MINERAL COMMODITIES LTD

ACN 008 478 653

NOTICE OF GENERAL MEETING

TIME : 10:30 AM (WST) DATE : Monday 19 September 2011 PLACE : BDO Kendall Ground Floor 38 Station Street Subiaco, Western Australia

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on + 61 8 9353 4894.

CONTENTS
Notice of Meeting (setting out the proposed Resolution)	4
Explanatory Statement (explaining the proposed Resolution)	6
Glossary	33
Schedule 1 – Pro-forma Balance Sheet	35
Proxy Form	Attached
CRITICAL DATES FOR SHAREHOLDERS
Event	Date
Announcement of Acquisition	27 July 2011
Dispatch of Notice of Meeting to Shareholders.	19 August 2011
Cut off for lodging proxy form for General Meeting	10:30 AM (WST)
	17 September 2011
Record date for eligibility to vote at General Meeting	16 September 2011
General Meeting of Shareholders	10:30 AM
	19 September 2011
Expected settlement of the Acquisition1	3 October 2001

Notes:

Assumes all conditions precedents to the Acquisition are waived or satisfied.

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The Meeting of the Shareholders to which this Notice of Meeting relates will be held at 10:30 AM (WST) on Monday 19 September 2011 at BDO Kendall, Ground Floor, 38 Station Street, Subiaco, Western Australia.

YOUR VOTE IS IMPORTANT

The business of the Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the Meeting on the date and at the place set out above.

Corporate Representatives

A body corporate which is a shareholder, or which has been appointed as a proxy, is entitled to appoint any person to act as its representative at the General Meeting. The appointment of the representative must comply with the requirements in section 250D of the Corporations Act 2001. The representative should bring to the AGM evidence of his or her appointment as the body corporate’s representative, including any authority under which the appointment is signed. Unless the appointment states otherwise, the representative may exercise on the body corporate’s behalf all of the powers that the appointing body could exercise at a meeting or in voting on a resolution. Shareholders can download and fill out the 'Appointment of Corporate Representation' form from the website of the share registry of the Company – www.linkmarketservices.com.au.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

(a) post to the Company’s share registry, Link Services Limited at Locked Bag A14, Sydney South NSW 1235, or deliver to Link Services Limited at Level 12, 680 George Street, Sydney NSW 2000; or
(b) facsimile to the Company’s share registry, Link Services Limited on facsimile number (+612) 9287 0309; or
(c) online by visiting www.linkmarketservices.com.au, Select ‘Investor Login’ and enter Mineral Commodities Limited or the ASX code (MRC) in the Issuer name field, your Security Reference Number (SRN) or Holder Identification Number (HIN) (which is shown on the front of your proxy form), postcode and security code which is shown on the screen and click ‘Login’. Select the ‘Voting’ tab and then follow the prompts. You will be taken to have signed your Proxy Form if you lodge it in accordance with the instructions given on the website,

so that it is received not later than 10:30 AM (WST) on Saturday 17 September 2011.

Proxy Forms received later than this time will be invalid.

NOTICE OF GENERAL MEETING

Notice is given that the Meeting of Shareholders will be held at 10:30 AM (WST) on Monday 19 September 2011 at BDO Kendall, Ground Floor, 38 Station Street, Subiaco, Western Australia.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the Meeting. The Explanatory Statement and the Proxy Form are part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders of the Company at 10:30 AM (WST) on 17 September 2011.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

AGENDA

ORDINARY BUSINESS

1. RESOLUTION 1 – ISSUE FOR CAPITAL RAISING

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue Shares raising up to a total of A$100 million by way of a placement to investors that may be identified by the Company as falling within one or more of the classes of exemptions specified in Section 708 of the Corporations Act on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue of the Shares and a person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

2. RESOLUTION 2 – APPROVAL OF FINANCIAL ASSISTANCE

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution :

“That, for the purposes of Section 260B(2) of the Corporations Act the Company approves the provision of financial assistance by Cable Sands (W.A.) Pty Ltd and Cable Sands Pty Limited to the Company through the guarantee and security given by Cable Sands (W.A.) Pty Ltd and Cable Sands Pty Limited in relation to the Vendor Financing, as outlined in the Explanatory Statement”.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who

may obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

3. RESOLUTION 3 – CHANGE TO SCALE OF ACTIVITIES

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, subject to and conditional upon the passing of Resolutions 1 and 2, for the purposes of ASX Listing Rule 11.1.2 and for all other purposes, approval is given for the Company to make a significant change in the scale of its activities as set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form, or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

DATED: 16 August 2011 BY ORDER OF THE BOARD

PETER TORRE COMPANY SECRETARY

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Meeting to be held at 10:30 AM (WST) on Monday 19 September 2011, at BDO Kendall, Ground Floor, 38 Station Street, Subiaco, Western Australia.

This purpose of this Explanatory Statement is to provide information, which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in the Notice of Meeting.

1. GENERAL

1.1 Background

Mineral Commodities Ltd is a public company listed on the official list of ASX (ASX code: MRC) ( MRC or the Company ).

The Company currently operates primarily as an exploration and development Company, with two mineral sands projects in South Africa. The South African operations are owned through the Company’s 100% owned subsidiary MRC Resources (Pty) Ltd (South Africa).

As announced to the ASX on 27 July 2011, the Company, through its subsidiary, MRC Cable Sands Pty Ltd ( MRC Cable Sands ), has entered into a Share Sale Agreement ( SSA ) with Bemax Resources Limited ( Bemax ), Cable Sands Holdings Pty Limited and Cable Sands Investment Pty Ltd (together the Vendors ) pursuant to which the Company will acquire 100% of the fully paid ordinary shares in the capital of Cable Sands (W.A.) Pty Ltd ( Cable Sands WA ) and Cable Sands Pty Ltd (together Cable Sands ) ( Acquisition ).

Cable Sands owns and operates the Bunbury Mineral Separation Plant located in Bunbury, within the south west region of Western Australia ( Bunbury MSP ) and has rights to associated vertically integrated infrastructure, including port access and storage facilities. In addition, Cable Sands has ownership of significant private land holdings and mineral sands tenements in close proximity to the Bunbury MSP ( Cable Sands Tenements ). MRC Cable Sands has purchased the operations as a going concern, with all employees and existing contractual arrangements. Further details of Cable Sands are set out in Section 1.5.

As part of the Acquisition, MRC has also entered into:

(a) a commercial arrangement made between, MRC Cable Sands WA and Bemax for the processing by Cable Sands WA of at least 248Kt of nonmagnetic mineral sands concentrate annually, to be guaranteed by MRC ( Toll Processing Agreement ); and
(b) a Right of First Refusal Deed with Cristal Australia Pty Limited ( Cristal ) for the purchase by MRC of all or a substantial part of the Murray Basin mineral assets belonging to Bemax and its related bodies corporate ( Bemax Group ) including the Ginkgo and Snapper mines and the Broken Hill mineral separation plant, only if the Bemax Group initiates a sale process for such assets ( Right of First Refusal Deed ).

Further details of the Acquisition, the Toll Processing Agreement and the First Right of Refusal Deed (together Cable Sands Transactions ) are set out in Section 1.2

In a separate transaction, announced to the ASX on 27 July 2011, MRC has entered into a Heads of Agreement with Simto Resources Limited ( Simto ) to acquire either 100% of the issued capital of Simto ( Simto Heads of Agreement ), or the assets of Simto. Simto owns tenements located in close proximity to Cable Sands’ existing operations and infrastructure in the south west of Western Australia.

Further details of Simto and the Simto Heads of Agreement are set out in Section 1.6.

