MINERAL COMMODITIES LTD

Mineral Commodities Ltd ACN: 008 478 653

APPENDIX 4E: PRELIMINARY FINAL REPORT

2015

MINERAL COMMODITIES LTD A.C.N. 008 478 653

APPENDIX 4E PRELIMINARY FINAL REPORT 31 DECEMBER 2015

RESULTS FOR ANNOUNCEMENT TO THE MARKET

This Preliminary Final Report is provided to the Australian Stock Exchange (ASX) under ASX Listing Rule 4.3A

Current Reporting Period: 31 December 2015 Previous Corresponding Period: 31 December 2014

For and on behalf of the Directors

==> picture [117 x 32] intentionally omitted <==

PETER TORRE COMPANY SECRETARY

Dated: 29 February 2016

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenue and Net Profit				USD
				$’000’s
Revenue from ordinary activities	up	33%	to	46,458
Profit from ordinary activities after tax
attributable to members	up	26%	to	10,577
Net profit for the period attributable to
members	up	26%	to	10,577

COMMENTARY ON RESULTS AND OTHER SIGNIFICANT INFORMATION

COMMENTARY

The Directors’ Report accompanying this Preliminary Final Report contains a review of operations and commentary on the results for the year ended 31 December 2015.

MINERAL COMMODITIES LTD A.C.N. 008 478 653

APPENDIX 4E PRELIMINARY FINAL REPORT 31 DECEMBER 2015

Dividends

The following dividend was proposed by the directors in respect to the 2015 financial year.

Dividends (distributions) Amount per security Final Dividend 1 AU cent Record date for determining entitlements to the dividends (if any)	Amount per security	Franked amount per security
	1 AU cent	Nil
		8 March 2016

Date the dividend ispayable Total dividend Amount per security of foreign sourced dividend or distribution Details of any dividend reinvestment plans in operation The last date for receipt of an election notice for participation in any dividend reinvestment plans		15 April 2016
		AUD 4,049,416
		N/A
		N/A
		N/A

NET TANGIBLE ASSET BACKING

NETTANGIBLEASSETBACKING

	31 Dec 2015 US$’000	31 Dec 2014 US$’000
Net assets	31,676	31,206

Lessintangible assets	-	-

Net tangible assets of the Company	31,676	31,206

Fully paid ordinary shares on issue at balance date	404,941,571	404,941,571

Net tangible asset backing per issued ordinary share	0.08	0.08
as at balance date
EARNINGSPERSHARE
Basic earnings pershare (US cents)	2.61	2.07

Diluted earnings pershare (US cents)	2.57	2.01

AUDIT DETAILS

The accompanying financial report has been audited.

ABN 39 008 478 653

Annual Report

31 December 2015

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Corporate directory ....................................................................................................................................................................................... 2 Directors’ report ............................................................................................................................................................................................ 3 Auditor’s independence declaration ........................................................................................................................................................... 19 Financial statements .................................................................................................................................................................................. 20

The consolidated financial statements are presented in United States Dollars (“$”), unless otherwise stated, which is the Company’s presentation currency.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Corporate directory

Corporate directory
Directors	Mark Victor Caruso	Executive Chairman and Chief Executive Officer
	Joseph Anthony Caruso	Non-Executive Director
	Peter Patrick Torre	Non-Executive Director and Company Secretary
	Guy Redvers Walker	Senior Independent Non-Executive Director
	Colin Ross Hastings	Independent Non-Executive Director
Principal registered office in Australia	40 Murray Road North
	Welshpool WA 6106
	Telephone: +61 (8) 6253 1100
	Facsimile: +61 (8) 9258 3601
	Email: [email protected]
Auditors	BDO Audit (WA) Pty Ltd
	38 Station Street
	Subiaco WA 6008
Solicitors	TDC Legal Pty Ltd	ENSafrica
	Level 15, 251 Adelaide Terrace	150 West Street
	Perth WA 6000	Sandown Sandton
		Johannesburg 2196
		South Africa
	Steinepreis Paganin
	Level 4, Next Building
	16 Milligan Street
	Perth WA 6000
Bankers	National Australia Bank
	Suite 7, 51 Kewdale Road
	Welshpool WA 6106
Share registry	Link Market Services Limited
	Level 4, Central Park
	152 St Georges Terrace
	Perth WA 6000
Stock exchange listing	The Company’s shares are listed on the Australian Securities Exchange (ASX)
	under ASX Code MRC
Website address	www.mineralcommodities.com

Competent Person Statement

The information, if any, in this report which relates to exploration results, mineral resources or ore reserves for Xolobeni Mineral Sands Project is based on information compiled by Mr Allen Maynard, who is a Member of the Australian Institute of Geosciences (“AIG”), a corporate member of the Australasian Institute of Mining & Metallurgy (“AusIMM”) and independent consultant to Mineral Commodities Ltd. Mr Maynard is the director and principal geologist of Al Maynard & Associates Pty Ltd and has over 35 years’ of exploration and mining experience in a variety of mineral deposit styles. Mr Maynard has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for reporting of Exploration Results, Exploration Targets, Mineral Resources and Ore Reserves” (JORC Code). This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Mr Maynard consents to inclusion in the report of the matters based on this information in the form and context in which it appears.

The information, if any, in this report which relates to exploration results, mineral resources or ore reserves for Tormin Mineral Sands Project is based on information compiled by Mr Adriaan du Toit, who is a Member of the AusIMM and an independent consultant to Mineral Commodities Ltd. Mr du Toit is the director and principal geologist of AEMCO PTY LTD and has over 23 years’ of exploration and mining experience in a variety of mineral deposits and styles. Mr du Toit has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. The information from Mr du Toit was prepared under the JORC Code 2012 Edition. Mr du Toit consents to inclusion in the report of the matters based on this information in the form and context in which it appears.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report

Your Directors present their report on the consolidated entity (referred to hereafter as the “Group”) consisting of Mineral Commodities Ltd (the “Company”) and the entities it controls at the end of, or during, the year ended 31 December 2015. The consolidated financial statements are presented in United States Dollars (“$”), unless otherwise stated, which is the Company’s presentation currency.

Directors

The following persons were Directors of the Company during the whole of the financial year and up to the date of this report, unless otherwise indicated:

Mark Victor Caruso Joseph Anthony Caruso Peter Patrick Torre Guy Redvers Walker Colin Ross Hastings - appointed 2 April 2015 James Gerald Leahy - resigned 27 May 2015

Principal activities

The principal activities of the Group during the year were mineral sands mining and processing at the Group’s Tormin Mineral Sands Project (“Tormin” or the “Tormin Project”) in the Western Cape Province of South Africa, undertaking procedures and evaluation for the future development of the Xolobeni Mineral Sands Project (“Xolobeni” or the “Xolobeni Project”) in the Eastern Cape Province of South Africa, and investigations into other mineral resources.

Dividends

Subsequent to year end, the Directors declared a final unfranked dividend for the year ended 31 December 2015 of 1 Australian cent per ordinary share, a total distribution of A$4,049,416 based on the number of ordinary shares on issue as at 31 December 2015. As the dividend is unfranked, there are income tax consequences for the owners of the Company relating to this dividend.

Review of operations

Information on the operations and financial position of the Group and its business strategies and prospects is set out in the review of operations set out below:

The Tormin Project successfully completed its second full year of production achieving the following key operating and financial metrics:

Production – Full Year
*Mining*_:_1,624,636 tonnes mined at a grade of 49.57% Heavy Mineral Concentrate (“HMC”) consisting of:
 28.94% Garnet;
 16.15% Ilmenite;
 3.88% Zircon; and
 0.60% Rutile.
*Production and Processing*_:_597,950 tonnes processed through the Secondary Concentrator Plant (“SCP”) to produce:
 284,990 tonnes Garnet concentrate;
 109,959 tonnes Ilmenite concentrate; and
 44,489 tonnesZircon/Rutile concentrate.
Sales – Full Year:$46.2m
*Zircon/Rutile concentrate*: 45,240 wet metric tonnes
*Ilmenite concentrate*: Nil wet metric tonnes
*Garnet concentrate*: 372,466 wet metric tonnes
Corporate and Cash
*Cash*_:_Cash balance of $4.2 million as at 31 December 2015, plus $7.0 million in trade and other receivables.
*Debt*: The balance of $0.6 million owing on the Wogen Pacific Limited pre-financing facility was repaid in full on 2 March 2015.
$1.2 million of shareholder loans repaid and a balance of$1.2 million as at 31 December 2015,repayable by30 September 2016.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Review of operations (continued)

Safety

During the year, the Company celebrated 1 million lost time injury (“LTI”) free hours. The Company has now worked in excess of 1,270,000 man hours without an LTI since operations commenced in October 2013.

The Company’s safety record continues to be industry best standard.

Mining

For the full year to 31 December 2015, 1,624,636 tonnes were mined at Tormin (approximately 1% above budget) at a HMC grade of 49.57%.

Mining continued to perform in line with all Key Performance Indicators (“KPIs”) in terms of production with significant reductions in operating costs in the second half of the year due to the depreciating Rand and diesel fuel costs as a result of global depressed crude oil pricing.

During the year, the Company has gained access to the previously deemed excised Conservation area on the mining lease. This area, totalling some additional 2.8 kilometres of accessible mining area, had previously been unmined and not only allowed higher grade Zircon to be accessed, but also gave additional replenishment time to other areas under the Run of Mine (“ROM”) plan.

