 0.44 0.10 176 33.1 1.4 2.6 0.6 104

Indicated 3.0 0.44 0.07 139 29.0 2.3 12.9 2.2 410

Inferred 1.2 0.28 0.04 124 16.6 4.4 3.2 0.4 143

Total 4.7 0.40 0.07 140 26.5 2.7 18.7 3.2 658

Combined SCONI South Resource

Measured 1.3 0.37 0.09 193 32.0 1.6 4.7 1.1 249

Indicated 9.5 0.29 0.06 163 32.6 1.5 27.5 5.9 1 544

Inferred 1.3 0.26 0.03 124 18.0 4.0 3.3 0.4 158

Total 12.0 0.30 0.06 162 31.0 1.8 35.5 7.4 1 950

117631033-005-Rev0


11/36

3.0 SCONI PROJECT SETTING

3.1 Location

The SCONI project in north Queensland consists of a number of nickel laterite deposits between the towns

of Mount Garnet and Greenvale approximately 250 km by road from Townsville, Figure 2. Mining was

undertaken at Greenvale from 1974 to 1992. Approximately 40 Mt of high grade nickel and cobalt ore was

transported by a now defunct railway line to the Yabulu nickel processing facility at Townsville. There is good

road access between Greenvale and Townsville.

Metallica has undertaken exploration activities at the SCONI project nickel laterite deposits with Mineral

Resources since 2006. Metallica has completed a pre-feasibility study for establishing a central processing

facility for the SCONI project at the existing Greenvale mine site. The following deposits have been assessed

to provide processing feed material to the SCONI Project:

Greenvale remnant in-situ resources, a previous mine oversize stockpile and previous mine external

waste2 dumps and is located 6 km west of the Greenvale township

Lucknow 6.5 km southeast of Greenvale

Kokomo 53 km northeast of Greenvale

Minnamoolka 91 km north-northeast of Greenvale

Bell Creek 115 km north-northeast of Greenvale.

The northern deposit could pre-process resource for further processing of as concentrate at Greenvale.

2 Waste as defined during previous mining was determined for a different higher cost processing method and did not consider the recovery of scandium.

117631033-005-Rev0


12/36

Figure 2: SCONI project location (by Metallica 2013)

3.2 Tenure

SCONI tenement holdings relevant to the resources estimated are summarised in Table 9. In most cases

exploration leases are in the process of being converted to mining leases. For Kokomo this process is

complete and the exploration lease will be left to expire. For Bell Creek, Greenvale and Lucknow this

process is ongoing and waiting the granting of the mining lease applications.

Table 9: SCONI tenement holdings

Tene-ment

Name Holder Status Date

Comm-enced

Date Expires

Sub-Blocks or Area

(ha)

Comment

EPM

11285 Bell Creek NORNICO Granted 28-Aug-96 27-Aug-13 6 Renewal lodged

MLA 20549

Bell Creek Consolidated

NORNICO Application 04-May-07

1224.4

ha Partial abandonment

MDL 387 Minnamoolka NORNICO Granted 20-Jun-08 30-Jun-13 654.3 ha Renewal sent

EPM 10699

Kokomo NORNICO Granted 22-Aug-95 21-Aug-13 11 Renewal withdrawn, tenement will expire

EPM

13873 Six Mile NORNICO Granted 11-Dec-02 10-Dec-13 1

After 6 sub-block reduction

ML 10342

Kokomo NORNICO Granted

30-Apr-34 1818.9

ha To be reduced to 1286

ha

EPM 10680

Lucknow North

GOP Granted* 18-Aug-95 31-Dec-15 3

EPM 10866

Lucknow South

GOP Granted* 12-Feb-96 31-Dec-15 4

MLA 10366

Lucknow NORNICO Application 15-Nov-11

268.9 ha Certificate of public

notice issued

EPM 11223

Dinner Creek GOP Granted* 12-Jul-96 31-Dec-15 7

MLA 10368

Greenvale GOP Application 20-Apr-12

3357.9 ha

COA issued

EPM 14066

Greenvale South

NORNICO Granted 13-May-03 23-Aug-04 26 Renewal and

reduction lodged

GOP = Greenvale Operations Pty Ltd NORNICO = NORNICO Pty Ltd * 1/4/2010 transferred from Straits

All tenements are held by either Greenvale Operations Pty Ltd or NORNICO Pty Ltd. Both companies are

wholly owned subsidiaries of Metallica Minerals Pty Ltd.

All Mineral Resources are located within the boundaries of valid exploration or mining leases. Expired

exploration leases in the process of being replaced with mining leases.

Figure 3 to Figure 7 display the location of the relevant tenements with respect to the estimated Mineral

Resources.

117631033-005-Rev0


13/36

Figure 3: Bell Creek tenements and Mineral Resource outlines

117631033-005-Rev0


14/36

Figure 4: Minnamoolka tenements and Mineral Resource outlines

117631033-005-Rev0


15/36

Figure 5: Kokomo tenements and Mineral Resource outlines

117631033-005-Rev0


16/36

Figure 6: Greenvale tenements and Mineral Resource outlines

117631033-005-Rev0


17/36

Figure 7: Lucknow tenements and Mineral Resource outlines

117631033-005-Rev0


18/36

3.3 Geology

The SCONI nickel-cobalt laterite deposits have formed on ultramafic rocks that include serpentinites, meta-

gabbros and pyroxenites. These occur as fragments of lower crust material rich in iron, magnesium and

nickel and are thought to be emplaced by shears and faults. This tectonic activity brings the ultramafic

fragments into the Proterozoic Shield and the Tasman Orogenic Belt, comprising Proterozoic meta-

sedimentary schists and meta-gabbros, Ordovician volcanogenic sediments and granitoids, and Devonian

limestone overlain by Neogene basalt.

