MINERAL COMMODITIES LTD — Annual Report 2010

Mar 31, 2011

MINERAL COMMODITIES LIMITED

ABN 39 008 478 653

ANNUAL FINANCIAL REPORT 31 DECEMBER 2010

Mineral Commodities Limited Annual Financial Report for the year ended 31 December 2010

Corporate Directory

Directors	Joseph Anthony Caruso - Non-Executive Chairman
	Mark Victor Caruso - Non-Executive Director
	Peter Patrick Torre - Non-Executive Director
Company Secretary	Peter Patrick Torre
Registered Office	Unit 27, Level 1
	133 Kewdale Road
	Kewdale,
	Western Australia 6105
	Telephone: (61 8) 9353 4890
	Facsimile: (61 8) 9353 4894
	Email: info@mncom.com.au
	Website: www.mncom.com.au
Solicitors	Steinepreis Paganin
	Level 4, Next Building
	16 Milligan Street
	Perth WA 6000
Auditors	BDO Audit (WA) Pty Ltd
	38 Station St
	Subiaco, Western Australia 6008
Share Registry	Link Market Services Limited
	Ground Floor, 178 St Georges Terrace
	PERTH WA 6000
	Telephone 1300 554 474
Stock Exchange Listing	The Company is Listed on the Australian Stock
	Exchange Limited under ASX Code - MRC

Mineral Commodities Limited Annual Financial Report for the year ended 31 December 2010

Contents

DIRECTORS’ REPORT	2
STATEMENT OF COMPREHENSIVE INCOME	11
STATEMENT OF FINANCIAL POSITION	12
STATEMENT OF CASH FLOWS	13
STATEMENT OF CHANGES IN EQUITY	14
NOTES TO THE FINANCIAL STATEMENTS	15
DIRECTORS’ DECLARATION	45
AUDITOR’S INDEPENDENCE DECLARATION	46
INDEPENDENT AUDITOR’S REPORT	47

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report

The Directors present their report together with the financial report of Mineral Commodities Limited (“the Company”) and its controlled entities (the “Group”) for the year ended 31 December 2010.

DIRECTORS

The Directors of the Company in office during or since the end of the financial year are:

. Mr Joseph A Caruso – Non Executive Chairman

. Mr Mark V Caruso – Non Executive Director

. Gregory Hugh Steemson – Managing Director (resigned 31 March 2010)

. Peter Patrick Torre – Non Executive Director and Company Secretary (appointed as a director on 1 April 2010)

DIRECTORS’ INFORMATION

Joseph Anthony Caruso (65 Years of Age)

Non-Executive Chairman

Mr Caruso is a Director of Zurich Bay Holdings Pty Ltd and Construction Manager of Simto Australia Pty Ltd, both of which are involved in mining, earthmoving and civil engineering construction earthworks. Mr Caruso has considerable experience in managing and administration of engineering, mining, raw materials production operations, earthmoving and related infrastructure utilities services resource contracts. Mr Caruso has been a director of Mineral Commodities Limited since September 2000.

Mark Victor Caruso (49 Years of Age)

Managing Director

Mr Caruso is a Director of Zurich Bay Holdings Pty Ltd and Simto Australia Pty Ltd, both of which are involved in mining, earthmoving and civil engineering construction earthworks. Mr Caruso has been a director of Mineral Commodities Limited since September 2000. He is also Executive Chairman of Allied Gold Limited. Former directorships of public listed companies in the last 3 years are CI Resources Limited from October 2003 to May 2007.

Peter Torre CA, ACIS, MAICD (38 Years of Age)

Mr Torre was appointed Company Secretary of Mineral Commodities Limited in July 2006, and as a director of the Company on 1 April 2010. He is a Chartered Accountant, a Chartered Secretary and a member of the Australian Institute of Company Directors. He was previously a partner of an internationally affiliated firm of Chartered Accountants. Mr Torre is the Company Secretary of several ASX listed companies and is a Director of Neo Resources Limited and Mission New Energy Limited.

Due to the size of the Company, all directors consider matters which would normally be dealt with by Audit and Remuneration Committees.

PRINCIPAL ACTIVITIES

The principal activity of the Group during the year was undertaking procedures for the development of mineral sands projects and investigations into other mineral resources. This has mainly involved the evaluation of the Xolobeni Mineral Sands Project in the Eastern Cape Province of South Africa and the Tormin Mineral Sands Project in the Western Cape Province of South Africa.

There were no significant changes in the nature of activities of the Group during the year.

CONSOLIDATED RESULTS

The loss of the group after income tax and non-controlling interests was $1,625,021 (2009: $642,991).

DIVIDENDS

No dividends have been paid, declared or recommended for payment, in respect of the current financial year.

• 2 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS

Highlights of the Company’s operations for the period under review are as follows:

South African Projects

Tormin Mineral Sands Project

Tormin is located on the west coast of South Africa, approximately 400km north of Cape Town. The predominant minerals of value are zircon and rutile, which are contained in a high grade beach placer deposit north of the Oliphants River outfall.

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 derived from the DFS provided for hydraulic mining of the beach deposits and hydraulically transferring the sand from the beach to a stockpile. The primary spiral plant followed by a wet high intensity magnetic separation (WHIMS) circuit was designed for a nominal throughput capacity of 1.6 Mtpa producing 30,000 to 40,000 tonnes of concentrates per annum grading up to 80% zircon and 10% rutile. The tailings, totaling in excess of 1.5Mtpa, were to be subsequently hydraulically transferred back to the beach for deposition.

The results of the DFS were incorporated into a financial model developed on behalf of the Company by MSP Engineering. During the course of trade-off and optimisation studies two additional opportunities were identified. The first of these involved primary concentration on the beach. Locating the primary gravity circuit on the beach reduces the volume of sand and tailings to be hydraulically transferred off and back to the beach with an associated reduction in operating costs (Opex), capital expenditure (Capex) and the environmental impact of the project.

Significant work was undertaken to further the development of the Tormin Mineral Sands Project (the Project) during the year.

Perth based MSP Engineering Pty Ltd completed most of the process engineering, including PFD’s, P&ID’s, Mass Balances and Process Design Criteria, and submitted initial designs for a primary wet concentrator based on the beach and the secondary concentration plant.

Amendments to the Environment Management Plan were submitted to the DMR during the last quarter of the year. Subsequent meetings were held with the DMR’s Regional Manager of the Western Cape. The DMR appeared content with the Company’s progress to finalise outstanding regulatory matters to enable it to proceed to develop and mine.

The Company held discussions with parties to assist with the management and development of the Project to ensure it is undertaken in the most expeditious and efficient manner. At the date of this report, the Company is finalising these discussions which will see the appointment of a contractor to assist with the development, mining, processing, and administration associated with the Project.

Xolobeni Mineral Sands Project

The Xolobeni Project is located in the Eastern Cape Province of South Africa approximately 300km north of East London and 200km south of Durban.

The Xolobeni Project is regarded as one of the largest undeveloped mineral sands resources in the world containing in excess of 9,000,000 tonnes of ilmenite.

The Company is awaiting the outcome of an appeal lodged with the Minister of the Department of Minerals and Energy (“DME”) against the grant of the Mining Right over the Kwanyana block. This appeal was lodged in September 2008.

The Company is aware that the task team established to advise the Mineral Resources Minister in South Africa on the Mining Right has submitted its report and recommendations to the Director-General without a public hearing as was initially anticipated.

The Department of Mineral Resources then advised the Company in meetings that consultation with various government departments is required prior to handing down a final decision.

• 3 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

In response to the Company’s request for clarity over the appeal, the DME has responded by informing the Company that the Minister has appointed a Task Team, consisting of the Mining and Minerals development Board. The term of office of this Board expired and a new board is yet to be appointed.

The Director-General then issued an instruction that the appeal be finalised by the establishment of a new panel, which will hear oral arguments by the relevant parties and then make a recommendation to the Minister. It was envisaged that the hearing would be arranged at the DME Durban regional Office in mid February 2011.

In March the Director General of Mineral Resources (DG) in South Africa advised MRC’s subsidiary Transworld Energy and Mineral Resources (SA) (Pty) Ltd (TEM) that the Department of Mineral Resources in South Africa (DMR) no longer intends to embark on oral hearings in respect of the appeal against the Xolobeni mining right awarded to TEM on the Kwanyana Block as previously advised. The DG has advised that the DMR will now proceed to advise the Minister on the appeals based on the available documentation. TEM has been advised that the Minister will consider the appeals towards the end of March 2011. To this date of this report, the Company still awaits the outcome from the Minister.

Investment in Allied Gold Limited (ASX listed: ALD)

MRC currently holds 6.5 million shares of ALD’s issued fully paid ordinary shares.

Allied Gold is an emerging 200,000 ounce per annum gold producer with production and exploration assets in Papua New Guinea and the Solomon Islands approximately 3 hours by plane from Brisbane, Australia. The company’s 100%-owned Simberi gold mine is 85 kilometres from Lihir Island in the Tabar Islands group in Papua New Guinea. Simberi commenced gold production in 2008, produced 64,000 ounces in 2009-10 and its process plant is being expanded to a throughput of 3.5 Mtpa to produce 100,000 ounces per annum by late 2011. Allied Gold acquired Gold Ridge in the Solomon Islands in late 2009 when it acquired Toronto-listed Australian Solomons Gold. Allied has invested $150 million to refurbish and redevelop Gold Ridge which is expected to produce an average 120,000 ounces per annum for a minimum ten years. Allied Gold Limited is listed on the ASX, TSX and the London AIM exchanges.

The market value of MRC’s shareholding at 31 December 2010 was $5.1 million.

Investment in Petro Ventures International Limited

The Company maintains a significant investment in Petro Ventures International Ltd (“PVIL”) an E & P company operating in the Northern Hemisphere. Petro has strategic oil & gas working interests in Romania (20%), Hungary (11.4%), Holland 30%) and France (between 25% to 50%).