Mining techniques also evolved to deal with the ongoing replenishment process of the beach. The mobilisation in the latter half of the year of a specialised larger Caterpillar D8T low ground pressure (“LGP”) bulldozer allowed a surface mining technique to be developed which involves stripping of the lower grade silica deposition from the replenished areas thus exposing high grade lenses of HM bearing ore. This process allows a much more flexible mining approach which optimises and limits beach excavation below sea level and limits total material movement.

The commissioning of the tailings return pumping system mitigated and alleviated the loading and haulage of Primary Beach Concentrator (“PBC”) and Secondary Concentrator Plant (“SCP”) processing tails to the beach by traditional earth moving methods. This resulted in much better utilisation of truck and loader mining equipment.

Processing

PBC budgeted production was not achieved due to the delay in the installation and commissioning of the Garnet Stripping Plant (“GSP”) caused by the Blastrite (Pty) Ltd litigation.

A total annual production of 473,445 tonnes of HMC was produced through the two PBCs.

The Company processed 597,950 tonnes through the SCP for the 2015 year, being 8% below budget. The balance of SCP feed of 124,505 tonnes was sourced as direct feed from high grade ROM material, which required no primary concentration due to its extremely high grade.

The annualized processing throughput for the SCP continued at 80 tonnes per hour (“tph”), well above nameplate capacity of 63 tph. On an adjusted basis for the delay in the GSP, the SCP continued to operate above budget.

SCP plant recoveries were slightly down for the year, after adjusting for the delay in the GSP, but were in line with expectations due to the increased SCP feed grade and additional throughput.

Annual non-magnetic Zircon/ Rutile concentrate production to 31 December 2015 was 44,489 tonnes.

Annual Ilmenite and Garnet concentrate production to 31 December 2015 was 109,959 tonnes and 284,990 tonnes respectively.

Total processing unit cash costs were within budget after adjusting for the budget assumption that the GSP would be commissioned by the start of October 2015.

All aspects of primary and secondary processing production through the PBCs and the SCP were also affected by industrial action during the year, which effectively resulted in five to six weeks of subdued production due to unavailability of the full labour force and strike action from Union members preventing access at times to processing plant on a full time basis.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Review of operations (continued)

In addition there was a total main power station failure which resulted in 4 days lost time.

The Company also delivered the Tailings Scavenger Plant (“TSP”) expansion, the tailings return system capital project and is well advanced with the implementation of the GSP project. It is also well advanced with progressing the engineering design for the installation of Eskom Mains Power to the site, which will significantly reduce operating costs. Collectively these projects, when commissioned, will deliver not only maximum optimization of the processing routes but lift the production profile of the Company in ranking amongst its peers.

The focus in 2016 will now turn to optimising recoveries from both the PBC and SPC processing circuits, which will be much easier to control with the commissioning and operation of the two TSPs and the GSP.

Tormin Sales and Marketing

Sales revenue for the year was $46.2m, with annual sales of:

Zircon/Rutile concentrates: 45,240 wet metric tonnes
Ilmenite concentrate: Nil wet metric tonnes
Garnet concentrate: 372,466 wet metric tonnes

The Company terminated the Pre-Finance and Marketing Agreement between the Company and Wogen Pacific Limited during the first half of the year. This allowed the Company to freely market and sell its non-magnetic Zircon/Rutile concentrate to buyers on an unrestricted basis for the remainder of the year.

Garnet concentrate production was supplied and sold under contract with GMA Garnet Group (“GMA”) and stockpiled within South Africa. The Garnet concentrate will be shipped at GMA’s discretion. The revenue for stockpile Garnet is initially lower with full sales value received upon shipment.

Although the Company continued to receive active enquiries for its Ilmenite product throughout the year, it was unable to secure an offtake partner for this product. This is not a function of the quality of the product, rather a function of the global Ilmenite product throughout the period. The Company will continue to engage with potential off takers during the course of 2016.

Black Economic Empowerment (“BEE”)

The Company worked closely with its joint shareholder in its South African subsidiary Mineral Sands Resources Pty Ltd (“MSR”) and BEE partner, Blue Bantry Investments 255 (Pty) Ltd (“Blue Bantry”), in continuing to assist in bridging the cultural divide that can sometimes exist in managing the expectations of interests and effected parties and communities.

Investment continues in personal development through programmes that are focused on education, training and gainful employment, including internships in the Perth Corporate office for mentoring and training in management reporting and accounting. The completion of the upgrade on the local Koekenaap School / Community Resource Centre, which includes a new library and computer classroom, was achieved during the second half of the year and was officially opened in January 2016. In addition to its Social Labour Plan (“SLP”) commitments at Tormin, the Company also continues to provide support to the Xolobeni community through the building of nurseries and supporting cattle and poultry programmes which will result in sustainable provision of basic food needs.

Tormin Resource

Work was undertaken during February 2016 on the annual Tormin Resource Review.

Approximately 1.625 million tonnes were mined for the year ended 31 December 2015. The beach replenishment continues with multiple mining of designated ore blocks occurring up to five times.

Since commencement, the Company has mined circa 2.7 million tonnes at greater than 4% contained zircon. This tonnage and grade exceeds the original LOM stated in the JORC Resources and Reserve statement and is consistent with the beach replenishment process which is currently occurring. The updated 2015 Inferred JORC Resource and Reserve confirms that 2.7 million tonnes of material at a 28.01% Heavy Mineral is remaining.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Review of operations (continued)

Tormin - Prospecting Activities

The Company was pleased to advise late in the year that MSR has been granted a new prospecting right by the Department of Mineral Resources – South Africa (“DMR”).

The awarded prospecting right represents an area of approximately 10,500 ha in size seaward from its current mining (Tormin mine) and prospecting areas.

The awarding of this right extends MSR’s prospecting area up to 10km offshore from its current mining area. The prospecting area is to be investigated for its offshore heavy mineral sand potential that is currently the source of replenishment taking place on the beach held under mining rights.

MSR has conducted a bathymetric and sub-bottom sea floor profiling geophysical survey over the surf zone area held under PR 10036. The survey, conducted by an independent firm, will provide detailed information that is to be used to plan an underwater exploration drill sampling campaign. This survey is in support of the aeromagnetic and radiometric aerial survey work done during 2014 by Xcalibur Geophysics. The 2014 survey identified off-shore heavy mineral sand exploration targets.

In conjunction with offshore bathymetric studies, the Company finalised the selection of a specialised offshore drilling and mining sampler contractor who will mobilise to site in the second quarter of 2016 to conduct resource drilling and sampling of the surf zone area i.e. the area between the low tide and the wave crest formation. The objective of this program is to achieve an offshore Inferred JORC resource.

In addition to the awarded rights, MSR has lodged a new prospecting and bulk sampling application (WC 30/5/1/2/10226 PR) along the beach and surf zone north of its current mining operations. This application represents a target area of approximately 24km along the coastline. Historical exploration work by non-related parties has indicated the area is prospective for heavy mineral sand deposits. This application is subject to a full public participation process and an environmental impact assessment for bulk sampling as is required under South African legislation.

The above activities are indicative of the long term plans of MSR to extend the heavy mineral sand resource of its Tormin mining operation and underpin the economic viability of its current operations.

Xolobeni Mineral Sands Project

The Company holds the prospecting rights to four of the five blocks in the Xolobeni Mineral Sands Project. A Mining Right Application was accepted in April 2015 and triggered the Public Participation Process for the Environmental Scoping Report Submission. The Public Participation Process resulted in the submission of the Environmental Scoping Report during the first half of 2015.

The Company made good progress throughout the year with its consultants to conduct all necessary baseline and technical studies to move the project through to the submission of an Environmental Impact Assessment (“EIA”) Report, which is required as part of the Mining Right Application process. An extension for the submission of the final EIA has been granted to the Company until April 2016. A reassessment of the Mining Right Application will take place in the March 2016 quarter, which may delay the final submission of the EIA.

The Company is maintaining its efforts to conclude baseline studies within the regulatory timeframes.

Corporate and Financial

It was an active year for the Company corporately.

As disclosed to the ASX in December 2014, an application was made in the High Court of South Africa (Western Cape Division, Cape Town) by Blastrite (Pty) Ltd (“Blastrite”) to seek relief for an order that MSR may not deal with any entity or person other than Blastrite in relation to the discussion and consideration relating to any potential Garnet and/or other abrasive media resource that may be present in or on the beach deposit located within the Tormin Project; and an order that MSR may not renew its existing offtake agreement with GMA for the period 1 July 2015 to 30 June 2016.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Review of operations (continued)

Corporate and Financial (continued)

Following a hearing on 19 December 2014, Blastrite withdrew its application to seek interim relief and were ordered to pay the Company’s costs occasioned by the application. Blastrite proceeded to make an application for final relief which was deferred to oral evidence and heard in June 2015.

In October 2015, the Company was pleased to advise that Blastite’s Court Application had been dismissed. The dismissal follows Blastrite’s withdrawal of its initial application to seek interim relief in December 2014. Blastrite has been ordered to pay MRC’s costs occasioned by the employment of two legal counsel, all of the costs occasioned by the referral to oral evidence, the costs occasioned by the discovery applications, including the costs occasioned by the Company’s parties discovery applications.

As stated when the initial application was made by Blastrite in December 2014, the Company’s view was that the Application was an abuse of the Court process, founded on incorrect facts and was of no merit and, as such, the Company and other respondents strenuously opposed the Application.

The Company was very pleased with the Blastrite litigation outcome.

