Metalicity Limited www.metalicity.com.au ASX Code: MCT 6 Outram Street ABN: 92 086 839 992 West Perth WA 6005

ASX RELEASE: 28 JULY 2017

JUNE 2017 QUARTERLY ACTIVITIES REPORT

Admiral Bay Zinc Project Pre-Feasibility Study (PFS) delivers outstanding optional mining results

Staged Direct Shipping Ore (DSO) and Concentrate model being incorporated into the PFS

MOU signed with China Minmetals regarding Admiral Bay zinc and lead offtake and financing

Option acquired for high grade Napier Range Zinc project to complement development of Admiral Bay

Outstanding cobalt anomalies identified at Kyarra Cobalt Project with drilling to commence

Further drilling program approved at Lynas Find North

Cash balance of approximately $1.82 million at 30 June 2017 (excluding $1.86m Options in the money)

The Company is considering a range of funding opportunities including sale of a net smelter royalty (NSR),

commodity streaming deal, sale of non-core assets and a strategic placement with Share Purchase Plan (SSP)

ADMIRAL BAY ZINC-LEAD PROJECT (100% MCT)

Pre-Feasibility Study (PFS) Stage 1

SRK Consulting (SRK) completed a review the high grade MRE located in M04/249 where the majority of drilling is concentrated. The high-grade MRE of 20Mt at 10% ZnEq (see ASX:MCT 10/2/2015) includes 4.9Mt at 12.5% ZnEq at 11% ZnEq cut-off, and is limited to 2.1km within the 18km global Inferred MRE (Figure 2). SRK have also validated the global resource model within the M04/249 and are suggesting that using the new geological models, mineralisation domains and a more local approach to grade, would help better define higher-grade zones to target for future drill planning.

Significant high-grade intersections >10% ZnEq occur in most of the holes that have tested the central axis of the antiform. In the higher-grade zone, seven holes have drilled mineralised zones of >10m thickness in the axial zone. Of these, three have intersected zones >10% ZnEq and four have intersected mineralisation from 8-10% ZnEq. The existence of intersections such as 20m at 14.5% ZnEq (including 6m at 24.3% ZnEq) in ABRD001, and 19m at 8.3% ZnEq and 14m at 17.7% ZnEq in SS02 indicate that high-grade zones are present in the axial zone of the deposit and it is considered likely that multiple high-grade zones will be intersected by further drilling. This central high-grade zone is the most logical area for the commencement of mining to accelerate payback on pre-production capital and it is a priority to convert a relevant portion of this zone to the indicated category. The design and budgeting of drilling options has therefore focussed on this portion of the deposit. SRK is currently undertaking further work to define the recommended target zone for the next drilling campaign. Two very significant outcomes were achieved from the studies by the SRK Geotechnical & Hydrogeological team, in summary, being: (1) the probability of intersection of the grant aquifer with both open stoping and longwall mining is very low and (2) the potential exists to de-water the aquifer at a very reasonable capital to eliminate residual risk.

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These results significantly enhance and de-risk the mining option studies for both the DSO Model (open stoping) and the Concentrate Model (open stoping and potential longwall mining). Ingress of groundwater is viewed as a key element for the mining of Admiral Bay in terms of capital to (1) implement a water management plan and (2) deploy an enhanced thermal management plan. The purpose of evaluating the open stoping and longwall mining methods (as opposed to the previous room and pillar model) is aimed at achieving greater volumes of ore extraction at significantly lower costs, enhancing the overall economics of Admiral Bay. As part of the ongoing studies, the recent evaluation of underground sensor based ore sorting, has provided an alternative mechanism to reduce the capital and operating cost. Outotec, has been appointed to perform the studies required to validate the concept for the Admiral Bay ore body. The ability to reduce the amount of waste hoisted up to surface, providing significant economic benefits, by reducing the materials handling tonnages, generating a higher grade feed into the plant, increasing capacity and many others.

Memorandum of Understanding (MOU) with China Minmetals Nonferrous Metals Co., Ltd (“CMN”).

During the quarter, a Memorandum of Understanding (“MOU”) regarding future zinc-lead offtake and financing

was signed with China Minmetals Nonferrous Metals Co., Ltd (“CMN”). CMN is a subsidiary of China Minmetals Corp (“Minmetals”) which is China’s, and one of the world’s, leading mining and metals company’s.

Minmetals is one of China’s leading zinc smelting companies with annual consumption capacity of 1Mtpa zinc concentrate and is currently completing a merger with China Metallurgical Corporation (MCC). The combined revenues of Minmetals and MCC are reported to amount to approximately twice that of the world’s largest publicly traded mining company, BHP.1 China is the world’s largest consumer and processor of zinc concentrates into refined zinc.