1.2 Material Terms of the Cable Sands Transactions

Share Sale Agreement

The material terms of the SSA are as follows:

(a) ( Conditions Precedent ): settlement of the SSA is conditional upon the Company obtaining the requisite Shareholder approvals and the Company completing a capital raising for up to A$100 million, the conditions precedent are otherwise customary for a transaction of this nature;
(b) ( Consideration ): in consideration of the acquisition of 100% of Cable Sands, on a debt free and cash free basis with normal working capital levels, the Company will pay to the Vendors a total of A$96 million (reduced by A$250,000 to reflect the payment already made by MRC to cover the costs of procuring a valuation of Cable Sands and the Vendors other out of pocket expenses in connection with the proposed Acquisition by MRC), with a further A$5 million payment due in 2013, contingent upon zircon prices reaching US$2,700 by the end of 2013)(the Purchase Price ). The Purchase Price is subject to adjustments at the completion of the Acquisition for working capital and land valuations; and
(c) ( Settlement ) : settlement of the SSA is to occur on that date which is 10 business days after the satisfaction or waiver of the last of the Conditions Precedent ( Settlement ).

The SSA otherwise contains standard clauses typical for an agreement of this nature.

Toll Processing Agreement

The Toll Processing Agreement with Bemax is an arm’s length, commercial arrangement for Cable Sands WA to continue to process, at the Bunbury MSP, at least 248Kt per annum of non-magnetic mineral concentrate, sourced from the operations the Bemax Group in the Murray Basin and is to be guaranteed by MRC. The material will be treated on a take or pay, cost plus 15% margin basis for a period of 5 years, which may be extended at the option of Bemax for up to 5 further 5 year terms.

Right of First Refusal Deed

The right of first refusal over the Bemax Group’s Murray Basin assets is exercisable for 5 years from the date of execution, and only if the Bemax Group initiates a sale process for all or a substantial part of those assets. The Bemax Group’s Murray Basin assets include the current operations at the Ginkgo and Snapper mines, some 220 kilometres from Broken Hill, New South Wales and the Mineral

Separation Plant located in Broken Hill, New South Wales where non-magnetic concentrates are separated, before being shipped to Bunbury for upstream processing.

1.3 Transaction Rationale

The acquisition of Cable Sands maximises the potential of MRC’s existing South African assets by quickly adding processing capacity at an attractive cost. Furthermore, it expands and diversifies the Company’s overall position in the mineral sands sector.

The proposed acquisition of Simto, would increase the resource base and extend the Company’s mine life in the south west of Western Australia. Simto’s tenements are in close proximity to the Bunbury MSP and the Cable Sands Tenements, which would provide opportunities for cost savings.

See Sections 1.13 and 1.14 for more detail on the advantages and disadvantages.

1.4 Overview of Current Operations of MRC

The Company currently has interests in two significant mineral sands projects in the Republic of South Africa, being a 50% interest in the Tormin Mineral Sands Project ( Tormin ), and a 56% interest in the Xolobeni Mineral Sands Project ( Xolobeni ).

Tormin

Tormin is a zircon and high titanium ( Hi Ti ) enriched deposit situated on the coast of the Western Cape, approximately 400 kilometres north of Cape Town in between Olifants River and Exxaro’s Namakwa Sands operation at Brand se Baai.

The heavy mineral deposits have accumulated along the approximately 12 kilometres long, 100 metre wide beach, to a maximum depth of 12 metres, and are still being supplemented through erosion of a heavy mineral enriched, 25 metre thick paleo-beach terrace situated 35 metres above current sea level. The predominant heavy mineral is garnet with ilmenite, pyroxene, zircon, rutile, and leucoxene contained in the heavy mineral assemblage.

As the heavy mineral placer deposits overlie diamond bearing gravel beds, a feasibility study into mining the beach deposits and extracting both diamonds and heavy minerals was undertaken by Trans Hex Operations (Pty) Ltd ( THG ), a South African diamond producer in 1992. In 2002 the Company signed an agreement with THG that allowed the Company to apply for the rights to the mineral sands.

Subsequent to obtaining the mining rights for the mineral sands, a Definitive Feasibility Study ( DFS ) commissioned by MRC demonstrated that Tormin can produce an enriched non-magnetic saleable concentrate containing predominately zircon and rutile. The base case design derived from the DFS provides for a nominal annual throughput capacity of 1.6Mt producing 40Kt to 50Kt of concentrates per annum grading up to 80% zircon and 10% rutile.

The Tormin project has an approved mining right, EMP and water use licence. Remaining approvals include land use, NNR and environmental approval from the South African, Department of Environmental Affairs. It is anticipated that the

outstanding environmental approvals are likely to be obtained in 6 to 8 months. The first concentrate is expected to leave Tormin in the second half of 2012.

The Tormin Project has a mineral sands inferred resource of 2.71Mt[1] (93Kt contained zircon, 19Kt contained rutile). It’s anticipated that annual production will be approximately 40Kt to 50Kt non-magnetic zircon/rutile concentrate for a minimum 3-5 year mine life. Average life-of-mine cash costs are estimated at approximately A$325 per tonne of heavy mineral concentrate. This includes approximately A$175 per tonne of heavy mineral concentrate of transport and handling costs.

Location of the Tormin Project

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BOTSWANA
NAMIBIA
TORMIN
CAPE TOWN
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Xolobeni

The Xolobeni mineral sands deposit is the 10th largest heavy mineral deposit in the world with a mineral sands resource of 346Mt[2] @ 5.00% heavy minerals containing 9.3Mt ilmenite. The mineral assemblage also includes zircon, rutile and lucoxene with an overall estimated mine life of approximately 25 years.

Xolobeni is located in the Eastern Cape Province of South Africa approximately 300 kilometres north of East London and 200 kilometres south of Durban. The area is the home of the Xhosa speaking Amadiba Tribal Community, the traditional landowners. The tenement area is approximately 22 kilometres long and 1,500 metres wide and covers approximately 2,900 hectares within the Xolobeni area.

The area consists of three main dune systems, which range from 25 to 95 metres above sea level. The Resource is divided into five blocks bounded by the Mzamba, Mpahlane, Mnyameni, Kwanyana, Sikombe and Mtentu Rivers that dissect the tenement area. Each block is named after the river defining the southern boundary. The current extent of mineralisation proposed to be mined takes in about 855 hectares of the tenement area.

The mineralised sands occur within recent sands and remnant red beds of Pleistocene Berea Formation. The predominant valuable heavy mineral is

1 and 2 See further in this Section for Resource statement and Section 1.22 for Competent Person’s statement

ilmenite, the feedstock for titanium slag production. Rutile, zircon and leucoxene add significantly to the value of the deposit.

MRC had been granted a conditional mining licence at Kwanyana block and the Company has recently been asked to address outstanding issues relevant to the final award of a mining licence. Further on-going prospecting, design and financial work is required to progress the project further.

Location of the Xolobeni project

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MOZAMBIQUE
DURBAN
XOLOBENI
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Tormin and Xolobeni Resources

	Property Name	Resource Category	Tonnes (Mt)	HM (%)	Ilmenite (% in HM)	Zircon (% in HM)	Rutile (% in HM)	Garnet (in HM %)
Tormin		Inferred	2.7	49.4%	21.4%	6.9%	1.4%	51.2%

Xolobeni		Measured	224.0	5.7%	54.5%	-	-	-
		Indicated	104.0	4.1%	53.7%	-	-	-
		Inferred	18.0	2.3%	69.6%	-	-	-
			346.0	5.0%	54.0%	-	-	-
	Total MRC		348.7	5.3%	51.7%	0.5%	0.1%	3.7%

See Section 1.22 Competent Person’s statement

Board and Management Changes

Mr Mark Caruso has been appointed as Managing Director and CEO of the Company. Mr Caruso has been a director of the Company since 2000 and was previously Managing Director from that date to May 2009 when he was appointed as Executive Chairman of Allied Gold Mining PLC (previously Allied Gold Limited) ( Allied Gold ). During his tenure as Executive Chairman at Allied Gold, Mr Caruso developed the Simberi Gold project in Papua New Guinea and the Gold Ridge project in the Solomon Islands, transforming Allied Gold to a significant gold producing entity, now listed on the London Stock Exchange. Mr Caruso has recently transitioned into a Non-Executive directorship with Allied Gold, which provides for his return to an executive capacity at Mineral Commodities Ltd.

