MetalicityLimited www.metalicity.com.auASXCode:MCT 6OutramStreetABN:92086839992 WestPerthWA6005

ASXRELEASE:31JANUARY2018

DECEMBER2017QUARTERLYACTIVITIESREPORT

Completionoftheacquisitionofthehigh-gradeNapierRangeZincwithdrillingplannedforMarchQuarter

SuccessfulMetallurgicaltestworkprogramontheAdmiralBayZincProjectwithChinaMinmetalsbeingakeysteprequiredtocomplywithfinancingrequirementsofChinesebanks

PositivereviewoftheAdmiralBayZincProjectPre-FeasibilityStudy(PFS)Stage1completedbyChinaNFC,beingakeysteprequiredtocomplywithfinancingrequirementsofChinesebanks

SignificantcobaltintersectionsattheKyarraCobaltprojectwithphase2drillingplanned

StrengtheningoftheMetalicityboardwiththeappointmentofJustinBartonasExecutiveDirector

ACQUISITIONOFHIGHGRADELENNARDSHELFZINCPROJECT(100%MCT)

Metalicity Limited (ASX:MCT) (“MCT” or “Company”) strengthened its zinc project pipeline through thecompletionoftheacquisitionofthehighgradeNapierRangeZincProjectandtheEmanuelRangeZincProject(collectivelytheLennardShelfZincProject),locatedintheLennardShelfoftheKimberleyRegion,WA.NapierRangerepresentsalowcapitalandneartermproducingzincproductionopportunity,whileEmanuelRangerepresentsanearly stagebuthighlyprospective zincexplorationprojectwithanextensive30kmstrikeoflargelyuntestedtargets.TheseprojectswillcomplementthedevelopmentofitslargescalelonglifeAdmiralBayZincProject,locatedintheadjoiningCanningBasinoftheKimberleyRegion,WA.

Overview

TheNapierRangeZincProjectconsistsof2grantedmininglicenses,anexplorationlicenseapplicationandagrantedgeneralpurposelicense(Table1).ItincludestheWagonPassdeposit,withaJORC2012compliantInferredMineral Resource Estimate (MRE) of 750Kt at 5.8% Zn, 7.2% Pb, 54g/t Ag (13.6% ZnEq) and anadjoiningExplorationTargetRange(ETR)of100Kt-200Ktat10%-13%ZnEq.ThemostrecentMREof750Ktat5.8%Zn,7.2%Pb,54g/tAg(13.6%ZnEq)atWagonPasswascompletedbyCubeConsultingin2016,usinga5%Zn+Pbcutoff,2mdownholecompositing,andanassumedbulkdensityofbothwasteandmineralisedmaterialof3.0g/cm3.Thedepositislocatedbetween150-200mdepthbelowsurface.AdditionaldetailsonkeyparametersoftheMREarepresentedinASXAnnouncement“HighGradeNearSurfaceZincProjectson30/10/17.ExtensionstotheWagonPassdepositandadditionaldepositsareconsideredlikelyifsystematicallyexplored,byleadingindependentgeologicalconsultantCSAGlobal,whorecentlycompletedacomprehensivetargetingexerciseandcommentedthattheareaisunderexplored(CSAGlobal2016).Thereportoutlines9targets,1forresourceextensionstotheWagonPassdepositand8furthertargets.F

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Figure1:LocationoftheLennardShelfZincProjects