The Company was informed in the last quarter of the year that drilling of the Eugenia (Pelican NE) and Ioana (Midia SE) has been approved by NAMR and assignment of the Romanian licences has been indicated by the Romanian Government to occur at the end of January 2011.

Following assignment, the value of Petro’s Romanian assets has been independently valued by RPS Energy at US$109m.

Following the Annual General Meeting of PVIL on 15 December, 2010 the Company settled the Deed of Termination with Macquarie Bank Ltd and consequently, 45,269,280 Options held by Macquarie were cancelled, PVIL issued 8,876,329 ordinary shares to Macquarie at a deemed issue price of 51 cents per share and:

• the Option Deeds were terminated;

• the Heads of Agreement dated 7 July, 2010 was terminated; and

• the Subscription Agreement was terminated.

Following the transaction, PVIL had 67,038,938 ordinary shares on issue and A$10.3m cash at bank.

• 4 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

In February 2011, the Company received a Notice of Meeting from Petro whereby it sought shareholder approval to transfer the Company to the UK. This will involve the formation of a limited company in the UK then undertaking a share exchange on a share for share basis.

Following the share exchange, PVIL has advised that a prospectus will be submitted to seek admission to the Alternative Investment Market in London (“AIM”). A listing on AIM will provide the necessary platform to recognise the value of PVIL and its assets.

The Company received a further update from PVIL in March 2011 advising that the general meeting of shareholders would be deferred due to PVIL receiving notification from the Romanian Authorities that the assignment of the Romanian Licenses had not been granted.

The Directors of PVIL have advised that they are considering their options in this regard and will update their shareholders accordingly.

Investment in Africa Uranium Limited

The Company holds an approximate 12% interest in Africa Uranium Limited. AUL’s main exploration assets are located in Namibia and South Africa. AUL’s Namibian interests are located in the area east of Swakopmund in the same general area as the Langer Heinrich uranium mine operated by Paladin Energy and the Rossing uranium mine operated by Rio Tinto.

In March 2010, Oklo Uranium Limited announced that it had entered into a transaction with Africa Uranium Limited to acquire its 70% interest in the Hoasib Project for an estimated value of approximately $20 million.

On 31 May 2010, Oklo Uranium Limited announced that following due diligence, Oklo formed the view that whilst the project remained prospective for uranium mineralisation, it was unable to support the key commercial terms of the acquisition and consequently terminated the transaction with Africa Uranium Limited. Oklo noted that it was in discussions with Africa Uranium Limited on the basis that it recognises the potential in the project and these discussions may or may not result in a new agreement with Africa Uranium Limited.

The Company understands that discussions with Oklo have now ceased and AUL may seek to raise capital itself to further the exploration and development of its assets.

FINANCIAL POSITION

The net assets of the group have increased from $19,844,256 at 31 December 2009 to $20,371,853 at 31 December 2010.

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

The company will continue the process of development of both the Tormin and Xolobeni projects in South Africa. The Board will continue to review other projects and opportunities in the interest of increasing shareholder value.

ENVIRONMENTAL REGULATIONS

The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and energy use in Australia. For the first measurement period the directors have assessed that there are no current reporting requirements, but may be required to do so in the future.

In the course of its normal mining and exploration activities, the Company adheres to environmental regulations imposed upon it by the relevant regulatory authorities, particularly those regulations relating to ground disturbance and the protection of rare and endangered flora and fauna.

• 5 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

SCHEDULE OF MINING TENEMENTS

Mining tenements currently held by the economic entity are:

Area	Entity holding the interest	% Held	Title	Status
Xolobeni – South Africa	Transworld Energy & Minerals Resources	100	New order Prospecting Right and Mining Right over Kwinyana Block	Granted – subject to appeal
Tormin – South Africa	Mineral Sands Resources	100	Mining Right	Granted

SIGNIFICANT CHANGES IN STATE OF AFFAIRS AND LIKELY DEVELOPMENTS

The following significant changes in the state of affairs of the Consolidated Entity occurred during the year:

OPTIONS

• In July 2009, 57,357,208 listed options to acquire shares at 20cents with an expiry date of 31 December 2012 were issued under the terms of a non-renounceable entitlement issue at an issue price of $0.005 per option to raise $286,786 excluding costs.

Options do not entitle the holder to receive a dividend paid to ordinary shareholders.

New issues of options and options exercised in the period are as follows:

Listed options	No of Options	Exercise Price	Expiry date
Opening Balance 1 January 2010	57,357,208	20 cents	31 December 2012
- Options issued	-	-	-
- Options Exercised	-	-	-
Balance at 31 December 2010	57,357,208	20 cents	31 December 2012

DIRECTORS’ SHAREHOLDING INTERESTS

The relevant interest of each director in the share capital of the Company, shown in the Register of Directors’ Shareholding at the date of the Directors’ Report is:

2010
	Balance at	Received as	Options		Net change	Balance
Ordinary Shares	1 January 2010	Remuneration	Exercised		other	31 Dec 2010
Mark Caruso -Indirect	19,050,988	-		-	2,519,000	21,569,988
- Direct	12,627	-		-	-	12,627
Joseph Caruso	19,050,988	-		-	2,519,000	21,569,988
Peter Torre	-	-		-	500,000	500,000

J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd, which holds 21,569,988 shares and 7,380,396 listed options in the Company.

• 6 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

2010
Listed Options	Balance at 1 January 2010	Granted as Remuneration	Options Exercised	Options Lapsed		Net change other	Balance at 31 Dec 2010
Mark Caruso	7,380,396	-	-		-	-	7,380,396
Joseph Caruso	7,380,396	-	-		-	-	7,380,396
Peter Torre	-	-	-		-	200,000	200,000

MEETINGS OF DIRECTORS

The number of directors meetings and number of meetings attended by each of the directors of the Company during the financial year are:

	Meetings Held	Meetings Attended
J A Caruso	2	2
M V Caruso	2	2
G H Steemson P P Torre	0 2	0 2

Other matters of board business have been resolved by circular resolutions of directors, which are a record of decisions made at a number of informal meetings of the directors held to control, implement and monitor the Company’s activities throughout the year.

REMUNERATION REPORT (Audited)

The remuneration report is set out under the following main headings:

• A. Principles used to determine the nature and amount of remuneration

• B. Details of remuneration

• C. Service Agreements

• D. Share-based compensation

• E. Additional Information

The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.

A. Principles used to determine the nature and amount of remuneration

In order to retain and attract executives of sufficient calibre to facilitate the efficient and effective management of the Company’s operations, the board reviews the remuneration packages of all directors and executive officers, if any, on an annual basis and makes recommendations. Remuneration packages are reviewed with due regard to performance and other relevant factors.

Remuneration packages may contain the following key elements:

• (a) Directors Fees;

• (b) Salary & Consultancy; and

• (c) Benefits – including provision of motor vehicle, superannuation.

Fees payable to non-executive directors reflect the demands which are made on, and the responsibilities of the directors. The Board reviews non-executive directors’ fees and payments annually.

• 7 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

REMUNERATION REPORT(Continued)

Executives are offered a competitive base pay that consists of fixed components. Base pay for senior executives, if any, is reviewed annually to ensure the executives pay is competitive with the market. Total Base Pay can be structured as a total employment package which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ discretion.

There were no short or medium term cash incentives provided to any executives of the Company during the financial year. Short or medium term cash incentives are not incorporated into any executives salary packages at the time of this report.

The directors are not required to hold any shares in the company under the constitution of the Company; however, to align directors’ interests with shareholders interests the directors are encouraged to hold shares in the company.

Remuneration is not directly related to company performance or key performance indicators.

The board has no separate remuneration committee due to the size of the Company. The directors perform the role of a remuneration committee as disclosed in the Corporate Governance statement.

B. Details of Remuneration

The key management personnel of Mineral Commodities Ltd Group are the directors of Mineral Commodities Ltd and the Company Secretary Mr Peter Torre who reports directly to the Director’s of the Company. The amounts disclosed are therefore applicable for both Mineral Commodities Limited and the Mineral Commodities Limited Group.

Details of the remuneration of directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of Mineral Commodities Limited and the Mineral Commodities Limited Group are set out in the following tables.

There are no long term benefits amounts due to Directors and key management personnel.

		Cash benefits	Post employment benefits	Share- based payments		Percentage performance based
		$	$	$	Totals $
Non Executive Directors
Joe Caruso	2010 44,037 2009 44,037		3,963 3,963	- -	48,000 48,000	- -
Mark Caruso	2010 48,000		-	-	48,000	-
	2009 48,000		-	-	48,000	-
Peter Torre Sub-total non executive directors	2010 54,000 2009 N/A 2010 2009 146,037 92,037		N/A 3,963 3,963	N/A -	54,000 N/A 150,000 96,000	- - -
Executive Directors
Greg Steemson	2010 60,000 2009 188,200		- -	- -	60,000 188,200	- -
Other Key Management Personnel
Peter Torre	2010 18,000 2009 72,000		- -	- -	18,000 72,000	- -
Total Key management personnel compensation	2010 2009 224,037 352,237		3,963 3,963	- -	228,000 356,200	- -

• 8 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

No options were issued to Directors or other Key Management Personnel during 2010 or the previous year as part of their remuneration.

C. Service Agreements

In accordance with the terms of the agreement with Mr Steemson, he was paid a fixed sum of $20,000 per month from 1 January 2010 until he resigned on 31 March 2010. There were no short or long term incentives to be provided to Mr Steemson.

There were no payments upon termination of the contract.

There are no other service agreements.

D. Share Based Compensation

No options or shares were issued to Directors or other Key Management Personnel during 2010 or the previous year as part of their remuneration.

E. Additional Information

There is no additional information to be provided in respect to the remuneration of the directors.

