Magma Metals Limited: Thunder Bay North-Exploration Update

Drilling Results and Geophysical Surveys Define Two High-Potential Exploration Targets

Press Release Source: Magma Metals Limited On Friday September 3, 2010, 9:25 am

PERTH, WESTERN AUSTRALIA--(Marketwire - Sept. 3, 2010) - Magma Metals Limited (TSX:MMW - News; ASX:MMW - News; "Magma" or the "Company") is pleased to advise that further exploration drilling and geophysical surveys at its Thunder Bay North Pt-Pd-Cu-Ni project in Ontario have defined two high-potential exploration targets - the West Beaver Lake High Sulphide Target and the South East Anomaly Gravity Target - which will be drilled over the next three months (Figure 1).

"Following completion of the infill resource drilling, Magma has embarked on a major exploration push at the Thunder Bay North project to find more resources," said Keith Watkins, Magma's Executive Chairman. "The identification of these high-quality targets demonstrates the significant potential at this project for further discoveries."

To view Figure 1, please visit the following link: http://media3.marketwire.com/docs/MMWfig1.pdf.

West Beaver Lake High-Sulphide Target

Magma recently completed a program of drilling in the Bridge and Beaver Lake Zones in the Current Lake Intrusive Complex, which tested 13 down-hole electro-magnetic (DHEM) targets with a single hole into each. The DHEM anomalies were interpreted to reflect potential high-sulphide zones containing heavily disseminated, semi-massive or massive sulphides. Seven intersections of high-sulphide zones were recorded in this program; five of these were announced previously (see Magma announcement of 21 July, 2010). The remaining significant results from this program are listed in Table 1.

To view Figure 2, please visit the following link: http://media3.marketwire.com/docs/MMWfig2.pdf.

In all, 14 intersections of massive sulphides have been made within a 700m strike length of the Bridge and western Beaver Lake Zones in the resource drilling and the more recent drilling targeting the DHEM anomalies (Figure 2). High-sulphide zones have the potential to form high-value domains within the resource. One area, shown in Figure 2, has been selected for detailed follow-up drilling to investigate the distribution and potential volume of this high-sulphide mineralization. This area has a number of attributes which prioritize it ahead of other high-sulphide targets in the intrusion:

-- It contains four massive sulphide drill intercepts within a 100m strike

length,

-- It contains a cluster of DHEM anomalies,

-- It is associated with a prominent reversely polarized magnetic anomaly

which extends from the northern margin of the intrusion to the south

(green and blue colours in Figure 2), and

-- It is located on the northern margin of the intrusion which is

controlled by a major east-west trending crustal-scale structure which

could host feeder zones to the intrusive complex.

Starting in the next week, Magma plans to commence approximately 6,500m of close-spaced drilling within this target to provide detailed information on the distribution of the sulphides. At least one hole will be drilled to a depth of about 500m and will form a platform for a number of down-hole geophysical surveys.

South East Anomaly Gravity Target

A surface gravity survey was also completed recently in the magnetic South East Anomaly. The survey mapped a prominent gravity anomaly indicating the presence of a dense body located in the northern part of the magnetic anomaly (Figure 3). The offset between the centres of the gravity and magnetic anomalies was unexpected and indicates they are likely due to different sources.

To view Figure 3, please visit the following link: http://media3.marketwire.com/docs/MMWfig3.pdf.

Modelling of the gravity anomaly using a density typical for peridotite, the main host rock to the mineralization at Thunder Bay North, indicates a body approximately 200m thick, 500m wide and 2,200m long (Figure 3), with depths to the top of the body ranging from 750m in the west to 500m in the east. An approximately 10,000m staged drilling program to investigate the gravity anomaly is planned to commence in the next few weeks (Figure 3).

Prior to the completion of the gravity survey two previous Magma drill holes, SEA08-01 and SEA08-02, in the South East Anomaly were extended to depths of 1,187m and 1,254m, respectively (Figure 3). These holes both intersected peridotite beneath a thick gabbro and gabbro-hybrid body. SEA08-01E intersected 12.6m of peridotite from 880m with anomalous Pt and Pd values up to 0.25g/t Pt+Pd. SEA08-02E intersected 66m of peridotite from 976m with a best intercept of 0.45m at 1.04g/t Pt+Pd (Table 1). The current interpretation suggests that the magnetic anomaly is due to a thick gabbro and gabbro-hybrid body overlying a less magnetic peridotite body, which could be the source of the gravity anomaly. If this is the case, the two extended deep holes were drilled on the southern edge of the interpreted peridotite body and in that context the mineralization intersected in these holes is very encouraging.

A prominent east-west magnetic feature in the South East Anomaly has recently been interpreted as a shallow magma conduit overlying the gabbro body (Figure 3). Magnetic modelling suggests it is within 100m of the surface. This feature mostly lies beneath a swamp and will be drill tested when the ground is frozen in the March quarter, 2011.