The laterites, commonly occurring as plateaus of high ground, were formed by a period of prolonged

weathering that postdates the Cretaceous era. The nature of the laterites depends on the underlying

lithology and always overly strongly weathered rocks. The ultramafic rocks have a high background level of

nickel and cobalt (i.e. between 500 to 2 000 ppm Ni and 60 to100 ppm Co) and the process of lateritisation

has concentrated the nickel and cobalt to grades which can be exploited economically.

At Bell Creek (Figure 8) granite intrusives persist through into the laterite profile in places. A general

northeast structural trend is defined by faulting and foliation in the pre-granitoid sequence. A lateritised pre-

basalt peneplain is preserved on higher ground.

Minnamoolka (Figure 9) consists of a series of low lying hills underlain by serpentinite and ultramafics over

an area of approximately 3 km by 1.5 km. In the elevated areas laterisation is common and is characterised

by a Tertiary crust comprising siliceous ferruginous boxwork zones enriched in nickel-cobalt mineralisation

and separated by resistant cores of Proterozoic Halls Reward metamorphics. Although bounded by

granitoids, pegmatite veins are rare.

At Kokomo the ultramafic complex and overlying nickel laterite form an elongated north-northeast trending

body approximately 16 km long and up to 700 m wide that was tectonically emplaced within steeply dipping

metasediments and basic volcanics. The ultramafics vary from peridotites to dunites to pyroxenites in

composition and resemble a series of sill-like bodies forming ridge lines, bounded by predominantly

siltstones on the eastern and western margins. Regolith mapping by Metallica (Figure 10) confirms the

boundaries of the laterite and indicates potential burial of laterite by alluvial material in a few locations where

creeks cut across the ultramafic body.

At Greenvale (Figure 11) the serpentinites are interpreted as being formed in shear zones at the top and

edges of the meta-gabbro. Through the central sections of the Greenvale and Lucknow deposits the

serpentinite and the resultant laterite are generally flat lying at shallow depth, with the serpentinites and

resultant mineralisation becoming steeper with several structures dipping up to 70° on the edges of the

deposits. The lateritisation or weathering has been preferentially super-imposed on the softer serpentinite.

Weathering has resulted in the formation of limonite hosted nickel mineralisation and the formation of cobalt

mineralisation from the scavenging of cobalt by the accumulation of manganese oxide near the base of

weathering profile.

Several serpentinite units have been mapped in the Greenvale area. In addition to the flat lying Greenvale

serpentinite, 50 to 150 metres wide, steeply dipping serpentinite masses occur on both the eastern and

western margin of the Greenvale meta-gabbro. The serpentinite extends south from the Greenvale

serpentinite, under the Tertiary ferruginous sediments.

The Lucknow deposit has not been mined previously, apart from a 50 kt bulk sample targeting only nickel

and cobalt, which was excavated in the 1980’s by Queensland Nickel Ltd. The Lucknow laterite deposit has

formed on ultramafic units of either dunite or pyroxenite composition.

117631033-005-Rev0


19/36

Figure 8: Bell Creek regional geology (by Metallica, 2013)

117631033-005-Rev0


20/36

Figure 9: Minnamoolka geology (by Metallica 2011)

117631033-005-Rev0


21/36

Figure 10: Kokomo local regional geology (by Metallica, 2012)

117631033-005-Rev0


22/36

Figure 11: Greenvale-Lucknow regional geology (by Metallica 2012)

117631033-005-Rev0


23/36

3.4 Mineralisation

3.4.1 Greenvale mineralisation

The Greenvale deposit is well developed over a 4 km by 2 km area. Mining from 1974 to 1992 amounted to

40 Mt at 1.57% Ni and 0.12% Co.

Of the remnant unmined resource areas developed by Metallica, the two main areas that provide the bulk of

the higher grade nickel-cobalt laterite resources are the Powerline and the Edge deposits. A cross section

through the Powerline deposit is provided in Figure 12.

The laterite profile is well preserved at the Greenvale Mine site with drill holes intersecting a complete laterite

profile from natural surface soil cover down to poorly mineralised bedrock.

Post laterite sediments (soil, eluvium, and alluvium) cover the laterite in all drill holes collared at or close to

the original natural surface in the Powerline area. The thickness of ore is generally consistent and between 3

and 10 m and thins out only at the extreme western and eastern edges.

A pisolite horizon comprising spherical iron pebbles occurs in some holes. This horizon is generally less than

1 m thick and overlies the nickel laterite. The upper laterite zone is iron rich and depleted in nickel with

grades from 0.10% to 0.4% nickel. Below this zone is a thin layer of silica rich laterite and below is a limonitic

rich zone, high in iron with elevated nickel values between 0.40% and 2% nickel. High cobalt grades, usually

associated with manganese, also occur within the limonite zone. Below the limonite zone is a saprolite zone

which has much lower iron content and commonly contains high grade nickel but generally low cobalt. This

zone is a weathered ultramafic, predominantly grey to greenish grey in colour, has low clay content, is much

harder and is low in iron and nickel, but high in magnesium.

Figure 12: Greenvale (Power Line deposit) cross section (by Metallica 2010)

3.4.2 Lucknow mineralisation

The Lucknow deposit is well defined by a 4.7 km long by 450 m wide (300 to 700 m) lateritic profile that has

extensive relief changes due to erosion. The laterite profile at Lucknow is not as well developed as that at

Greenvale. The laterite is not as thick, only reaching depths of between 30 to 35 m and averaging 20 to25 m

in thickness. The overall nickel tenor at Lucknow is much lower than that at Greenvale, but the cobalt grades

are generally significantly higher. It is considered that majority of the underlying bedrock is a pyroxenite

whereas at Greenvale, it is more predominately dunite.