End of the Audited Remuneration Report

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Mineral Commodities Limited adhere to strict principles of corporate governance. The Company’s Corporate Governance statement will be included before the Additional ASX Information section of the Annual Financial Report.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Share Capital

In March 2011, the Company raised $1.2 million via a placement of 10,000,000 fully paid ordinary shares at $0.12 cents per share. The placement was made to M&G Investments Limited a UK based Institution.

Xolobeni Project

The Director General of Mineral Resources (DG) in South Africa advised MRC’s subsidiary Transworld Energy and Mineral Resources (SA) (Pty) Ltd (TEM) that the Department of Mineral Resources in South Africa (DMR) no longer intends to embark on oral hearings in respect of the appeal against the Xolobeni mining right awarded to TEM on the Kwanyana Block as previously advised. The DG has advised that the DMR will now proceed to advise the Minister on the appeals based on the available documentation. TEM has been advised that the Minister will consider the appeals towards the end of March 2011.

Sale of Investments

A further 1,000,000 Ordinary Shares in Allied Gold Ltd were sold in February 2011 net proceeds received were $577,993.

Petro Ventures International Ltd (PVIL)

The Company received a further update from PVIL in March 2011 advising that the general meeting of shareholders would be deferred due to PVIL receiving notification from the Romanian Authorities that the assignment of the Romanian Licenses had not been granted. The Directors of PVIL have advised that they are considering their options in this regard and will update their shareholders accordingly.

No other event or transaction has arisen in the interval between the end of the financial year and the date of this report of a material and unusual nature likely, other than what has been disclosed elsewhere in this financial report, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations or the state of affairs of the Company or the Consolidated Entity in future financial years unless otherwise disclosed in this Directors Report.

• 9 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors Report (continued)

PROCEEDINGS ON BEHALF OF THE GROUP

No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

INSURANCE OF OFFICERS

During the financial year the Group has paid an insurance premium to insure the directors and secretaries of the company and its controlled entities. The premium paid was $31,500 representing $10,500 per director. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Group.

AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s Independence Declaration as required by Section 307C of the Corporations Act 2001 is set out on page 46 and forms part of this report.

NON-AUDIT SERVICES

The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the company and/or the group are important.

Non audit services totalling $6,670 were charged by a BDO Audit (WA) Pty Ltd related entity, BDO Tax (WA) Pty Ltd.

There were no further non–audit services provided by BDO Audit (WA) Pty Ltd in the year.

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non related firms:

Audit Services:	$
BDO Audit (WA) Pty Ltd
Audit and review of financial reports	39,492
Non BDO audit firm (Tuffias Sandberg)	6,558
Total remuneration for audit services	46,050

BDO Audit (WA) Pty Ltd continues in office.

This report has been made in accordance with a resolution of the Directors.

==> picture [63 x 45] intentionally omitted <==

Mark Caruso Perth, Western Australia 31 March 2011

• 10 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Statement of Comprehensive Income For the year ended 31 December 2010

For the year ended 31 December 2010
	Note	Consolidated
		2010	2009
		$	$
Revenue from continuing operations	2	525,700	995,439
Administration expenses		(455,071)	(567,677)
Employees and consultants remuneration		(205,117)	(270,906)
Exploration and evaluation costs	13	(10,564)	(133,783)
Depreciation and amortisation	12 (a)	(11,250)	(14,356)
Loss on disposal of assets	12 (a)	(8,588)	-
Impairment of Investments	10	(1,488,644)	-
Finance costs		(5,413)	(16,239)
		(2,184,647)	(1,002,961)
Loss before income tax		(1,658,947)	(7,522)
Income tax expense	4	-	-
(Loss) from continuing operations		(1,658,947)	(7,522)
Profit from discontinued operations	5	33,926	(635,469)
(Loss) for the year		(1,625,021)	(642,991)
Other comprehensive income
Changes in the fair value of available-for- sale financial assets	10	2,390,277	(1,165,147)
Exchange differences on translation of foreign operations		(237,660)	(173,901)
Other comprehensive income for the year net of tax		2,152,617	(1,339,048)
Total comprehensive income for the year		527,596	(1,982,039)
Loss / Profit is attributable to:
Owners of Mineral Commodities Ltd		(1,625,021)	(642,991)
Non-controlling interest		-	-
		(1,625,021)	(642,991)
Total comprehensive income for the year is
attributable to
Owners of Mineral Commodities Ltd		527,596	(1,982,039)
Non-controlling interest		-	-
		527,596	(1,982,039)
Earnings/(Loss) per share from continuing operations	attributable	to the ordinary equity holders of the company.
Basic Loss per share		cents	cents
From continuing operations attributable to the ordinary shareholders of the company (cents per share)		(1.158)	(0.005)
From discontinued operations (cents per share)		0.024	( 0.445)
Total basic loss per share attributable to the ordinary equity holders of the company (cents per share)		(1.134)	(0.045)

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

• 11 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Statement of Financial Position as at 31 December 2010

Note CURRENT ASSETS Cash and cash equivalents 8 Trade and other receivables 9 Available for sale financial assets 10 Other current assets 11 Non-Current asset held for sale Total Current Assets NON-CURRENT ASSETS Property, plant and equipment 12 Exploration & development expenditure 13 Other financial assets Total Non-Current Assets Total Assets CURRENT LIABILITIES Trade and other payables 16 Provisions Total Current Liabilities Total Liabilities NET ASSETS EQUITY Contributed equity 17 Reserves 18 Accumulated losses Parent entity interest Non-controlling interest 15 TOTAL EQUITY	Consolidated 2010 2009 $ $ 191,506 153,566 527,986 539,358 6,277,651 6,070,777 10,376 13,351 - 165,639
	7,007,519 6,942,691
	7,377 26,515 13,928,167 13,159,249 - 6
	13,935,544 13,185,770
	20,943,063 20,128,461
	541,540 251,699 29,670 32,506
	571,210 284,205
	571,210 284,205
	20,371,853 19,844,256
	40,004,350 40,004,350 5,825,595 3,672,977 (25,636,941) (24,011,920)
	20,193,0004 19,665,407 178,849 178,849
	20,371,853 19,844,256

The above Statements of Financial Position should be read in conjunction with the accompanying notes.

• 12 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Statement of Cash Flows

For the year ended 31 December 2010

Note CASH FLOWS FROM OPERATING ACTIVITIES Exploration and development expenditure Interest received Payments to suppliers & employees Interest paid Sundry income Net cash (outflows) / inflows from operating activities 23(a) CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant and equipment 12 (a) Purchase of investments Proceeds from sales of investments Proceeds from sale of assets held for resale 12 (b) Net cash inflow/(outflow) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of shares and options 17 Net cash inflow from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 8	Consolidated 2010 2009 $ $ (661,773) (1,307,142) 25,711 50,937 (678,586) (494,625) (5,413) (16,239) 4,789 100
	(1,315,272) (1,766,969)
	(700) (28,942) - (1,488,644) 1,189,361 2,154,216 164,551 -
	1,353,212 636,630
	- 486,578
	- 486,578
	37,940 (643,761) 153,566 797,328
	191,506 153,566

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

• 13 -

Mineral Commodities Limited

Annual Financial Statements for the year ended 31 December 2010

Statement of Changes in Equity

ement of Changes in Equity
Consolidated Entity For the year ended 31 December 2010 Balance at 1 January 2010 Loss for the year Exchange differences on translation of foreign operations Changes in the fair value of available for sale financial assets Total comprehensive income for the year Transactions with owners in their capacity as owners Contributions of equity net of transaction costs Issue of listed options net of costs Increase in non controlling interest Balance at the end of the year	Contributed Equity Listed options reserve Accum- ulated Losses General Reserve Currency Translation Reserve Financial Asset Revaluation Reserve Total Non-controlling interest Total Equity $ $ $ $ $ $ $ $ $ 40,004,350 286,578 (24,011,920) 2,437,582 (758,112) 1,706,929 19,665,407 178,849 19,844,256 - - (1,625,021) - - - (1,625,021) - (1,625,021) - - - - (237,660) - (237,660) - (237,660) - - - - - 2,390,277 2,390,277 - 2,390,277
	- - (1,625,021) - (237,660) 2,390,277 527,596 - 527,596 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	40,004,350 286,578 (25,636,941) 2,437,582 (995,772) 4,097,206 20,193,003 178,849 20,371,852

Statement of Changes in Equity

Consolidated Entity For the year ended 31 December 2009 Balance at 1 January 2009 Loss for the year Exchange differences on translation of foreign operations Changes in the fair value of available for sale financial assets Transfer from reserve – on expiry of options Total comprehensive income for the year Transactions with owners in their capacity as owners Contributions of equity net of transaction costs Issue of listed options net of costs Increase in non controlling interest Balance at the end of the year	Contributed Equity Listed options reserve Accum- ulated Losses General Reserve Currency Translation Reserve Share Based Payments Reserve Financial Asset Revaluation Reserve Total Non-controlling interest Total Equity $ $ $ $ $ $ $ $ $ $ 39,804,350 - (23,516,438) 2,551,100 (584,211) 78,500 2,872,076 21,205,377 134,340 21,339,717 - - (642,991) - - - - (642,991) - (642,991) - - - - (173,901) - - (173,901) - (173,901) - - - - - - (1,165,147) (1,165,147) - (1,165,147) - - 78,500 - - (78,500) - - - -
	- - (564,491) - (173,901) (78,500) (1,165,147) (1,982,039) - (1,982,039) - - - - - - - - - - 200,000 - - - - - - 200,000 - 200,000 - 286,578 - - - - - 286,578 - 286,578 - - 69,009 (113,518) - - - (44,509) 44,509 -
	40,004,350 286,578 (24,011,920) 2,437,582 (758,112) - 1,706,929 19,665,407 178,849 19,844,256

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

• 14 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Accounting

These financial statements are for Mineral Commodities Limited and its controlled entities, as the consolidated entity (group). Mineral Commodities Limited is an Australian domiciled public listed company.

