Quarterly Report to 30 June 2016

ASX Release

30 June 2016

Metallica Minerals Limited is an Australian resources

developer primarily focused on advancing its bauxite, graphite and mineral sands projects

ASX:MLM

ISSUED CAPITAL (30/06/16)

227,311,635 Ordinary Shares

29,935,691 Listed Options

8,000,000 Unlisted Options

See Appendix 5B Lodged

20/07/16 and 25/07/16 for more detail

SHAREHOLDERS (01/07/16)

PROJECT HIGHLIGHTS

CAPE YORK BAUXITE AND HMS JOINT VENTURE (JV QLD)

URQUHART BAUXITE PROJECT

» First bauxite production remains on schedule for the first half of 2017.

» Department of the Environment (Commonwealth Government) confirms that it does not require an Environmental Impact Study (EIS) to be completed.1

» Heads of Agreement executed for bauxite logistic services and transhipping access to ensure very low start-up capital and a compressed start-

up schedule, thereby significantly de-risking the project.2

» Completed the planning and mobilisation for a drill program scheduled to commence early in August 2016 to increase the current Resource category confidence and further underpin studies to verify the results of a previously completed internal Options Study.

2 3 2

» Inferred Mineral Resource of 7.5 million tonnes (dry Mt) averaging 51% total aluminum oxide (Al O ) and 16.3% total silicon oxide (SiO ) of Direct Shipping Bauxite (DSB).3

2,116 shareholders

Top 20 shareholders hold 41.09%

LARGEST SHAREHOLDERS

Jien Mining Pty Ltd - 17.64% Golden Breed Pty Ltd - 3.96%

DIRECTORS

Barry Casson

Non Executive Chairman

Andrew Gillies

Non Executive Director

Shu Wu

Non Executive Director

Shu Zhang

Alternate Director to Dr Wu

SENIOR MANAGEMENT

Simon Slesarewich

Chief Executive Officer

John Haley

CFO & Company Secretary

CASH BALANCE

As at 30/06/16, MLM's cash balance was approximately $2,280,000.

No debt.

» DSB confirmed for Area A with high available alumina of 40.6% and moderate reactive silica of 4.9%.4

URQUHART HMS PROJECT

» The project is fully permitted.

» The JV has deferred construction of the mineral sand processing plant to focus on the higher value Urquhart Bauxite Project.

» Interest received from third parties in relation to the HMS Project, as well as use of the wholly-owned mineral sands processing plant.

ESMERALDA GRAPHITE PROJECT (QLD)

» Two drill holes completed on the granite-hosted, hydrothermal- style Esmeralda graphite deposits near Croydon.

» Assay results confirm thick graphite (Cg) mineralised intervals in the first two exploration holes:5

» WD001 - 95.0 m @ 6.5% Cg from 71 m

» WD002 - 29.1 m @ 7.8% Cg from 71.9 m, including 7.1 m @ 12.9% Cg

» High grade concentrate of 97.8% Total Carbon (TC) produced.6

» Standard flotation tests delivered a 91.5% TC concentrate with a 91% recovery.6

1 ASX Release 24th June 2016 "Commonwealth Government confirms Urquhart Bauxite does not require an EIS".

2 ASX Release 7 April 2016 "Logistics Solution for Urquhart Bauxite Project", available www.asx.com.au.

3 ASX Release 11 May 2015 "Maiden Bauxite Resource", available www.asx.com.au.

4 ASX Release 17 April 2015 "Direct Shipping Bauxite confirmed at Urquhart Point", available www.asx.com.au.

5 ASX Release 10 December 2015 "Assays strongly support potential for large graphite deposit", available www.asx.com.au.

6 ASX Release 24 May 2016 "High Purity and Recovery from Esmeralda Graphite testwork", available www.asx.com.au.

ABN: 45 076 696 092 |  +61 7 3249 3000 | 7 +61 7 3249 3001 |  [email protected] | ASX:MLM www.metallicaminerals.com.au | 71 Lytton Road, East Brisbane QLD 4169 |  GPO Box 122, Brisbane QLD 4001

COMPANY HIGHLIGHTS

CORPORATE

Received final payment of $900,000 from the sale of the Boyne Limestone project in Queensland to a private group.7

SAFETY

There were no Lost-Time Injuries recorded during the June 2016 quarter.