The Shareholder loans obtained in 2014 were extended to 30 September 2015, and then subsequently paid down by 50% later in the year with the balance extended to 30 September 2016.

The reduction of shareholder debt is part of the Company’s overall capital management strategy. Whilst the Company had the capacity to repay the debt in total, its preferred position was to retain 50% to provide further flexibility in working capital management.

The Company assessed financing options for its Garnet Stripping Plant (“GSP”) expansion initiative and was pleased to advise, subsequent to year end, that it had entered into a $4.5 million financing arrangement with GMA.

The Company also concluded the purchase agreement of the 1,787 hectare farm on which its Tormin processing facilities are located. The purchase removes all restrictions that were formally in place under the previous Land Use agreement and increases the available land usage from the existing 9.89 hectares which, subject to regulatory authority, provides significantly more land to expand the processing facility’s footprint and stockpiling area, allowing for optimisation of the operational performance.

Consolidated result and financial position

The profit of the Group after income tax and non-controlling interests was $10.6m (2014: $8.4m). The net assets of the Group have increased from $31.2m as at 31 December 2014 to $31.7m as at 31 December 2015.

Revenue for the year was $46.5m (2014: $35.0m), with profit before income tax expense of $12.9m (2014: $3.9m).

Outlook

The Company will proceed to complete the construction of the GSP by June 2016.

The Company is in a position to take advantage of any incremental increase in Zircon pricing and has significant upside in the sale of Ilmenite concentrate.

Operationally, the Company will continue to enjoy the benefits of a weaker Rand on its South African cost base in conjunction with US denominated sales revenue.

With the GSP processing plant upgrade, the Company is anticipating significant growth in production in 2016.

Significant changes in the state of affairs

Details of the year’s operational performance and the resulting financial impact is set out in the Review of Operations above.

No 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

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Significant changes in the state of affairs (continued)

Company, to affect significantly the operations of the Group, the results of those operations or the state of affairs of the Company or the Group in future financial years unless otherwise disclosed in this Directors’ Report.

Events since the end of the financial year

The Company was pleased to advise, in February 2016, that MSR has secured $4.5 million via a loan facility from GMA to fund the completion of its GSP. The GSP will be installed at the front of the existing SCP. The installation of the GSP will increase the nonmagnetic feed grade to the SCP by removing the Garnet fraction from the HMC prior to the SCP. This, in turn, will allow a high grade Zircon concentrate to be fed to the existing magnetic circuit, and thereby increase non-magnetic concentrate production.

Completion of the GSP is expected on or around 30 June 2016.

The loan agreement entered into with GMA provides for $4.5 million funding with 3 year repayment terms commencing on the re-start of shipping of garnet concentrate product to GMA (planned for January 2017). The offtake agreement previously entered into with GMA has also been amended to increase the term of the agreement to the life of mine, and an increase in the annual offtake tonnage to 210,000 tonnes up from 150,000 tonnes with an option to take all other remaining Garnet concentrate production. The Company produced approximately 285,000 tonnes of Garnet for the year ended 31 December 2015.

There have been no other material matters arising subsequent to the end of the financial year.

Likely developments and expected results of operations

Likely developments in the operations of the Group that were not finalised at the date of this report are included in the Review of Operations above and as detailed in the Outlook section.

The Board will continue to review other projects and opportunities in the interests of increasing shareholder value.

Environmental regulation

The Group is subject to various environmental regulations in respect to its exploration, development and production activities.

In the course of its normal mining and exploration activities, the Group 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.

Schedule of mining and prospecting tenements

Mining and prospecting tenements currently held or under application by the Group are:

Country	Location	Number	Type of Right	Status	Interest

South Africa	Tormin	(WC)30/5/1/2/2/163MR	Mining	Approved	100%

South Africa	Tormin	(WC)30/5/1/2/2/162MR	Mining	Approved	100%

South Africa	Tormin	(WC)30/5/1/1/2/10036PR	Prospecting	Approved	100%

South Africa	Tormin	(WC)30/5/1/1/2/10199PR	Prospecting	Approved	100%

South Africa	Tormin	(WC)30/5/1/1/2/10226PR	Prospecting	Under Application	100%

South Africa	Tormin	(WC)30/5/1/1/2/10229PR	Prospecting	Under Application	100%

South Africa	Xolobeni	EC30/5/1/1/2/6PR	Prospecting	Approved	100%

South Africa	Xolobeni	EC30/5/1/1/2/10025PR	Prospecting	Under Application	100%

South Africa	Xolobeni	EC 10025 MR	Mining	Under Application	100%

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Greenhouse gas and energy data reporting requirements

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 measurement period, the Directors have assessed that there are no current reporting requirements, but may be required to do so in the future.

Information on Directors

Mark Victor Caruso	Executive Chairman and Chief Executive Officer	Age 54
*Experience and expertise*
Mr Caruso has extensive experience in mining, earthmoving and civil engineering construction earthworks. He has been a Director
of the Company since September 2000. He was previously Chairman of Allied Gold Mining PLC (AGMP), responsible for the
delivery of the Gold Ridge Project in the Solomon Islands and the Simberi Gold Project in Papua New Guinea. After resigning from
AGMP, he transitioned into the position of Executive Chairman of the Company in August 2012.
*Other current directorships*
Perpetual Resources Limited
*Former directorships in the last 3 years*
None
*Special responsibilities*
Chairman of the Board
Chief Executive Officer
*Interests in shares and options*
78,554,014 ordinary shares in the Company – indirect holding ¹
15,784 ordinary shares in the Company – direct holding
5,000,000 options over ordinary shares in the Company
Joseph Anthony Caruso	Non-Executive Director	Age 70
*Experience and expertise*
Mr Caruso was appointed as Non-Executive Director of the Company in September 2000. He 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. He has considerable experience in managing and administration of engineering, mining, raw materials
production operations, earthmoving and related infrastructure utilities services resource contracts.
*Other current directorships*
None
*Former directorships in the last 3 years*
None
*Special responsibilities*
Member of the Remuneration and Nomination Committee
*Interests in shares and options*
77,007,485 ordinary shares in the Company ¹

¹ J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd, which holds 77,007,485 shares in the Company. Mr Mark Caruso also holds shares indirectly through Regional Management Pty Ltd.

Peter Patrick Torre CA, AGIA, MAICD Non-Executive Director and Company Secretary Age 44

Experience and expertise

Mr Torre was appointed Company Secretary of the Company 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.

Other current directorships None Former directorships in the last 3 years

Neo Resources Limited, Mission New Energy Limited

Special responsibilities

Company Secretary and member of the Audit, Compliance and Risk Committee Interests in shares and options

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Information on directors (continued)

Guy Redvers WalkerBCA, CA, CFA, CMInstD		Age 46
*Experience and expertise*
Mr Walker is a highly accomplished director and senior investment management executive with over 20	years’ financial markets
experience. He currently and in the past has sat on the boards of listed mining companies including exploration, development and
production companies. He has extensive experience in capital raising through both traditional banks and	alternative lenders.
*Other current directorships*
Metals Exploration plc
*Former directorships in the last 3 years*
Bacanora Minerals Ltd
ENK plc
Navigator Resources Limited
*Special responsibilities*
Senior Independent Non-Executive Director, Chairman of the Audit, Compliance and Risk Committee		and member of the
Remuneration and Nomination Committee
*Interests in shares and options*
125,000 ordinary shares in the Company

Colin Ross HastingsBSc (Geology),	Independent Non-Executive Director	Age 65
MSc (Economic Geology), MAusIMM
*Experience and expertise*

Mr Hastings was appointed as a non-executive Director in April 2015. He is a geologist with over 30 years’ experience in mining and exploration, project generation and project development, covering Australia and overseas. He has a strong geotechnical background with 10 years’ experience in this field and has extensive experience in mining related disciplines and processes. From 1996 to 2014, Mr Hastings was involved with Allied Gold PLC’s Simberi Gold Project where his roles included management of exploration and the feasibility and pre-development studies for mine construction. Mr Hastings then progressed to General Manager Resource Development and concluded his tenure at St Barbara subsequent to the merger between it and Allied Gold Mining PLC. Other current directorships Perpetual Resources Former directorships in the last 3 years None

Special responsibilities

Chairman of the Remuneration and Nomination Committee and member of the Audit, Compliance and Risk Committee since his appointment on 2 April 2015.

Interests in shares and options

Nil

Meetings of directors

The number of meetings of the Company’s Board of Directors and each of the Board committees held during the year ended 31 December 2015, and the number of meetings attended by each Director were:

Name	Directors’ Meetings	Directors’ Meetings	Meetings of committees	Meetings of committees	Meetings of committees	Meetings of committees
			Audit, Compliance and Risk		Remuneration and Nomination
Number of meetings held A being total of meetings eligible to attend B being total of meetings actually attended	A	B	A	B	A	B
Mark Victor Caruso	5	5	-	-	-	-
Joseph Anthony Caruso	5	4	-	-	4	4
Peter Patrick Torre	5	5	4	4	-	-
Guy Redvers Walker	5	5	4	4	4	4
James Gerald Leahy (resigned 27 May 2015)	3	2	2	1	2	2
Colin Ross Hastings (appointed 2 April 2015)	4	4	2	2	2	2

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Information on directors (continued)

Meetings of directors (continued)

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)

This remuneration report sets out the remuneration information for the Company’s non-executive Directors, executive Directors, other key management personnel and the key executives of the Group and the Company. 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
F. Other transactions with key management personnel

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 key management personnel, 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 and consultancy; and
(c) Benefits, including the provision of a motor vehicle and 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 on annual basis.