The general purpose financial statements for the year ended 31 December 2010 have been prepared in accordance with Australian Accounting Standards and Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Compliance with IFRS

The financial statements of Mineral Commodities Limited and controlled entities also comply with International Financial Reporting Standards (IFRS).

Historical Cost Convention

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of available for sale financial assets for which the fair value basis of accounting has been applied.

The following significant accounting policies have been adopted in the preparation and presentation of the financial statements and have been consistently applied to all the years presented, unless otherwise stated.

(b) Principles of Consolidation

The consolidated financial report incorporates the assets and liabilities of all subsidiaries of Mineral Commodities Ltd (“Company” or “parent entity”) as at 31 December 2010 and the results of its subsidiaries for the year then ended. Mineral Commodities Ltd and its subsidiaries together are referred to in this financial report as the group.

Intercompany transactions, balances and unrealised gains on transactions between parent and or subsidiary companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the parent company.

Subsidiaries are those entities over which the Parent company has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights.

Where control of an entity is obtained during a financial year, its results are included in the statements of comprehensive income from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for that part of the year during which control existed.

The purchase method of accounting is used to account for the acquisition of subsidiaries – refer to note (h).

The Consolidated entity applies a policy of treating transactions with non-controlling interests as transactions with external parties to the entity. Disposals to non-controlling interests result in gains and losses for the Consolidated entity are recorded in the statement of comprehensive income. Purchases from non-controlling interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of identifiable net assets of the subsidiary.

• 15 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Interest Income

Interest and other income is recognised as it accrues on a time proportion basis using the effective interest method.

(d) Taxes

Income taxes

The charge for current income tax expense or revenue is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the date of the Statements of Financial Position. Income tax expense is adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where this has no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited to profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions or deductibility imposed by the law.

The income tax expense for the year is calculated using the 30% tax rate (2009: 30%).

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred on a purchase of goods & services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and where receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables in the Statements of Financial Position.

Cash flows are included in the Statements of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

• 16 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rated prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the profit for the year except where deferred in equity as a qualifying net investment hedge.

Subsidiary Companies

The financial results and position of subsidiary companies whose functional currency is different from the consolidated entities presentation currency are translated into the presentation currency as follows;

Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.

Income and expenses are translated at average exchange rates for the period.

Hedge of a net investment in a foreign operation

The group applies hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and the parent entity’s functional currency (AUD), regardless of whether the investment is held directly or through an intermediate parent.

Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in other comprehensive income to the extent that the hedge is effective, and are presented within equity in the foreign currency translation reserve. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged part of a net investment is disposed of, the relevant amount in the foreign currency translation reserve is transferred to profit or loss as part of the profit or loss on disposal.

(f) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Items of plant and equipment are initially recorded at cost and includes any expenditure that is directly attributable to acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset as appropriate. All other repairs and maintenance are charged to the profit for the year in which they are incurred.

Depreciation of Plant and Equipment

Plant and equipment are depreciated at rates based upon the expected useful lives of these assets. The expected useful lives of these assets are 3-10 years.

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.

• 17 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Disposal of Assets

The gain or loss on disposal of assets is calculated as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal and is included in profit for the year of disposal.

(g) Exploration and Development Expenditure

Costs incurred during the exploration and development stages of specific areas of interest are accumulated. Such costs are only carried forward if they are expected to be fully recouped through the successful development of the area, or where activities to date have not yet reached a stage to allow reasonable assessment regarding the existence of economically recoverable reserves, otherwise this expenditure is recognised in the profit for the year. Costs are written off as soon as an area has been abandoned or considered to be non-commercial or impaired where an area is considered non-commercial at the period end.

Once production commences, expenditure accumulated in respect of areas of interest is amortised on a unit of production basis over the life of the total proven economically recoverable reserves. Restoration costs recognised in respect of areas of interest in the exploration and evaluation stage are carried forward as exploration and evaluation expenditure. Costs recognised after the commencement of production in areas of interest will be charged to the profit for the year.

(h) Investments

Interests in Subsidiaries

Investments in subsidiaries are carried in the Company’s financial report at cost less any impairment losses. Dividends and distributions are brought to account in profit when they are declared by the subsidiaries.

Investments in associates

Associates are all entities over which the Consolidated entity has significant influence but not control, generally accompanying a shareholding of between 20%-50% of the voting rights. Investments in associates are accounted for in the parent entity financial statements using the cost method and in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost. The Consolidated entity’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

The Consolidated entity’s share of its associates post acquisition profits or losses is recognised in profit for the year, and its share of post acquisition movements in reserves is recognised directly in reserves. The cumulative post acquisition movements are adjusted against the carrying amount of the investment.

(i) Impairment of Assets

At each reporting date, the Consolidated entity reviews the carrying values of it tangible assets and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over it recoverable amount is expensed to profit or loss.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(j) Financial Instruments

The Consolidated entity classifies its financial instruments on initial recognition. The classification depends on the purpose for which the financial instrument was acquired.

Recognition and de-recognition

Regular purchases and sales of financial assets are recognised on trade date; the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are

• 18 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

derecognised when the rights to receive cash flows from the financial assets have expired or been transferred and the Group has transferred substantially all the risks and rewards of ownership.

(k) Financial Instruments (continued)

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value of all unlisted securities, including recent arm’s length transactions, reference to similar instruments and other pricing models.

Loans and receivables

Loans and receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest rate method. They are included within current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets.

Available-for-sale financial assets

Available-for-sale financial assets are recognised at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity until the instrument is sold at which time any balance in equity relating to the instrument is recycled to profit or loss as part of the profit or loss on sale.

Financial Liabilities

Financial liabilities are recognised initially at fair value and subsequently at amortised cost, comprising original debt less principle payments and amortisation of transaction costs.

Impairment

At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in profit or loss. Impairment losses recognised on equity instruments classified as available for sale are not reversed through the income statement.

(l) Contributed Equity

Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(m) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities in the statement of financial position.

(n) Earnings /(Loss) per Share

Basic Earnings /(Loss) per Share

Basic earnings per share is determined by dividing the profit after income tax attributable to members of Mineral Commodities Ltd by the weighted average number of ordinary shares outstanding during the financial year.

Diluted Earnings /(Loss) per Share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share would arise from the exercise of options outstanding at the end of the financial year.

• 19 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(o) Employee Benefits

Wages and Salaries, Annual Leave, Long Service and Sick Leave

Provision is made for the consolidated entity’s liability for employee entitlements arising from services rendered by employees to balance date. These benefits include annual and long service leave. Sick leave is non-vesting and has not been provided for. Employee entitlements expected to be settled within one year have been measured at the amounts expected to be paid when the liabilities are settled and are recognised in other payables.

The contributions made to defined contribution superannuation funds by entities within the consolidated entity are charged against profits when due.

Share-Based Payments

Share-based compensation benefits were provided to employees via the Mineral Commodities Employee Incentive Option Scheme approved by shareholders in 2006. This Scheme has now expired. The fair value of options granted under the Mineral Commodities Employee Incentive Option Scheme were recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employee becomes unconditionally entitled to the options.

The fair value at grant date is independently determined using a Binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

(p) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised on a straight line basis.

(q) Segment reporting

Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Directors that make strategic decisions. There is no goodwill attached to any of the segments. There has been no impact on the measurement of the assets and liabilities reported for each segment.

(r) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.

(s) Comparatives

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year.

(t) Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale or transaction rather than continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets, investment property and non-current biological assets that are carried at fair value.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increase in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition.

• 20 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

A discontinued operation is a component of the entity that has been disposed of or has been abandoned, or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of comprehensive income.

(u) Critical accounting estimates and judgements

The Group makes significant estimates and judgements concerning the future. The resulting accounting estimates may not equal the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Critical Accounting Estimates

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Significant judgements and critical estimate in applying the entity’s accounting policies

Impairment

During the previous year, the consolidated entity impaired its property, plant and equipment (Note 12), in relation to the Sierra Leone assets as the directors assessed that these amounts were no longer recoverable.

Available for sale financial assets

During the year, the company sold 3 million shares in Allied Gold Limited (2009 5 million shares). The Directors classify the investment in Allied Gold as “available for sale” financial assets because (they intend to hold the investments to earn benefits in the medium to long term increases in the value of these investments) or (they do not meet the criteria to be held as financial assets through profit and loss as they are not monitored and evaluated on a fair value basis).

Exploration and development expenditure

Recoupment of the capitalised exploration and evaluation expenditure is dependant on the successful development and commercial exploitation of the Xolobeni Mineral Sands and the Tormin Mineral Sands areas of interest in South Africa. The capitalised expenditure in relation to the Xolobeni project is $9,610,919 (2009: $9,722,704) is expected to be fully recoverable once the grant of the mining right has been affirmed by the Minister of Minerals and Energy in South Africa and the Company proceeds to further develop this project.

Investment in Unlisted Entities

The investments in Africa Uranium Ltd has been fully impaired $1,488,643 (2009: nil) The remaining investment in an unlisted entity Petro Ventures International Ltd has been valued by using information provided by the Company together with information from an independent source. Assumptions and estimates have been used in this valuation. Should any of these assumptions or estimates change, this could significantly effect the carrying value of this investment.

• 21 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(v) Accounting Standards not yet effective

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 31 December 2010, but have not been applied in preparing this financial report.

• AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 will become mandatory for the Group’s 31 December 2014 financial statements. Retrospective application is generally required, although there are exceptions, particularly if the entity adopts the standard for the year ended 30 June 2012 or earlier. The Group has not yet determined the potential effect of the standard.

• AASB 124 Related Party Disclosures (revised December 2009) simplifies and clarifies the intended meaning of the definition of a related party and provides a partial exemption from the disclosure requirements for government-related entities. The amendments, which will become mandatory for the Group’s 31 December 2012 financial statements, are not expected to have any impact on the financial statements.

• AASB 2009-5 Further amendments to Australian Accounting Standards arising from the Annual Improvement Process affect various AASBs resulting in minor changes for presentation, disclosure, recognition and measurement purposes. The amendments, which become mandatory for the Group’s 31 December 2012 financial statements, are not expected to have a significant impact on the financial statements.