FINANCIAL AND INVESTMENT POSITION

Metallica had approximately $2,280,000 in cash as at 30 June 2016 and no debts other than trade creditors.

IronClad self-propelled barge moored at the mother vessle loading point in the Embley River, Weipa, North Queensland - June 2016

NOTICES

COMPETENT PERSON'S STATEMENT

The technical information contained in this report was compiled or supervised by Mr Andrew Gillies, BSc(Geol), a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM) and a non-Executive Director of Metallica Minerals Ltd. Mr Gillies has relevant experience in the mineralisation, exploration results and resources being reported to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012). Mr Gillies consents to the inclusion of this information in the form and context in which it appears in this release.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made in this announcement contain or comprise certain forward-looking statements. Although Metallica believes that the estimates and expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in commodity prices and exchange rates and business and operational risk management. Metallica undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.

7 ASX Release 27 June 2016 "$900,000 boost to Metallica cash balance", available www.asx.com.au.

OUTLOOK

FOR THE SEPTEMBER QUARTER

The Company's current focus is on completing the work required to enable the granting of mining leases for the Urquhart Bauxite project and on progressing the full access and logistics agreements to utilise the nearby Hey Point facility. A drill program is planned to commence early in August 2016 and is designed to increase the resource category confidence. This

in turn will underpin further studies that are expected to confirm results from a previously completed internal Options Study. The attractiveness of Metallica's considerable and strategically located Cape York bauxite assets has been boosted by the Indonesian Government's export ban on bauxite

and the further imposition of a bauxite mining moratorium by the Malaysian Government.

Drilling and assays from two diamond drill core holes were completed at Metallica's wholly-owned Esmeralda Graphite Project near Croydon. Initial assay results were received in December 2015. The Company has now completed the final testwork with a high grade concentrate of 97.8% Total

Carbon (TC) produced. The Company will now focus on locating near surface graphite deposits.

The HMS processing plant is currently stored near Brisbane. Given the continuing low heavy minerals sands prices, the Cape York Bauxite and HMS Joint Venture has deferred planned construction of the HMS plant to focus on the higher value Urquhart Bauxite Project. Following several approaches from third parties, the Joint Venture is progressing several options that may deliver value to the Joint Venture.

The Company is currently in ongoing discussions with an established nickel company for a possible joint venture or other partnership on

the SCONI (Ni-Co-Sc) Project northwest of Townsville. It is also seeking a potential joint venture partnership or other transactions on the Cape Flattery Silica Sands Project.

Metallica continues to assess potential acquisition opportunities that will add value to shareholders.

CAPE YORK

BAUXITE AND HMS JOINT VENTURE

AREA 1,797 Ha under mining leases and applications and 1,257 km2 under exploration tenure

COMMODITY Bauxite and Heavy Mineral Sands (zircon, rutile, titanium minerals)

HOLDING MLM 50% (Ozore Resources Pty Ltd 50%)

Pursuant to the joint venture agreement, the Cape York HMS and Bauxite Project Joint Venture is held 50% by Oresome Australia Pty Ltd, a wholly owned subsidiary of Metallica Minerals, and 50% by a private Chinese investor, Ozore Resources Pty Ltd (Ozore).

The Cape York HMS and Bauxite Project Joint Venture comprises three separate projects: Urquhart Bauxite Project, Urquhart Point HMS Project, and Cape York Regional Exploration Project.

Since the formation of the JV on 8 September 2014, the JV has expended in excess of $8.5 million. The funds have been applied to progressing development of the Urquhart Bauxite Project as well as the design and fabrication of the Urquhart Point HMS processing plant.

PRIORITIES FOR THE SEPTEMBER QUARTER

Development of the Urquhart Bauxite Project remains on schedule to commence production in Urquhart Bauxite Project H1 2017. The JV will continue on with permitting and approvals necessary to realise

production from Urquhart Bauxite and commence the drilling program as referred to in this report.

The Joint Venture will also look to commence negotiations for the binding Logistics and access Agreements for trans shipping operations from the nearby Hey Point following on from the Heads of Agreement executed in April 2016.

Approaches from third parties in relation to the Urquhart Point HMS Project and processing plant, will be progressed so as to potentially deliver value to the Joint Venture.

Installed barge loading facility at Hey Point - June 2016