The laterite profile at Lucknow is capped by a pisolitic layer which in part is poorly cemented and

characterised by cobble-sized rocks or pebble-size pisolite. This layer can be between a few centimetres to 3

to 4 m thick. Below this is a hematite rich laterite clay layer which varies in colour from a dark brownish red

117631033-005-Rev0


24/36

colour to a more yellowish colour. This zone can contain either high nickel and cobalt grades or high

scandium. At the base of the haematite / limonite zone is a narrow, 2 to 5 m wide saprolite zone which lies

immediately above a grey-brown-pinkish pyroxenite.

At the edges of the Lucknow Plateau the laterite appears to be more massive and strongly siliceous and is

characterised by silica-boxwork, with chalcedonic quartz veins and magnesite veins being more prevalent on

the Plateau margins. On the slopes of the Plateau fresh and weakly weathered ultramafic rocks outcrop.

High grade nickel-cobalt zones at Lucknow are patchy and only occur as discrete pods within a blanket of

low grade nickel laterite. The iron content is generally higher than seen at Greenvale and averages between

25 to 40% iron.

Scandium concentrations are much higher at Lucknow than at Greenvale. Scandium values up to 1,580 g/t

have been recorded at Lucknow with the scandium rich zones generally averaging between 200 to 300 g/t

Sc (the average scandium grade for Greenvale is between 20 to 50 g/t Sc). To date the scandium

mineralisation has been particularly prominent in two areas, these areas are referred to as Grants Gully and

Red Fort, which are approximately 500 m apart. These two zones do merge but there is a drop in scandium

grade between the two zones.

The scandium mineralisation can be associated with high nickel-cobalt grades, but predominantly occurs

above or adjacent to the higher grade nickel cobalt mineralisation in the laterite profile, as seen at Grants

Gully (Figure 13). The scandium mineralisation can also occur in areas where the nickel and cobalt values

are very low, i.e. less than 1,000 ppm Ni and 100 ppm Co. In areas of high scandium there is usually a one

to four metre wide zone of high cobalt mineralisation at the base of the laterite profile, just above the

weathered ultramafic units, i.e. at Red Fort (Figure 14).

The high grade scandium results are probably a reflection of the underlying pre-cursor ultramafic unit which

is likely to be a pyroxenite as opposed to a gabbro or serpentinite. It is possible that the Lucknow ridge

comprises a layered sequence of ultramafic rocks of different composition that when lateritised, concentrate

either nickel, cobalt or scandium in the resultant laterite profile.

Figure 13: Lucknow Section at Grants Gully (by Metallica 2010)

TD 21m

TD 18mTD 18m

285,

000m

E

LKRC106

LKRC107

LKRC108

E

Low Grade Ni - Co Laterite

Medium to High Grade Ni - Co Laterite

Scandium Rich Laterite

Weathered Ultra Mafic

LEGEND

TD 18m

TD 24

TD 30m

8m @

1.01% Ni

0.09% Co

11g/t Sc

LKRC105

LKRC103

LKRC104

Looking North

8m @

0.56% Ni

0.21% Co

38g/t Sc

15m @

193g/t Sc

284,

900m

E

LKRC101

LKRC102

4m @

244g/t Sc

2m @

0.12% Co

TD 33m

TD 18m

TD31

13m @

0.71% Ni

0.29% Co

81g/t Sc

5m @

1.43% Ni

0.54% Co

291g/t Sc

LKRC099

LKRC100

27m @

882g/t Sc

2m @

0.11% Co

490m

485m

TD 27m

TD 12m

Base of Lateritisation

LKRC098

RL

500m

495m

W

12m @

272g/t Sc

460m

480m

475m

470m

465m

455m

450m

0 10 20

1:1,000

30 40 50 m

Horizontal Scale

(Vertical Exaggeration=2)

GRANTS GULLY NICKEL - COBALT - SCANDIUM ZONE

CROSS SECTION

117631033-005-Rev0


25/36

Figure 14: Lucknow Section at Red Fort (by Metallica, 2010)

3.4.3 Kokomo mineralisation

The ultra-mafic complex forms an elongate north-northeast trending ridge or set of ridge lines and plateau

areas which fall away sharply at the margins. The margins display a marked increase in nickel and cobalt

content, with examples of sections in Figure 15 and Figure 16. The enrichment of nickel and cobalt is the

result of water flow, assisted by the topography during laterite formation. This process of enrichment was

probably also potentially enhanced by tectonic structures orientated along the ultra-mafic boundaries that

may have assisted deeper weathering and greater water flow.

Enrichment of scandium at Kokomo along the margins is similar to that noted for nickel and cobalt. Drilling

results also support this enrichment although the highest grades are more patchy and localised. The higher

grade enrichment of scandium (>100 g/t Sc) is more localised than that at Lucknow .

Figure 15: Kokomo long section (by Metallica 2012)

E

LKRC141

25m @ 168g/t Sc

Laterite

<100g/t Sc

TD 24m

5m @ 0.46% Co

2m @ 0.72% Co

16m @ 202g/t Sc

5m @ 0.30% Co

Scandium Rich

Zone

(Laterite >100g/t Sc)

284,

750m

E

LKRC017

LKRC140

Looking North

26m @ 246g/t Sc

TD 27m TD 27m

TD 30m

PyroxenitePyroxenite

Laterite <100g/t Sc

284,

700m

E

LKRC139

27m @ 228g/t Sc

Cobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt Rich

ZoneZoneZoneZoneZoneZoneZoneZoneZone2m @ 0.16% Co

13m @ 202g/t Sc

495m

490m

W

RL500m LKRC146

Laterite <100g/t Sc

485m

480m

475m

470m

TD 24m

1m @ 0.14% Co

E

LKRC141

25m @ 168g/t Sc

Laterite

<100g/t Sc

TD 24m

5m @ 0.46% Co

2m @ 0.72% Co

16m @ 202g/t Sc

5m @ 0.30% Co

Scandium Rich

Zone

(Laterite >100g/t Sc)