Executives are offered a competitive base pay which is reviewed annually to ensure the pay is competitive with the market.

There were short term cash incentives provided to both the Executive Chairman and Chief Financial Officer (“CFO”). Long-term incentives are provided to Directors and other key management personnel to incentivise them to deliver long-term shareholder returns. These are determined based on what the Board views as reasonable based on market conditions. Any grant of securities to Directors of the Company must be approved by shareholders in a general meeting.

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.

As at 31 December 2015, the short term cash bonus incentives are up to 25% of base pay calculated on Company performance and other key performance indicators. Directors’ fees are fixed.

	2015	2014	2013	2012	2011	2010
Profit /(loss) for the year after tax (USD)	10,576,785	8,376,344	(1,569,980)	(1,233,344)	(2,206,055)	(1,494,207)
Closing share price (AUD)	10.0 cents	11.0 cents	18.5 cents	9.9 cents	7.5 cents	8.1 cents

Voting and comments made at the Company’s 2015 Annual General Meeting

The Company received the unanimous support of shareholders present on the remuneration report at the AGM for the 2014 financial year and 99.7% of proxy votes were in favour of the resolution to approve the remuneration report. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Remuneration report (Audited) (continued)

B. Details of Remuneration

The key management personnel of the Group are the Directors of the Company and Mr Tony Sheard, the CFO. Mr Tony Sheard was appointed as a full time employee on 1 January 2015. Mr Sheard was acting in his capacity as a consultant up to 31 December 2014. The amounts disclosed are applicable for both the Company and the Group.

Details of the remuneration of Directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the Company and the Group are set out in the following tables. There are no long term benefits amounts due to Directors and key management personnel, other than those disclosed. Non-cash benefits in the form of options were provided to key management personnel during the year. The following fees are applicable to Directors and key management personnel of the Company.

Name	Year	Cash salary (A$)	Cash bonus (A$)	Annual and long service leave (A$)	Post- employment benefits (A$)	Share- based payments (Options) (A$)	Totals (A$)	Percentage performance based (%)	Share based payments as a percentage of remuneration (%)
Directors
Executive Chairman
Mark Caruso (*)	2015	547,945	150,000	43,882	52,055	149,590	943,472	15.9	15.9
	2014	293,228	-	86,534	27,124	-	406,886	-	-
Non-Executive Director
Joseph Caruso	2015	63,934	-	-	6,066	-	70,000	-	-
	2014	50,248	-	-	4,648	-	54,896	-	-
Peter Torre	2015	150,000	-	-	-	-	150,000	-	-
	2014	135,360	-	-	-	-	135,360	-	-
Guy Walker	2015	80,000	-	-	-	-	80,000	-	-
	2014	63,920	-	-	-	-	63,920	-	-
Ross Hastings (appointed 2 April 2015)	2015	52,311	-	-	4,828	-	57,139	-	-
	2014	-	-	-	-	-	-	-	-
James Leahy (resigned 27 May 2015)	2015	32,667	-	-	-	-	32,667	-	-
	2014	63,920	-	-	-	-	63,920	-	-
Total Director Remuneration	2015	926,856	150,000	43,882	62,949	149,590	1,333,278	11.3	11.2
	2014	606,676	-	86,534	31,772	-	724,982	-	-
Other Key Management Personnel
Tony Sheard (**)	2015	251,142	59,813	9,981	23,858	26,182	370,976	16.1	7.1
	2014	92,045	-	-	-	-	92,045	-	-
Andrew Lashbrooke (resigned 12 Sept 2014)	2015	-	-	-	-	-	-	-	-
	2014	270,720	-	-	-	-	270,720	-	-
Total Key Management Personnel Remuneration	2015	1,177,998	209,813	53,863	86,808	175,773	1,704,254	12.3	10.3
	2014	969,441	-	86,534	31,772	-	1,087,747	-	-

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Remuneration report (Audited) (continued)

B. Details of Remuneration (continued)

Mark Caruso’s comparative remuneration has been re-stated to include annual leave and long service leave previously not included.
** Tony Sheard commenced employment as a consultant on 18 August 2014 and received consultancy fees of $92,045 for the year ended 31 December 2014. Effective from 1 January 2015, he entered into a service agreement with the Company. It has no fixed term, with a total remuneration package of A$275,000 per annum. There are no termination benefits unless made constructively redundant in which case he receives 12 months’ remuneration.

Other short and long term benefits forming part of the service agreements are detailed below:

Cash bonus

The Executive Chairman was entitled to an annual bonus of 25% of the Base Remuneration, measured against the following criteria, 20% weighting for each:

Mine production against budget;
Securing and entering into an offtake agreement for Ilmenite;
Achieving Budget Earnings before Interest, Tax, Depreciation and Amortisation (“ EBITDA”) taking into account uncontrollable variables at the discretion of the Board;
Completion of replenishment studies on mined areas sufficient to allow results to be reported to the ASX; and 5. Submission of a Mining Right Application in 2015 for the Xolobeni Mineral Sands Project.

Future bonuses will be at the sole discretion of the Board.

The measurable objectives were chosen to ensure the Executive Chairman was incentivised to meet budgeted production and EBITDA; secure offtake agreements for the Company’s remaining product not currently being sold into the market; to continue to expand and replenish the Company’s Resources, and to progress the Company’s other mineral sands project in South Africa.

The Chairman of the Remuneration and Nomination Committee assessed the performance of the Executive Chairman, and reviewed his performance against the above set measurable objectives, taking into account other mitigating factors throughout the year. Objectives 1,3,4 and 5 were assessed as being met. Objective 2 was not met, however the Executive Chairman also achieved other key strategic and operational objectives throughout the year which were not set by the Remuneration and Nomination Committee and the Committee has used its discretion to award the full bonus of 25% of base remuneration due to the significant efforts of the Executive Chairman throughout the year.

The CFO was entitled to an annual bonus of 25% of the Base Remuneration, measured against the following criteria, one third weighting for each:

Performance against scope of services set out in the employment contract at the sole discretion of the Executive Chairman;
Board Reporting within set timing each month; and
Achieving EBTIDA against budget taking into account uncontrollable variables at the discretion of the Board.

Future bonuses will be at the sole discretion of the Board.

The measurable objectives were chosen to align the two key executives incentives in terms of meeting budgeted EBITDA, this is to ensure the CFO performed each of the tasks outlined in his employment contract which are typical of that for a CFO position, and timely reporting to the Board to ensure business decisions can be made on a timely and informed basis.

The Executive Chairman assessed the performance of the CFO against the above measurable objectives and awarded 33% for objective 1, 20% for objective 2 and 34 % for objective 3, being a total of 87% of the total achievable bonus.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Remuneration report (Audited) (continued)

B. Details of Remuneration (continued)

Grant of options

The following options were issued during the year:

5,000,000 Unlisted Options to the Executive Chairman exercisable at A$0.20 on or before 30 May 2018 and subject to the
following vesting conditions:
(i) 1,666,668 vesting immediately;
(ii) 1,666,666 vesting on 8 June 2016; and
(iii) 1,666,666 vesting on 8 June 2017.
1,000,000 Unlisted Options to the CFO exercisable at A$0.20 on or before 31 March 2018 and subject to the following vesting
conditions:
(i) 333,334 vesting immediately;
(ii) 333,333 vesting on 31 March 2016; and
(iii) 333,333 vesting on 31 March 2017.

Relative proportions of fixed vs variable remuneration expense

The following table shows the relative proportions of remuneration that are linked to performance and those that are fixed, based on the amounts disclosed as statutory remuneration expense in the previous table:

Name	Fixed Remuneration	Fixed Remuneration	At Risk- STI	At Risk- STI	At Risk- LTI	At Risk- LTI
	2015	2014	2015	2014	2015	2014
Directors Executive Chairman Mark Caruso Non-Executive Directors Joseph Caruso Peter Torre Guy Walker James Leahy Ross Hastings Other Key Management Personnel Tony Sheard Andrew Lashbrooke	68% 100% 100% 100% 100% 100% 71% n/a	100% 100% 100% 100% 100% n/a 100% 100%	16% 0% 0% 0% 0% 0% 23% n/a	n/a n/a n/a n/a n/a n/a n/a n/a	16% 0% 0% 0% 0% 0% 6% n/a	n/a n/a n/a n/a n/a n/a n/a n/a

C. Service Agreements

No formal service contract was signed with the Executive Chairman however, the following were the terms under which the Executive Chairman was employed throughout the year:

Mark Caruso Commencement date 6 August 2012 Term No fixed term Total Remuneration package and cash bonus as set out above Termination benefits 12 months’ base salary plus any payment in lieu of notice

The Remuneration and Nomination Committee engaged the services of a remuneration consultant, Sherwood Love and Associates, to provide a recommendation in respect to Mr Mark Caruso’s remuneration. Mr Caruso’s remuneration was set based on the recommendation made by Sherwood Love and Associates.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Remuneration report (Audited) (continued)

C. Service Agreements ( continued )

Mark Caruso (continued)

The remuneration recommendations were free from undue influence as they were made to and directed by the Remuneration and Nomination Committee under the direction of the Chairman of that Committee. The Board is satisfied that the remuneration recommendation was made free from undue influence by the relevant member of the key management personnel as he did not have any input into the recommendations. The recommendations were made to the Remuneration and Nomination Committee and Sherwood Love and Associates only took instructions from the Committee.

The Company paid a fee of A$10,000 to Sherwood Love and Associates for their report on Mr Mark Caruso’s remuneration.