The Board of the Company will be restructured to ensure it comprises the necessary skill-set and independence to meet the additional scope of activities

and scale expected from the transaction, being cognisant of the ASX's Corporate Governance principals and recommendations in this regard.

1.5 Overview of Cable Sands

Bunbury MSP

The Bunbury MSP is strategically located in Bunbury, approximately 165 kilometres south of Perth, Western Australia at the Bunbury port, one of the world’s largest mineral sands ports. The site is approximately 8.3 hectares and is covered by a long-term, general purpose mining lease. Cable Sands has rights to associated vertically integrated infrastructure, including port access and storage facilities.

The facilities house an administration building with a central storage area, workshops, exploration facility and assay laboratory. The location at the Bunbury port and the flexible storage facilities allows low-cost and efficient loading of bulk cargoes. The laboratory is certified by the National Australian Testing Authorities and is supported by modern pilot plant facilities.

The Bunbury MSP processes heavy mineral concentrate into its various heavy mineral constituents: ilmenite, leucoxene, rutile and zircon. Residual tailings from the separation process are transported back to the mine sites for disposal as part of the rehabilitation process.

The Bunbury MSP was constructed in 1956 and has undergone several upgrades and expansions to make it a highly versatile mineral separation plant. In 2005, the Bunbury MSP underwent an A$6.6 million upgrade to allow it to process rutile and zircon concentrate from the Bemax Group’s operations in the Murray Basin.

The Bunbury MSP has two independent processing circuits, with a combined nameplate annual primary processing capacity of approximately 580Kt titanium and zircon concentrates. The first circuit has an annual capacity of 330Kt of ore body magnetic and non-magnetic concentrates. The second circuit has an annual capacity of 250Kt, which is used to process non-magnetic mineral sands concentrate from the Bemax Group’s Murray Basin operations and it will continue be used for that purpose as part of the terms of the Toll Processing Agreement.

In 2010, the Bunbury MSP processed approximately 149Kt of heavy mineral concentrate from Cable Sands’ Gwindinup mine. In addition, the Bunbury MSP processed approximately 200Kt tonnes of zircon and rutile concentrate from the Bemax Group’s Murray Basin operations.

Planned Development of the Bunbury MSP

MRC plans to expand the annual capacity in the non-magnetic circuit at the Bunbury MSP by 50Kt in order to process zircon/rutile concentrate sourced from Tormin in South Africa. The anticipated capital expenditure required for this is approximately A$5-7 million.

Overview of the Cable Sands Tenements

The five key Cable Sands Tenements have a total estimated Measured & Indicated Resource of 60.3Mt[3] , comprising approximately 4,100Kt of contained

3 See further in this Section for Resource statement and Section 1.22 for Competent Person’s statement

heavy minerals @ 9.1% zircon and 88.3% ilmenite. Average life-of-mine cash cost for the Cable Sands operations is estimated at approximately A$100–140 per tonne of heavy mineral concentrate (including transport and handling).

Cable Sands Resources

	Property Name	Resource Category	Tonnes (Mt)	HM (%)	Ilmenite (% in HM)	Zircon (% in HM)
Gwindinup North (2)		Measured	11.2	6.2%	88.0%	9.0%
Gwindinup South		Measured	13.3	7.1%	88.0%	9.0%
Happy Valley North		Measured	3.4	10.8%	87.0%	12.0%
Wonnerup		Measured	16.3	5.0%	90.0%	8.0%
Dardanup		Indicated	16.1	7.9%	88.0%	9.0%
	Total Cable Sands		60.3	6.8%	88.3%	9.1%

Notes:

1 See Section 1.22 for Competent Person’s statement

2 Not adjusted for mining since October 2010

Geology and Exploration

Heavy mineral sands deposits in the south west of Western Australia occur principally as paleo-strands and associated dunal sands. They have been formed in the period from early Pleistocene to the present day. The strands are associated with a number of old shorelines and it is not uncommon to find multiple overlapping deposits at any one location.

Two prospective regions exist in this area, the Swan Coastal Plain and the Scott Coastal Plain, on the Southern Coast.

The Swan Coastal Plain lies between the Darling Scarp and the sea, and is a feature of Western Australian Geography, stretching from Geraldton to Busselton. In the region between Perth and Busselton, these shorelines occur on the geomorphic feature known as the Swan Coastal Plain. They include the Ridge Hill, Yoganup/Waroona, Capel and Spearwood shorelines and are distinguished by the current day elevations at which they are found.

On the South Coast the deposits are associated with the Donnelly Shoreline on the Scott Coastal Plain. Separating the Swan Coastal Plain from the Scott Coastal Plain is the slightly more elevated geomorphic region known as the Blackwood Plateau. Although the southern coast has a number of mineral sands deposits, only two operations have taken place in this province.

Cable Sands has had a lengthy exploration presence in this region, developing projects to supply the Bunbury MSP. The area is mature in terms of exploration potential but there is still potential for heavy mineral deposits to occur that could be economically treated at the Bunbury MSP. An exploration programme to review remaining potential in the southwest has been commenced.

Environment

Cable Sands has environmental policies that comply and, in many areas, exceed the requirements of environmental authorities in terms of the rehabilitation and management of mine sites. Innovative and effective mine site rehabilitation is one of Cable Sands’ most acknowledged features of its operations. Specifically, Cable Sands has implemented an Environmental Management System, which provides a focused and systematic approach to assessing the environment in which they operate. In addition, the Western Australian operations have ISO14001, ISO9001 and AS4801 certification as part of an Integrated Environmental, Quality and Safety Management System.

Restoration and rehabilitation at Cable Sand’s former mine sites at Ludlow and Tutunup South continues to progress well. A skilled and experienced management team leads the rehabilitation programmes with a focus on enhancing the land form after mining to improve stability, drainage and soil productivity. One of the rehabilitation techniques employed is known as “block translocation”. This technique assists with the success of re-vegetation by lifting the original vegetation, roots and soil and relocating it back on the ground to continue growing. This technique is particularly useful with plant species that are difficult to propagate using conventional techniques. Upon completion of mining, the translocated block is returned, providing immediate habitat for native fauna and ensuring the natural environmental balance.

1.6 Overview of Simto and the Simto Heads of Agreement

Simto owns a number of strategic, granted heavy mineral mining leases in close proximity to the Bunbury MSP and Cable Sands tenements, making this a highly complementary addition to the acquisition of Cable Sands. Total JORC compliant Measured, Indicated and Inferred Resources are estimated to exceed 2.4Mt[4] of contained heavy minerals, including zircon (178Kt), ilmenite (1,737Kt) and rutile (26Kt) heavy minerals.

In addition, Simto has a First Right of Refusal to significant tenement holdings currently held by Iluka Resources Limited ( Iluka ) through the 1990 Wonnerup Agreement between Simto and AMC Minerals Sands Ltd (now known as Iluka Midwest Limited, and a wholly owned subsidiary of Iluka).

The proposed acquisition of Simto is a related party transaction as Simto is associated with MRC Directors Messrs Joseph Caruso and Mark Caruso and it will be subject to satisfactory findings of an Independent Expert and subsequent approval by non-associated MRC Shareholders.

Under the terms of the Simto Heads of Agreement, the consideration is to be finalised based on an independent valuation and may consist of both cash and scrip. Any shares issued as part of the scrip component would be issued at the same price realised in the share placement to be conducted by MRC to fund the Cable Sands acquisition. The terms and conditions set out in the Simto Heads of Agreement will be incorporated into a formal sale and purchase agreement. Further details of the Simto acquisition will be released to the market in due course.

