Magma Metals Limited
TSX : MMW
ASX : MMW

Magma Metals Limited

January 28, 2011 09:25 ET

Magma Metals Limited: Quarterly Report for the Period Ended December 31, 2010

HIGHLIGHTS

Thunder Bay North Platinum-Palladium Project, Ontario

- Drilling during the quarter defined two high-grade high-sulphide zones within the mineral resource area.

- Regional winter drilling program commenced with up to three drill-rigs to identify new areas of mineralization within the intrusive complexes in the project area.

- The independent scoping study being conducted by AMEC Americas is near to completion; results to be announced shortly.

Griffins Find Gold Project, Western Australia

- Drilling is in progress with two drill-rigs to test a large 3km by 1km gold anomaly defined by an auger geochemical survey earlier in 2010.

PERTH, WESTERN AUSTRALIA--(Marketwire - Jan. 28, 2011) - Magma Metals Limited (TSX:MMW)(ASX:MMW) ("Magma" or the "Company") is pleased to provide its activities and cash flow report for the quarter ended December 31, 2010. Activities included field exploration programs on the Thunder Bay North platinum-palladium-copper-nickel project in north-western Ontario, Canada and the Griffins Find gold project in Western Australia (Figure 1). These activities and plans for further exploration work are described in this report.

To view Figure 1, please visit the following link: http://media3.marketwire.com/docs/mmwfig1a.pdf

NORTH-WESTERN ONTARIO, CANADA

Thunder Bay North Platinum-Palladium-Copper-Nickel Project

(Magma 100%, with options to acquire 100% of various additional claims)

High-Sulphide Targets

Most of the drilling completed at the project in the December quarter focused on two previously identified high-sulphide targets within the mineral resource, the West Beaver Lake (22 drill holes for 5,412m) and East Bridge Zone (8 drill-holes for 1,692m) areas (Figure 2). The objective of the drilling was to map these zones in detail to determine their continuity, size and shape.

Results for 14 of the 22 holes drilled at West Beaver Lake were described in the Company's announcement of November 24, 2010. Significant intersections from the remaining 8 holes from this program are listed in Table 1. Significant results from the 8 holes drilled in the East Bridge Zone target are also listed in Table 1 and include:

  BL10-368: 37.2m @ 1.70g/t Pt, 1.66g/t Pd, 0.44% Cu & 0.25% Ni from 147.55m
  including: 25.2m @ 2.33g/t Pt, 2.27g/t Pd, 0.59% Cu & 0.31% Ni from 159.55m
  including: 3.0m @ 4.40g/t Pt, 4.42g/t Pd, 1.13% Cu & 0.51% Ni from 180.75m
     
  BL10-371: 32.9m @ 1.19g/t Pt, 1.15g/t Pd, 0.30% Cu & 0.21% Ni from 147.00m
  including: 12.9m @ 2.10g/t Pt, 2.01g/t Pd, 0.50% Cu & 0.29% Ni from 167.00m
  including: 5.9m @ 3.49g/t Pt, 3.35g/t Pd, 0.82% Cu & 0.39% Ni from 174.00m
     
  BL10-374: 31.3m @ 1.08g/t Pt, 0.99g/t Pd, 0.23% Cu & 0.16% Ni from 144.85m
  including: 11.0m @ 2.36g/t Pt, 2.14g/t Pd, 0.49% Cu & 0.25% Ni from 165.15m
  including: 7.0m @ 3.23g/t Pt, 2.93g/t Pd, 0.66% Cu & 0.31% Ni from 169.15m
     
  BL10-375: 26.1m @ 1.21g/t Pt, 1.14g/t Pd, 0.29% Cu & 0.17% Ni from 145.30m
  including: 10.0m @ 1.98g/t Pt, 1.83g/t Pd, 0.43% Cu & 0.22% Ni from 161.40m
  including: 5.0m @ 2.70g/t Pt, 2.42g/t Pd, 0.55% Cu & 0.22% Ni from 166.40m

The drilling at the East Bridge Zone target intersected semi-massive to heavily disseminated sulphides along strike from the massive sulphides intersected in previous drilling (e.g. 2.6m @ 52.77g/t Pt, 41.54g/t Pd, 3.87g/t Au, 61.0g/t Ag, 11.6% Cu & 3.29% Ni from 187.4m in drill-hole BL10-197 – see Magma announcement of February 15, 2010). The massive sulphide units in both target zones appear to be approximately 40m in strike length, 10-20m wide and up to 2.5m thick (Figure 2). They are surrounded by halos of semi-massive to heavily disseminated sulphides with relatively high-grade mineralization. The shapes of the massive sulphide units appear to be controlled by depressions in the floor of the intrusion where sulphides accumulated. Massive sulphide units have been intersected in drilling at several other locations in the Bridge Zone and the western part of the Beaver Lake Zone (Figure 2).

To view Figure 2, please visit the following link: http://media3.marketwire.com/docs/mmwfig2a.pdf

Winter Drilling Program

A winter drilling program of approximately 11,000m commenced on January 20th to test several targets that lie beneath lakes, watercourses and swamps. Many of these targets are only accessible in the winter when the ground is frozen. Up to three drill-rigs will be deployed to complete the program before the end of March, 2011.