The MOU contemplates the supply of an initial 10% of future offtake from an anticipated production of 174Kt zinc and 115Kt lead per annum from Admiral Bay in exchange for metallurgical and beneficiation testwork which establishes a pathway for investing in Metalicity and/or Admiral Bay at the company and/or project level. Both parties will work towards a binding agreement.

CMN will undertake metallurgical and beneficiation testwork on approximately 50kg of existing core currently held by the company in a refrigerated container. CMN will prepare a report for Metalicity as part of the current PFS for the DSO and Concentrate Model, as well as for future financing and off-take. The MOU is the first step in a potential partnership regarding offtake and financing of Admiral Bay and appropriately

compliments the recently signed MOU with China Non-Ferrous Metals for the development, construction and financing of Admiral Bay. The Company has subsequently appointed a Beijing based Investment Bank to progress the MOU’s to a binding investment agreement with both NFC and Minmetals, and will conduct technical and financial presentations in Beijing in the September Quarter to advance these agreements.

Option acquired for High Grade Napier Range Zinc Project During the quarter, the Company also entered into an Option Agreement for the acquisition of the high-grade Napier Range Zinc Project located in the Lennard Shelf of the Kimberley Region, WA, which may represent a low capital and near term producing zinc project opportunity, to complement the development of its large-scale long life Admiral Bay Zinc Project.

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The Napier Range Zinc Project consists of 2 granted mining licenses, an exploration license application and a granted general purpose license (Table 1). It includes the Wagon Pass deposit, with a JORC 2012 compliant Inferred Mineral Resource Estimate of 750Kt at 5.8% Zn, 7.2% Pb, 54g/t Ag (13.6% ZnEq) and an adjoining Exploration Target Range (ETR) of 100Kt-200Kt at 10%-13% ZnEq. The most recent MRE of 750Kt at 5.8% Zn, 7.2% Pb, 54g/t Ag (13.6% ZnEq) at Wagon Pass was completed by Cube Consulting in 2016, using a 5% Zn + Pb cut off, 2m downhole compositing, and an assumed bulk density of both waste and mineralised material of 3.0 g/cm3. The deposit is located between 150-200m depth below surface. Additional details on key parameters of the MRE are presented in JORC Table 1 below, and the block model is shown in Figure 2. Extensions to the Wagon Pass deposit and additional deposits are considered likely if systematically explored, by leading independent geological consultant CSA Global, who recently completed a comprehensive targeting exercise and commented that the area is underexplored (CSA Global 2016). The report outlines 9 targets, 1 for resource extensions to the Wagon Pass deposit and 8 further targets. At Wagon Pass, mineralisation potential exists to extend the resource to west of the deposit, with an Exploration Target Range of 100-200Kt at 10-15% ZnEq. The remaining 8 targets are located further south, mostly in analogous settings to Wagon Pass. CSA further commented ‘Although drilling has occurred in the project area, many drill holes did not test the favorable Lower Napier stratigraphy. In addition, the footprint of the Wagon Pass deposit is small and the area is significantly under-explored for additional deposits 0.5 to 1 Mt size.’ Based on the CSA Global analysis the Company is targeting multiple occurrences of 0.5-1Mt size, resulting in an Exploration Target Range at Napier Range of 1-4 Mt @ 10-15% ZnEq. The grade and tonnage range is based on the grade and geometry of the Wagon Pass deposit, and the clustering nature of this deposit type. The Emmanuel Range Zinc Project consists of one exploration tenement and two tenement applications in close proximity to the Pillara, Kapok, Cadjebut and Goongewa Mines, in the Emmanuel Range of the Kimberley Region, WA. (Figure 3). All of the tenements in this project cover the prospective stratigraphy and structural positions, in very close proximity to existing deposits or mines. For example, E04/2453 is located less than 2km from the Pillara deposit, the largest Pb-Zn deposit yet discovered in the Lennard Shelf. A number of synergistic opportunities may be likely with the development of the Company’s 100% owned large scale long life Admiral Bay Zinc Project. The primary synergy is the potential of Napier Range to be a high grade low capital near term producing asset, that would generate sufficient cashflow to help support the development of Admiral Bay. Key synergies identified to date include various infrastructure components, mineral processing equipment, human resources, financing and offtake synergies. These will be further evaluated and quantified during the Due Diligence period. Terms of the Heads of Agreement with Ridgecape Holdings Pty Ltd (‘Ridgecape’) Metalicity has signed a Heads of Agreement (HOA) for the 100% acquisition of Ridgecape whose primary asset is an Option Agreement with Meridian Minerals Pty Ltd (‘Meridian’) over the Napier Range and Emmanuel Range Projects. Metalicity will acquire Ridgecape for $1,100,000 in cash and fully paid ordinary shares in the company, via the following payments:

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• $100,000 cash and $500,000 fully paid ordinary shares upon signing the Heads of Agreement

• $500,000 in fully paid shares upon the exercise of the Option. Terms of the Option Agreement with Meridian Metalicity (via the Ridgecape Option Agreement) has the right to exercise the Option to acquire 100% of the Napier Range and Emmanuel Range Projects via the following payments:

• A$500,000 cash by November 19, 2017

• A$500,000 cash 6 months thereafter May 19, 2018

• A$1,000,000 cash 6 months thereafter November, 2018 Meridian is a fully owned subsidiary of Chinese State-Owned Enterprise, China Northwest Non-Ferrous Metals and if appropriate the Company will seek to negotiate more favourable terms on the transaction for these the projects.

Figure 1: Admiral Bay Zinc Project: MRE and ETR in plan view

Source: Metalicity

The Exploration Target Range (ETR) stated above is conceptual in nature and the potential quantities and grades are conceptual in nature. There has been insufficient exploration to estimate a Mineral Resources Estimate and it is uncertain whether further exploration will result in the estimation of Mineral Resources. F

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Figure 2: Admiral Bay Zinc Project high grade zone extending over a 2.1km strike

Source: Metalicity

Figure 3: Location of the Option Agreement Tenements

Source: Metalicity

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Table 1: Tenements included within the Option Agreement

Source: Metalicity ASX Release 26/07/2017

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COBALT PROJECTS (100% MCT)

Kyarra Cobalt Project

Two further field visits during the Quarter and subsequent assay results, confirmed widespread cobalt and base metal anomalism at surface across the Project area. In particular at Kyarra West where results up to 1500 ppm Co, >1% Zn, and 3830 ppm Ni were received (ASX:MCT 21/06/2017 and ASX:MCT 21/06/2017, Figure 4, Figure 5, Table 2). Approvals are currently underway to facilitate drilling at Kyarra West in the September Quarter. The targeting study commissioned on the Yerrida Basin by Dennis Gee has been received and is being reviewed to enhance the existing targeting efforts.

Figure 4: Kyarra West

Source: Metalicity ASX release 21/07/2017

Area shown

in Figure 7

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Figure 5: Kyarra West Target Area showing the locations of recent Metalicity surface samples with cobalt

anomalism highlighted (see Table 2 below).

Source: Metalicity ASX release 21/07/2017

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Table 2: Selected recent surface sample results at Kyarra West, shown in Figure 5 (note MCRK0263 Zn

exceeded the assay detection limit and is currently being re-assayed).

Source: Metalicity ASX Release 21/07/2017

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LITHIUM PROJECTS (100% MCT)

Pilbara Lithium Projects

A range of approvals were progressed across the Pilgangoora Lithium Projects for planned drilling programs at Stannum and Lynas Find. And most recently at Turner River North following the grant during the Quarter of E45/4675.

Figure 6: Detailed view of ‘Tria’ Prospect at Stannum showing location of drilling completed, and the circled area to be targeted in approved Phase 2 drilling.

Source: Metalicity ASX Release 28/04/2017

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CORPORATE AND FINANCIAL

The Company’s cash balance at the end of the Quarter stood at approximately $1.82 million at 30 June 2017

(excluding $1.86m Options in the money).

Additional funding to progress the Admiral Bay PFS is being evaluated including but not limited to the sale of non-

core assets, a formal JV on Admiral Bay, the sale of a Net Smelter Royalty (NSR) on Admiral Bay, Commodity

Streaming Deals (CSD) on Admiral Bay, Pre-payment on Off-take on Admiral Bay and/or a capital raising including a

share purchase plan (SPP) so that existing shareholders may participate.

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ENQUIRIES

Investors Media

Matt Gauci Michael Vaughan

Managing Director Fivemark Partners

+61 8 9324 1053 +61 422 602 720

mgauci@metalicity.com.au michael.vaughan@fivemark.com.au

Competent Person Statement Regarding Admiral Bay Project

See Metalicity ASX Announcement 19/0 4/2017.

Competent Person Statement Regarding Lithium Projects

See Metalicity ASX Announcement 28/04/2017

Competent Person Statement Regarding Kyarra Cobalt Project

See Metalicity ASX Announcements of 21/06/2017 and 21/07/2017

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