• AASB 2009-8 Amendments to Australian Accounting Standards - Group Cash settled Share-based Payment Transactions resolves diversity in practice regarding the attribution of cash-settled share-based payments between different entities within a group. As a result of the amendments AI 8 Scope of AASB 2 and AI 11 AASB 2 - Group and Treasury Share Transactions will be withdrawn from the application date. The amendments, which become mandatory for the Group’s 31 December 2012 financial statements, are not expected to have a significant impact on the financial statements.

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. IFRIC 19 will become mandatory for the Group’s 31 December 2011 financial statements, with retrospective application required. The Group has not yet determined the potential effect of the interpretation.

No other standards, interpretations or amendments which have been issued are expected to have an impact on the group.

• 22 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

2. OTHER REVENUE FROM CONTINUING OPERATIONS

Interest Interest revenue from unrelated entities Other Income Profit from sales of investments in listed companies Miscellaneous and other income Total Other Revenue from Continuing Operations Total Revenue from continuing operations From discontinued operations Other income (refer note 5)	Consolidated 2010 2009 $ $ 25,711 50,937
	495,200 944,402 4,789 100
	499,989 944,502
	525,700 995,439
	45,209 -
	45,209 -

3. EXPENSES

	Consolidated	Consolidated
	2010	2009
	$	$
Loss before income tax has been arrived at after
charging the following:
Exploration expenditure written off	10,564	133,783
Operating lease rentals	76,444	70,133
Depreciation - plant and equipment	11,250	14,356
Superannuation contributions	18,927	14,329
Movement in provision for employee entitlements	(2,836)	4,359
Impairment of investments	(1,488,644)	-

• 23 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

4. INCOME TAX

The components of current income tax expense comprise: Current taxation Income tax (benefit) reported in the income statement The prima facie tax on loss before income tax is reconciled to the income tax expense as follows: (Loss) / Profit before income tax Prima facie tax payable / (benefit) on loss @ 30% (2009:30%) Non allowable items Non-assessable income Net deferred tax assets not brought to account Income tax expense / (benefit) Future income tax benefit arising from un-recouped deductions at balance date, for Australian tax resident entities. Revenue losses Capital losses	Consolidated 2010 2009 $ $ - -
	- -
	(1,625,021) (642,991)
	(487,506) (192,897) 3,167 (542,252) 611,818 (43,110) (127,479) 778,259
	- -
	4,152,853 3,984,681 4,689,637 4,689,637

In addition the economic entity has unconfirmed tax losses and accumulated exploration expenditure that gives rise to potential carry forward tax benefits in South Africa amounting to approximately Rand 97 million (approximately A$14million (2009:13 million). The benefit of these potential deferred tax assets has not been brought to account, and will only be realised if circumstances similar to those described above, also apply to the economic entity’s future operations in South Africa.

There are no franking credits available.

• 24 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

5 DISCONTINUED OPERATIONS

(a) Description

Kariba Kono (SL) Ltd

Operations ceased in 2008, mining equipment was removed and sold during 2009-10.

(b) Financial performance and cash flow information

Revenue Other income Total revenue Expenses Site Operating expenses General & administration expenses Loss on disposal of fixed assets (refer note 12) Impairment of fixed assets Total expenses Loss before income tax Income tax expense Profit /(Loss) after income tax from discontinued operations Net cash inflow/(outflow) from operating activities Net cash inflow /(outflow) from investing activities Net Cash generated (used) by discontinued operations (c) Carrying amounts of assets and liabilities Cash and cash equivalents Property plant and equipment Non – current assets held for sale Receivables & Prepayments Total Assets Trade Creditors Total Liabilities Net Assets	Consolidated 2010 2009 $ $ 45,209 -
	- - (314,220) 10,196 (125,758) 1,088 - - (195,491)
	11,283 (635,469)
	- -
	33,926 (635,469)
	33,926 (439,978) - (195,491)
	33,926 (635,469)
	- - - 165,639 5 5
	5 165,644
	(46,024) (46,024)
	(46,024) (46,024)
	(46,019) 119,620

• 25 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

6. SEGMENT INFORMATION

Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors which makes strategic decisions. There is no goodwill attaching to any of the segments. There has been no impact on the measurement of the assets and liabilities reported for each segment.

There are two operating segments for South Africa, these are exploration and development projects one Tormin Mineral Sands held in Minerals Sands Resources Ltd and located on the West coast. The other is the Xolobeni Mineral Sands projected held in Transworld Energy and Minerals located on the East coast.

In Australia the Group operates in two segments, investing in the securities of unrelated entities and interest on the deposit of surplus funds. The other segment is the corporate overhead associated with the management and administration of the company’s projects and corporate administration.

2010 Revenue from operations Gain from sales of investments in listed companies Interest earned from unrelated entities Interest earned from controlled entity Management fees from controlled entity Other revenue Inter segment revenue Total segment revenue Segment results (Loss) / Profit before income tax Included in segment results is the following: Impairment of Investment Total segment assets Total segment liabilities	Africa Australia Discontinued operations Totals Tormin Xolobeni Investing Unallocated $ $ $ $ $ - - 495,200 - - 495,200 16,348 860 8,503 - - 25,711 - - - 560,657 - 560,657 - - - 97,787 - 97,787 - - - 4,789 45,209 49,998 - - - (658,444) - (658,444)
	16,348 860 503,703 4,789 45,209 570,909
	(1,411) (75) (984,941) (673,607) 35,013 (1,625,021) - - (1,488,644) - - (1,488,644) 4,751,504 9,610,919 6,277,651 254,846 48,143 20,943,063 19,137 4,259 - 501,790 46,024 571,210

• 26 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

SEGMENT INFORMATION (CONTINUED)

7. PARENT ENTITY INFORMATION The following details information related to the parent entity, Mineral Commodities Limited, at 31 December 2010. The information presented here has been prepared using consistent accounting policies as presented in Note 1. 2010 $ 2009 $ Current assets 6,572,260 6,430,030 Non-current assets 17,242,283 15,712,689 Total assets 23,814,543 22,142,719 Current liabilities 501,772 213,154 Non-current liabilities - - Total Liabilities 501,772 213,154 Net Assets 23,312,771 21,929,565 Contributed equity 40,004,350 40,004,350 Retained earnings / (accumulated losses) (20,792,991) (19,827,900) Option reserve 286,578 286,578 Other reserves 3,814,834 1,466,537 Total equity 23,312,771 21,929,565 (Loss) / Profit for the year (965,091) 91,707 Other comprehensive income / (loss) for the year 2,348,297 (1,193,263) Total comprehensive income / (loss) for the year 1,383,206 (1,101,556) 2009 South Africa Australia Discontinued operations Totals Tormin Xolobeni Investing Unallocated $ $ $ $ $ Revenue from operations Profit from sales of investments in listed companies - - 944,402 - - 944,402 Interest earned from unrelated entities 26,594 1,400 22,943 - - 50,937 Interest earned from controlled entity - - - 553,453 - 553,453 Management fees from controlled entity - - - 100,641 - 100,641 Other income - - - 100 - 100 Inter segment revenue - - - (654,094) - (654,094) Total segment revenue 26,594 1,400 967,345 100 - 995,439 Segment results Profit / (Loss) before income tax 2 - 967,345 (974,869) (635,469) (642,991) Total segment assets 3,953,063 9,722,704 6,070,777 216,278 165,639 20,128,461 Total segment liabilities 23,922 1,087 - 213,172 46,024 284,205	South Africa Australia Discontinued operations Totals Tormin Xolobeni Investing Unallocated $ $ $ $ $ - - 944,402 - - 944,402 26,594 1,400 22,943 - - 50,937 - - - 553,453 - 553,453 - - - 100,641 - 100,641 - - - 100 - 100 - - - (654,094) - (654,094)
	26,594 1,400 967,345 100 - 995,439
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total Liabilities Net Assets Contributed equity Retained earnings / (accumulated losses) Option reserve Other reserves Total equity (Loss) / Profit for the year Other comprehensive income / (loss) for the year Total comprehensive income / (loss) for the year

• 27 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

PARENT ENTITY INFORMATION (Continued)

TRADE AND OTHER RECEIVABLES – NON-CURRENT

Opening Balance Loans and advances - controlled entities Interest on Loans Less impairment Total Trade and other receivables	Parent Entity 2010 2009 14,240,022 11,841,568 984,224 2,203,374 560,657 553,453 - (358,373)
	15,784,903 14,240,022

Recovery of the loans to controlled entities is dependent upon the commercial exploitation of mining tenements held by the controlled entities.

(a) Impaired receivables and receivables past due

As at 31 December 2010 non current loans and advances with a nominal value of $1,804,651 (2009: $1,804,651) were impaired.

This related to the following loans:

(i) $1,773,619 (2009:1,773,619) advanced to Kariba Kono (SL) Ltd. This company has been struck off the register refer note 14

(ii) $31,033 (2009: $31,033) advanced to Blackhawk Oil & Gas Ltd and Queensland Minex NL were also considered to be impaired.

.

(b) Risk Exposure

Information about the Group’s exposure to credit risk, foreign exchange and interest rate risk is provided in Note 24.

8. CASH AND CASH EQUIVALENTS

Cash at Bank	Consolidated 2010 2009 $ $ 191,506 153,566
	191,506 153,566

The effective interest rate on cash at bank in 2010 was 3.50% (2009:3.00%)

(a) Interest rate risk exposure

The consolidated entity’s exposure to interest rate risk is discussed in Note 24.

(b) Reconciliation to cash at the end of the year

The above figures represent the cash at the end of the financial year as shown in the Statement of Cash Flows.