4 See further in this Section for Resource statement and Section 1.22 for Competent Person’s statement

Simto Resources

	Property Name	Resource Category	Tonnes (Mt)	HM (%)	Ilmenite (% in HM)	Zircon (% in HM)	Rutile (% in HM)
Tutunup West		Indicated	11.7	8.7%	64.5%	6.7%	1.1%
Coolup		Indicated	4.9	7.0%	77.7%	7.9%	2.5%
Grice		Indicated	3.2	6.7%	80.3%	7.9%	0.7%
North Capel Extended		Inferred	0.5	6.5%	87.2%	3.9%	1.2%
Stratham		Measured	0.8	6.7%	87.5%	4.5%	1.7%
		Indicated	0.2	5.3%	87.5%	4.5%	1.7%
			1.0	6.4%	87.5%	4.5%	1.7%
Wonnerup		Inferred	6.4	5.2%	69.8%	7.2%	0.8%
Cookernup		Indicated	4.2	5.5%	79.0%	8.7%	0.0%
		Inferred	3.2	5.9%	74.0%	11.4%	0.0%
			7.4	5.7%	76.8%	8.8%	0.0%
	Total Simto		35.1	6.9%	71.5%	7.3%	1.1%

See Section 1.22 for Competent Person’s statement

1.7 Profile of the Combined Operations

Production Profile

By 2013, based on the expanded capacity, MRC anticipates to process a total of approximately 370Kt per annum of its own concentrate sourced from the acquired Cable Sands Tenements (~320Kt) and the Tormin project (~50Kt), in addition to the projected 248Kt of concentrate processed under the Toll Processing Agreement. The Tormin project and Cable Sands Tenements have a combined estimated mine life in excess of ten years, with significant potential to extend this through the addition of the Simto assets, the Xolobeni project and further exploration.

Indicative Concentrate Processing Production Profile

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400
300
200
100
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Note: Tormin production shown at 100% (MRC ownership is 50%)
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Finished Product Split 2013E
(ex Toll Processing Agreement)
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Concentrate Processing Split 2013E

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Total: ~310kt
Tormin Rutile
Zircon
8% 2%
17%
Leucoxene
2%
Toll
Cable 43%
Processing
Sands 49% Ilmenite
79%
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Total: ~620kt
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Location Map - Cable Sands and Simto Tenements

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1.8 Industry Overview

Information in this section is based on the Mineral Sands Annual Review 2011 prepared by TZ Minerals International Pty Ltd.

Introduction

The mineral sands industry generally involves two product chains:

(a) the supply of titanium raw materials (titanium feedstocks), largely used to produce titanium dioxide (TiO2) pigment; and
(b) the supply of zircon sand to a number of industries, dominated by the ceramics sector.

Mineral sands are predominantly mined from alluvial resources in close proximity to coastlines. Processing of the alluvial ore produces zircon and the titanium mineral products – ilmenite, rutile and leucoxene.

The titanium and zircon industries are characterised by a concentration of ownership in the hands of a relatively small number of large mining groups and by close relationships between mineral producers and consumers. The top 10 titanium minerals producers, led by Rio Tinto Plc and Iluka Resources Limited, account for approximately three-quarters of global production.

Titanium Feedstock

A significant proportion of the titanium minerals are used directly in the production of TiO2 pigment. More than half of global output is further processed to concentrate the titanium content of the products to titanium slag and synthetic rutile, before being used as feedstock for the TiO2 pigment industry or in titanium sponge production.

TiO2 pigment is used predominantly in the production of high-quality surface finishes to impart opacity, brightness and whiteness. The paint and coatings sector is the largest consumer of TiO2 pigment, accounting for just over half of total pigment consumption. The plastics sector accounts for approximately a quarter of consumption, with the remainder used mostly in the production of coated paper and paper laminates, inks, fibres and other more specialty applications.

The supply/demand dynamics of the titanium feedstocks sector have changed considerably during the last 12 months, influenced by a number of factors, but specifically:

(a) a lack of development of, or investigation into, new projects due to reduced investor interest and mediocre financial returns from feedstock producers;
(b) the global financial crisis resulted in the curtailment of global production to match the considerable fall in demand; and
(c) demand levels for titanium feedstocks in 2010 grew strongly and exceeded the expectations of most industry participants.

These new market dynamics, both in terms of pricing and supply tightness, look set to continue to be the main features of the sector.

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Supply/Demand Balances for All Titanium Feedstocks 2008 - 2013F
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Source: TZ Minerals International Pty Ltd: Mineral Sands Annual Review 2011

Zircon

More than half of zircon sand is finely ground before being used for its opacifying properties in the ceramics industry. Zircon sand is also used as a refractory material and foundry sand; in the production of zirconia, zirconium chemicals and zirconium metals; and as an additive to glass in television screens.

Global demand in 2010 surged to record levels as demand recovered in all zircon consuming regions along with significant growth in demand from China. This, along with supply shortages, has resulted in unprecedented price increases leading to record price levels for zircon.

As depicted in the chart below, the global supply deficit/demand balance for zircon is likely to grow into progressively larger deficits during the remainder of the decade, as underlying demand for zircon continues to grow uninterrupted while the supply base declines.

Zircon prices are expected to rise further. The trend is expected to continue through 2012, with strong demand and limited supply still driving prices.

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Zircon Supply and Demand Outlook to 2015F
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Source: TZ Minerals International Pty Ltd: Mineral Sands Annual Review 2011

1.9 Financing of the Acquisition

MRC intends to fund the Cable Sands Acquisition, together with associated working capital and capital expenditure requirements, through a combination of a A$35 million vendor financing facility provided by Cristal and Bemax to MRC Cable Sands, which is to be guaranteed by MRC and Cable Sands and secured against the Cable Sands assets ( Vendor Financing ) and an equity placement to institutional investors of up to A$100 million ( Capital Raising ), subject to shareholder approval under ASX Listing Rule 7.1 and section 260B(2) of the Corporations Act.

Morgan Stanley Australia Limited has been appointed to act as lead manager for the equity raising, with Mirabaud Securities LLP acting as co-manager.

As part of the Vendor Financing arrangement, MRC Cable Sands entered into a facility agreement with Cristal and Bemax as the lenders(together the Lenders ), and MRC and Cable Sands as the guarantors ( Guarantors ) ( Facility Agreement ), the key terms of the Facility Agreement are as follows:

(a) the loan amount of A$35 million plus unpaid interest, if any, must be repaid on or before (without penalty) 1 May 2014;
(b) interest will be calculated at a rate of 9.375% per annum, payable on the final day of each interest period, being every 90 days;
(c) MRC and Cable Sands jointly and severally guarantee to the Lender the due and punctual payment by MRC Cable Sands of the guaranteed money;
(d) Cable Sands has agreed to grant a first ranking security to the Lenders over the assets of Cable Sands and MRC Cable Sands has agreed to grant a share mortgage over its shares in the Cable Sands Companies; and
(e) if MRC Cable Sands defaults in the payment of any guaranteed money, Cable Sands must pay that money on demand to, or as directed by the Lender.

1.10 Impact of the Capital Raising on Capital Structure

The issue price of the Shares issued pursuant to Resolution 1 will be not less than 80% of the average market price for Shares calculated over the 5 days on which sales in the Shares are recorded before the day on which the issue is made. Examples of the effect of the Acquisition and the Capital Raising (on an undiluted basis) on the capital structure of the Company (assuming A$100 million is raised under the Capital Raising), at various issue prices are outlined below. At the date of this Notice, there are currently 153,393,021 Shares on issue.

The following examples show the number of Shares that may be issued using various issue prices:

Issue price	No. of Shares to be issued1	Total Shares
13 cents	769,230,769	922,623,790
15 cents2	666,666,666	820,059,688
17 cents	588,235,294	741,628,315
20 cents	500,000,000	653,393,021

Notes:

The calculations above are for illustrative purposes only, the actual impact of the Capital Raising on the capital structure of the Company will be based on the number of Shares issued which will be calculated in accordance with section 2.1 of this Notice.
The MRC share price at close of trade on 4 August 2011.

1.11 Pro Forma Balance Sheet

An unaudited pro forma balance sheet of the Company following completion of the Acquisition and Capital Raising is set out in Schedule 1 of this Explanatory Statement.