284,

750m

E

LKRC017

LKRC140

Looking North

26m @ 246g/t Sc

TD 27m TD 27m

TD 30m

PyroxenitePyroxenite

Laterite <100g/t Sc

284,

700m

E

LKRC139

27m @ 228g/t Sc

Cobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt RichCobalt Rich

ZoneZoneZoneZoneZoneZoneZoneZoneZone2m @ 0.16% Co

13m @ 202g/t Sc

495m

490m

W

RL500m LKRC146

Laterite <100g/t Sc

485m

480m

475m

470m

TD 24m

1m @ 0.14% Co

0 5

1:500

10 15 20 m

Horizontal Scale

(Vertical exaggeration=2)

RED FORT SCANDIUM (Sc) ZONE

CROSS SECTION THROUGH HIGH GRADE SCANDIUM ZONE

117631033-005-Rev0


26/36

Figure 16: Kokomo (Mona deposit) cross section 7 946 820 mN (by Metallica 2010)

3.4.4 Bell Creek mineralisation

The Bell Creek laterites (Figure 17) are developed over serpentinite which is closely associated with mid-

Carboniferous granite intrusives. The ultra-mafic bodies occur as inliers in the granite, where the granite

occurs on the margins of the ultra-mafic units. Pegmatite dykes related to the granite intrusions cross cut the

ultra-mafic bodies. These pegmatite dykes are 1 to 3 m wide and are usually white, coarse-grained and

characterised by large (>5 mm) platy muscovite crystals. Isolated quartz blows have also intruded into the

serpentinites.

In more recent times, parts of the Bell Creek area have been covered by Quaternary sands, gravel, clays

and silts or Tertiary basalts of the McBride formation. The thickness of the sediments and basalts can vary

from a few meters to over 40 m and are usually underlain by either granites or rocks of the Halls Reward

Metamorphics.

The Bell Creek nickel laterite deposits comprise three separate bodies that are referred to as Bell Creek

South (BCS), Bell Creek North (BCN), Bell Creek Northwest (BCNW) and The Neck. BCNW is made up of

three separate zones of laterite enrichment known as Zones A to C.

The nickel mineralisation at the Bell Creek deposits occur throughout the laterite profile, which varies from a

siliceous honeycombed laterite, to a clay rich ferruginous laterite, to a basal, strongly weathered serpentinite

/ saprolitic zone. The laterite material forms a blanket over the ultra-mafic rocks that can vary in thickness

from 2 to 20 m. The contact with the fresher ultramafic rocks at the base of the laterite profile is uneven,

where peaks and troughs can be identified in cross section. Boulders of serpentinite also occur within the

laterite profile. These boulders can be between a few centimetres and in excess of 3 m in diameter.

At the southern end of BCS and in the western part of BCNW a layer of depleted nickel laterite overlies the

mineralised laterite. This depleted laterite layer varies in thickness from 1 to 40 m and is characterised by

being clay rich, nickel poor (<0.30% Ni) and iron rich (>20% Fe).

Figure 17: Bell Creek South cross section (by Metallica 2008)

117631033-005-Rev0


27/36

3.4.5 Minnamoolka mineralisation

Geochemically and physically the Minnamoolka laterite is very similar to the BCN laterite. Figure 18 displays

an example section.

The nickel laterite mineralisation varies in thickness from 1 m to in excess of 35 m, and generally starts from

surface forming a surface blanket over the topography. The zones of deeper lateritisation which occur at

Minnamoolka appear to be related to possible faults or fractures, as these zones have an apparent

northeast–southwest orientation. Elevated cobalt and iron values are associated with these deeper zones of

lateritisation.

Figure 18: Minnamoolka cross section (by Metallica 2008)

117631033-005-Rev0


28/36

4.0 JORC 2012 RESOURCE ESTIMATE DETAILS

The following sections present the details of the SCONI Mineral Resource estimates, collated from a series

of technical reports. The information is presented in the order and form of the JORC (2012) Table1.

4.1 Sampling techniques and data

4.1.1 Sampling techniques

The sampling method used by Metallica since 1997 involves the following methodology:

Samples from Reverse Circulation (RC) drilling were collected on 1 m intervals. The sample coming from the

drill face through the cyclone is collected in 600 mm by 400 mm plastic bags with the bag held under the

cyclone so the entire sample falls into the bag. The cyclone effectively homogenizes the sample coming up

through the drill string prior to it being deposited into the plastic bags. The cyclone/splitter reject material was

collected and held onsite until assaying was completed and there was no further immediate use for the reject

material.

A sample for the laboratory is then collected from the plastic bags. A “spear” method is used for this, with a

spear inserted into the bag and a “core” of the material in the plastic bag collected. A sample of between 1.5

to 3 kg is collected and put in calico bags which are labelled with the hole number and hole depth. These

numbers represent the “sample number”. No separate individual sample numbers are allocated to each

interval other than for check sampling.

The “spear” sub-sampling approach was tested during the early exploration at Bell Creek and Kokomo with

specific exhaustive duplicate sampling sets completed. This demonstrated the effectiveness of the

subsampling process which is considered acceptable. Drilling also used riffle splitting to compare to the

spear sampling method.

During the Metallica 2010 and 2012 drilling programme a field portable XRF unit was on site and most

samples were tested. Zones of low grade nickel mineralisation (<0.20% Ni) identified by the unit were

generally composited.

Surface samples and drill hole hand held field XRF analyses were undertaken by Metallica geologists to

confirm and direct the exploration program. These results are not considered for the resource evaluation.

Drilling used for resource estimation that predate Metallica’s drilling campaigns include:

Straits RC drilling at Greenvale completed in 2007 using standard cyclone and riffle splitting methods.

Anderson drilling.