• 28 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

9. TRADE AND OTHER RECEIVABLES – CURRENT

Trade receivables Security deposits¹ Other receivables	Consolidated 2010 2009 $ $ 145 167 409,569 423,352 118,272 115,839
	527,986 539,358

¹

Includes a secured deposit of $397,037 (2009 $410,574) with First Rand bank held as security for a performance guarantee issued by the Bank in favour of the South African Department of Minerals and Energy in respect of Mineral Sands Resources (Pty) Ltd obligations under the Tormin Mining right.

There are no receivables past due and impaired

(a) Fair Values and credit risk

Due to the short term nature of these receivables the carrying values represent their respective fair values as at 31 December 2010 and 2009

.

The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to Note 24 for more information on the risk management policy of the Group and the credit quality of the entity’s receivables.

(b) Foreign Exchange and Interest Rate Risk

Information about the Group’s exposure to foreign exchange and interest rate Risk in relation to trade and other receivables is provided in Note 24.

• 29 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

10. FINANCIAL ASSETS - CURRENT

Available for sale Investments Investments in companies listed on a recognised stock exchange - shares at fair value At the beginning of the year Cost of Allied Gold Ltd Shares sold Disposal of other listed shares Fair value movement Total available for sale investments in companies listed on a recognised stock exchange Available for sale investment in companies not listed on a recognised stock exchanges At the beginning of the year Investment this year Fair value movement Impairment Total available for sale investments in companies not listed on a recognised stock exchange Total Financial Assets - Current	Consolidated 2010 2009 $ $ 3,477,483 6,580,870 (694,760) (1,144,814) - (65,000) 2,390,277 (1,893,573)
	5,173,000 3,477,483
	2,593,294 376,224 - 1,488,643 - 728,427 (1,488,643) -
	1,104,651 2,593,294
	6,277,651 6,070,777

Available for sale financial assets comprise investments in the ordinary share capital of various entities. There are no fixed returns or fixed maturity dates attached to these investments.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

• 30 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

10. FINANCIAL ASSETS – CURRENT (Continued)

2010 Available for sale financial assets Total 2009 Available for sale financial assets Total	Level 1 Level 2 Level 3 Total 5,173,000 - 1,104,651 6,277,651
	5,173,000 - 1,104,651 6,277,651
	Level 1 Level 2 Level 3 Total 3,477,483 - 2,593,294 6,070,777
	3,477,483 - 2,593,294 6,070,777

Fair Value of Investment in Allied Gold Limited

The market value of the investment in Allied Gold at balance date was $5,100,000 based on a price of 68 cents per share. The remaining available for sale assets had a market value of $73,000 at balance date.

The level 3 investment in an unlisted entity has been valued by using information provided by the Company together with information from an independent source. Assumptions and estimates have been used in this valuation. Should any of these assumptions or estimates change, this could significantly effect the carrying value of this investment.

(a) Risk Exposure

Information about the Group’s exposure to credit risk, foreign exchange and interest rate risk is provided in Note 24.

11. OTHER – CURRENT

12.

Prepayments PROPERTY, PLANT AND EQUIPMENT (a) Plant and office equipment - at cost Accumulated depreciation Total property, plant and equipment Reconciliation of the carrying amount of plant & equipment at the beginning and end of the current and previous financial year Plant and office equipment Carrying amount at beginning of year Additions Impairment Depreciation Loss on disposal of fixed assets Transferred to Available for sale assets Carrying amount at end of year	Consolidated 2010 2009 $ $ 10,376 13,351 2010 2009 72,147 307,753 (64,770) (281,238)
	7,377 26,515
	26,515 373,060 700 28,942 - (195,491) (11,250) (14,356) (8,588) - - (165,639)
	7,377 26,515

• 31 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

12. PROPERTY, PLANT AND EQUIPMENT (Continued)

(b) Non-current asset held for sale Available for sale plant and equipment 31 December 2009 Transferred from fixed assets Proceeds of sale Loss on disposal (refer note 5) Available for sale plant and equipment 31 December 2010	2010 $ 2009 $ 165,639 - - 165,639 (164,551) - (1,088) -
	- 165,639

In 2009 adjustments to impairment losses of $195,491 were brought to account in respect of the available for sale Plant and Equipment ex Sierra Leone. The impairment value was calculated to write off the full carrying value less the estimated net sale value.

13. EXPLORATION AND DEVELOPMENT EXPENDITURE

Exploration expenditure - costs carried forward in respect of areas of interest in: Exploration and evaluation phases Total exploration and evaluation expenditure Reconciliation of the carrying amount of exploration and development expenditure at the beginning and end of the current and the previous financial year. Carrying amount at beginning of year Expenditure during the year Impairment of exploration expenditure Foreign exchange movements Write off discontinued projects Carrying amount at end of year	Consolidated 2010 2009 $ $ 13,928,167 13,159,249
	13,928,167 13,159,249
	13,159,249 12,026,008 1,005,691 1,394,052 - (226,209) (127,028) (10,564) (133,783)
	13,928,167 13,159,249

• 32 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

13. EXPLORATION AND DEVELOPMENT EXPENDITURE (Continued)

In March 2007, Mineral Commodities Limited’s (“MRC’s”) majority owned South African subsidiary Transworld Energy and Minerals Resources SA Pty Ltd (“TEM”) lodged the Mining Right Application for the Xolobeni Project with the Department of Minerals and Energy (“DME”).

On 4 August 2008 MRC announced that it had received notification from the DME that the Mining Right for the Kwanyana block within the Xolobeni Project area would be granted. The remaining blocks (Sikombe, Mnyameni and Mpahlane) would then be held under a Prospecting Right valid to 2010 which could be extended until applications are made to convert each block into a Mining Right.

The Kwanyana block represents approximately 30% of the mining area and contains around 46% of the total insitu ilmenite resource.

However, in September 2008, the Company was advised that, on behalf of the AmaDiba Crisis Committee (“ACC”) and its members, the Grahamstown office of the Legal Resources Centre filed a Notice of Appeal (“the Appeal”) with the Minister of the DME. The ACC requested the Minister to suspend and then appeal the decision to grant the Mining Right.

The Company is awaiting the outcome of an appeal lodged with the Minister of the Department of Minerals and Energy (“DME”).

The Company is aware that the task team established to advise the Mineral Resources Minister in South Africa on the Mining Right has submitted its report and recommendations to the Director-General without a public hearing as was initially anticipated.

The Department of Mineral Resources then advised the Company in meetings that consultation with various government departments is required prior to handing down a final decision.

In response to the Company’s request for clarity over the appeal, the DME has responded by informing the Company that the Minister has appointed a Task Team, consisting of the Mining and Minerals development Board. The term of office of this Board expired and a new board is yet to be appointed.

The Director-General then issued an instruction that the appeal be finalised by the establishment of a new panel, which will hear oral arguments by the relevant parties and then make a recommendation to the Minister. It was envisaged that the hearing would be arranged at the DME Durban regional Office in mid February 2011.

In March the Director General of Mineral Resources (DG) in South Africa advised MRC’s subsidiary Transworld Energy and Mineral Resources (SA) (Pty) Ltd (TEM) that the Department of Mineral Resources in South Africa (DMR) no longer intends to embark on oral hearings in respect of the appeal against the Xolobeni mining right awarded to TEM on the Kwanyana Block as previously advised. The DG has advised that the DMR will now proceed to advise the Minister on the appeals based on the available documentation. TEM has been advised that the Minister will consider the appeals towards the end of March 2011. To this date of this report, the Company still awaits the outcome from the Minister.

MRC believes that due to the importance of the Xolobeni Project to the area, the Minister will continue to support the issuing of the Xolobeni Mining Right. The Company has therefore taken steps to minimise expenditure on the project pending a resolution of the Appeal.

Recoupment of carried forward exploration and evaluation expenditure is dependent upon the granting of mining rights and successful development and commercial exploitation of each area of interest, or otherwise by their sale at an amount not less than the carrying value.

• 33 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

14 SUBSIDIARIES

Class of Share Place of Incorporation Equity Holding 2010 2009 % % Parent Entity Mineral Commodities Limited Australia Controlled Entities Rexelle Pty Ltd Ord Australia 100 100 Queensland Minex NL Ord Australia 100 100 Q Smelt Pty Ltd Ord Australia 90 90 Mincom Waste Pty Ltd Ord Australia 100 100 MRC Resources (Pty) Ltd Ord South Africa 100 100 MRC Africa Pty Ltd Ord Australia 100 100 Kariba Kono (S.L.) Ltd ¹ Ord Sierra Leone - 100 Blackhawk Oil & Gas Ltd Ord Australia 100 100 Less Impairment	Cost to Company 2010 2009 % $ 1,450,001 1,450,001 4,718,302 4,718,302 - - - - - - 1,000 1,000 - - 100,000 100,000
	6,269,303 6,269,303 (4,818,302) (4,818,302)
	1,451,001 1,451,001

¹ The Company received confirmation from the Registrar of Companies in Sierra Leone that in accordance with a request from the shareholder Mineral Commodities Ltd Kariba Kono (S.L) Ltd had been struck off the Register of companies on 27th October 2010.

		Place of Incorporation	Equity	Holding	Cost to	Company
			2010	2009	2010	2009
			%	%	$	$
Transworld Energy & Minerals Resources (SA) (Pty) Limited	Ord	South Africa	56	56	2,500,000	2,500,000
Mineral Sands Resources (Pty) Ltd	Ord	South Africa	50	50	-	-
Nyati Titanium Eastern Cape (Pty) Ltd	Ord	South Africa	100	100	-	-
MRC Metals (Pty) Ltd	Ord	South Africa	100	100	-	-
Skeleton Coast Resources (Pty) Ltd	Ord	Namibia	100	100	-	-

• 34 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

15. NON-CONTROLLING INTERESTS

Non-controlling interests in subsidiaries comprise: Interest in retained earnings at the beginning of the financial year after adjusting for non- controlling equity interests in the entities acquired during the financial year Operating loss Share capital Reserves Total non-controlling interests	Consolidated Entity 2010 2009 $ $ - - - - 54,748 54,748 124,101 124,101
	178,849 178,849

During 2008 two subsidiaries’ ownership interests were restructured to comply with South African legislation. Ordinary shares were issued to the Black Empowerment Parties to effect these changes in accordance with the respective agreements entered into with the Black Empowerment partners.