1.12 Impact of the Acquisition on the Company

Settlement of the SSA will result in MRC Cable Sands acquiring Cable Sands. The proposed Acquisition will result in various advantages and disadvantages to the Company which Shareholders should consider prior to exercising their vote.

1.13 Advantages of Acquisition

The Directors consider that the key advantages to the Company and nonassociated Shareholders of completing the Acquisition are as follows:

(a) Cable Sands adds existing production in excess of 100K tonnes per annum of zircon, ilmenite and leucoxene;
(b) MRC intends to expand this to more than 320K tonnes per annum by running a two-mine strategy;
(c) the strategically located Bunbury MSP provides a platform for processing MRC’s existing high value, zircon-rich mineral sands projects located in South Africa;
(d) opportunity for operational efficiencies by increasing capacity utilisation and expanding the Bunbury MSP;
(e) attractive growth potential funded through strong expected cash flows and low-cost expansion potential at the Bunbury MSP;
(f) the Toll Processing Agreement provides steady cash flows and significantly contributes to fixed cost coverage;

(g) cost saving opportunities from a combination of Cable Sands and Simto tenements through added scale and proximity;
(h) opportune time to acquire producing mineral sands assets given the current and expected continued favourable pricing environment; and
(i) attractive vendor financing for the Acquisition.

1.14 Disadvantages of Acquisition

The Directors consider that the key disadvantages to the Company and nonassociated Shareholders of completing the Acquisition are as follows:

(a) the Capital Raising will result in the Company issuing new shares which will result in the dilution to the holdings of existing Shareholders;
(b) there is no guarantee the Company’s shares will rise in value as a result of the Acquisition and the associated Capital Raising; and
(c) the transaction increases the complexity of the business as a result of projects in multiple jurisdictions as well as the operation of a mineral separation plant.

Shareholders should also consider the risks of the Acquisition set out in section 1.16 of this Notice of Meeting.

1.15 Sources and uses of funds

The Company intends to apply funds raised pursuant to the Capital Raising (up to A$100 million) and Vendor Financing (A$35 million) as follows:

Use	Amount (A$)
Acquisition of Cable Sands1	95,750,000
Working Capital and administration expenses	39,250,000
Total2, 3	135,000,000

Notes:

1 Excludes the A$5 million payable within 30 days of the bulk FOB zircon price reaching US$2,700 per tonne and the $250,000 already paid as set out in section 1.2(b); amount subject to adjustments at completion.
2 Amounts shown in the table are rounded up or down to millions.
3 It should be noted that the allocation of funds will be subject to modification based on the outcome and success of the exploration programmes.

1.16 Risks

Shareholders should be aware that if the Resolutions are approved, the Company will complete the Acquisition and the Company will become subject to various risk factors which do not necessarily apply to the Company at present. The business of Cable Sands is subject to a number of investment risk factors, both specific to its business and of a general nature, which may affect the future exploration, as well as the operating and financial performance of Cable Sands. The risks and uncertainties described below are not intended to be exhaustive. There may be additional risks and uncertainties that the Company is unaware of or that the Company currently considers to be immaterial, which may affect the

Company. Based on the information available, a non-exhaustive list of risk factors associated with the Acquisition are as follows:

(a) Mineral sands price volatility

Upon completion of the Acquisition and subsequent development of the Bunbury MSP (if developed), a significant proportion of the Company’s revenues and cash flows are likely to be derived from the sale of mineral sands. Therefore, the financial performance of the Company will be sensitive to the mineral sands price. Mineral sands prices are affected by numerous factors and events that are beyond the control of the Company. These factors and events include general economic activity, world demand, costs of production by other mineral sands producers and other matters such as inflationary expectations, interest rates, currency exchange rates (particularly the strength of the US dollar) as well as general global economic conditions and political trends.

If mineral sands prices should fall below or remain below the Company’s future costs of production for any sustained period due to these or other factors and events, the Company’s exploration and production could be delayed or even abandoned. A delay in exploration or production or the abandonment of the Company’s project may have a material adverse effect on the Company’s production, earnings and financial position.

(b) Contract and Toll Processing Agreement risk

The Company and Cable Sands WA have entered into a Toll Processing Agreement with Bemax to process 248Kt of non-magnetic mineral sands feedstock annually. This includes the treatment of non-magnetic feedstock sourced from the Bemax Group’s Murray Basin operations. The quantity of mineral sands feedstock processed will be dependent upon a number of factors including the ability of the Bemax Group’s Murray Basin operations to provide the specified quantity and quality of feedstock to the Bunbury MSP.

The contract is for a minimum of five (5) years and may be extended at Bemax’s discretion in five (5) year increments for a total of 30 years. There is no certainty that the contract will be extended at the end of each five (5) year period. This may result in substantial amounts of unused non-magnetic concentrate processing capacity.

The agreed price is adjusted annually for inflation. There is a risk that if the adjustment does not fully reflect the actual cost increase with a negative effect on profit margins.

(c)

Integration risk

There is a risk that management may not be able to integrate the Cable Sands Acquisition and implement the Company’s growth strategy after completion of the Acquisition.

(d) Reliance on key management

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel.

In particular, the Company intends that the day-to-day management of the Bunbury MSP will remain with the existing senior management and key personnel of Cable Sands, who have the experience and knowledge required to manage facility and assets. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these personnel cease their employment.

(e) New management

The ability of the new management to properly implement and manage the strategic direction of the Company may affect the Company’s financial performance.

(f) Competition

There are currently a number of mineral sand explorers in the market. Current strength in mineral sands prices may increase the probability that more explorers will transition into mineral sands producers over the next five (5) years. These transitions may be accelerated by strengthening mineral sands prices.

(g) Infrastructure

Mine development is largely dependent on access to major infrastructure to enable the export of the bulk commodity. Any development of the tenements of the Company or Cable Sands will require road haulage and a port with capacity. Haul roads can generally be constructed through a defined approval process.

(h) Exploration, production and development risks

The business of mineral sands exploration and refining involves risks by its very nature. To prosper, it depends on the successful exploration, appraisal and development of mineral sands reserves. Operations, such as the design and construction of efficient recovery and processing facilities, competent operational and managerial performance and efficient distribution and marketing services are required to be successful. In particular, production operations can be hampered by force majeure circumstances, engineering difficulties, cost overruns, inconsistent recovery rates and other unforeseen events.

The outcome of exploration and refining programmes will affect the future performance of the Company and its Shares. Production may be curtailed or shut down for considerable periods of time due to any of the following factors:

(i) disruptions to the transport chain being road and rail;

(ii) port infrastructure and ocean freight;
(iii) a lack of market demand;
(iv) shortages of skilled labour in Australia;
(v) government regulation;
(vi) production allocations; and

(vii) force majeure events.

These curtailments may continue for a considerable period of time resulting in a material adverse effect on the results of operations and financial condition of the Company.

Further, the exploration for and production of mineral sands involves certain operating hazards, such as:

(i) failure and or breakdown of equipment;
(ii) adverse geological, seismic and geotechnical conditions;
(iii) industrial accidents;
(iv) labour disputes;
(v) adverse weather conditions;
(vi) pollution; and
(vii) other environmental hazards and risks.

Any of these hazards could cause the Company to suffer substantial losses if they occur.

The future exploration activities of the Company may not be successful. Unsuccessful exploration activities could have a material adverse effect on the results of operations and financial condition of the Company.

(i)

Resource estimates

Resource and other estimates of mineral sands occurrences, including those contained in this Notice, are expressions of judgment based on knowledge, experience and industry practice. Often these estimates were appropriate when made but may change significantly when new information becomes available. There are risks associated with such estimates, including that mineral sands mined may be of a different quality, tonnage or strip ratio from the estimates. Resource estimates are necessarily imprecise and depend to some extent upon interpretations, which may ultimately prove to be inaccurate and require adjustment. Adjustments to the estimates of mineral sands reserves could affect of the Company’s development and mining plans.