Current Lake Drilling

Two drill holes were completed recently from the eastern shore of the southern part of Current Lake to close off mineralization on a drill section which was open to the east. One of these holes, TBND210, intersected significant high-grade mineralization (Table 1), which was comparable to that defined on the drill section. The other hole, TBND211, closed off the mineralization.

Table 1. Significant Drilling Results

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Pt+Pd

From To Length Pt Pd Pt+Pd Cu Ni Cut-Off

Drill Hole (m) (m) (m) (g/t) (g/t) (g/t) (%) (%) (g/t)

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Bridge & Beaver Lake Zone

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BL10-334 158.45 160.45 2.00 1.74 1.58 3.32 0.40 0.13 1.0

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BL10-335 192.15 198.65 6.50 4.57 4.32 8.89 1.13 0.38 1.0

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including 195.15 198.65 3.50 6.35 5.84 12.19 1.52 0.46 10.0

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BL10-336 178.60 186.20 7.60 1.56 1.36 2.92 0.46 0.33 0.5

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including 185.20 185.70 0.50(i) 13.40 8.60 22.00 4.12 3.54 10.0

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BL10-337 140.65 150.65 10.00 1.19 1.17 2.36 0.28 0.19 1.0

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including 144.65 146.65 2.00 1.93 1.86 3.79 0.44 0.25 3.0

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BL10-338 156.60 163.60 7.00 1.39 1.35 2.74 0.29 0.19 1.0

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including 160.60 163.60 3.00 1.89 1.82 3.71 0.38 0.23 3.0

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BL10-341 150.40 161.40 11.00 1.75 1.71 3.46 0.44 0.25 1.0

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247.80 266.80 19.00 1.82 1.72 3.54 0.40 0.28 1.0

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South East Anomaly

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SEA08-02E 1040.00 1042.00 2.00 0.32 0.36 0.68 0.11 0.09 0.5

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including 1041.00 1041.45 0.45 0.49 0.55 1.04 0.16 0.10 1.0

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Current Lake

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TBND210 51.00 74.00 23.00 3.77 3.39 7.16 0.83 0.37 1.0

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including 55.00 66.00 11.00 5.61 5.13 10.74 1.23 0.51 5.0

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Results are reported for intercepts greater than 0.5 g/t Pt+Pd at the lower

cut-off grades shown in the right hand column; these may include internal

intervals up to 3m below the cut-off grade. Drill intercepts are down-hole

thicknesses and may not represent true thicknesses.

(i) Massive sulphide intercept

Table 2. Drill Hole Collar and Depth Information

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Easting Northing Azimuth Dip Depth

Drill Hole (m) (m) (Deg) (Deg) (m)

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Bridge & Beaver Lake Zone

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BL10-334 357770 5402475 0 -90 201

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BL10-335 358075 5402510 0 -90 225

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BL10-336 358135 5402512 0 -90 261

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BL10-337 358370 5402425 0 -90 309

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BL10-338 357840 5402463 0 -90 219

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BL10-341 358480 5402445 0 -90 306

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South East Anomaly

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SEA08-02E 360330 5401480 0 -90 324m extension to 1,254m

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Current Lake

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TBND210 357552 5403070 258 -57 120

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Background

An independent Scoping Study is in progress on the Thunder Bay North Pt-Pd-Cu-Ni deposit which was discovered in late 2006. This includes a resource estimate update which is currently being finalized and is based on a recently completed 47,000m infill diamond drilling program as well as 50,000m of previously completed diamond drilling. The Scoping Study is scheduled for completion in the December quarter, 2010.

A substantial exploration program has been budgeted for the 2010-2011 financial year, including provision for 40,000m of diamond drilling and a significant geophysical program. Much of the drilling is planned for the winter (March quarter, 2011), when the ground is frozen and many of the targets, which are in swampy ground or in and around lakes or watercourses, are accessible. The two targets described above are accessible now and will be drilled over the next three months.

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).

The information in this report that relates to Exploration Results or Mineral Resources is based on information compiled, reviewed or prepared by Dr Keith Watkins and Dr William Stone, the Executive Chairman and Vice President Exploration of Magma Metals Limited, respectively, who are both Members of the Australasian Institute of Mining and Metallurgy, and each of whom is a "qualified person" as such term is defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Dr Watkins 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 qualify as Competent Persons as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code). Dr Watkins and Dr Stone consent to the inclusion in the report of the matters based on this information in the form and context in which they appear.

Drill-hole location and detailed assay data for drill-holes mentioned in this report but not provided herein have been provided in previous announcements. These are available on the Company's website at www.magmametals.com.au.

Assays were conducted at the ALS Laboratory Group facility in Vancouver, British Columbia, following sample preparation at their facility in Thunder Bay, Ontario.

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

Contact:

Keith Watkins

Magma Metals Limited

Executive Chairman

+61 (0)8 9324 1500 (Perth)

[email protected]

Greg Taylor

Magma Metals Limited

Investor Relations

+1-905-337-7673 (Toronto) or Mob: +1-416-605-5120

[email protected]

www.magmametals.com.au