The program will mainly be focused on the 80km2 complex of prospective intrusions which appear to form a network of magma conduits within the project area (Figure 3). Approximately 1,200m of this drilling will target magnetic anomalies in the Spruce River project, 20km to the northwest of the Current Lake Intrusive Complex.

The main objectives of the program within the principal area of interest (Figure 3) are to: 

  • Test a number of electro-magnetic conductors in the Current Lake Zone, with modelled sources beneath the drilled mineralization;
  • Evaluate the mineralization potential in the northern part of the Current Lake Intrusive Complex;
  • Investigate mineralization intersected in reconnaissance drilling in the southern part of the Steepledge Lake Intrusive Complex; and,
  • Test a number of magnetic targets in the EWC Intrusive Complex.

To view Figure 3, please visit the following link: http://media3.marketwire.com/docs/mmwfig3a.pdf 

Scoping Study (Preliminary Economic Assessment)

AMEC Americas Limited ("AMEC") is conducting an independent scoping study for the Thunder Bay North project, which incorporates their updated mineral resource estimate (see Company announcement of September 6, 2010). The scoping study is nearing completion and the results will be released shortly. Key areas of the study include mining strategy, metallurgy and process engineering, and environmental and permitting considerations.

WESTERN AUSTRALIA

Griffins Find Gold Project, Western Australia

(Magma option to acquire 100%)

The Company announced on August 20, 2010, that an auger geochemical soil survey had mapped a large gold anomaly at the Griffins Find project, 320km southeast of Perth in Western Australia (Figure 4). The anomaly is 3km by 1km in size when contoured at a level greater than 100 parts per billion (ppb) gold (equivalent to 0.1g/t gold). The historical Griffins Find gold mine is located on the northern edge of this gold anomaly. This mine produced approximately 55,000 ounces of gold in the 1980's from two shallow open pits. Shallow gold zones at the Griffins West and Ridge prospects, defined by drilling in the June quarter, 2010, also occur on the periphery of the anomaly.

An approximately 8,000m drilling program designed to test parts of the auger geochemical anomaly and follow-up previous Magma drilling commenced during the quarter. At the end of the quarter 29 reverse circulation (RC) drill holes had been completed for 3,078m; some of these holes failed to reach their target depths and will be deepened with a diamond drill rig. Assay results from this drilling are pending. The drilling program recommenced after the Christmas – New Year break in mid-January with one RC and one diamond drill rig. The program is planned to be completed in the March quarter, 2011.

To view Figure 4, please visit the following link: http://media3.marketwire.com/docs/mmwfig4a.pdf

No substantive fieldwork was undertaken on any of Magma's other projects in Western Australia during the quarter.

CORPORATE

Mr David Constable was appointed a Non-Executive Director of the Company during the quarter. Mr Constable is based in Burlington, Ontario.

The total issued capital of Magma Metals Limited at December 31, 2010, was 195,605,923 shares. During the quarter the Company issued a total of 1,100,000 share options to Canadian based employees. There were 19,591,000 unlisted options outstanding at December 31, 2010.

Magma retained $9.3 million in cash at the end of the quarter. 

The aforementioned cash flow report for the quarter ended December 31, 2010 is available on the Company's website at www.magmametals.com.au and is filed under the Company's profile on SEDAR at www.sedar.com.

Company announcements referred to in this report and further information on the Company and its projects are available on its website at www.magmametals.com.au.