Peter Torre

Commencement date 1 November 2012 Term No fixed term Total Remuneration package A$150,000 per annum Termination benefits 12 months’ base salary plus any payment in lieu of notice Tony Sheard Commencement date 1 January 2015 Term No fixed term Total Remuneration package A$275,000 per annum (inclusive of 9.5% superannuation) and cash bonus as set out above Termination benefits Nil unless constructive redundancy in which case 12 months’ salary

There are no other service agreements.

D. Share Based Compensation

The following options were granted as remuneration during the year ended 31 December 2015 (2014: Nil):

Mark Caruso 5,000,000 Tony Sheard 1,000,000

The terms and conditions of each grant of options are as follows:

Grant Date Expiry date Exercise price Fair Value at grant date	Options at the start of the year Granted during the year Exercised during the year Forfeited during the year Lapsed during the year Balance at the end of the year Vested at the end of the year
21 Dec 2012 31 Dec 2015 20 cents 3.35 cents 21 Dec 2012 31 Dec 2015 35 cents 2.23 cents 27 May 2015 30 May 2018 20 cents 4.90 cents 07 Sept 2015 31 Mar 2018 20 cents 5.40 cents Total	10,000,000 - - - (10,000,000) - - 1,000,000 - - - (1,000,000) - - - 5,000,000 - - - 5,000,000 1,666,668 - 1,000,000 - - - 1,000,000 333,334
	11,000,000 6,000,000 - - (11,000,000) 6,000,000 2,000,002

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Remuneration report (Audited) (continued)

D. Share Based Compensation (continued)

The relevant interest of each Director and key management personnel in the share capital of the Company, shown in the Register of Directors’ and Key Management Personnel Shareholding at the date of the Directors’ Report is as follows:

			Balance as at		Increase as a		Balance as at
			1 January	Received as	result of options	Net	31 December
			2015	remuneration	exercised	change	2015
Mark Caruso		Indirect	78,354,014	-	-	200,000	78,554,014
		Direct	15,784	-	-	-	15,784
Joseph Caruso			77,007,485	-	-	-	77,007,485
Peter Torre			625,000	-	-	-	625,000
Guy Walker			125,000	-	-	-	125,000
Ross Hastings			-	-	-	-	-
James Leahy			-	-	-	-	-
Tony Sheard			100,000	-	-	50,000	150,000

Details of options over ordinary shares in the Company provided as remuneration to key management personnel are shown below:

	Balance as at 1 January 2015 Received as remuneration Options exercised Options lapsed Balance as at 31 December 2015
Mark Caruso Joseph Caruso Peter Torre Guy Walker James Leahy Ross Hastings Tony Sheard Total	1,000,000 5,000,000 - (1,000,000) 5,000,000 1,000,000 - - (1,000,000) - 1,000,000 - - (1,000,000) - 1,000,000 - - (1,000,000) - 1,000,000 - - (1,000,000) - - - - - - - 1,000,000 - - 1,000,000
	5,000,000 6,000,000 - (5,000,000) 6,000,000

E. Other transactions with key management personnel

Mine Site Construction Services (“MSCS”), a company associated with Mr Mark Caruso and Mr Joseph Caruso has provided the followings services to the Company during 2015:

 Provision of office space.

The amount paid by the Company to MSCS for the year ended 31 December 2015 was $47,734. This is considered to be an arm’s length commercial rent. There is no formal sub lease in place.

 Provision of secretarial staff to the Executive Chairman.

The amount paid by the Company to MSCS for the year ended 31 December 2015 was $57,784. The amounts payable are pursuant to an Executive Service Agreement and have been reimbursed on an arm’s length basis at normal commercial rates.

 Provision of technical staff.

The amount paid by the Company to MSCS for the year ended 31 December 2015 was $299,422. The amounts payable have been in respect to the provision of technical staff at the Groups’ head office and at the Tormin project and have been reimbursed on an armslength basis at normal commercial rates.

As at 31 December 2015, amount payable to MSCS is $92,105.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Remuneration report (Audited) (continued)

E. Other transactions with key management personnel (continued)

As announced by the Company on 30 May 2014, the Company obtained an unsecured short term working capital facility of up to $4m from major shareholders. This included a A$2 million facility provided by Regional Management Pty Ltd (“RMS”), a related party of Mr Mark Caruso, the Executive Chairman of the Company.

Pursuant to the Loan Agreement entered into between the Company and RMS, the lender provided a finance facility capped at A$2 million on the following arm’s-length and commercial terms:

Loan is unsecured;
Interest of 13% per annum;
Line fee of 1% and establishment fee of 1%;
Repayment to take in three equal tranches on 31 January 2015, 28 February 2015 and 31 March 2015; and
Default interest of 10% if not repaid on the repayment date.

As announced by the Company on 23 February 2015, RMS agreed to extend the term of the loan it provided to 30 September 2015. As announced by the Company on 5 August 2015, RMS agreed to than repayment of 50% of the principal and to extend the term of the remaining balance of the loan to 30 September 2016 to provide the Company with flexibility with its funding arrangements for the GSP.

As at 31 December 2015, the balance (including interest payable) outstanding is $597,872. Interest paid amounted to $159,246 in 2015.

End of the audited remuneration report

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 annual premium paid was $49,703 representing $9,940 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 directors or 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.

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.

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.

Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are set out below.

The Board of Directors has considered the position and, in accordance with advice received from the Audit, Compliance and Risk Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed by the Audit, Compliance and Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

Mineral Commodities Ltd Annual Report for the year ended 31 December 2015

Directors’ report (continued)

Non-audit services (continued)

During the year, the following fees were paid or payable for services provided by BDO Audit (WA) Pty Ltd and BDO Tax (WA) Pty Ltd, its related practices and related firms:

Audit services Audit and review of financial reports BDO Audit (WA) Pty Ltd BDO Cape Town South Africa Non-audit services Taxation and company secretarial (South African entities) BDO Tax (WA) Pty Ltd BDO Cape Town South Africa	31 Dec 2015 $ 31 Dec 2014 $
	60,790 68,281 48,588 32,871
	109,378 101,152
	80,366 90,768 6,964 5,555
	87,330 96,323

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 19 and forms part of this report.

Auditor

BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001 .

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

==> picture [108 x 85] intentionally omitted <==

Mark Caruso Executive Chairman Perth, Western Australia 29 February 2016

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

==> picture [78 x 31] intentionally omitted <==

DECLARATION OF INDEPENDENCE BY IAN SKELTON TO THE DIRECTORS OF MINERAL COMMODITIES LIMITED

As lead auditor of Mineral Commodities Limited for the year ended 31 December 2015, 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
No contraventions of 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.

==> picture [100 x 34] intentionally omitted <==

Ian Skelton

Director

BDO Audit (WA) Pty Ltd

Perth, 29 February 2016

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

Mineral Commodities Ltd Annual financial statements for the year ended 31 December 2015

Financial statements

Consolidated income statement ................................................................................................................................................................. 21 Consolidated statement of comprehensive income .................................................................................................................................... 22 Consolidated balance sheet ....................................................................................................................................................................... 23 Consolidated statement of cash flows ........................................................................................................................................................ 25 Consolidated statement of changes in equity ............................................................................................................................................. 26 Notes to the consolidated financial statements .......................................................................................................................................... 27 Directors’ declaration .................................................................................................................................................................................. 66 Independent auditor’s report to the members ............................................................................................................................................ 67

Mineral Commodities Ltd Annual financial statements for the year ended 31 December 2015

Consolidated income statement

For the year ended 31 December 2015

Notes Revenue from continuing operations Sale of product 3 Other revenue 3 Other income 4 Expenses Mining and processing costs 4 Other expenses from ordinary activities Administration expenditure 4 Exploration and evaluation expenditure written off Impairment charge Finance costs 4 Profit before income tax Income tax (expense) / benefit 5 Profit after income tax Profit is attributable to: Owners of Mineral Commodities Ltd Non-controlling interest Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the Company: Basic earnings per share 28 Diluted earnings per share 28	31 Dec 2015 $ 31 Dec 2014 $
	46,180,153 33,270,806 278,384 1,689,143
	46,458,537 34,959,949 - 502 (30,546,945) (27,077,759) (2,411,730) (3,425,917) - (29,601) (172,398) - (396,315) (477,927)
	12,931,149 3,949,247 (2,354,364) 4,427,097
	10,576,785 8,376,344
	10,576,785 8,376,344 - -
	10,576,785 8,376,344
	Cents Cents 2.61 2.07 2.57 2.01

The above consolidated income statement should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Annual financial statements for the year ended 31 December 2015

Consolidated statement of comprehensive income

For the year ended 31 December 2015

Profit for the year Other comprehensive income Changes in the fair value of available-for-sale financial assets 18 Exchange differences on translation of foreign operations 18 Other comprehensive income for the year, net of tax Total comprehensive income for the year Total comprehensive income for the year is attributable to: Owners of Mineral Commodities Ltd Non-controlling interest	31 Dec 2015 $ 31 Dec 2014 $
	10,576,785 8,376,344 6,387 - (10,240,709) (2,549,618)
	342,463 5,826,726
	342,463 5,826,726
	342,463 5,826,726 - -
	342,463 5,826,726

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Annual financial statements for the year ended 31 December 2015