16. TRADE AND OTHER PAYABLES - CURRENT

Trade payables - unsecured Other payables and accruals - unsecured	Consolidated 2010 2009 $ 340,660 67,488 200,880 184,211
	541,540 251,699

(a) Fair Values and credit risk

Due to the short term nature of these payables the carrying values represent their respective fair values as at 31 December 20010 and 2009.

(b)

Foreign Exchange and Interest Rate Risk

Information about the Group’s exposure to foreign exchange and interest rate Risk in relation to trade and other payables is provided in Note 24.

17. CONTRIBUTED EQUITY

Balance at beginning of financial year Consideration for shares in Africa Uranium Ltd Costs of capital raising Balance at end of financial year	2010 Number of shares 2009 Number of shares 2010 $ 2009 $ 143,393,385 141,393,385 40,004,350 39,804,350 - 2,000,000 - 200,000 - - - -
	143,393,385 143,393,385 40,004,350 40,004,350

In June 2009 the Company issued 2 million shares as part consideration to acquire a 10% interest in Africa Uranium Ltd.

• 35 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

CONTRIBUTED EQUITY (Continued)

(a) Ordinary Shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(b) Capital risk management

The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets in order to maintain sufficient funds necessary to continue its operations.

As a junior mineral explorer debt financing is not an option until such time at the Group’s projects have reached a stage at which debt financing can be obtained, therefore the Company considers its contributed equity as it’s capital during this period. Investments such as the shareholding in Allied Gold Ltd are also regarded as part of the capital base and sold as required to fund ongoing operations.

18. RESERVES

General Reserve Financial asset revaluation reserve Listed options reserve Foreign currency translation reserve	Consolidated 2009 $ 2,437,582 2,437,582 4,097,207 1,706,929 286,578 286,578 (995,772) (758,112)
	5,825,595 3,672,977

Nature and purpose of reserves

General Reserve

The General Reserve arose from the issue of shares in MRC Resources Pty Ltd to an entity outside the economic entity.

Financial asset revaluation reserve

The financial asset revaluation reserve arises from the revaluation at balance date of available for sale financial assets.

Foreign Currency Translation reserve

The foreign currency translation reserve records the unrealised foreign currency differences arising from the translation of operations into the presentation currency of the group. Refer to accounting policy Note 1 (e).

Share Based Payments Reserve

The share based payments reserve was used to recognise the fair value of options issued to employees but not exercised and the fair value of shares issued to employees. These options were not exercised by the expiry date of 30 September 2009 and have thus lapsed.

Listed Options Reserve

Proceeds form the issue of 57,357,208 listed options pursuant to an entitlement issue.

• 36 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

19. LOSS PER SHARE

PER SHARE
	Consolidated
	2010	2009
(a) Basic loss per share	cents	cents
From continuing operations attributable to the ordinary shareholders of the company (cents per share)	(1.158)	(0.005)
From discontinued operations (cents per share)	0.024	(0.445)
Total basic loss per share attributable to the ordinary equity holders of the company (cents per share)	(1.134)	(.045)
Weighted average number of ordinary shares outstanding during the year used in calculation of basic loss per share	143,393,021	142,434,481
Loss used in the calculation of basic loss per share from continued operations	(1,660,034)	(7,522)
Profit / (Loss)Loss used in the calculation of basic loss per share from discontinued operations	35,013	(635,469)

There are 57,357,208 options with an exercise price of 20 cents and an expiry date of 31 December 2012 on issue as at 31 December 2010. These potential ordinary shares are not considered dilutive and accordingly have not been used to calculate dilutive earnings per share.

20. AUDITORS’ REMUNERATION

During the year, the following fees were paid or payable for services provided by the auditor of the parent entity and nonrelated audit firms:

Amounts paid or due and payable to the auditors Auditors of the parent entity Audit and review Non-related practice of the auditors Audit of subsidiaries	Consolidated 2010 2009 $ $ 39,492 48,752 6,558 6,364 46,050 55,116

21. KEY MANAGEMENT PERSONNEL DISCLOSURES

Key Management Personnel Compensation

Key Management Personnel Short-term employee benefits Post-employment benefits	Economic Entity 2010 2009 $ $ 224,037 352,237 3,963 3,963
	228,000 356,200

• 37 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

(c) Option holdings of key management personnel

The numbers of options over ordinary shares in the company held during the financial year by each director of Mineral Commodities Limited and other key management personnel of the Consolidated entity are set out below:

2010
Key Management Personnel	Balance at 1 January 2010	Granted as Remuneration	Options Exercised	Options Lapsed	Net change other	Balance at 31 Dec 2010	Vested and exercisable	Unvested
Mark Caruso	7,380,396	-	-	-	-	7,380,396	7,380,396	-
Joseph Caruso	7,380,396	-	-	-	-	7,380,396	7,380,396	-
Greg Steemson	604,000	-	-	-	-	604,000¹	604,000	-
Peter Torre	-	-	-	-	200,000	200,000	200,000	-
2009
Key Management Personnel	Balance at 1 January 2009	Granted as Remuneration	Options Exercised	Options Lapsed	Net change other	Balance at 31 Dec 2009	Vested and exercisable	Unvested
Mark Caruso	-	-	-	-	7,380,396	7,380,396	7,380,396	-
Joseph Caruso	-	-	-	-	7,380,396	7,380,396	7,380,396	-
Greg Steemson	-	-	-	-	604,000	604,000	604,000	-
Peter Torre	250,000	-	-	(250,000)	-	-	-	-

The net change other above was the take up of the entitlement issued undertaken by the Company during the period.

¹ Options held on 31 March 2011 (date of resignation)

(d)

Shareholdings of key management personnel

The numbers of ordinary shares in the company held during the financial year by each director of Mineral Commodities Limited and other key management personnel of the Consolidated entity are set out below:

2010
	Balance at	Received as	Options			Balance
Director	1 January 2010	Remuneration	Exercised		Net change other	31 Dec 2010
Mark Caruso	19,063,615	-		-	2,519,000	21,582,615
Joseph Caruso	19,050,988	-		-	2,519,000	21,569,988
Greg Steemson	1,510,000	-		-	-	1,510,000²
Peter Torre	-	-		-	500,000	500,000
2009
	Balance at	Received as	Options			Balance
Director	1 January ‘09	Remuneration	Exercised		Net change other	31 Dec ‘09
Mark Caruso	18,463,615	-		-	600,000	19,063,615
Joseph Caruso	18,450,988	-		-	600,000	19,050,988
Greg Steemson	1,510,000	-		-	-	1,510,000
Peter Torre	-	-		-	-	-

• 38 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

Shareholdings of key management personnel (Continued)

Joseph and Mark Caruso are both directors of Zurich Bay Holdings Pty Ltd which has a relevant interest in 21,569,988 shares. The net change other above was the take up of the entitlement issued undertaken by the Company during the period.

² Shareholding at 31 March 2011 (date of resignation)

All equity transactions with key management personnel, other than those arising from the exercise of remuneration options, have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length.

(e) Loans to key management personnel

There were no loans to key management personnel during the period.

(f) Other transactions and balances with key management personnel

There were no transactions or balances with key personnel except as disclosed in this note and Note 22.

22. RELATED PARTY TRANSACTIONS

There were no transactions with directors or director related entities during the financial period other than the payment of directors’ remuneration and the sale of an excavator retrieved from Sierra Leone to Zurich Bay holdings a company associated with Mark & Joseph Caruso for $115,000.(2009:Nil)

Mineral Commodities Ltd is a shareholder in Allied Gold Ltd owning 7,500,000 shares (2009: 10,534,379) of the issued share capital at balance date. Mark Caruso, Greg Steemson and Peter Torre are also officers of Allied Gold Limited.

Wholly owned group

The group consists of Mineral Commodities Limited and its subsidiaries. Details of entities in the group are set out in Note 14.

Transactions between Mineral Commodities Limited and other entities in the group during the years ended 31 December 2010 and 31 December 2009 consisted of loans advanced and payments received and made on inter company accounts. These transactions were made on normal commercial terms and conditions and at market rates.

During the financial year, the Company provided management, accounting and administration services to other entities in the wholly-owned group.

An impairment loss was booked on the receivable from Kariba Kono in 2009 all other inter company receivables are expected to be receivable in full.

Key management personnel

Disclosures relating to key management personnel are set out in Note 21.

• 39 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

23(a) RECONCILIATION OF LOSS FOR THE YEAR TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

	Consolidated	Consolidated
	2010	2009
	$	$
Profit/(loss) after income tax and outside equity interest	(1,625,021)	(642,991)
Depreciation	11,250	14,356
Impairment losses	1,488,644	195,491
Provision for Employee Entitlements	(2,836)	4,359
(Profit)/loss on sale of investment in listed companies	(495,200)	(944,402)
Loss on sale of available for sale assets	1,088	-
Loss on disposal of fixed assets	8,589	-
Exploration expenditure written off	10,564	133,783
Exploration expenditure capitalised	(1,015,529)	(1,394,052)
Other non-cash items	1,827	(46,866)
Changes in assets and liabilities during the year:
Increase (decrease) in trade payables and other liabilities	287,005	(789,357)
(Increase) decrease in trade and other receivables	11,372	1,702,916
(Increase) decrease in prepayments	2,975	(206)
Net cash inflow / (outflow) from operating activities	(1,315,272)	(1,766,969)

23(b) Non-cash Investing and Financing Activities

The group has no available finance facilities as at balance date.