Source:Metalicity

At Wagon Pass, mineralisation potential exists to extend the resource to west of the deposit, with anExplorationTargetRangeof100-200Ktat10-15%ZnEq.Theremaining8targetsare locatedfurthersouth,mostlyinanalogoussettingstoWagonPass.CSAfurthercommented‘Althoughdrillinghasoccurredintheprojectarea,manydrillholesdidnottestthefavorableLowerNapierstratigraphy.Inaddition,thefootprintoftheWagonPassdepositissmallandtheareaissignificantlyunder-exploredforadditional deposits 0.5 to1Mt size.’ Basedon theCSAGlobal analysis theCompany is targetingmultipleoccurrencesof0.5-1Mtsize,resultinginanExplorationTargetRange(ETR)atNapierRangeof1-4Mt@10-15%ZnEq.ThegradeandtonnagerangeisbasedonthegradeandgeometryoftheWagonPassdeposit,andtheclusteringnatureofthisdeposittype.AdditionaldetailsonkeyparametersoftheETRarepresentedinASXAnnouncement“HighGradeNearSurfaceZincProjects”on30/10/17.TheExplorationTargetRanges(ETR)statedaboveareconceptualinnatureandthe potential quantities and grades are conceptual in nature. There has been insufficient exploration toestimateaMineralResourceEstimateoutsidethatknownatWagonPass,anditisuncertainwhetherfurtherexplorationwillresultintheestimationofadditionalMineralResources.

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Figure2:ExplorationTargetareas,existingandproposeddrilling,andmajorgossanlocationsatNapierRange.

Source:Metalicity

TheEmmanuelRangeZincProjectconsistsofoneexplorationtenementandtwotenementapplications incloseproximitytothePillara,Kapok,CadjebutandGoongewaMines,intheEmmanuelRangeoftheKimberleyRegion,WA.(Figure3).Allofthetenementsinthisprojectcovertheprospectivestratigraphyandstructuralpositions,inverycloseproximitytoexistingdepositsormines.Forexample,E04/2453islocatedlessthan2kmfromthePillaradeposit,thelargestPb-ZndeposityetdiscoveredintheLennardShelf.

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Anumberofsynergisticopportunitiesmaybe likelywiththedevelopmentof theCompany’s100%ownedlargescalelonglifeandlowcostAdmiralBayZincProject.TheprimarysynergyisthepotentialofNapierRangetobeahighgrade lowcapitalnear termproducingasset, thatwouldgeneratesufficientcashflowtohelpsupportthedevelopmentofAdmiralBay.Other key synergies identified to date include various infrastructure components, mineral processingequipment,humanresources,financingandofftakesynergies.ThesewillbefurtherevaluatedandquantifiedduringtheDueDiligenceperiod.NotethatLennardShelfPtyLtd(a50:50jointventurebetweenGlencoreandTeck)retainanoptiontoearna51%participatinginterestintheWagonPasstenementsifanewJORCInferredResourcehasbeendiscovered,byeithercompletingandsolefundingaFeasibilityStudy,orspending$20Montheassessmentoftheinferredresources.MetalicityhashelddiscussionswithbothGlencoreandTeckregardingthisoptionandwillupdatethemarketshouldanyinvestmentand/oramendmenttotheagreementbereached.ForfurtherinformationrelatedtoGeology,MineralResourceEstimate(MRE),ExplorationTargetRange(ETR)andTermsoftheAcquisitionpleaseseeASXAnnouncement“HighGradeNearSurfaceZincProjects,30/10/17.”