4.1.2 Drilling techniques

All resource drilling by Metallica and Straits was mostly by RC methods and to a lesser extent air core, using

modern methods and high air pressures. All drilling used in the resource estimation was managed by

Metallica. However, in the case of Lucknow and Greenvale, certain recent Straits drilling was used as well.

Older drilling using uncertain methods and quality control were excluded for the purpose of this resource

estimation. Table 10 provides a summary of the data used in the estimation and the data that was excluded

(in grey).

Early drilling at Bell Creek was done using percussion methods and early RC drilling methods. Some

diamond drilling at Bell Creek was used in the resource estimate, using a mix of HQ and PQ size core.

PQ size diamond drilling by Metallica at other deposits was undertaken for metallurgical purposes and does

not contribute to the resource estimate other than providing bulk density samples.

117631033-005-Rev0


29/36

Table 10: SCONI drilling summary

Deposit Company Year Holes Meters Drilled

Method Comment

Lucknow

QNI 1980s (~140) 2 788 RC Not used

Annoconda 1998 (12) 242 RC Not used

Straits 2005 19 834 RC

Metallica 2010 298 7 030 RC

Metallica 2010 3 128 DDH Metallurgy - No Assays

Resource subtotal

317 7 864 RC

Greenvale

Metal Ex 1970 (266) 6 878 RC Not used

Anaconda 1998 (23) 733 RC Not used

Straits 2007-08 141 5 935 RC

Metallica 2010-12 805 20 652 RC

Metallica 2010 3 73.7 DDH Metallurgy - No Assays

Resource subtotal

946 26 587 RC

Kokomo Metallica 2000-09 1 056 28 787 RC

Metallica 2007-09 10 5,212 DDH Metallurgy - No Assays

Minna-moolka

Metallica 2003-07 345 6 604 RC

Austin Anderson 1971 (78) Percussion Locations lost

Bell Creek

Austin Anderson 1971-72 26 (215) 800 Percussion Full data for only 26 of 215 holes

Ashton Mining 1989-90 122 (255) 1 800 RC Full data for only 122 of 255 holes

Metallica 1998-07 919 16 525 RC

Metallica 2005-07 43 981 DDH

Resource subtotal

1 110 19 587 RC and

some DDH

4.1.3 Drill sample recovery

Metallica RC drilling generally used high air pressure to keep the laterite samples dry and maintain

reasonable recovery and sample splitting.

Metallica geologists indicated that the recovery for RC drilling by Metallica in the mineralised zone was good

to excellent. This was confirmed through observations by Golder at Greenvale and Kokomo during site visits.

The RC samples were not weighed to support this observation and the comments are based on expected

volume from 1 m sample intervals and the bit size used on the day.

The degree of recovery is not recorded for the Straits drill holes at Greenvale and Lucknow. However, their

reports indicated redrilling of several holes that did have unacceptable recovery.

Recovery information is unknown for early Bell Creek drilling by other parties.

4.1.4 Logging

Metallica had a competent geologist supervising the drilling and sampling at all times. The sample bags were

removed from the cyclone by the drillers’ off-sider and a Metallica field assistant then collected the samples,

and prepared them for submission to the analytical laboratory. A sampling and logging protocol was followed

by all geologists to maintain consistency.

The drill logs were standardised with set geological codes to limit the number of rock types and therefore

assist in geological interpretation. All the data from the geological logs were entered into Excel spread

sheets and the geology code entered into a database. The geological logs in digital format were made

available at Metallica’s Brisbane Office for review. Photographs of the RC chip trays were also taken. There

is on-site storage of chip trays and pulps.

117631033-005-Rev0


30/36

A logging process was developed by Metallica during initial exploration at Bell Creek and then applied

consistently to logging on all subsequent areas. The process was adapted slightly as new material types

were recognised. Logging consists of basic material characteristics and lithology. The logging of lithology

types were essential to understanding the laterite profile and are used in the application of density and

interpretation of the laterite domains. The main logged materials include:

Hm Haematite rich soil

Lfe Ferruginous laterite

Lsi Ferruginous laterite with silica boxwork

Lsap Saprolite

Wum Weathered ultramafic

Ser Serpentinite - fresh ultramafic

Other lithologies such as granite intersected at Bell Creek were also included

A few diamond drill core holes at each deposit were completed for metallurgical sampling. The core was

used to confirm the rock types and collect large whole core density measurements.

4.1.5 Sub-sampling techniques and sample preparation

RC drill hole samples were split at the drill rig and subsampled as described in Section 4.1.1. This produced

a field sample of 2 to 3 kg which was sent to an accredited laboratory for analysis. The principal laboratory

was changed during the exploration program from ALS to SGS with similar procedures and standard

methods. Both laboratories conform to Australian Standards ISO 9001 and ISO 17025.

For RC sample preparation and assaying the process at each laboratory is as follows:

SGS assaying techniques involve drying the samples and then milling the material in a LM5 Mill to a

nominal 85% passing 75 µm. An analytical pulp of approximately 220 g is sub-sampled and the milled

residue is retained for future reference. The “pulp” is then digested with 4 acids: nitric, hydrochloric,

hydrofluoric and perchloric acid to effect as near to total solubility of the metals in the sample as

possible. The resultant solution is then presented to an ICP for element quantification.

ALS uses a similar method to SGS. The RC samples are dried then the entire sample is pulverised to a

nominal 85% passing 75 µm. A “pulp” sample is split off and the residue is retained for future reference.

The “pulp” is then split down to 0.5 g which is digested in a mixture of nitric, perchloric and hydrofluoric

acids. The residue is then leached in hydrochloric acid and the resultant solution is made to 100 ml in a

volumetric flask. Elemental concentrations are determined simultaneously by Inductively Coupled

Plasma Atomic Emission Spectrometry (ICPAES). Accuracy and precision is improved through the use

of an internal standard.