(j)

Insurance

The Company will, where possible and economically practicable, endeavour to mitigate some project and business risks by procuring relevant insurance cover. However, such insurance cover may not always be available or economically justifiable and the policy provisions and exclusions may render a particular claim by the Company outside the scope of the insurance cover.

While the Company will undertake all reasonable due diligence in assessing the creditworthiness of its insurance providers, there will remain the risk that an insurer defaults in payment of a legitimate claim by the Company under an insurance policy.

(k)

Third party risks

The operations of the Company will require the involvement of a number of third parties, including suppliers, contractors and customers. Financial failure, default or contractual non-compliance on the part of such third parties may have a material impact on the Company’s operations and performance. It is not possible for the Company to predict or protect itself against all such risks.

(l)

Environmental risk

The Company’s operations will be subject to various regulations regarding environmental matters and the discharge of hazardous waste and materials. Development of mineral sands resources will be dependent on the project meeting environmental guidelines and gaining approvals by government authorities. Whilst the Company intends to conduct its activities in an environmentally responsible manner, risks arise in relation to compliance with these regulations and approvals. The introduction of more stringent regulations and conditions may also adversely affect the Company.

(m)

Economic risks

General economic conditions, movements in interest and inflation rates, commodity prices and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities.

Further, share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

(i) general political and economic outlook in Australia;
(ii) interest rates and inflation rates;
(iii) currency fluctuations;
(iv) changes in investor sentiment toward particular market sectors (in particular mineral sands); and
(v) industrial and landowner issues and disputes; and terrorism or other hostilities.

(n)

Commodity price and exchange rate risk

If the Company achieves success leading to mineral production, the revenue it will derive through the sale of mineral sands exposes the potential income of the Company to commodity price and exchange rate risks.

(o)

Unforeseen expenditure risk

Expenditure may need to be incurred that has not been taken into account in the preparation of this Notice. Although the Company is not aware of any such additional expenditure requirements, if such expenditure is subsequently incurred, this may adversely affect the expenditure proposals of the Company.

(p) Additional requirements for capital

The Directors expect that the Company will have sufficient capital resources to enable the Company to achieve its initial business objectives upon settlement of the SSA.

However, the Directors can give no assurances that such objectives will in fact be met without future borrowings or capital raisings. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its expansion and development programmes. If the Company is successful in meeting its initial objectives with respect to the Bunbury MSP, then additional capital may be required to further develop its operations and pursue business opportunities.

(q)

Labour shortage

In recent years, Australia has experienced a shortage of skilled labour, principally due to a number of new mining projects being developed. This has in the past, and may have in the future, a negative impact on the Company’s ability to hire and retain skilled labourers and could cause a shortage of workers or put increased pressure on wages.

(r)

Transport risks

Any unavailability or increased cost of transportation required to deliver mineral sands products to markets or customers, including those caused by weather-related problems, infrastructure damage, strikes, lock-outs, increased fuel prices, lack of fuel or maintenance items, transportation delays or other events, could temporarily impair the Company’s ability to supply mineral sands to its customers, or its customers’ desire to purchase mineral sands from the Company. Either of these outcomes could have a material adverse effect on the Company.

(s)

Government policy changes and legal risk

Government action or policy change in relation to access to lands and infrastructure, compliance with environmental regulations, export restrictions, taxation, royalties and subsidies may adversely affect the Company’s operations and financial performance.

The Company’s operations will be governed by a series of laws and regulations. Breaches or non-compliance with these laws and regulations can result in penalties and other liabilities. These may have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price of the Company.

These laws and regulations may be amended from time to time, which may also have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price for the Company.

The introduction of new legislation or amendments to existing legislation by governments, developments in existing common law, or the respective interpretation of the legal requirements in any of the legal

jurisdictions which govern the Company’s operations or contractual obligations, could impact adversely on the assets, operations and, ultimately, the financial performance of the Company and the value of its Shares. In addition, there is a commercial risk that legal action may be taken against the Company in relation to commercial matters.

1.17 Proposed board of directors

Upon completion of the Acquisition, all the members of the current Cable Sands board will resign and the board will change to introduce an experienced executive team who will oversee the exploration and development activities of the Bunbury MSP. The board appointments will include Mr Mark Caruso and Mr Joseph Caruso, who are currently directors of the Company.

1.18 Resolution

The Company is putting the Resolutions to Shareholders to seek approval for:

(a) in the case of Resolution 1, the issue of Shares raising up to A$100 million pursuant to the Capital Raising; and
(b) in the case of Resolution 2, the approval for Cable Sands to provide financial assistance to the Company to acquire 100% of the issued capital of Cable Sands.

1.19 Plans for the Company if the Acquisition does not proceed

If the Acquisition does not complete, the Company will continue with its current activities and continue to look for an alternate transaction or acquisition to add value to the Company.

1.20 Directors recommendations

The Directors do not have any material interest in the outcome of the Resolutions other than as a result of their interest arising solely in the capacity of Shareholders of the Company.

Each of the Directors intends to vote their Shares in favour of the Resolutions. Based on the information available, all of the Directors consider that the proposed Acquisition is in the best interests of the Company and recommend that Shareholders vote in favour of the Resolutions. The Directors have approved the proposal to put the Resolutions to Shareholders.

1.21 Forward looking statements

The forward looking statements in this Notice of Meeting are based on the Company’s current expectations about future events. They are, however, subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of the Company and its Directors that could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by the forward looking statements in this Notice of Meeting. These risks include but are not limited to, the risks outlined in section 1.16 of this Notice of Meeting. Forward looking statements include those containing words such as ‘anticipate’, ‘estimates’, ‘should’, ‘will’, ‘expects’, ‘plans’ or similar expressions.

1.22 Competent Person

The information in this Notice, which relates to Exploration Results, Mineral Resources or Ore Reserves, is based on information compiled by Allen J Maynard, who is a Member of the Australian Institute of Geosciences ( AIG ) and a Corporate Member of the Australasian Institute of Mining & Metallurgy ( AusIMM ) and an independent consultant to the Company. Mr Maynard is the Director and principal geologist of Al Maynard & Associates Pty Ltd and has over 30 years of exploration and mining experience in a variety of mineral deposit styles. Mr Maynard has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Maynard consents to inclusion in this Notice of Meeting of the matters based on his information in the form and context in which it appears.

2. RESOLUTION 1 - ISSUE OF SHARES FOR CAPITAL RAISING

2.1 ASX Listing Rule 7.1

ASX Listing Rule 7.1 requires the approval of the shareholders of a company for an issue of equity securities if the securities will, when aggregated with the securities issued by the company during the previous 12 months, exceed 15% of the number of securities on issue at the commencement of that 12 month period (i.e. the Company’s “placement capacity”).

One circumstance where an issue is not taken into account in the calculation of the 15% threshold is where the issue has the prior approval of shareholders in general meeting.

Resolution 1 seeks Shareholder approval for the Capital Raising, that is the allotment and issue of Shares to raise up to a total of A$100 million.

The minimum price at which Shares may be issued under the Resolution is at least 80% of the volume weighted average market price for the five days on which sales of Shares were recorded which precede the date on which the issue of the Shares is made. Based on this minimum price, the formula for calculating the maximum number of Shares to be issued is:

A$100,000,000 = Maximum Number of Shares to be issued 80% x 5 day VWAP

The Company intends to conduct the Capital Raising through a placement of Shares to long term, institutional investors that may be identified by the Company as falling within one or more of the classes of exemptions specified in Section 708 of the Corporations Act.

2.2 Technical information required by ASX Listing Rules 7.1 and 7.3

Pursuant to and in accordance with ASX Listing Rules 7.1 and 7.3, the following information is provided in relation to the issue of the Shares for the purpose of the Acquisition:

(a) the maximum number of Shares to be issued is calculated in accordance with the formula outlined in section 2.1 above;
(b) the Shares will be issued and allotted no later than 3 months after the date of the General Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur as a single allotment;
(c) the issue price of the Shares will be a price per Share that is at least 80% of VWAP for the five days on which sales of Shares were recorded which precede the date on which the issue of the Shares is made;
(d) the Shares issued will be fully paid ordinary shares in the capital of the Company which will rank equally in all respects with existing ordinary fully paid shares on issue in the Company;
(e) the Shares will be issued by way of a placement to investors falling within one or more of the classes of exemptions specified in Section 708 of the Corporations Act. None of the subscribers will be related parties of the Company and no subscriber will hold an interest of 20% or greater in the

capital of the Company as a result of the issue of Shares pursuant to the Capital Raising; and

(f) the Company intends to use the amounts raised from the Capital Raising for the purposes described in Section 1.15 of this Notice of Meeting.