COMPLETIONOFKEYSTEPSOFTHEMOU’SWITHCHINAMINMETALSANDCHINANFC

CHINAMINMETALSMETALLURGICALTESTWORKPROGRAM

On 19 July 2017, the Company signed aMOUwith CMN for future offtake from Admiral Bay. TheMOUcontemplatesthesupplyofaninitial10%offutureofftakefromananticipatedproductionof174,000tofzincconcentrate and 115,000t of lead concentrate per annum from Admiral Bay in exchange for preliminarymetallurgicalandbeneficiationtestwork.ForfurtherdetailsontheMOUseeASX:MCT19/7/17.TheCompany’smetallurgicalandmineralprocessingtestworkcarriedouttodatedeliveredpositiveresultsincluding (1) The material does not currently demonstrate any deleterious metallurgical behaviour (2) Itappearsreadilyamenabletoprocessingthroughasimple,conventionalflotationplanttoachievehighzinc,leadandsilverrecoveries(3)Preliminarymetalrecoveryexpectationsareintherangeof90-95%acrosszinc,leadandsilver(4)Concentrateproductgradesweregood(Pb+60%andZn+48%),althoughselectivityofzincandleadwasnotidealandthereisscopeforfurtheroptimisation(seeASX:MCT27/7/16).The preliminary metallurgical testwork study by CMN was undertaken by Changsha Institute of MiningResearchCo., Ltdunder thecommissioningofCMNon52.4kgofdiamondcore fromdrillholesABRD005,ABRD006,ABRD008andABRD009locatedprimarilywithinthehigh-gradezoneofAdmiralBayandlocatedwithinthegrantedmininglicense(ML4/249).ThecorewasselectedtoberepresentativeoftheAdmiralBayorebodyandanadvanceonprevioustestwork.Sampleswerecrushedandscreenedtoaparticlesizeof-2mm,andwerethenpreparedbymixinganddivision,and taken forbeneficiation tests,analysis,mineralogical studiesandstandbyapplication.Fourcomposites(ABMET1,ABMET2,ABMET3,ABMET4)wereassayedpre-comminution,eachsamplerepresentingsectionsofdifferentdrillholes.CompositesABMET1&ABMET4wherecombinedandselectedfortesting.F

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Table1:SampleInformationfortesting

SampleID DryWeight(kg)

Pbgrade(%)

Zngrade(%)

Augrade(g/t)

Aggrade(g/t)

ABMET1ABRD006 26.12 1.17 4.85 0.1 24.98ABMET2ABRD005 14.44 0.58 3.08 0.23 17.54ABMET3ABRD008 2.18 0.3 2.01 0.23 4.47ABMET4ABRD009 9.62 1.78 2.24 0.21 16.06Calculatedtotalaveragegrade: 52.36 1.08 3.76 0.16 20.44

Bench flotation tests were carried out on the samples to establish the amenability of conventionalbeneficiation. The samples were characterised by a mineralogy study and chemical composition. Theobjectivesofthebenchflotationtestswereto:

(1) To gain a comprehensive understanding of the properties of the samples via amineralogy study,providingabasisforbeneficiationtestworkstudy

(2) Todeterminetheeconomicbeneficiationprocessflowsheet,reagentsystemandperformanceindicesindexes forAdmiralBayZinc-Lead-Silverbyconductingsystematicbeneficiationtests, investigatingthemainmineralogical and technologicalprocess factors that influencebeneficiation indexes,andprovidingthebasisforthenextstepintestworkstudy.

SUMMARYOFMETALLURGICALTESTWORKRESULTSWITHCHINAMINMETALS

SummaryofResults

(1) Sampleswerecharacterisedaszinc-leadprimarysulphideswiththemainrecoverablemineralsbeingsphaleriteandgalena.Themineralogywascharacterisedassphalerite,galena,pyriteandchalcopyrite,withganguemineralsbeingmainlycalcite,quartz,bariteandsericite.

(2) Sequentialflotationisthepreferredmethodwithleadflotationfollowedbyzincflotationfromleadtailings.Thereagent regimesselectedwere: (a)CaO (Lime)waschosentodepresspyrite,with (b)ZnSO4andNaSo3selectedtodepresszincand(c)ETCandBXhaveaselectivecollectingeffectonLeadminerals,thesewereadoptedasacollectorblendintheLeadflotation

(3) Fullprocess,close-circuit,testswerecarriedoutwithZincrecoveriesof88.27%toazincconcentratewithagradeof51.27%Znand181.2g/tAgachieved,whileLeadrecoveriestoleadconcentratewere91.88%ataleadconcentrategradeof65.13%Pband137g/tAg(refertoTable2).

(4) Thegradeofdeleteriouselementswillnotattractpenalties.(5) Goldandsilverareupto0.23g/tAuand23.22g/tAgrespectivelywithasignificantrecoveryvalue.