4.1.6 Quality of assay data and laboratory tests

Both SGS and ALS laboratories used were experienced in processing and assaying nickel laterite samples

and used appropriate analytical methods. Both laboratories demonstrated the use of internal quality control

processes.

In addition Metallica regularly took RC duplicate field samples and submitted these for assay within the same

batch at a rate of approximately 1 in 45. Field XRF analyses were used to exclude drilling from duplicate

sampling if the entire hole returned insignificant results. The results were reviewed for each deposit and

these indicated that the combined sampling and assaying variance is less than 10% for all significant

elements. Magnesium displayed a higher variance but this is not unusual for nickel laterite deposits.

In 2008 Metallica obtained five independent certified reference standards from Geostats Pty Ltd in Perth.

These were first used at Kokomo in 2008 and in all subsequent drilling programmes at Kokomo, Greenvale

and Lucknow. The standards are only certified for nickel, copper and zinc, with Co, Fe, cobalt, iron, chrome

and scandium values available from single neutron activation analysis. The results were reviewed by Golder

for Kokomo in 2009 and Greenvale and Lucknow in 2010. The results were considered acceptable and

confirmed the relative accuracy of the assay laboratories.

117631033-005-Rev0


31/36

Check samples where the original or second split pulps were re-assayed at a second laboratory were

undertaken intermittently by Golder after all major drilling programmes. Review of the paired assays by

Golder indicated acceptable variations. Some issues with chrome analysis remain unresolved but do not

affect the Mineral Resource estimate. Check sample batches included:

48 check samples in 1998 from Bell Creek that were used to confirm the laboratory results.

298 check samples from Bell Creek and Minnamoolka in 2006.

169 check samples in 2008 for Kokomo.

196 check samples in 2010, with 109 from Greenvale and 87 from Lucknow.

Additional exhaustive check duplicate samples using the spear sampling method were undertaken at the Bell

Creek and Kokomo deposits. These tests indicated that the spear sampling provides acceptable

repeatability.

In 2007 Metallica also checked the spear sampling method against second duplicates derived from more

traditional riffle splitting. This displayed sufficient correlation to indicate the spear method was acceptable for

the primary sampling method.

4.1.7 Verification of sampling and assaying

No direct verification data exists as either independent re-assaying or twin drill holes were completed, with

the exception of three twin holes between Metallica and previous Bell Creek drilling. These provided

comparable results.

Golder observed field hand held XRF results at Greenvale and Kokomo drill rigs that were consistent with

the mineralisation.

Mineralisation defined by Metallica drilling at Greenvale is consistent with unmined areas adjacent to

previously mine areas.

Mineralisation and drilling results were confirmed by Straits’ drilling at the Greenvale and Lucknow deposits.

A trial mine area at Lucknow confirmed nickel mineralisation in one location.

All Mineral Resource areas were visited by Golder where laterite profiles consistent with nickel laterite

mineralisation were observed.

No other adjustments of the resource assay data were performed other than applying high grade top-cuts

and lower limits applied to reflect the assaying detection limit. Top-cuts were applied for all deposits for

nickel, cobalt and scandium to limit the impact of extreme grades. The top-cut values vary by laterite domain

but do not affect the metal content significantly.

The drill hole and GIS databases have been compiled by an independent contractor for the life of project.

Prior to the completion of the initial Mineral Resource estimate for each deposit, Golder undertook a data

audit that included a review of a portion of the databases supplied by Metallica against original assay

certificates. In each case the databases were found to be well constructed with a few minor issues identified

which were resolved before proceeding with grade estimation. Subsequent resource updates for some

deposits relied on comparison of the updated results to ensure consistency with previous work and

geological interpretations.

4.1.8 Location of data points

All drill holes were located by independent surveying companies, generally using Digital Global Positioning

System (DGPS) equipment to provide sub-metre accuracy for regional Map Grid of Australia (MGA)

coordinates.

Topography data was supplied separately and is both detailed and accurate. The data sets include:

Bell Creek and Minnamoolka used photogrammetry by Quasco Surveys Pty Ltd, which was flown in

2006.

117631033-005-Rev0


32/36

Kokomo used an airborne survey flown in Sep 2008 and processed by Schlenckner Mapping Pty Ltd.

Greenvale and Lucknow used WorldView-2 satellite imagery dated Dec 2010.

4.1.9 Data spacing and distribution

Resource classification (Section 4.3.12) is based on data spacing and should adequately reflect the

continuity and the risk of all areas. Extrapolation at the laterite margins is generally limited to half the drill

spacing or less where not closed out by subgrade drilling results.

Compositing to 1 m lengths was undertaken to ensure consistent sample support and search selection. In

most cases this has little effect as the majority of samples were 1 m in length.

4.1.10 Orientation of data in relation to geological structure

All drill holes were drilled vertically. This is generally the best angle to intersect the laterite profile that is

relatively thin and laterally extensive with horizontal continuity and a vertical grade profile.

4.1.11 Sample security

No specific security measures were undertaken for sampling and delivery. However in most cases the

samples were under the duty of care of the Metallica or contract geologist until delivery to the laboratory.

The sampling and dispatch process in most cases involved:

Sampling and logging completed at the drill rig and overseen by the Metallica or contract geologist,

Metallica sampler and independent drilling company crew.

Samples were contained within calico bags and bundled together into polyweave bags and stored at

either an exploration camp (until 2011) or at the Metallica office in the Greenvale township (from 2011)

until dispatched.

Transport of the samples was by a Metallica or a contract geology staff member.

Samples were received and checked against the dispatch sheet delivered separately or in person.

This process is considered acceptable as the type of mineralisation is not susceptible to tamper or

contamination.

4.1.12 Audits or reviews

Golder audited the assay database for each deposit during the initial Mineral Resource estimate and

resolved all issues prior to proceeding.

