ARIKA RESOURCES LIMITED — Interim / Quarterly Report 2016

Jan 28, 2016

6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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ASX Code: MCT

29 January 2016

QUARTERLY ACTIVITIES REPORT

HIGHLIGHTS

Base Metals

• Scoping Study on track at the Admiral Bay Zinc Project, due for completion March 2016

• Extensive drill core re-logging and seismic data re-processing at Admiral Bay

• New geological model being developed with a potential resource update in March 2016

• Positive stakeholder meetings and potential partner meetings held

Rare Metals

• Exploration targeting model developed for Lithium and Graphite in WA

• New Lithium Projects acquired in the highly prospective Pilgangoora District, Pilbara, WA

• New Graphite Projects acquired in the highly prospective Munglinup District, WA

• Exploration commenced on both projects with desktop and field surveys underway

Corporate

• Completion of the acquisition of the base metals projects

• Re-listing on the Australian Securities Exchange (ASX) as Metalicity Limited (ASX:MCT)

• Well-funded exploration and development plans with ~$5m cash in bank

• Management appointments made to the base metals and rare metals projects

6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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Base Metals

Admiral Bay Zinc Project

During the quarter the Company progressed a Scoping Study on the Admiral Bay Zinc Project which is due for completion by the end of the March Quarter 2016.

Exploration and Geological Model

The Geological model being compiled is an innovative and modern approach to assessing the Admiral Bay deposit, and consists of the acquisition, compilation and interpretation of data previously unavailable and evaluated for the first time by world experts. The process involves:

• Structural interpretation, re-logging drill core and integration of all historic data

• Re-processing historic 2D seismic data to image alteration and mineralisation, and determine ore horizon continuity from drillhole to drillhole

• Re-assess the current resource estimate using all available data including seismic data

• Assess potential for 3D seismic to image structures, mineralisation and drill targets

This will result in the compilation of a maiden 3D Geological Model to enhance the understanding of the mineralisation, its continuity and generate discrete drill targets. This work has also identified significant thick high grade zones of zinc and lead mineralisation within the existing Mineral Resource Estimate (MRE), which may enable a Mineral Resource Estimate update.

Figure 1. Drill Core Re-logging and Interpretation

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Figure 2. Very high-grade sphalerite (left) & high-grade sphalerite-galena (right) mineralisation

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6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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Exploration and Development Studies

As part of the Scoping Study SRK Consulting Pty Ltd is undertaking a study on options for mine access including conventional drill and blast decline development, Tunnel Boring Machine (TBM) decline development and blind shaft sinking. Due to the depth of the deposit, the requirement to penetrate multiple aquifers and the necessity for appropriate ventilation, preliminary development studies have identified shaft sinking as the current preferred method of access.

Another option would be to first develop an exploration shaft. This would allow a detailed analysis of the orebody including a drill out to support an ore reserve, and will enable the conversion of an exploration shaft to a production shaft, as well as providing appropriate ventilation during development work.

Figure 3. Shaft Option

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Admiral Bay Scoping Study Shaft Option
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Mining Studies

SRK are undertaking a study on mining method options. Studies are focusing on room and pillar and some form of open stoping (with fill) at this stage. This work is being done in conjunction with a geotechnical assessment, however significant geotechnical data is required and will be sourced through future resource drilling campaigns. Various production rates and schedules are being evauated in line with the anticipated Mineral Resource Upgrade in the March Quarter 2016, as well as a range of capital and operating cost parameters.

6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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Metallurgy and Processing Studies

Preliminary metallurgical studies have identified a coarse grind, high quality zinc and lead concentrate with high recoveries, where testwork has achieved indicative recoveries of 96% zinc recovery and 98% lead recovery. Testwork produced an indicative 55% zinc concentrate grade and 70% lead concentrate grade with very low impurities and comparable to zinc and lead concentrate from the Century deposit.

