Magma Metals Limited: Quarterly Report for the Period Ended June 30, 2011

PERTH, WESTERN AUSTRALIA--(Marketwire - July 26, 2011) - Magma Metals Limited (TSX:MMW - News; ASX:MMW - News;"Magma" or the "Company") is pleased to provide its activities and cash flow report for the quarter ended June 30, 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/715483_fig_1.pdf

NORTH-WESTERN ONTARIO, CANADA

Thunder Bay North Platinum-Palladium-Copper-Nickel Project

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

Summer Drilling Program

An initial approximately 14,000m drilling program is in progress 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 2). Initial results are encouraging (see Highlights section above) and confirm the potential for significant extensions to the mineral resource to the southeast. An east-west trending zone of sulphide mineralization is being defined by the drilling, which is associated with a linear depression in the floor of the intrusion. The drilling program will be expanded beyond the planned 14,000m to track the sulphide mineralized trend further to the east (see Company announcement of July 8, 2011).

The exploration focus for the remainder of 2011 and into 2012 will be on resource extension drilling and testing regional targets with the objective of building a larger resource inventory for the project. Resource extension drilling will focus on the 2.5km strike extent of the Current Lake Intrusive Complex immediately east of the mineral resource.

Engineering Studies

Following completion of the independent scoping study for the Thunder Bay North project (see Company announcement of February 7, 2011), further engineering work has been initiated to optimize the outcomes of this study. Key areas of focus include simplification of the mineral processing flow sheet and inclusion of the underground resource in the mine plan. The strategy is to examine ways to reduce the capital and operating cost estimates for the project, which when applied to a potentially larger resource base, may significantly enhance the project's economics.

To view Figure 2. Summer drilling program in the Current Lake Intrusive Complex, please visit the following link: http://media3.marketwire.com/docs/715483_fig_2.pdf

WESTERN AUSTRALIA

Griffins Find Gold Project

(Magma option to acquire 100%)

An 8,557m drilling program was completed during the quarter to test various prospects in the Griffins Find gold project. Results from the three main prospects, Ridge, Griffins West and Griffins Pit, were encouraging and mineralization remains open at these prospects (see Company announcements of April 6 and July 18, 2011). Further drilling is planned.

Lake Grace Gold Project

(Magma 100%)

Magma has applied for exploration licences covering an area of approximately 7,000km2, to be called the Lake Grace gold project, to the north and south of the Griffins Find gold project (Figure 3). This area covers a strike length of approximately 180km of the gneiss belt which hosts the Griffins Find gold deposits and is comparable in size to Ausgold Limited's Boddington South gold project, which is adjacent to the west.

A number of large greenstone units prospective for gold mineralization have been identified in the Lake Grace project area from analysis of historical exploration records, interpretation of aeromagnetic data and Magma's own field reconnaissance. In addition, a number of gold occurrences and anomalies are known in this belt, which is mainly under soil cover in a wheat farming district and has had little systematic modern exploration coverage. Regional exploration work is planned to investigate the gold potential of the project, particularly within the identified greenstone units.

To view Figure 3. Lake Grace Gold Project, please visit the following link:http://media3.marketwire.com/docs/715483_fig_3.pdf

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 June 30, 2011, was 267,180,923 shares. In addition, there were 18,450,000 unlisted options outstanding.

The A$20 million placement announced on April 14, 2011, was finalized during the quarter following the approval of Magma's shareholders at the General Meeting held on May 17, 2011. A total of 71,430,000 new shares were issued at A$0.28 per share in the placement, which was well supported by existing and new institutional and qualified professional investors. RBC Capital Markets was the lead manager with Argonaut Limited as co-manager.

Magma recently completed a restructure of its Board and senior management, which was announced on June 20, 2011. As part of this restructure, William Stone, Magma's former Vice President Exploration - Canada, has left the Company.

Magma retained $19.6 million in cash at the end of the quarter.

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.