QUARTERLY REPORT – TO 31 MARCH 2008  

 HIGHLIGHTS

Ø      The combined NORNICO Resource (Bell Creek and Minnamoolka deposits) now stands at 35.5 million tonnes (Mt) at 0.73% nickel (Ni) containing approximately 259,000 tonnes of nickel.

Ø      Over 85% of the NORNICO Resource is in the Measured and Indicated category, which includes a Measured Resource component of 7.5 Mt at 0.94% Ni at the key Bell Creek South deposit.

Ø      New Minnamoolka Inferred and Indicated Resource is 14.7 Mt at 0.66% Ni comprising an 11.8 Mt at 0.67% Ni Indicated and a 2.9 Mt at 0.64% Ni Inferred Resource.

Ø      NORNICO Feasibility Study progressing with study manager Lycopodium Engineering. Revised mining studies commenced for a 1 Mt per annum heap leach nickel operation to produce an average of approximately 7,500 tonnes of Ni per annum for the first 10 years.

Ø      Process design change to improve efficiencies – now includes an Ion Exchange (IX) Resin section for clean, selective and more efficient nickel and cobalt recovery.

Ø      During the March Quarter, 335 drill holes were completed predominantly outside the current resource boundary of the Bell Creek South deposit with significant nickel mineralisation recorded.

Ø      Pilot testing plant established at Bell Creek for further large column acid leaching tests. Three columns now loaded with representative blended Bell Creek ores.

Ø      Nickel Supply Agreement for the Lucky Break nickel project was signed between Metallica, joint venture partner Metals Finance Corp. (ASX:MFC) and the BHP Billiton Yabulu Nickel Refinery.

Ø  Cape Alumina Pty Ltd (MLM 40%) progressing with planned IPO, targeting third Quarter 2008. Appointment of  two highly       experienced professionals Mr George Lloyd and Mr Rennie Fritschy as consultants who will become Non-executive Independent Chairman and Non-executive Independent Director respectively, from the ASX listing date. Mr Mark Annandale also joined the management team as Community Relations and Environment Manager.

Ø    MetroCoal’s Surat Coal Basin project further progressed with coal exploration targets generated with a strategy for exploration and evaluation for Underground Coal Gasification (UCG) with Coal to Liquids (CTL) and conventional coal mining targets.

CORPORATE HIGHLIGHTS

• MLM has a strategic 40% interest in Cape Alumina, which holds 100% of the Weipa bauxite project located on Queensland’s western Cape York Peninsula.  Preparation for listing Cape Alumina on the ASX through an Initial Public Offering (IPO) is progressing. The targeted completion is in the third Quarter 2008.

• Maintaining strong funding position of approximately $5.87 million cash plus 25 million Cockatoo Coal Ltd (ASX:COK) shares (value approximately $23 million as at date this release).

SUBSEQUENT EVENTS – Lucky Break Acid Supply

On the 24^th April, Metallica was advised by its joint venture partner and manager of the Lucky Break nickel project, Metals Finance Corp (ASX: Code MFC) that MFC is in dispute with Sun Metals Corporation (the operator of an acid plant and zinc refinery in Townsville) in relation to the supply of sulphuric acid to the Lucky Break nickel project. The development of the project will likely be delayed pending the outcome of the dispute with Sun Metals. For further information see MFC ASX release dated 24 April 2008.

FINANCIAL

(to be read in conjunction with the Appendix 5B attached)

As of 31 March 2008, Metallica has 108.4 million shares on issue and cash of $5.87 million.  Metallica also holds 25 million Cockatoo Coal Ltd (ASX: COK) shares (escrowed until July 2008) currently valued around $23 million (based on a share price of 92 cents).

Exploration and evaluation expenditure totalled $1,190,000 and administration expenditure was $435,000 for the Quarter to 31 March 2008. The total combined March Quarterly expenditure was approximately $1.625 million.

The estimated expenditure by Metallica for the June Quarter is $2.95 million. Significant additional expenditure is expected by joint venture parties, MFC (Lucky Break Nickel project) and Matilda Minerals (Urquhart Point - Weipa heavy mineral sands project) as well as through its shareholding in Cape Alumina (Weipa bauxite project).

Metallica provided $400,000 in equity funds to Cape Alumina during the March Quarter to maintain its 40% shareholding. Metallica has loaned a cumulative total $1.5 million to Cape Alumina, which is repayable to Metallica in May 2008.

No Directors or Management Unlisted Performance Options were issued during the quarter.

Metallica continues to look at opportunities to enhance its core nickel projects and to divest or joint venture its non-core mineral properties, such as its Metrocoal coal assets to enable it to maintain focus on and fund its key NORNICO nickel projects. 

For further information or to view the full report please refer to our website, www.metallicaminerals.com.au