Consolidated balance sheet

as at 31 December 2015

Notes ASSETS Current assets Cash and cash equivalents 6 Trade and other receivables 7 Inventories 8 Available-for-sale financial assets Total Current Assets Non-current assets Trade and other receivables 7 Property, plant and equipment 9 Mine development expenditure 10 Exploration expenditure 11 Mine properties 12 Deferred tax assets 13 Total Non-Current Assets Total Assets LIABILITIES Current liabilities Trade and other payables 14 Unearned revenue 15 Borrowings 16 Provisions 17 Total Current Liabilities Non-current liabilities Provisions 17 Long term borrowings 16 Deferred tax liabilities 13 Total non-current Liabilities Total Liabilities NET ASSETS	31 Dec 2015 31 Dec 2014 $ $
	4,227,444 4,216,052 2,348,737 3,084,929 2,301,803 6,123,021 63,866 64,228
	8,941,850 13,488,230
	4,650,398 665,553 11,302,408 14,642,240 5,217,072 5,003,743 5,323,062 6,019,727 2,372,287 4,617,463 3,517,369 4,036,956
	32,382,596 34,985,682
	41,324,446 48,473,912
	3,153,297 5,683,843 - 4,130,000 2,970,210 7,235,413 252,938 141,768
	6,376,445 17,191,024
	78,086 77,167 988,584 - 2,204,851 -
	3,271,521 77,167
	9,647,966 17,268,191
	31,676,480 31,205,721

Mineral Commodities Ltd Annual financial statements for the year ended 31 December 2015

Consolidated balance sheet (continued)

as at 31 December 2015

Notes Equity Contributed equity 18 Reserves 18 Accumulated losses 18 Parent entity interest Non-controlling interest 18 Total equity	31 Dec 2015 31 Dec 2014 $ $
	63,437,092 63,437,092 (20,508,920) (10,402,894) (11,365,331) (21,942,116)
	31,562,841 31,092,082 113,639 113,639
	31,676,480 31,205,721

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Annual financial statements for the year ended 31 December 2015

Consolidated statement of cash flows

For the year ended 31 December 2015

Notes Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees Net cash inflow from operating activities 19 Cash flows from investing activities Exploration expenditure Payments for property, plant and equipment Payments for development expenditure Payments for general fixed assets Proceeds from sales of investments Interest received Net cash outflow from investing activities Cash flows from financing activities Proceeds from the issue of shares and options (net of costs) Proceeds from borrowings Repayment of borrowings Interest paid on borrowings Net cash outflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year 6 Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of financial year 6	31 Dec 2015 31 Dec 2014 $ $
	37,475,013 36,177,065 (28,336,874) (27,737,444)
	9,138,139 8,439,621
	(845,318) (96,407) (3,356,090) (1,863,340) (1,869,848) (3,198,386) - (256,131) - 17,647 8,113 12,889
	(6,063,143) (5,383,728)
	- (3,235) 3,203,052 2,907,010 (5,139,048) (2,236,045) (669,586) (944,926)
	(2,605,582) (277,196)
	469,414 2,778,697 4,216,052 1,503,316 (458,022) (65,961)
	4,227,444 4,216,052

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Annual financial statements for the year ended 31 December 2015

Consolidated statement of changes in equity

For the year ended 31 December 2015 At 1 January 2015 Profit for the year Other comprehensive loss for the year Total comprehensive income / (loss) for the year Transaction with owners in their capacity as owners Contribution of equity net of transactions Issue of unlisted options Balance at the end of the year For the year ended 31 December 2014 At 1 January 2014 Profit for the year Other comprehensive loss for the year Total comprehensive income / (loss) for the year Transaction with owners in their capacity as owners Contribution of equity net of transactions Issue of unlisted options Balance at the end of the year	Contributed equity Reserves Accumulated losses Totals Non- controlling interest Total equity $ $ $ $ $ $
	63,437,092 (10,402,894) (21,942,116) 31,092,082 113,639 31,205,721 - - 10,576,785 10,576,785 - 10,576,785 - (10,234,322) -(10,234,322) - (10,234,322)
	- (10,234,322) 10,576,785 324,463 - 324,463 - 128,296 - 128,296 - 128,296
	63,437,092 (20,508,920) (11,365,331) 31,562,841 113,639 31,676,480
	Contributed equity Reserves Accumulated losses Totals Non- controlling interest Total equity $ $ $ $ $ $
	63,440,327 (7,853,276) (30,318,460) 25,268,591 113,639 25,382,230 - - 8,376,344 8,376,344 - 8,376,344 - (2,549,618) - (2,549,618) - (2,549,618)
	- (2,549,618) 8,376,344 5,826,726 - 5,826,726 (3,235) - - (3,235) - (3,235)
	63,437,092 (10,402,894) (21,942,116) 31,092,082 113,639 31,205,721

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements

1. Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Mineral Commodities Ltd (the “Company”) and its subsidiaries (together are referred to hereafter as the “Group”). Mineral Commodities Ltd is an Australian domiciled public listed company.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001 . Mineral Commodities Ltd is a for-profit entity for the purpose of preparing the financial statements.

(i) Compliance with IFRS

The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

available-for-sale financial assets, financial assets and liabilities (including derivative instruments)
certain classes of property, plant and equipment and investment property – measured at fair value
assets held for sale – measured at fair value less cost of disposal, and

(iii) New and amended standards adopted by the Group

There were no new standards or amendments to standards, which required adoption for the first time for the annual reporting period commencing 1 January 2015.

(iv) New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2015 reporting periods and have not been early adopted by the Group. It has been determined by the Group that there is no impact, material or otherwise, of the above standards on its business and, therefore, no change is necessary to the Group accounting policies. Refer to note 1(x) for further details.

(b) Principles of consolidation

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

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

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and balance sheet respectively.

As noted in note 21(ii), the Company, via its wholly owned subsidiary MRC Resources Proprietary Limited (“MRCR”), has a 50% interest in the issued capital in Mineral Sands Resources Proprietary Limited (“MSR”). Whilst the Group controls 50% of the share voting power, it has been determined that the Group effectively has 100% control due to its control over the relevant activities for accounting purposes, controls the management of MSR, and also controls the Board of MSR due to provisions set out in the Shareholders Agreement entered into between the shareholders of MSR.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(b) Principles of consolidation (continued)

(i) Subsidiaries (continued)

shares would be redeemed out of distributable profits and net assets of MSR before all other ordinary shareholders, until such time as the net assets exceed the value of the unredeemed A and B preference shares, no value has been attributed to the noncontrolling interest. Until that time, the non-controlling interest has no rights to the assets or results of the Company, and therefore has not been allocated any value in these financial statements.

(ii) Associates Associates are entities over which the group has significant influence but not control or joint control. This is generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting (see (iii) below), after initially being recognised at cost.

(iii) Equity method

Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the Company.

(c) 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.

(d) Foreign currency translation

(i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in United States (USD) dollars, which is the Company’s presentation currency.

assets and liabilities for each balance sheet presented have been translated at the closing rate at the date of that statement of balance sheet;
results for the cash flow statement were translated at average daily exchange rates from 1 January 2015 to 31 December 2015; and
exchange differences on translating income, expenses and movements in equity and reserves at annual average exchange rates and assets and liabilities at closing exchange rates from functional currency to presentation currency are taken to the foreign currency translation reserve in the equity section and under other comprehensive income/(expense) in the statement of comprehensive income.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(d) Foreign currency translation (continued)

(ii) Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the income statement, within finance costs. All other foreign exchange gains and losses are presented in the income statement on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognised in other comprehensive income.

(ii) Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

(e) 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:

(i) Sale of goods

Revenue from the sale of goods is recognised when there is persuasive evidence indicating that there has been a transfer of risks and rewards to the customer, generally for the Group, this is based on free-on-board sales where transfer of risks and rewards passes at port of origin. Sales revenue comprises gross revenue earned from the provision of product to customers. Sales are initially recognised at estimates sales value when the product is delivered. Adjustments are made for variations in metals price, assay, weight and moisture content between the time of delivery and the time of final settlement of sales proceeds.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(e) Revenue Recognition (continued)

(ii) Stockpiled Revenue Revenue from the stockpiling of goods is recognised when there is evidence that there has been a transfer of risks and rewards to the customer. This is based on a contractual obligation of the customer to take final delivery and make full and final payment for all amounts delivered to the stockpile.

(iii) Unearned revenue

Unearned revenue represents revenue that has been received by the Group for requested goods where the risks and rewards have not yet been transferred as the goods have not been substantially provided. Deferred revenue is recognised as revenue subsequent to this in accordance with the Group’s revenue recognition policy.

(iv) Interest income Interest and other income are recognised as it accrues on a time proportion basis using the effective interest method.

(f)

Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

From 1 January 2014, the Company and its wholly-owned Australian controlled entities have formed an income tax consolidated group under the tax consolidation regime with Mineral Commodities Ltd as the head entity. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the “separate taxpayer within group” approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amount, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(f) Income tax (continued)

Assets or liabilities arising under the tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensure that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

(i) Investment allowances and similar tax incentives

Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets or in relation to qualifying expenditure (eg the Research and Development Tax Incentive regime in Australia or other investment allowances). The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.

(g)

Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. The respective leased assets are included in the balance sheet based on their nature.

(h) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or Groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(i) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(j) Trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

(k) Inventories

Raw materials and stores, ore stockpiles and work in progress and finished stocks are physically measured or estimated and valued at the lower of cost and net realisable value. Net realisable value less costs to sell is assessed annually based on the amount estimated to be obtained from sale of the item of inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale.

Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure and depreciation and amortisation relating to mining activities, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Weighted average cost includes direct costs and an appropriate portion of fixed and variable overhead expenditure, including depreciation and amortisation. As a result of mineral sands being co-products from the same mineral separation process, costs are allocated to inventory on the basis of the relative sales value of the finished goods produced. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost, which includes the cost of purchase as well as transportation and statutory charges, or net realisable value. Any provision for obsolescence is determined by reference to specific stock items identified.

During the exploration, development and production phases, where the cost of extracting the ore exceeds the likely recoverable amount, work in progress inventory is written down to net realisable value. A portion of the related depreciation, depletion and amortisation charge is included in the cost of inventory.

(l) Investments

(i) 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.

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

(m) 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 include 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.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(m) Property, plant and equipment (continued)

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.

Depreciation of property, plant and equipment

Depreciation and amortisation is provided to expense the cost of property, plant and equipment, and mine properties and development, over its estimated useful life on a straight line or units of usage (activity) basis.

The basis of depreciation and amortisation of each asset is reviewed annually and changes to the basis of depreciation and amortisation are made if the straight line or units of production basis is no longer considered to represent the expected pattern of consumption of economic benefits.

The reserves and life of each mine and the remaining useful life of each class of asset are reassessed at regular intervals and the depreciation and amortisation rates adjusted accordingly on a prospective basis.

The estimated useful lives for the main categories of assets are as follows:

Fixed Asset Category	Estimated Useful Life
Mine properties and development	The shorter of applicable mine life or generally 10 years
Land	Not depreciated
Mine buildings	The shorter of applicable mine life or generally 10 years
Heavy earth moving vehicles
Excavators and loaders working in significant salt exposed	Generally 12,000 hours operation
conditions
All other heavy earth moving vehicles	Generally 18,000 hours operation
Light and other mobile vehicles	Generally 5 years
Mine specific machinery, plant and equipment	The shorter of applicable mine life or generally 10 years
Other machinery, plant and equipment	Generally 10 years
Computer hardware	Generally 4 years
Software acquisitions and development	Generally 3 years
Office leasehold fit-outs	Generally lease term, including extensions
Other office furniture and fittings	Generally 10 years

Note: For assets under a finance lease, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term or its useful life.

Note: “Generally” implies that if a specific asset or class of assets useful life is reasonably able to be determined as less than that stipulated above, then the applicable lower estimated useful life is to be used.

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.

(n) Exploration and development expenditure

(i) Exploration and evaluation expenditure

Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such expenditure comprises direct costs and does not include general overheads or administrative expenditure not having a specific nexus with a particular area of interest.

Exploration expenditure for each area of interest is carried forward as an asset provided the rights to tenure of the area of interest are current and one of the following conditions is met:

The exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(n) Exploration and development expenditure (continued)
(i) Exploration and evaluation expenditure (continued)
Exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interests is continuing.

Exploration expenditure is written off when it fails to meet at least one of the conditions outlined above or an area of interest is abandoned.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount the impairment loss will be measured and disclosed in accordance with AASB 136 Impairment of Assets.

When a decision is made to develop an area of interest, all carried forward exploration expenditure in relation to the area of interest is transferred to development expenditure.

(ii) Mine Properties and Development expenditure

Mine properties relates to capitalised restoration costs expected to be incurred.

Development expenditure represents the accumulated exploration, evaluation, land and development expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of a mineral resource has commenced.

When further development expenditure is incurred in respect of a mine property after commencement of production, such expenditure is carried forward as part of the development expenditure only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production.

In some circumstances, where conversion of resources into reserves is expected, some resources may be included. Development and land expenditure still to be incurred in relation to the current reserves are included in the amortisation calculation. Where the life of the assets are shorter than the mine life their costs are amortised based on the useful life of the assets.

The estimated recoverable reserves and life of the mine and the remaining useful life of each class of asset are reassessed at least annually. Where there is a change in the reserves/resources amortisation rates are correspondingly adjusted. Please refer to the table in note 1(m) above for basis of amortisation rates used.

(iii) Stripping costs in the production phase of a surface mine

Deferred stripping costs represent certain mining costs, principally those that relate to the stripping of waste, which provides access so that future economically recoverable ore can be mined. Stripping (i.e. overburden and other waste removal) costs incurred in the production phase of a surface mine are capitalised to the extent that they improve access to an identified component of the ore body and are subsequently amortised on a systematic basis over the expected useful life of the identified component of the ore body. Capitalised stripping costs are disclosed as a component of Mine Properties and Development.

Components of an ore body are determined with reference to life of mine plans and take account of factors such as the geographical separation of mining locations and/or the economic status of mine development decisions.

Capitalised stripping costs are initially measured at cost and represent an accumulation of costs directly incurred in performing the stripping activity that improves access to the identified component of the ore body, plus an allocation of directly attributable overhead costs.

The amount of stripping costs deferred is based on a relevant production measure which uses a ratio obtained by dividing the tonnage of waste mined by the quantity of ore mined for an identified component of the ore body. Stripping costs incurred in

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(n) Exploration and development expenditure (continued)

(iv) Stripping costs in the production phase of a surface mine

the period for an identified component of the ore body are deferred to the extent that the current period ratio exceeds the expected ratio for the life of the identified component of the ore body. Such deferred costs are then charged against the income statement on systematic units of production basis over the expected useful life of an identified component of the ore body. The expected life of mine and component ratio is based on proved and probable reserves of the mine as per the annual mine plan. These are a function of the mine design and therefore any changes to the design will generally result in changes to the ratio. Changes in other technical or economic parameters that impact on reserves may also have an impact on the component ratio even though they may not impact the mine design.

Changes to the life of mine plan, identified components of an ore body, stripping ratios, units of production and expected useful life are accounted for prospectively.

Deferred stripping costs form part of the total investment in a cash generating unit, which is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.

Due to the current nature of the operations no amount of stripping costs has been deferred, as there is no overburden or other production striping required. The full amount of mining cost has been recognised through inventory and costs of production as incurred.

(o) Trade and other payables

Trade and other payables are recognised originally at fair value and subsequently measured at amortised cost using the effective interest rate method. Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of each reporting period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date.

(p) Interest bearing loans and borrowings

All loans and borrowings are initially recognised at cost, being fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the amortisation process.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting periods.

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

(q) 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.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(r) Employee Benefits

(i) Wages and salaries, annual leave, long service and sick leave Provision is made for the Group’s liability for employee entitlements arising from services rendered by employees to reporting 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.

(i) Share-based payments

Equity-settled share-based compensation benefits are provided to certain senior employees.

Equity-settled transactions are awards of options over shares that are provided to employees in exchange for the rendering of services.

The cost of equity-settled transactions is measured at fair value at grant date. Fair value is independently determined using the Black-Scholes 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. No account is taken of any other vesting conditions.

The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative change to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

(r) 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.

(s) Earnings / (loss) per share

(i) Basic earnings / (loss) per share Basic earnings per share is determined by dividing the profit after income tax attributable to members of the Company by the weighted average number of ordinary shares outstanding during the financial year.

(ii) 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.

(t) 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 and 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 consolidated balance sheet. 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.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(u) Financial Instruments

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

(i) 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 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.

(ii) 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.

(iii) 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.

(iv) 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.

(v) Financial Liabilities

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

(vi) 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 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.

(v) Parent entity information

The financial information for the parent entity, Mineral Commodities Ltd, disclosed in note 29 has been prepared on the same basis as the consolidated financial statements, unless stated otherwise.

(w) 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.

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.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(x) Critical accounting estimates and judgements (continued)

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

Estimation of useful lives of assets

The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Exploration and development expenditure

Recoupment of the capitalised exploration and evaluation expenditure is dependent on the successful development and commercial exploitation of the Xolobeni Mineral Sands area of interest in South Africa. The capitalised expenditure in relation to the Xolobeni project 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.

Reserves and Resources

In order to calculate ore reserves and mineral resources, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as revised in 2012 (the JORC code).

As economic assumptions used to estimate reserves change and as additional geological data is generated during the course of operations, estimates of reserves and mineral resources may vary from period to period. Changes in reported reserves and mineral resources may affect the Group’s financial results and financial position in a number of ways, including the following:

Asset carrying values may be affected due to changes in estimated future cash flows;
Depreciation and amortisation charges in profit or loss may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change; and
Restoration and rehabilitation provision may be affected due to changes in the magnitude of future restoration and rehabilitation expenditure.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. As a result of this review, at balance date, it was determined that losses of $Nil (2014: $4,427,097) at 30% have been bought to account as it is now probable that they will be recovered.