Table 1. Significant Drilling Results, High-Sulphide Targets, Thunder Bay North

Drill Hole From (m)   To (m)   Length (m)   Pt (g/t)   Pd (g/t)   Pt+Pd (g/t)   Cu (%)   Ni (%)   Pt+Pd Cut-Off (g/t)
West Beaver Lake High-Sulphide Target
BL10-350 143.20   175.00   31.80   0.65   0.66   1.31   0.19   0.14   0.5
including 169.00   173.30   4.30   1.50   1.49   2.99   0.47   0.25   1.0
including 171.30   173.30   2.00   2.35   2.34   4.69   0.74   0.37   3.0
BL10-360 184.90   190.90   6.00   1.85   1.75   3.60   0.48   0.24   1.0
including 187.90   190.90   3.00   2.68   2.51   5.19   0.68   0.31   3.0
BL10-362 162.40   168.40   6.00   0.86   0.84   1.70   0.22   0.14   1.0
including 177.50   180.50   3.00   1.33   1.38   2.71   0.43   0.22   0.5
East Bridge Zone High-Sulphide Target
BL10-368 147.55   184.75   37.20   1.70   1.66   3.36   0.44   0.25   0.5
including 159.55   184.75   25.20   2.33   2.27   4.60   0.59   0.31   3.0
including 180.75   183.75   3.00   4.40   4.42   8.82   1.13   0.51   5.0
BL10-369 145.00   177.65   32.65   0.57   0.56   1.13   0.14   0.14   0.5
including 158.00   168.00   10.00   0.88   0.84   1.72   0.21   0.18   1.0
including 158.00   160.00   2.00   1.79   1.74   3.53   0.44   0.25   3.0
BL10-370 148.00   172.00   24.00   1.25   1.22   2.47   0.32   0.19   0.5
including 158.00   168.00   10.00   1.68   1.65   3.33   0.44   0.24   3.0
BL10-371 147.00   179.90   32.90   1.19   1.15   2.34   0.30   0.21   0.5
including 167.00   179.90   12.90   2.10   2.01   4.11   0.50   0.29   1.0
including 174.00   179.90   5.90   3.49   3.35   6.84   0.82   0.39   3.0
BL10-373 148.00   187.80   39.80   0.87   0.83   1.70   0.21   0.15   0.5
including 176.00   187.80   11.80   2.11   2.03   4.14   0.49   0.24   1.0
including 181.00   187.80   6.80   2.97   2.85   5.82   0.67   0.30   3.0
BL10-374 144.85   176.15   31.3   1.08   0.99   2.07   0.23   0.16   0.5
including 165.15   176.15   11.00   2.36   2.14   4.50   0.49   0.25   1.0
including 169.15   176.15   7.00   3.23   2.93   6.16   0.66   0.31   5.0
BL10-375 145.30   171.40   26.10   1.21   1.14   2.35   0.29   0.17   0.5
including 161.40   171.40   10.00   1.98   1.83   3.81   0.43   0.22   1.0
including 166.40   171.40   5.00   2.70   2.42   5.12   0.55   0.22   5.0
BL10-377 147.20   179.70   32.50   1.02   0.97   1.99   0.24   0.17   0.5
including 165.20   179.70   14.50   1.74   1.65   3.39   0.39   0.23   1.0
including 167.70   175.20   7.50   2.41   2.32   4.73   0.56   0.30   3.0

Results are reported for intercepts >1.0 g/t Pt+Pd and >5 g/t Pt+Pd x m at the lower cut-off grades shown in the right hand column; these may include internal intervals up to 2m below the cut-off grade. Drill intercepts are down-hole thicknesses and may not represent true thicknesses.

Table 2. Drill Hole Collar and Depth Information, High-Sulphide Targets, Thunder Bay North

Drill Hole Easting (m) Northing (m) Azimuth (Deg) Dip (Deg) Depth (m)
BL10-350 358087.5 5402490.0 0 -90 228
BL10-360 358075.0 5402500.0 0 -90 225
BL10-362 358125.0 5402520.0 0 -90 240
BL10-368 357975.0 5402413.0 0 -90 216
BL10-369 357962.5 5402415.0 0 -90 210
BL10-370 357962.5 5402395.0 0 -90 216
BL10-371 357975.0 5402402.5 0 -90 210
BL10-373 357975.0 5402422.5 0 -90 219
BL10-374 357937.5 5402391.0 0 -90 210
BL10-375 357937.5 5402381.0 0 -90 201
BL10-377 357937.5 5402401.0 0 -90 210

Quality Control and Assurance

Additional information on Magma and its projects, including descriptions of its quality control and assurance procedures, is available on its website at www.magmametals.com.au and in technical reports filed under the Company's profile on the SEDAR website (sedar.com).

Drill-hole location and detailed assay data for all drill-holes mentioned in this report but not provided herein have been provided in previous announcements during the quarter. These are available on the Company's website at www.magmametals.com.au. All drill intercepts referred to in this report are down-hole thicknesses and may not represent true thicknesses.

Assays for samples from Canada were conducted at the ALS Laboratory Group facility in Vancouver, British Columbia, following sample preparation at their facility in Thunder Bay, Ontario. Sample preparation and assays for samples from Australia were conducted at the ALS Laboratory Group facility in Perth, Western Australia.

Competent Persons Statements

The information in this report that relates to exploration results is based on information compiled or reviewed by Dr Keith Watkins, Mr Ralph Porter and/or Dr Bill Stone, the Executive Chairman, Director Exploration – Australia and Vice President Exploration – Canada, respectively, who are all Members of the Australasian Institute of Mining and Metallurgy. Dr Watkins, Mr Porter and Dr Stone have sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activities undertaken, to each qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code), and as a Qualified Person as such term is defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects. Dr Watkins, Mr Porter and Dr Stone consent to the inclusion in this report of the matters based on this information in the form and context in which they appear.

Cautionary Statement Regarding Forward Looking Statements 

Certain information contained in this report constitutes "forward-looking information" under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" , "is expected", "estimates", "intends", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Although management believes that the expectations expressed in such forward-looking information disclosed herein are based on reasonable assumptions, these statements are not guarantees of future performance. A number of factors could cause actual results, performance or achievements to differ materially from those in the forward-looking information. Such factors include future metal prices, exploration and evaluation results, future availability of capital and general economic, market or business conditions, government regulation of mining operations, failure of equipment or processes to operate as anticipated, risks inherent in mineral exploration and development including unusual or unexpected geological formations. Descriptions of these risks can be found in the Company's various statutory reports, including its Annual Information Form available on its website at www.magmametals.com.au and on the SEDAR website (sedar.com).

ABN 72 114 581 047

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