Table2:TestworksummaryresultsforPb/Zn&Aggradesinconcentratewithrespectiverecoveries

Product

YieldRate(%ofMass)

Pbgrade(%)

Zngrade(%)

Aggrade(g/t)

PbRecovery

(%)

ZnRecovery

(%)

AgRecovery

(%)PbConcentrate 1.89 65.13 3.95 137.65 91.88 1.75 11.25ZnConcentrate 7.36 0.49 51.27 181.20 2.69 88.27 57.72Tailings 90.75 0.08 0.47 7.90 5.43 9.98 31.03

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SUMMARYOFTHECHINANFCPROJECTREVIEW

During the quarter, China Non-Ferrous Metals (NFC) formally notified the Company of the successfulcompletionofadetailedreview(Review)ofthetechnicalandfinancialparametersoftheAdmiralBayZincProjectPFSStage1report(seeASX:MCT10/10/17)supportingtheMemorandumofUnderstanding(“MOU”)signedwiththeNFCholdingcompanyCNFCforthefeasibility,developmentandfinancingofAdmiralBay(seeASX:MCT8/2/17).CNFC is the major engineering and equipment arm of NFC in the resources and mining sector and hasestablishedmarketsintheMiddleEast,CentralandNorthAsia,CentralandSouthAfrica,andisseekingfurtherprojects related to resources in developed resources and mining markets such as Australia. CNFC is anorganizationwithastrongtrackrecordinsupportingthedevelopmentof large, longlifeprojects, incudingMehdiabad,Citronen,TallaHamzaandotherprojectsinNorthernChinaincludingthe“CityofZinc”.NFChasenteredtheShenzen100StockIndexandShanghai-Shenzen300CompositeIndex.TheReviewisakeytermoftheMOUbetweentheCompaniesandastrongendorsementofthetechnicalandfinancialparametersoftheAdmiralZincProjectPFSStage1report,establishingaframeworkfortheProjectStudy at the completion of the PFS, incorporating NFC EPC costings. The Project Study is anticipated tosignificantlyreduceoverallcapitalandoperatingcosts,reducelongleaditemstimes,acceleratedevelopmenttimelines and overall economics, and in turn support a binding agreement regarding the feasibility,developmentandfinancingofAdmiralBay.

Figure3:AdmiralBayZincProject:MREandETRinplanview

Source:Metalicity

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TheExplorationTargetRanges(ETR)statedaboveareconceptualinnatureandthepotentialquantitiesandgrades are conceptual in nature. There has been insufficient exploration to estimate aMineral ResourceEstimateoutsidetheMineralResourceEstimateatAdmiralBay,anditisuncertainwhetherfurtherexplorationwillresultintheestimationofadditionalMineralResources.

Figure4:AdmiralBayZincProjecthighgradezoneextendingovera2.1kmstrike

Source:Metalicity

SIGNIFICANTCOBALTINTERSECTIONSATTHEKYARRAPROJECT(100%MCT)

KyarraCobaltProjectThe Company completed an initial 1,800mRC drill program at the Kyarra Cobalt project following recentdesktopandfieldworkwhereanother65rockchipsampleswerecollectedincludingsignificantresultsofupto1500ppmCoand>1%Zninweatherednear-surfacerockchipswerereceived,acrosstheentireoutcroparea sampled. Some of the cobalt anomalism has been observed to be associated with west-north-weststrikingbrecciazonesinterpretedtoberelatedtodeep-seatedstructuresandtorepresentpartofaplumbingsystemformetalliferousfluidsupwardandsouthwardsintosuitabletraphorizons.Ofparticularnoteare thegenerally steepdipsofunits (typically >50° to the southand southeast),whichindicatesignificantdisruptionoftheunitsinthisareaincontrasttothegenerallyheldviewoftheYerridaBasinunitsbeingflatlying.Duetosignificantdelaysinthedeliveryandthenprocessingofthesamples,largelyoutofthecontroloftheCompany,resultsandinterpretationoftheprogramwillbedueshortly.