2.3 Interests and Recommendations of Directors

Based on the information available, including that contained in this Explanatory Statement, all of the Directors consider that the Acquisition and issue of Shares the subject of the Resolution is in the best interests of the Company for the reasons set out in Section 1.13.

Each of the Directors approved the proposal to put the Resolution to Shareholders and each of the Directors recommends that Shareholders vote in favour of the Resolution.

3. RESOLUTION 2 – ACCEPTANCE OF FINANCIAL ASSISTANCE

3.1 Particulars of the proposed financial assistance

It is proposed that Bemax and Cristal will, in accordance with the terms of the Facility Agreement, provide a loan of A$35 million to MRC Cable Sands, to allow MRC Cable Sands to acquire Cable Sands. Following the Acquisition, Cable Sands will become indirect subsidiaries of the Company.

The proposed loan arrangement will be secured against:

(a) assets of Cable Sands by way of:
(i) a real property mortgage over certain real property of Cable Sands, ( Real Property Mortgage ); and
(ii) mining mortgages and charges over the tenements and other assets of Cable Sands ( Mining Mortgage ); and
(b) a share mortgage granted by MRC Cable Sands over the shares of Cable Sands ( Share Mortgage ),

(together the Security ).

In addition to the Security, under the Facility Agreement, the repayment obligations of MRC Cable Sands will be guaranteed by the Company and Cable Sands ( Guarantee ).

3.2 Shareholder approval of financial assistance

The financing arrangements made by MRC Cable Sands and the Company to fund the Acquisition contain a requirement that, once the Acquisition is completed, Cable Sands will provide the Guarantee in respect of amounts drawn down on behalf of the Company under those arrangements.

The provision of the Guarantee, in addition to the Security, by Cable Sands would constitute the giving of financial assistance in connection with the acquisition of their shares under Part 2J.3 of the Corporations Act.

Section 260A of the Corporations Act provides that the giving of financial assistance by a company for the acquisition of its own or its holding company’s shares may only occur, (subject to certain exceptions):

(a) with the approval of the shareholders of the company by special or unanimous resolution; or
(b) if the giving of financial assistance does not materially prejudice either the interests of the company or its shareholders, or the company’s ability to pay its creditors.

Section 260B(2) of the Corporations Act further requires that, if a company provides financial assistance for the acquisition of its own or its holding company’s shares and, immediately after the acquisition, the company will be a subsidiary of a listed domestic corporation, then the financial assistance must also be approved by a special resolution of the shareholders of the listed domestic corporation. Given that Cable Sands will, following the Acquisition, be indirectly wholly owned subsidiaries of the Company, section 260B(2) requires the members of the Company to also approve the giving of financial assistance by Cable Sands.

Section 260B(4) of the Corporations Act requires that a notice convening a general meeting of shareholders to consider a resolution to approve the giving of financial assistance under section 260B(1), (2) or (3) of the Corporations Act must include with it a statement setting out all the information known to the company that is material to the decision on how to vote on the resolution.

However, a company does not have to disclose information if it would be unreasonable to require the company to do so because the company had previously disclosed the information to its shareholders.

This section of the Explanatory Memorandum is provided to the Shareholders of the Company in compliance with section 260B(4) of the Corporations Act.

Accordingly, this Explanatory Memorandum does not include information relating to the financial position, financial performance or cash flows of the Company (which information was disclosed in a consolidated fashion in the annual financial report published to date by the Company) or which has previously been announced to the ASX.

3.3 Financial assistance given by Cable Sands

Pursuant to the Facility Agreement, a loan facility will be made available to MRC Cable Sands for the purpose of financing (in part) the Acquisition.

The provision of the Guarantee and the Security by Cable Sands in accordance with the Facility Agreement constitutes the provision of financial assistance by Cable Sands to the Company’s wholly owned subsidiary, MRC Cable Sands for the purposes of 260A of the Corporations Act.

Cable Sands will provide financial assistance for the acquisition of Cable Sands shares. The effects of providing the Guarantee is that each of the companies in Cable Sands is jointly and severally liable to pay the outstanding moneys on demand from the Lender in the event that any or all part of the outstanding moneys owing to the Lender are not paid when due.

As at the date of the Notice convening this Meeting, the amount to be borrowed is approximately A$35 million. If the Resolution is not approved, the

Company may have to negotiate alternative financing and would expect to incur additional costs and transaction fees.

3.4 Effect of the proposed financial assistance

If there is a default in the due and punctual payment of amounts owing under the Facility Agreement or if certain other events of default occur, MRC Cable Sands could be required to immediately pay on demand all amounts then owing by MRC Cable Sands, the Company and Cable Sands under the Facility Agreement. To the extent such amounts are not repaid, the Security (being the security granted over the assets of Cable Sands) will become enforceable by Bemax and Cristal.

The advantages of the proposed financial assistance include the following:

(a) the Directors of the Company believe that the Facility Agreement, in conjunction with the Capital Raising, is the most appropriate form of financing available in order to finance the Acquisition; and
(b) if the proposed Resolution is not approved, the Lender may not be able to provide the finance provided for under the Facility Agreement which may prejudice the Company’s ability to achieve the best possible terms and conditions (including pricing) for these financing arrangements.

The Directors of the Company do not believe there is any disadvantage to the Company in approving the proposed Resolution and believe the entry into of the Facility Agreement and the granting of the Security is for the benefit of the Company.

3.5 Interests and Recommendations of Directors

The Directors of the Company unanimously recommend that shareholders support the granting of financial assistance by Cable Sands to the Company by voting in favour of the resolution set out in this Notice of Meeting.

None of the Directors of the Company has any interest (directly or indirectly) in the proposed provision of financial assistance contemplated by Resolution 2 other than in relation to their position as a director or an employee of the Company.

The Directors consider that there is no other information that is known to the Company that is material to a shareholder’s decision on how to vote on the proposed resolution, other than information which it would be unreasonable to require the Company to include in this document as the Company has previously disclosed the information to its shareholders.

4. RESOLUTION 3 – APPROVAL FOR CHANGE IN SCALE OF ACTIVITIES

4.1 General

Resolution 3 seeks approval from Shareholders for a change in the scale of the activities of the Company following the Acquisition and the associated Capital Raising. ASX has notified the Company that it requires approval pursuant to ASX Listing Rule 11.1.2.

4.2 ASX Listing Rule 11.1

ASX Listing Rule 11.1 provides that where an entity proposes to make a significant change, either directly or indirectly, to the nature or scale of its activities, it must provide full details to ASX as soon as practicable and comply with the following:

(a) provide to ASX information regarding the change and its effect on future potential earnings, and any information that ASX asks for;
(b) if ASX requires, obtain the approval of holders of its shares and any requirements of ASX in relation to the notice of meeting; and
(c) if ASX requires, meet the requirements of Chapters 1 and 2 of the ASX Listing Rules as if the Company were applying for admission to the official list of ASX

ASX has indicated to the Company that, given the significant change in the scale of the activities of the Company upon completion of the Acquisition, it requires the Company to obtain the approval of its Shareholders for the proposed change of the scale of its activities; and

For this reason, the Company is seeking Shareholder approval for the Company to change the scale of its activities under ASX Listing Rule 11.1.

5. ENQUIRIES

Shareholders are required to contact the Company Secretary on +61 8 9353 4890 if they have any queries in respect of the matters set out in these documents.

GLOSSARY

$ or A$ means Australian dollars.