Golder inspected exploration practises and activities in the field on three different occasions. This included

independently surveying selected drill collars with a hand held GPS. All data processes that were reviewed

were considered acceptable.

Metallica undertook several exploration programs recommended by Golder to supplement QAQC or density

measurements.

4.2 Reporting of Exploration Results

4.2.1 Mineral tenement and land tenure status

The tenements covering the Greenvale Mineral Resource are 100% held by Metallica via wholly owned

subsidiary companies and is further described in Section 3.2

4.2.2 Exploration done by other parties

Metallica commenced exploration in 1997 in areas known to have nickel laterites. For most deposits the

previous exploration was limited and has not been used for resource evaluation purposes. The existence

and use of previous exploration drilling is summarised in Table 10.

At Bell Creek previous Austin Anderson and Ashton drilling has been used. This drilling has little available

QAQC or verification. Some holes were resurveyed but most rely on previous locations. Subsequent

Metallica drilling has verified the resource and now dominates most resource areas.

117631033-005-Rev0


33/36

At Lucknow and Greenvale early exploration drilling is available and Greenvale has subsequently been

mined. This early exploration data was used by Straits to undertake an exploration programme for scandium.

On acquiring the tenements from Straits Metallica targeted their exploration for nickel, cobalt and scandium

based on previous drilling. From the previous companies that explored the Lucknow and Greenvale deposits,

only the Straits drilling is supported with QAQC data and is considered adequate to be included in the

Mineral Resource estimate.

4.2.3 Geology

All the deposits are nickel laterites developed by weathering processes over fragments of ultramafic

basement rocks. Nickel, cobalt and scandium have been enriched from the basement rocks by both residual

and supergene processes. The geology is described in more detail in Section 3.3 and Section 3.4.

4.2.4 Drill hole information

Not relevant as exploration results are not included.

4.2.5 Data aggregation methods


4.2.6 Relationship between mineralisation widths and intercept lengths

Nickel laterite deposits are relatively thin and laterally extensive. They have a vertical grade profile as a

result of the weathering processes that reduce with depth. Vertical RC drilling completed to date provides the

best drilling orientation as demonstrated in the example sections in Figure 12 to Figure 18

4.2.7 Diagrams

Plans of the resource areas are provided in Section 3.3 and Figure 8 to Figure 11.

Example cross sections are provided in Section 3.4 and Figure 12 to Figure 17.

4.2.8 Balanced reporting


4.2.9 Other substantive exploration data

Golder is not aware of or has not been provided with exploration data outside of that drilling used for the

Mineral Resource estimate and which could significantly affect the resource estimate.

Metallica indicate metallurgical work his indicated favourable nickel, cobalt and scandium recoveries in

excess of 90% for some extraction methods.

4.2.10 Further work

The Mineral Resources currently have sufficient drilling to define the extent of most of the expected

mineralisation zones. There is further scope to extend the resource estimate at Lucknow and Greenvale.

However the SCONI project is currently at a stage of project evaluation where extensive exploration is not

anticipated until the project commences development.

4.3 Estimation and Reporting of Mineral Resources

4.3.1 Database integrity

Golder audited the assay database for each deposit during the initial Mineral Resource estimate and

resolved all issues prior to proceeding. This included both manual verification of selected drilling holes

against hard copy assay certificates and full 100% comparison of digital data (i.e. original laboratory assay

files). For subsequent resource updates only the additional drilling were added to the audited database.

4.3.2 Site visits

John Horton of Golder visited all the sites during the main stages of exploration at the various deposits. This

allowed exploration processes to be reviewed and evidence of site work inspected. These independent site

visits included:

July 2007 for Bell Creek and Minnamoolka

August 2008 for Kokomo

117631033-005-Rev0


34/36

March 2010 for Lucknow and Greenvale

4.3.3 Geological interpretation

Nickel laterite geology is well understood and the data at each deposit for SCONI conforms to the expected

laterite sequence. The laterite profile is developed from weathering processes with significant lateral

continuity in the profile. This can have local variation in thickness and grade as a result of weathering

processes. This is expected for laterite deposits where mining is expected to adapt to the local changes. The

Mineral Resource classification is based on drill spacing that will reduce volume uncertainty when drilling is

closer spaced.

4.3.4 Dimensions

Nickel laterite deposits are relatively thin and laterally extensive. Thicknesses can vary from 2 to 30 m with

example sections in Figure 12 to Figure 17. Extents of mineralisation are indicated in Figure 8 to Figure 11.

The classified resource areas estimated include:

Greenvale 1.6 km2

Lucknow 0.6 km2

Kokomo 2.7 km2

Minnamoolka 1.0 km2

Bell Creek 1.5 km2

4.3.5 Estimation and modelling techniques

All significant elements assayed were incorporated into the resource estimate that included the potentially

economically significant elements nickel, cobalt and scandium, as well as other elements significant for

processing or whole rock chemistry including magnesium, iron, manganese, aluminium, calcium, chrome

and copper.

All elements were estimated using ordinary kriging with variogram model parameters derived from the drill

hole samples by laterite domain.

All estimations were undertaken separately for the principal laterite geology types that include laterite,

saprolite and weathered rock. Other domains varied by deposit but generally included:

Nickel and cobalt were estimated within a mineralisation domain interpreted using a nominal 0.3% Ni

cut-off, varied to account for continuity and laterite profile. Nickel and cobalt are correlated and this

relationship is maintained by using the same estimation processes and parameters.

Higher grade scandium was estimated within a 70 g/t Sc interpretation. Scandium displays a separate

control to that for nickel and cobalt and can cross-cut the geology at times.

Some iron boundaries were applied within the laterite to subdivide material for processing option

analysis.

All estimates used unfolding methods to ensure variations in the laterite surface are reflected in the

estimates and sample selection.

Geology and grade domains were interpreted as polygons or surface lines on drill sections and wireframed

for block modelling.

