INTERVIEW WITH ANDREW GILLIES, MANAGING DIRECTOR OF METALLICA MINERALS LIMITED (MLM)

“Another Busy Quarter Progressing Projects”

http://www.brr.com.au/event/48867

FRIDAY, AUGUST 1, 2008, 11:05 AM.

            BRR    Today Boardroom Radio welcomes back Andrew Gillies, the Managing Director of Metallica Minerals. Andrew, thanks again for your time.

10        MLM     Yeah, good morning, Cameron, and Boardroom Radio.

            BRR    Andrew, another quarter down. It’s been an incredibly busy quarter. When we last spoke, we talked about the business of selling the Cockatoo Coal shareholding, which has taken cash balances right up. Can you talk us

15                    through briefly what the highlights of the quarter, please?

            MLM     Yeah, we always have busy quarters and you’ll see in our quarterlies, they are quite bulky and we’ve got a lot of projects on the boil. But certainly the one up top of the list is, you know, our consolidated cash position now at 26.7 million. That works out to be about just over 23 cents a share. So we basically

20                    got, you know, that’s over half our share price in terms of cash backing. So, you know, a lot of that came in from the 20 million sale of the Cockatoo shares but also we had about $6 million in equity and we’ve also raised 1.5 million for MetroCoal in seed capital and also during the quarter XRF exercise their options that brought another 1.6. So we’re in a very healthy position

25                    there and certainly it would be quite difficult, I'd imagine rising capital so we’re in a very good position there.

            BRR    And, Andrew, with your increased cash backing, what are you're plans for the cash?

30        MLM     Well, we’ll probably be using the majority of it obviously to the vast Metallica NORNICO project for the nickel and it's holdings in coal where we’ve got a 94% interest in MetroCoal and also the Bauxite as probably bit of backup. We did put investment funds in from time to time. Metallica with a 40% holding in that and we’d be looking at getting that company listed. It also enables

35                    Metallica to assess other opportunities that are compatible to the company’s core operations and obviously that’s mainly the nickel, so I think more of the same.

            BRR    And, Andrew, moving on to the highlights, NORNICO?

40        MLM     Yes. It’s an acronym for North Queensland Nickel Cobalt project. We’re completing our feasibility study on that for 1 million tonne a year heap leach and we have got a resource base up there of about 35 million tons and that will be expanded. So that contains about 262,000 tonnes of nickel and, well, you know, our game plan up there is to complete the feasibility study and

45                    we’re looking into producing an average of about 8,000 tonnes of nickel consigned in-product per annum for the first ten years and we may well expand. But it will have a very long mine life once established, so that’s nickel and that will be expanded on in this quarter. We have had drilling from last quarter and has defined a lot of mineralization outside the Bell Creek South resource and we expect to get a resource estimate out of the next few weeks at Bell Creek South, that’s probably the main focus for our mining into the future, certainly for the first five to ten years of NORNICO. But we’re also undertaking well into a major drilling program at Kokomo where we’re looking

5                      at 20,000 major drill program. That will mean about 475 holes on a nickel laterite, sort of a 5 kilometre by 800 metre area. So we expect to get a substantial resource estimate out of that that probably will be coming around October. And I guess the third big ticket item for us is Cape Alumina. We’ve also, during the quarter, released a resource estimate effectively doubling our

10                    Bauxite tonnage now to about 100 million tonnes of industry use Bauxite and still relatively a small portion of our tenement holdings up there at Weipa. And we’re also looking at progressing towards an IPO which should be released this September quarter and also of course fourthly, I guess, is MetroCoal. As I said earlier, we’ve just raised 1.5 million during the quarter in seed capital, so

15                    mostly sophisticated investors, basically gearing up for an IPO, but we are putting some of that money into a drilling program that should be started in the next couple of weeks. We’ve got a very large tenement holding out there, about 4,000 square kilometres and putting in perspective I guess, you know, it’s comparable to, you know, the combined holdings of Link, Carbon energy

20                    in Cougar out there in the Surat. So we think we’ve got a pretty good story out there. We have got the technology yet. We're certainly on the sidelines there. But we’re quite happy to follow Link and Cougar and Carbon Energy and basically build up our resource base there. So I think that certainly would be an interesting one to watch and we’re also probably doing the IPO is probably

25                    part of that deal is to distribute a portion of that holding to Metallica shareholders.

            BRR    And, Andrew, you mentioned the technology utilized by Link and Cougar and Carbon, what is exactly the technology?

30        MLM     Well, MetroCoal, itself, doesn’t have the personnel or the expertise on the technology. We’re quite happy to wait for that to come and, you know, when I say 'technology' I’m really talking underground coal gasification and coals to liquids. Our strategy is really increase our resource base of coal that would be suitable for UCG and coals to liquids, typically between depths of say 150

35                    down to 400 metres and that will be our focus there and we’re quite happy to add value by building our resource base up and let the technology come down the track.

            BRR    And, Andrew, if our listeners are allowed to get some more information about

40                    the float of Cape Alumina, what’s the best way they can do that? Who’s handling the float there?

            MLM     Well, it’s usually the advisers, but I guess the best thing is just watch the releases on Metallica’s website or the ASX site and also, you know, Cape Alumina at www.capealumina.com.au, probably the best thing. But, yeah,

45                    we’re expecting it out to be certainly by September.

            BRR    Great. I should also remind our listeners that if they like to ask you a question about Metallica or indeed find out some more information about Cape Alumina, they’re able to ask a question through the webcast facility and we’ll send it to Andrew who can then answer it at a later stage.

            MLM     Yeah, thanks, Cameron. I think with Metallica tells a compelling story. Now we see ourselves very much as an emerging multi-commodity resource

5                      company with the nickel development focus plus major interest in coal and Bauxite and we’ve got the cash to back it up.

            BRR    Certainly have. That’s been Queensland-based Metallica Minerals, Andrew Gillies, the Managing Director there, giving us an update on Boardroom

10                    Radio.

            MLM     Thank you.

INTERVIEW CONCLUDED

Contact brr@brr.com.au for more information

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