Acquisition means the proposed acquisition of 100% of the issued capital of Cable Sands by the Company from wholly owned subsidiaries of Cristal in accordance with the terms and conditions of the SSA.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by it, as the context requires.

ASX Listing Rules means the Listing Rules of ASX.

Bemax or Bemax Resources Limited means Bemax Resources Limited (ACN 009 247 858)

Bemax Group means Bemax and certain of its related bodies corporate.

Board means the current board of directors of the Company.

Bunbury MSP means the Bunbury MSP located in Bunbury, Western Australia as described in section 1.3.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Cable Sands means Cable Sands Pty Ltd (ACN 008 678 386) and Cable Sands WA.

Cable Sands Tenements means the tenements and associated land, owned by Cable Sands.

Cable Sands WA means Cable Sands (W.A.) Pty Ltd (ACN 009 137 142).

Capital Raising means the allotment and issue of Shares in accordance with the formula outlined in section 2.1 of this Notice of Meeting to raise up to a total of A$100 million.

Company or MRC means Mineral Commodities Ltd (ACN 008 478 653).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Cristal means Cristal Australia Pty Ltd (ACN 102 888 559).

Director means a director of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

Facility Agreement means the agreement between Cristal, Bemax, MRC, MRC Cable Sands and Cable Sands Group for the provision of vendor financing of A$35 million dated 26 July 2011.

Guarantee means the guarantee provided by Cable Sands to Cristal and Bemax pursuant to the Facility Agreement.

Kt mean thousand tonnes

Meeting or General Meeting means the general meeting convened by the Notice of Meeting.

MRC means Mineral Commodities Ltd (ACN 008 478 653).

MRC Cable Sands means MRC Cable Sands Pty Ltd (ACN 152 225 075).

Mt means Million tonnes

Notice of Meeting or Notice means this notice of Meeting, including the Explanatory Statement.

Purchase Price means the purchase price of the issued capital of Cable Sands as outlined in section 1.2(b) of this Notice of Meeting.

Related body corporate has the meaning given in the Corporations Act.

Resolution means a resolution referred to in the Notice of Meeting and which is to be considered by Shareholders at the Meeting.

Right of First Refusal Deed means the deed entered into by the Company and Cristal in relation to the Murray Basin assets on 26 July 2011.

Security means the Real Property Mortgage, the Share Mortgage and the Mining Mortgage as defined in section 3.1 of this Notice of Meeting.

Settlement means the settlement date of the Share Sale Agreement.

Share means a fully paid ordinary share in the capital of the Company.

Share Sale Agreement or SSA means the agreement between MRC Cable Sands, the Company, Cable Sands Holdings and Cable Sands Investments for the sale and purchase of Cable Sands Group as summarised in Section 1.2 dated 26 July 2011.

Shareholder means a holder of a Share.

Simto means Simto Resources Limited (ACN 009 206 302).

Simto Assets means all the assets of Simto.

Simto Heads of Agreement means the heads of agreement entered into by the Company and Simto on 26 July 2011 for the sale and purchase of the either the issued capital of Simto, or the Simto Assets.

Toll Processing Agreement means the agreement for the processing of mineral sands between Bemax Resources Limited, Cable Sands WA and MRC dated 26 July 2011.

Tormin means the Tormin Mineral Sands Project owned by the Company in South Africa.

Vendor Financing means the vendor financing facility provided by Cristal.

VWAP means the volume weighted average price.

WST means Western Standard Time as observed in Perth, Western Australia.

Xolobeni means the Company’s Xolobeni Mineral Sands Project located in South Africa.

SCHEDULE 1 – PRO-FORMA BALANCE SHEET

	Unaudited Unaudited
	MRC Cable Sands Group Consolidation Pro-forma Consolidated
	30-Jun-11 30-Jun-11 Adjustment Adjustment Pro-forma After Issue
Note	$ $ $ $ $
CURRENT ASSETS Cash and cash equivalents 1a & 2 Trade and other receivables Available for sale Financial Assets Inventories Other current assets Non current asset held for sale Total Current Assets NON-CURRENT ASSETS Trade and other receivables Property, plant and equipment 1c Exploration and evaluation expenditure 1c Total Non-Current Assets Total Assets CURRENT LIABILITIES Trade and other payables Provisions Total Current Liabilities NON-CURRENT LIABILITIES Trade and other payables Interest-bearing loans and borrowings 2 Provisions 1a Total Current Liabilities Total Liabilities Net Assets SHAREHOLDERS EQUITY Contributed equity 2 Reserves 1b Retained Profits/(Accumulated Losses) 1b Parent entity interest Non controlling interest TOTAL SHAREHOLDERS EQUITY	418,065 - (96,000,000) 135,000,000 39,418,065 450,787 7,815 - - 458,602 4,369,570 - - - 4,369,570 - 14,794,468 - - 14,794,468 283,483 2,737,430 - - 3,020,913 37,913 - - - 37,913
	5,559,818 17,539,713 (96,000,000) 135,000,00 0 62,099,531 - 1,057,168 - - 1,057,168 13,421 20,084,049 37,528,706 - 57,626,176 13,706,089 2,644,473 37,528,706 - 53,879,268
	13,719,510 23,785,690 75,057,412 - 112,562,612
	19,279,328 41,325,403 (20,942,588) 135,000,00 0 174,662,143 493,260 - - - 493,260 34,900 5,000,520 - - 5,035,420
	528,160 5,000,520 - - 5,528,680 - - - - - - - - 35,000,000 35,000,000 - 10,382,295 5,000,000 - 15,382,295
	- 10,382,295 5,000,000 35,000,000 50,382,295
	528,160 15,382,815 5,000,000 35,000,000 55,910,975
	18,751,168 25,942,588 (25,942,588) 100,000,00 0 118,751,168
	41,204,350 - - 100,000,000 141,204,350 3,234,391 (286,000) 286,000 - 3,234,391 (25,866,422 ) 26,228,588 (26,228,588) - (25,866,422)
	18,572,319 25,942,588 (25,942,588) 100,000,000 118,572,319 178,849 - - - 178,849
	18,751,168 25,942,588 (25,942,588) 100,000,00 0 118,751,168

The unaudited pro-forma balance sheet above has been prepared on a provisional basis to reflect the consolidation adjustment impact following completion of the acquisition of the Cable Sands Group and the pro-forma adjustment impact of the capital raising and vendor financing outlined as part of the Notice of Meeting. Details to the adjustments are explained below:

Consolidation adjustment

A consolidation adjustment has been prepared to demonstrate the accounting impact of consolidating the balance sheet of the Cable Sands Group into MRC.
a. Under the terms and conditions of the Share Sale Agreement with subsidiaries of Cristal, the Company will acquire 100% of the issued capital in the Cable Sands Group for a total cash consideration of A$96 million, with a further A$5 million payment contingent upon Zircon prices reaching US$2,700 by the end of 2013. As a result, cash is decreased by A$96 million and a provision for contingent payment of $5 million is included as part of the consolidation adjustment.
b. Reserves and retained profits of Cable Sands Group are eliminated as part of consolidation adjustments.
c. A fair value uplift of $37,528,706 to property, plant and equipment and exploration assets respectively is included as a result from the acquisition of the Cable Sands Group. The acquisition has been accounted for on a provisional basis, based upon management’s best estimate of the fair values of assets and liabilities acquired. MRC management will be finalising an assessment of the fair value of the assets and liabilities of the Cable Sands Group at settlement date which may result in adjustments to the assets and liabilities acquired as presented above.

Pro-forma adjustment

A pro-forma adjustment has been prepared to demonstrate the accounting impact of the share placement issue of MRC ordinary shares to raise a notional amount of $100 million and the vendor financing of $35 million under Resolution 1 and 2 of the Notice of Meeting respectively. If more or less funds are raised, this will have the impact of either increasing or decreasing the cash holdings with a corresponding increase or decrease in contributed equity.

AI assistant

MINERAL COMMODITIES LTD — AGM Information 2011

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