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ThedrillingintersectedsandstonesoftheYelmaFormationunconformablyoverlyingMaralooFormationblackshales.Holeswere terminatedwithinblack shaleat apredetermineddepth. Locally, anomalousanalyticalresults were associated with quartz veining, related to fractures and brecciation, was intersected. Thedownholequartzzonesarepossiblycorrelativewithquartzfloatatsurface,andrelatedtothewest-north-westtrendingbrecciazones.Drillholesencounteredaconsistentnear-surfacebasemetalenrichmentzone,interpretedtobearegolithenrichment zone, which may account for some of the anomalous results in surface samples. Moreinterestingly,an8mto12mthick,shallowsouth-dippingzoneofanomalousbasemetal(400–500ppmCuand50–60ppmCo)was intersected inalldrillholes.Thesevalues representaround4x theCubackgroundandabout2xtheCobackgroundvalues(Table1).This anomalism is considered significant because in the Central African Copperbelt – the source of theexplorationmodel–therearemultiplemineralisedhorizons(associatedwithminorredoxboundaries)foundabovethebasalproductivezone.TheCompanywillnowfocus iseffortstotargetthebaseoftheMaralooFormation and themain transition zone from the underlying “red-bed” sandstones,which represents theprimarytargetandmostprospectivesettingforsignificantmineralisation.ForfurtherinformationrelatedtoKyarraCobaltProjectseeASXAnnouncement“SignificantCobaltintersectionsatKyarra”14/11/17.

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Figure5:RegionalLocationMapshowingMetalicity’sKyarraProjectinrelationtonearbytenementholders

Source:Metalicity

E51/1756

E51/1755

E53/1894

248ppm Co, 553ppmNi

808ppmZn

839ppm Co, 2,100ppmNi

6,400ppmCo,3,000ppmCu

544ppmCo,2,400ppmNi

1,220ppmCo,3,590ppmNi

AreashowninFigure3

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LITHIUMPROJECTS(100%MCT)

PilbaraLithiumProjectsThe Company completed an initial 500-600mRC drill program at the PilgangooraNorth Project aimed attesting for mineralized pegmatites extending north into the southern parts of the tenement, below thepegmatitesalreadymappedatsurface.Drillingintersectedpegmatitesineveryhole.Anomalouslithiumwasintersectedineveryhole.Subsequenttothedrillingprogram,theCompanyappointedlithiumexpertsfromCSAGlobaltoundertakeaprojectreviewandtargetingexerciseacrosstheCompany’sPilbaraLithiumprojects.Theresultswereverypositive with a number of new targets identified that have yet to be systematically tested withmodernexplorationtechniques.

CORPORATEANDFINANCIAL

The Company is completing a capital raising via an equity placement to institutional and sophisticatedinvestorsinNorthAmericaandAustralia.ProceedsoftheraisingaretobeinvestedindrillingtheNapierRangeZincProject,progressingtheAdmiralBayZincProjectPFS,andphase2drillingoftheKyarraCobaltProject.

DuringthequartertheCompanyappointedJustinBartontotheboardasanExecutiveDirector.

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ENQUIRIES

Investors Media/InvestorRelations

MattGauci DavidTaskerManagingDirector ChapterOneAdvisors+61893241053 +61433112936mgauci@metalicity.com.au david.tasker@lateral.com.auCompetentPersonStatementRegardingNapierRangeZincProjectSeeMetalicityAnnouncement30/10/17CompetentPersonStatementRegardingAdmiralBayProjectSeeMetalicityASXAnnouncement19/04/2017.

CompetentPersonStatementRegardingLithiumProjects

SeeMetalicityASXAnnouncement28/04/2017

CompetentPersonStatementRegardingKyarraCobaltProject

SeeMetalicityASXAnnouncementsof21/06/2017and21/07/2017

InaccordancewithListingRule5.23.2,theCompanyisnotawareofanynewinformationordatathatmateriallyaffectstheinformationincludedintheQuarterlyReportandtherelevantannouncementsreferredaboveand,inthecaseofestimatesofmineralresourcesororereserves,thatallmaterialassumptionsandtechnicalparametersunderpinningtheestimatesintheQuarterlyReportandrelevantannouncementsreferredabovecontinuetoapplyandhavenotmateriallychanged.

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