High grade cuts were applied to nickel, cobalt and scandium to reduce the influence of extreme grades or

outliers. The top-cuts applied varied by deposit but do not significantly affect the global metal content

estimated.

4.3.6 Moisture

All resource tonnages were calculated on a dry basis and are consistent with the assays that are prepared

on a dry basis.

117631033-005-Rev0


35/36

Moisture content (MC) was calculated for a range of samples at all deposits during bulk density

determinations. Values are relatively low and are generally from 0.5% to 17% MC with an average of ~10%.

4.3.7 Cut-off parameters

The SCONI Resources are multi-element and combine nickel, cobalt and scandium grades using a nickel

equivalent cut-off grade where:

NiEq = Ni +1.5 * Co + 0.01 * Sc

This formula has been derived using the following commodity prices and recoveries:

Nickel – US$10/lb and 90% recovery

Cobalt – US$15/lb and 90% recovery

Scandium – US$1500/kg scandium oxide and 90% recovery (scandium oxide is the product

typically traded and contains 65.2% scandium metal)

Note scandium units are in g/t which is equivalent to ppm. Nickel and cobalt units are in %.

The marginal cost of operating an acid leach process is understood to be around 0.7% NiEq for a large scale

facility. This understanding is the basis for the current resource statement at a 0.7% NiEq cut-off for reporting

the Mineral Resource base case that could form part of the combined SCONI project development. To

provide a return on capital investment a higher grade target would be required initially (a higher cut-off is also

provided).

4.3.8 Mining factors or assumptions

No mining factors are applied to the Mineral Resource estimate which is estimated for 10 m by 10 m by 1 m

size blocks. Some aggregation of the resource blocks is required for any mining selectivity scenario in

addition to the application of mining losses and dilution factors.

4.3.9 Metallurgical factors or assumptions

Metallica have completed test work that indicates metallurgical recovery is in the order of 90% for each of

nickel, cobalt and scandium.

4.3.10 Environmental factors or assumptions

Processing options and analysis are currently underway by Metallica. In general:

Mining of the laterite is in shallow pits that will not expose significant fresh rock.

Mine waste materials are highly oxidised and are relatively easy to landform and rehabilitation, as

demonstrated by the successful rehabilitation of the Greenvale mine site which won some

environmental awards.

Disposal of mine tailings can either be in external residue facilities or into in-pit voids.

4.3.11 Bulk density

Dry bulk density (DBD) was measured for each deposit using a range of methods and samples to provide a

basis for deriving the resource estimate assumptions. Determination methods for in-situ material include:

Caliper – Direct measurement of volume of whole PQ drill core from the metallurgical drill holes

Sand Core – Indirect measurement of volume by measuring displaced sand in a bucket

Surface Pits – Pit volume measured measuring sand filling a small 30 by 30 b y 30 cm pit.

Average DBD for the major geological material types were applied to the resource model after small

downward adjustment to correct for expected small selection bias, Table 11.

117631033-005-Rev0


36/36

Table 11: Dry bulk density summary

Project & Method

Geological Material Type Samples

Lfe

Iron

Laterite

Lhm

Red

Laterite

Lsap

Saprolite

Lsi

Silica

Boxwork

Wum

Weathered

Ultramafic

Lmot

Mottled

Ser

Serpentine

Greenvale - Caliper 1.44 1.90 1.46 - 1.63 2.09 1.79 137

Lucknow - Caliper 1.52 1.96 1.45 2.03 1.93 - - 70

Kokomo – Surface Pits 1.64 - - - - - - 36

Kokomo - Caliper 1.72 - 1.62 2.14 1.92 - - 43

Kokomo - Sand Core (filt) 1.73 2.13 1.83 1.98 2.00 - - 192

Minnamoolka – Caliper 1.32 - - 1.79 2.11 - - 54

Minnamoolka - Sand Core 1.24 - - 1.74 2.05 - - 45

Bell Creek(all)- Surface pits 1.85 - - - - - - 42

Bell Creek NW - Sand Core 1.49 - 1.46 - - - - 86

Bell Creek Sth - Sand Core 1.38 - 1.51 1.48 1.55 - - 174

Bell Creek Nth - Sand Core - - - 1.74 - - - 33

Oversize stockpile material density was averaged from ten test pits.

4.3.12 Classification

Generally classification has been applied on a drill density spacing as follows:

Measured Mineral Resource for a reasonably regular pattern of 20 m (SCONI South) or 30 m (SCONI

North) m.

Indicated Mineral Resource for a reasonably regular pattern of 40 m (SCONI South) or 60 m (SCONI

North).

Inferred Mineral Resource for a reasonably regular pattern of >60 m (SCONI North) or 80 m (SCONI

south except 40 m by 100 m for Kokomo) or 100 m for Greenvale dumps.

4.3.13 Audits or reviews

Golder audited the databases used for Mineral Resource estimation of each deposit.

Bell Creek was previously reviewed and estimated by independent consultants, Computer Aided Geoscience

(2006).

Greenvale and Lucknow were previously explored, drilled and resources estimated by Straits (2007).

Lucknow data was reviewed by Phil Jones and Partners (2009).

4.3.14 Discussion of relative accuracy and confidence

No detailed studies have been completed using simulation or probabilistic methods that could quantify

relative accuracy of the resource estimates.

Laterites can have significant short range variation in material types and grade due to local variations in

weathering process. However on a broader scale they demonstrate consistency in lateral extent. As a result

drilling demonstrates a regional grade and volume rather than local certainty. Hence drill spacing, as used

for the resource classification, is the prime indicator of estimation risk.

4.4 Estimation and Reporting of Ore Reserves

No Ore Reserves are reported or have been reported previously by Metallica for any of the SCONI deposits.

sconi project, north queensland nickel-cobalt …€¦ · the nieq cog has been used to ensure all...

Documents