No fatal flaws have been identified in the preliminary review and the favorable metallurgical behaviour indicates a simple, conventional process flowsheet design involving crushing, 2 staged grinding, flotation and thickening to produce a zinc and lead concentrate.

Infrastructure

Infrastructure studies are being undertaken by Mintrex Pty Ltd. Preliminary studies have outlined excellent existing infrastructure within the project area with various opportunities to reduce costs and improve efficiencies related to power, transport and port costs, taking advantage of an industry reduction in capital and operating costs since 2009, when previous studies were undertaken.

Power requirements have identified Gas, LNG, Geothermal and Tidal Power as potentially viable supply options. Besides various power options the project should also benefit from the significant reduction in the oil price. Port options being investigated include Port Hedland, Broome and Derby. Port Hedland represents a real option, it is one of the largest bulk export terminals in the world and is equipped to handle such product movements.

Figure 4. Port Hedland Bulk Export Terminal

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6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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Environmental

Bioscope Environmental Pty Ltd have been engaged to undertake an Environmental Baseline Study. A weather station has been acquired and is in the process of being installed while a wet season survey is being planned for February 2016 to support flora and fauna studies.

Environmental permitting requirements are currently being undertaken for exploration activities (seismic survey initially) and being assessed for mine access and eventual mining. Meetings with various regulators and stakeholders are being held to define appropriate pathways to development.

Figure 5. Typical flora and fauna at Admiral Bay

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Hydrogeology

SRK have undertaken preliminary hydrogeology studies. The Admiral Bay deposit is hosted beneath three key regional groundwater systems; the Broome, Wallal and Grant formations. Further characterisation of the groundwater systems and their impact on access development and mining is required, along with support for mine dewatering and project water supply.

Geotechnical

SRK has carried out preliminary geotechnical studies. While limited data is currently available, a review of existing data sets has provided an opportunity to inform potential mining option evaluations. A key aspect for future resource drilling campaigns will be gathering additional geotechnical data through all zones of waste (mine access) and ore in support of the mining method analysis.

6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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Rocky Gully Nickel Project

During the quarter the Company commenced exploration at the Rocky Gully Nickel Project.

An extensive regional soil sampling program was completed to progress a pipeline of Nova-type nickel copper targets, Tropicana-type gold targets, VMS-type copper-zinc targets and sedimentary graphite targets, where a strike extent of ~70km of prospective rocks with graphite occurring locally exists. Assay results are pending and once assessed will be integrated with historic aeromagnetic and radiometric survey data over the project area.

Figure 6. Albany Fraser Belt, WA.

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Stakeholder Meetings

A number of stakeholder meetings were held in the Rocky Gully region with landholders, contractors and councils to outline the Company’s plans and prospectivity of the Rocky Gully region to host Nova-type nickel copper targets, as well as a number of Tropicana-type gold targets.

6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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Rare Metals

Pilgangoora South Lithium Project

During the quarter the Company lodged more than 450km[2] of exploration license applications that are considered prospective for Lithium, Tantalum and Tin, at the Pilgangoora South Project, in the world class Pilgangoora district, Pilbara Region, WA.

The Pilgangoora South project comprises the Stannum Project (E45/4677) located adjacent to the Wodgina Operations of Global Advanced Metals (GAM), where one of the largest hard rock resources of tantalum is located while the Turner River Project (Applications E45/4675, E45/4676) located 5 km SW of the Pilgangoora Lithium deposits (Pilbara Minerals/Altura Mining), where the world’s 2nd largest deposit of spodumene (hard rock lithium) has recently been defined.

The Stannum Project is located within the Wodgina Greenstone Belt, which hosts rare metal pegmatite mineralisation at numerous prospects, including Wodgina, Mount Cassiterite, Tinstone South and Wodgina West. Spodumene has been recorded at several localities throughout the belt, including at the L1 and L2 Targets.

Compilation and assessment of available data has identified several targets for initial field based programs. These targets, where outcropping pegmatites have been identified, were generated from existing geological mapping datasets, aerial imagery analysis, and limited previous surface sampling that did not analyse for lithium. A significant strike length (>5km) of prospective rocks has been identified on this basis.