• 40 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

24. FINANCIAL RISK MANAGEMENT

The Group and the Parent entity hold the following financial instruments:

Financial Assets Cash at bank and short term bank deposits AA1 BBB Total Cash at bank and short term bank deposits Trade and other receivables Counterparties with external credit rating (Moody’s) AAA BBB Counterparties without external credit rating Sundry trade receivables Total Receivables Available for sale investments Financial Liabilities Trade Creditors Other payables	Consolidated 2010 2009 $ $ 188,895 151,739 2,611 1,827
	191,506 153,566
	46,535 21,353 431,645 509,837
	478,180 531,190
	49,806 8,168
	527,986 539,358
	6,277,651 6,070,777
	6,997,143 6,763,701
	340,660 67,488 200,880 184,211
	541,540 251,699
	6,455,603 6,512,002

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group. Risk management is carried out by the Board of Directors.

The Group does not hold any derivative financial instruments.

• 41 -

Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

24. FINANCIAL RISK MANAGEMENT (Continued)

Financial Risk

The main risk the Group is exposed to through its financial instruments are exchange rate risk, interest rate risk, liquidity risk, credit risk and price risk.

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. The primary exposure is in respect to the South African Rand arising from the investments in and loans to South African entities.

Foreign exchange risk arises from assets and liabilities denominated in a currency that is not the Reporting company’s functional currency and net investments in foreign operations.

The Group does not hold any derivatives or foreign exchange contracts to hedge it’s foreign exchange risk exposure.

Based on the financial instruments held at the reporting date, the sensitivity of the Group’s profits after tax for the year and equity at the reporting date to movements in the Australian Dollar to South African Rand was:

• Had the Australian Dollar weakened / strengthened by 5% against the South African Rand with all other variables remaining constant, the Group’s profit after tax would have been $755,946 lower / higher (2009: 678,702 lower / higher) and equity would have been $755,946 lower / higher (2009:678,702 lower / higher) The reasonable possible change is based on historical changes in rates estimated by management.

Credit Risk

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks, as well as credit exposures including outstanding receivables and investments in unlisted entities.

All cash balances held at banks are held at internationally recognised institutions. The majority of receivables held are with related parties and within the Group. Given this, the credit quality of financial assets that are neither past due or impaired can be assessed by reference to historical information about default rates.

The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the economic entity’s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained.

Interest Rate Risk

The Group’s exposure to interest rate risk relates primarily to the Group’s floating interest rate cash balance which is subject to movements in interest rates. The Board monitors its cash balance on an ongoing basis and liaises with its financiers regularly to mitigate cash flow interest rate risk. Interest is charged on the loans from the parent company to the South African subsidiaries at rates permitted by the South African reserve bank. This interest is eliminated on consolidation.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash to meet commitments as and when they fall due. The Board monitors rolling cash flow forecasts to manage liquidity risk. The only financial liabilities of the Group at balance date are trade and other payables, these amounts are unsecured.

As at reporting date the Group had sufficient cash reserves to meet its requirements. Should additional cash be required to fund operations this may be raised from the sale of listed equities held as available for sale. The Group therefore had no other credit standby facilities or arrangements for further funding in place.

The only financial liabilities the Group had at reporting date were trade payables incurred in the normal course of the business. These were non interest bearing and were due within the normal 30 day terms of creditor payments.

Price Risk

The Group has an exposure to equity securities price risk. This arises from investments held by the Group and classified on the Statement of Financial Position as available for sale financial assets. The Group is not exposed to commodity price risk.

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Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

FINANCIAL RISK MANAGEMENT (Continued)

The following table summarises the impact of any increases/decreases in the market price of available for sale equity investments. The percentage used is based on possible volatility of the share price and market value of the investments held. The 30% reasonable movement is based on managements estimate of historical changes.

2010 Available for sale investments Listed Shares & Options Unlisted shares 2009 Available for sale investments Listed Shares & Options Unlisted shares	Price Risk -30% +30% Carrying amount $ Profit $ Equity $ Profit $ Equity $ 5,173,000 (1,551,900) 1,551,900 1,104,651 (331,395) 331,395
	6,277,651 (1,883,295) 1,883,295
	Price Risk -30% +30% Carrying amount $ Profit $ Equity $ Profit $ Equity $ 3,477,483 (1,043,245) - - 1,043,245 2,593,294 (777,988) - - 777,988
	6,070,777 (1,821,233) - - 1,821,233

25. SHARE BASED PAYMENTS (a) Employee Option Plan

The establishment of the Mineral Commodities Employee Incentive Option Scheme was approved by shareholders at the 2006 annual general meeting. The incentive scheme was designed to provide long term incentives for senior staff to deliver long term shareholder returns. Under the plan, participants were granted options which vested immediately but were not exercisable until 30 September 2009. Participation in the plan was at the Boards discretion and no individual had a contractual right to participate in the plan or to receive any guaranteed benefits. At the expiry date none of the options were exercised and consequently lapsed.

Options granted under the plan did not carry any dividend or voting rights. When exercisable, each option was convertible into one ordinary share within 10 business days.

Set out below are summaries of options granted under the plan:

2009 Grant date Expiry date Exercise price 16-Nov-07 30-Sep-09 $0.30 23-Nov-07 30-Sep-09 $0.30 23-Nov-07 30-Sep-09 $0.40	Balance at start of the year Granted during the year Exercised during the year Forfeited during the 2009 year Balance at end of the year Vested and exercisable at end of the year 1,250,000 - - (1,250,000) - - 500,000 - - (500,000) - - 500,000 - - (500,000) - -
	2,250,000 - - (2,250,000) - -

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Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Notes to the Financial Statements (continued)

26 . COMMITMENTS

(a) Non- Cancellable Operating Leases

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

Within one year Later than one year but not later than five years Total	Consolidated 2010 2009 $ $ 21,447 76,444 1,875 9,572
	23,322 86,016

The operating lease is a rental agreement for the Group’s office premises in Welshpool. The previous lease expired in February 2011 and the Group relocated to smaller premises in Kewdale. The new lease is for a term of 1 year with an option to renew for a further year.

(b) Exploration Tenement Leases – Commitments for Expenditure.

In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to outlay lease rentals and to meet the minimum expenditure requirements which are not considered to be material.

27 CONTINGENT LIABILITIES

There are no Contingent Liabilities.

28. SUBSEQUENT EVENTS

Share Issue

In March 2011, the Company raised $1.2 million via a placement of 10,000,000 fully paid ordinary shares at $0.12 cents per share. The placement was made to M&G Investments Limited a UK based Institution.

Xolobeni Project

The Director General of Mineral Resources (DG) in South Africa advised MRC’s subsidiary Transworld Energy and Mineral Resources (SA) (Pty) Ltd (TEM) that the Department of Mineral Resources in South Africa (DMR) no longer intends to embark on oral hearings in respect of the appeal against the Xolobeni mining right awarded to TEM on the Kwanyana Block as previously advised. The DG has advised that the DMR will now proceed to advise the Minister on the appeals based on the available documentation. TEM has been advised that the Minister will consider the appeals towards the end of March 2011.

Investments

Allied Gold Ltd

A further 1,000,000 Ordinary Shares in Allied Gold Ltd were sold in February 2011 net proceeds received were $577,993.

Petro Ventures International Ltd (PVIL)

The Company received a further update from PVIL in March 2011 advising that the general meeting of shareholders would be deferred due to PVIL receiving notification from the Romanian Authorities that the assignment of the Romanian Licenses had not been granted. The Directors of PVIL have advised that they are considering their options in this regard and will update their shareholders accordingly.

No other event or transaction has arisen in the interval between the end of the financial year and the date of this report of a material and unusual nature likely, other than what has been disclosed elsewhere in this financial report, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years unless otherwise disclosed in this Directors Report.

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Mineral Commodities Limited Annual Financial Statements for the year ended 31 December 2010

Directors’ Declaration

The Directors of the Company declare that:

1. The financial statements, comprising the statement of comprehensive income, statement of financial position, statement of cash flow, statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 including;

2. (a) complying with Australian Accounting Standards and the Corporations Regulations 2001 and,

3. (b) give a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of it’s performance for the year ended on that date.

4. The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.

5. In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The remuneration disclosures set out on pages 7 to 9 of the Directors Report as part of the audited remuneration report comply with S300A of the Corporations Act 2001 for the year ended 31 December 2010.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of the Directors:

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Mark Caruso Non Executive Director Dated at Perth, Western Australia this 31[st] day of March 2011

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38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

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31 March 2011

Mineral Commodities Limited The Board of Directors Unit 15, Level 1 51 – 53 Kewdale Road WELSHPOOL WA 6106

Dear Sirs,

DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF MINERAL COMMODITIES LIMITED

As lead auditor of Mineral Commodities Limited for the year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Mineral Commodities Limited and the entities it controlled during the period.

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Peter Toll Director

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BDO Audit (WA) Pty Ltd Perth, Western Australia

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Tel: +8 6382 4600 38 Station Street Fax: +8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MINERAL COMMODITIES LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Mineral Commodities Limited, which comprises the consolidated statement of financial position as at 31 December 2010, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1(a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards .

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Mineral Commodities Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Opinion

In our opinion:

• (a) the financial report of Mineral Commodities Limited is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and

• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(a)

Emphasis of Matter

Without qualification to the opinion expressed above, attention is drawn to Note 13 in the financial statements regarding the Notice of Appeal filed in relation to the Mining Right over the Xolobeni area of interest. Pending the outcome of this appeal the issue date of the Mining Right has been deferred. Expenditure has been minimised until outcome of the appeal has been resolved. The ultimate outcome of the matter cannot presently be determined, and no impairment in respect of this area has been recognised. If the appeal by third parties is successful, the capitalised expenditure of $9,610,919 in relation to the Xolobeni area of interest may not be recoverable at the amounts stated in the financial statements.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 31 December 2010. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Mineral Commodities Limited for the year ended 31 December 2010 complies with section 300A of the Corporations Act 2001 .

BDO Audit (WA) Pty Ltd

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Peter Toll

Director

Perth, Western Australia Date this 31[st] day of March 2011

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