Magma Metals Limited
TSX : MMW
ASX : MMW

Magma Metals Limited

April 27, 2011 08:56 ET

Magma Metals Limited: Quarterly Report for the Period Ended March 31, 2011

PERTH, WESTERN AUSTRALIA--(Marketwire - April 27, 2011) - Magma Metals Limited (TSX:MMW)(ASX:MMW) -

HIGHLIGHTS

Thunder Bay North Platinum-Palladium Project, Ontario

  • A drill hole, which tested an EM anomaly in the southern part of Current Lake, returned an excellent intersection of: 53.65m @ 7.58g/t Pt+Pd, 0.92% Cu & 0.51% Ni from 34.4m

  • A 14,000m drilling program to test potential resource extensions over a 600m strike length is planned to commence in early May. This is part of a budgeted 30,000m of drilling in 2011 to identify additional resource potential at the project.

Griffins Find Gold Project, Western Australia

  • A 9,000m drilling program is in progress to test several targets within a 3km x 1km gold-in-soil anomaly; initial results are encouraging.

Corporate

  • Magma announced a A$20 million placement subsequent to the end of the quarter.

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 March 31, 2011. Activities included drilling 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. Project Locations, please visit the following link: http://media3.marketwire.com/docs/magma_metals_apr27_fig01.pdf

NORTH-WESTERN ONTARIO, CANADA

Thunder Bay North Platinum-Palladium-Copper-Nickel Project

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

Winter Drilling Program

A winter drilling program of approximately 11,000m commenced on January 20, 2011, to test several targets mainly within the 80km2 complex of prospective intrusions which appear to form a network of magma conduits in the project area (Figure 2). The drilling tested:

  • An electro-magnetic (EM) target in the southern part of Current Lake;
  • Magnetic targets to the north and southeast of the defined mineral resource in the Current Lake Intrusive Complex, which lie beneath lakes;
  • The southern part of the Steepledge Lake Intrusive Complex, where previous reconnaissance drilling had returned encouraging results; and,
  • A number of magnetic targets in the EWC Intrusive Complex.

Magma reported results from some of this drilling in its announcement of March 29, 2011, including the best result of 53.65m @ 3.86g/t Pt, 3.72g/t Pd (7.58g/t Pt+Pd), 0.92% Cu & 0.51% Ni from 34.4m, including 33.00m @ 5.60g/t Pt, 5.39g/t Pd (10.99g/t Pt+Pd), 1.29% Cu & 0.71% Ni from 50m in drill hole TBND233, which tested the EM target in the southern part of Current Lake. Encouraging assay results and visible sulphides were also reported adjacent and to the southeast of the mineral resource in the Beaver Lake area. Results from some of this drilling are still pending.

One hole remains to be drilled to complete the program in the southern part of the Steepledge Lake Intrusive Complex (Figure 2).

Summer Drilling Program

An initial approximately 14,000m drilling program has been designed to evaluate the potential for resource extensions within a strike length of 600m, immediately southeast of the mineral resource in the Beaver Lake area (Figure 3). Some holes will also be drilled to the south of the Bridge Zone to test some open positions in that area. This drilling will commence with two drill rigs in early May.

To view Figure 2. Winter drilling program at Thunder Bay North, and Figure 3. Summer drilling program in the Current Lake Intrusive Complex, please visit the following link: http://media3.marketwire.com/docs/magma_metals_apr27_fig02_fig03.pdf

Note the red lines in the figure indicate the sections to be drilled; on one of these the hole collars are off-section. Refer to Magma's announcement of February 7, 2011, for information on mineral resource estimates, including the calculation of platinum equivalents.

The exploration focus for the remainder of this year and into next year will be on resource extension drilling and testing regional targets with the objective of building a larger resource inventory for the project.

Approximately 25,000m of drilling has been budgeted for the remainder of 2011 to identify extensions to the mineral resource. The 14,000m program noted above is the first phase of this drilling. Resource extension drilling will focus on the 2.5km strike extent of the Current Lake Intrusive Complex immediately east of the mineral resource (Figure 3).

In addition, approximately 5,000m of drilling has been allocated to testing regional targets within the Thunder Bay North project (Figure 2).

Scoping Study (Preliminary Economic Assessment)

AMEC Americas Limited ("AMEC") completed an independent scoping study for the Thunder Bay North project during the quarter (see Company announcement of February 7, 2011). Key areas of the study included mining strategy, metallurgy and process engineering, and environmental and permitting considerations. Further studies are planned in 2011 to optimize the outcomes of the scoping study, with particular focus on simplification of the mineral processing flow sheet and reducing capital and operating costs for the project.

WESTERN AUSTRALIA

Griffins Find Gold Project, Western Australia

(Magma option to acquire 100%)

A 9,000m drilling program is in progress to evaluate the Ridge and Griffins West prospects and test several other targets in a 3km x 1km gold-in-soil anomaly. Magma reported results from some of this drilling in its announcement of April 6, 2011. The initial results are encouraging and have better defined a number of the current targets. Approximately 1,000m of diamond drilling remain to complete the program. Assay results are pending for the recently completed drill holes.

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

CORPORATE

The total issued capital of Magma Metals Limited at March 31, 2011, was 195,610,923 shares. In addition, there were 19,586,000 unlisted options outstanding.

Following the end of the quarter, on April 14, 2011, the Company announced a A$20 million placement, which was well supported by existing and new institutional and sophisticated investors. RBC Capital Markets was the lead manager with Argonaut Limited as co-manager.

The placement will be completed in two tranches. Under the first tranche, on April 19, 2011, the Company issued 27,741,000 shares at the issue price of A$0.28 per share. Under the second tranche, a further 43,689,000 shares are to be issued at the issue price of A$0.28 per share subject to the approval of Magma's shareholders, which will be sought at a General Meeting scheduled for May 17, 2011.

Magma retained $5.6 million in cash at the end of the quarter, with a further $20 million, less fees, to be received during April and May 2011 from the placement described above.

The aforementioned cash flow report for the quarter ended March 31, 2011 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.

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 www.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 www.sedar.com.

ABN 72 114 581 047

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