At Stannum, Lithium rock chip samples of up to 1.62% Li2O have been reported within the pegmatites by the West Australian Geological Survey in the 1970’s, while a drill program for tantalum undertaken by Talison Wodgina Pty Ltd in 2008, identified rare metal pegmatites with tantalum and tin mineralisation including intersections of 5m @ 419 ppm Ta2O5 and 9m @ 232 ppm Ta2O5. Lithium analysis was not undertaken on these samples.

Munglinup North Graphite Project

Subsequent to the end of the quarter, the Company also entered into a Tenement Sale Letter Agreement to acquire one EL and one ELA covering 146km[2] which is considered highly prospective for high grade graphite mineralisation, located in the Munglinup district of the Albany Fraser Belt, WA.

The Munglinup North Project (E74/550 and ELA74/551) is located 20km north of the Munglinup Graphite deposit (owned by Gold Terrace Pty Ltd), one the world’s highest grade graphite deposits. Previous limited assaying for graphite in shallow drilling on E74/550 intersected 12m at 7.4% carbon, including 4m @ 10.33% carbon, from 20m beneath the surface. The Project is situated across the boundary of the Yilgarn Craton and the Albany Fraser Belt.

Numerous untested electromagnetic anomalies are present on the project, which may represent graphite occurrences. Versatile Time Domain Electromagnetic (VTEM) data for the project has recently become available, and an early priority for Metalicity will be to commission interpretation and modelling of this data to assist in refining drill targets.

6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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See ASX Announcement dated 13 January 2016 and 19 January 2016 for more information on the Rare Metals projects.

Tenement Administration

Refer to Appendix A for a schedule of tenements the Company has an interest in.

For More Information:

Matthew Gauci Managing Director +61 8 9324 1053

David Tasker Professional Public Relations T: +61 8 9388 0944

Competent Person Statement

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the ‘JORC Code’) sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The Information contained in this announcement has been presented in accordance with the JORC Code and references to “Measured, Indicated and Inferred Resources” are to those terms as defined in the JORC Code.

The information in this report that relates to Geology and Exploration Results is based, and fairly reflects, information compiled by Dr Neal Reynolds, who is a Member of the Australian Institute of Geoscientists. Dr Reynolds is employed by CSA Global Pty Ltd, independent resource industry consultants. Dr Reynolds has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking 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’. Dr Reynolds consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

All parties have consented to the inclusion of their work for the purposes of this announcement. The interpretations and conclusions reached in this report are based on current geological theory and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim for absolute certainty. Any economic decisions which might be taken on the basis of interpretations or conclusions contained in this report will therefore carry an element of risks.

6 Outram Street, West Perth WA 6005 PO Box 1227, West Perth WA 6872 Phone: +61 8 9324 1053 Fax: +61 8 9324 3366

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APPENDIX A – METALICITY LIMITED TENEMENT SCHEDULE

Tenement Type & Number	Country	Project	Registered Company Name	% Held at End of Quarter	% Acquired During Quarter	% Disposed During Quarter
M04/244	Australia	Admiral Bay	Metalicity Limited	100%	-	-
M04/249	Australia	Admiral Bay	Metalicity Limited	100%	-	-
E04/1610	Australia	Admiral Bay	Metalicity Limited	100%	-	-
E70/2801	Australia	Rocky Gully	Stuart Town Gold Pty Ltd	90%	-	-
E70/4436	Australia	Rocky Gully	Stuart Town Gold Pty Ltd	100%	-	-
E70/4437	Australia	Rocky Gully	Stuart Town Gold Pty Ltd	90%	-	-
E70/4543	Australia	Rocky Gully	Stuart Town Gold Pty Ltd	90%	-	-
E70/4622	Australia	Rocky Gully	Metalicity Limited	100%	-	-

Stuart Town Gold Pty Ltd is a wholly owned subsidiary of Metalicity Limited.