Rehabilitation provision

A provision has been made for the present value of anticipated costs for future rehabilitation of land explored or mined. The Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognises management's best estimate for assets retirement obligations and site rehabilitations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(x) Accounting standards not yet effective

Reference	Title	Nature of Change	Application date of standard	Impact on entity financial statements	Application date for entity
AASB 9 (issued December 2014)	Financial Instruments	Amends the requirements for classification and measurement of financial assets. The available-for- sale and held-to-maturity categories of financial assets in AASB 139 have been eliminated. Under AASB 9, there are three categories of financial assets:  Amortised cost  Fair value through profit or loss  Fair value through other comprehensive income. AASB 9 requires that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income. Impairment The new impairment model in AASB 9 is now based on an ‘expected loss’ model rather than an ‘incurred loss’ model. A complex three stage model applies to debt instruments at amortised cost or at fair value through other comprehensive income for recognising impairment losses. A simplified impairment model applies to trade receivables and lease receivables with maturities that are less than 12 months. For trade receivables and lease receivables with maturity longer than 12 months, entities have a choice of applying the complex three stage model or the simplified model.	Annual reporting periods beginning on or after 1 January 2018	Adoption of AASB 9 is only mandatory for the year ending 31 December 2018. The entity has not yet made an assessment of the impact of these amendments. The entity has financial assets classified as available-for-sale. When AASB 9 is first adopted, the entity will reclassify these into the fair value through profit or loss category. On 1 January 2018, the cumulative fair value changes in the available-for- sale reserve will be reclassified into retained earnings and subsequent fair value changes will be recognised in profit or loss. The change is applied retrospectively, however comparatives need not be retrospectively restated. Instead, the cumulative effect of applying the change for the first time will be recognised as an adjustment to the opening balance of retained earnings on 1 January 2018. The entity has both long term and short term trade receivables. When this standard is adopted, the entity’s loss allowance on trade receivable will increase. The change is applied retrospectively, however comparatives need not be retrospectively restated. Instead, the cumulative effect of applying the change for the first time is recognised as an adjustment to the opening balance of retained earnings on 1 January 2018.	1 January 2018

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

1. Summary of Significant Accounting Policies (continued)

(x) Accounting standards not yet effective (continued)

Reference	Title	Nature of Change	Application date of standard	Impact on entity financial statements	Application date for entity
AASB15 IFRS 15 (issued June 2014)	Revenue from contracts with customers	An entity will recognise revenue to depict the transfer of promised good or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This means that revenue will be recognised when control of goods or services is transferred, rather than on transfer of risks and rewards as is currently the case under IAS 18 Revenue.	Annual reporting periods beginning on or after 1 January 2018.	The entity operates in the mining industry and recognises revenue for sale of mineral sands per note 1(e)(i). When this standard is first adopted, revenue for sale of mineral sands will instead be recognised when control of goods is transferred. The entity has not yet made an assessment of the impact of these amendments. Comparatives will need to be retrospectively restated, either back to 1 January 2017 if the full retrospective transitional requirements are applied, or to 1 January 2018 if the modified retrospective transitional requirements are applied. Modified retrospective restatement requires that the cumulative effect of applying AASB 15 for the first time be recognised as an adjustment to the opening balance of retained earnings on 1 January2018.	1 January 2017

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

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

2. Segment information

(i) Description of segments

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.

The chief operating decision maker has identified three reportable segments to its business, being:

Mineral Sands mining and production (Tormin Mineral Sands project) – South Africa;
Mineral Sands exploration (Xolobeni Mineral Sands project) – South Africa; and
Corporate (management and administration of the Company’s projects) – Australia and South Africa.

(ii) Segment results The segment information provided to the chief operating decision maker for the reportable segments for the year ended 31 December 2015 is as follows:

2015 Total segment revenue Inter-segment revenue Revenue from external customers Adjusted EBITDA Depreciation and amortisation Total segment assets Total segment liabilities 2014 Total segment revenue Inter-segment revenue Revenue from external customers Adjusted EBITDA Depreciation and amortisation Total segment assets Total segment liabilities	Tormin Xolobeni Consolidation project project Corporate eliminations Total $ $ $ $ $ 45,773,169 1 46,219,946 - 91,993,116 (45,534,579) - - - (45,534,579)
	238,590 1 46,219,946 - 46,458,537
	14,487,488 (6,147) (2,981,878) 6,390,035 17,889,498
	4,178,968 - 53,960 - 4,232,928 14,424,727 4,242,685 62,878,801 (40,221,767) 41,324,446
	6,932,933 4,154,609 37,552,832 (38,992,408) 9,647,966
	Tormin Xolobeni Consolidation project project Corporate eliminations Total $ $ $ $ $ 35,218,170 - 8,097,593 - 43,315,763 (8,355,814) - - - (8,355,814)
	26,862,356 - 8,097,593 - 34,959,949
	4,752,419 - 411,773 3,030,088 8,194,280
	3,229,243 - 41,494 - 3,270,737 33,779,540 4,635,884 6,949,476 3,109,012 48,473,912
	8,323,403 - 9,503,494 (558,706) 17,268,191

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

2. Segment information (continued)

Adjusted EBITDA reconciles to operating profit before income tax as follows:

Adjusted EBITDA Interest expense Depreciation and amortisation Operating profit before income tax . Revenue From continuing operations Sales revenue Sale of product Other revenue Revenue from sub-leasing access road Interest income Other	31 Dec 2015 $ 31 Dec 2014 $
	17,889,498 8,194,280 (725,421) (974,296) (4,232,928) (3,270,737)
	12,931,149 3,949,247
	46,180,153 33,270,806
	- 1,592,893 18,759 12,889 259,625 83,361
	278,384 1,689,143

3. 4. Other income and expense items

This note provides a breakdown of the items included in ‘other income’ and an analysis of expenses by nature.

(i) Other income Other (ii) Mining and processing costs Mining and processing costs include the following material expenditure items: Transport of product Fuel Wages and salaries Repairs and maintenance Depreciation and amortisation – mining and processing assets (iii) Administration expenses Administration expenses include the following material expenditure items: Directors and key management personnel remuneration Operating lease rentals Depreciation – corporate assets (iv) Finance costs Interest expense on borrowings Borrowing facility fee Bank interest paid	- 502
	- 502
	4,743,839 8,066,438 3,499,106 4,559,406 5,558,319 3,786,958 3,637,970 1,071,589 4,178,968 3,229,243 2,939,786 1,001,213 68,073 75,393 53,960 41,494 319,529 397,751 76,785 77,978 - 2,198
	396,315 477,927

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

5. Income tax expense / (benefit)

This note provides an analysis of the group’s income tax benefit, shows what amounts are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It also explains significant estimates made in relation to the Group’s tax position.

*The components of income tax expense / (benefit) comprise:* Current tax Deferred tax Adjustments for current tax of prior periods Income tax expense / (benefit) is attributable to: Profit from continuing operations Aggregate income tax benefit Deferred income tax benefit included in income tax expense / (benefit) comprises: Decrease / (increase) in deferred tax assets (Decrease) / increase in deferred tax liabilities *Numerical reconciliation of income tax expense / (benefit) to prima facia tax* Profit from continuing operations before income tax expense / (benefit) Prima facia tax payable on profit from ordinary activities before at a rate of 30% (2014: 30%) Foreign tax rate differential Tax at consolidated amount Tax effect of: Entertainment Intercompany loan interest reversed Capital losses realised Capital losses utilised on sale of shares Projects discontinued Transfer pricing tax adjustment Legal fees Donations Amortisation of exploration and evaluation asset Consulting Assets written off Share based payment Other non-assessable income Net deferred tax assets not brought to account Adjustment for current tax of prior period Income tax expense / (benefit)	31 Dec 2015 $ 31 Dec 2014 $
	- - 2,385,999 (4,427,097) (31,635) -
	2,354,364 (4,427,097)
	2,354,364 (4,427,097)
	2,354,364 (4,427,097)
	1,492,770 (4,815,548) (128,263) 388,451
	1,364,507 (4,427,097)
	*expense / (benefit)* 12,931,149 3,949,247 3,879,345 1,184,775 (53,892) (65,760)
	3,825,453 1,119,015 1,886 1,527 - 523,462 - 516,430 - (150) - 8,800 - 32,786 182,628 (863,646) 943 1,662 97,448 112,094 726 98,775 27,572 28,969 39,676 - (1,790,333) (6) - (6,006,815) (31,635) -
	2,354,364 (4,427,097)

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

5. Income tax expense / (benefit) (continued)

Amounts recognised directly in equity Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other comprehensive income but directly debited or credited to equity: Current tax – credited directly to equity Net deferred tax – debited (credited) to equity	31 Dec 2015 $ 31 Dec 2014 $ - - - -
	- -

Total estimated revenue tax losses of A$Nil and ZAR54,376,151 (2014: A$4,849,434 and ZAR54,297,645) have not been brought to account at year end as their ultimate recoverability has not yet been assessed as probable. These losses are also subject to final verification in the relevant jurisdictions.

Mineral Commodities Ltd (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime effective from 1 January 2014. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

6. Cash and cash equivalents

Cash assets Cash at bank and in hand	4,227,444 4,216,052

(i) Interest rate risk exposure The Group’s exposure to interest rate risk is discussed in note 20(a)(ii).

(ii) Reconciliation to cash flow statement

The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year.

7. Trade and other receivables

Current Trade receivables Less: Provision for impairment of receivables Other receivables(i) Prepayments Non-current Trade receivables(ii) Security deposits(iii) Advance to Blue Bantry(iv)	1,842,030 1,236,441 (172,398) -
	1,669,632 1,236,441 654,389 1,671,499 24,716 176,989
	2,348,737 3,084,929
	3,937,487 - 182,088 235,053 530,823 430,500
	4,650,398 665,553

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

7. Trade and other receivables (continued)

(i) Includes $223,507 (2014: $1,031,088) of VAT refundable from the South African Revenue Service.
(ii) The amount has been recorded at amortised cost as payment is expected when shipment occurs from April 2017.
(iii) Includes a secured deposit of $182,088 (2014: $230,748) 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.
(iv) An amount of ZAR 8.25 million (2014: ZAR 5 million) has been advanced to the BEE partner, Blue Bantry. Refer to note 23(d) for details.

Impairment of receivables

The Group has recognised a loss of $172,398 (2014: $Nil) in profit or loss in respect of impairment of receivables for the year ended 31 December 2015.

Fair values and credit risk

Except for the non-current trade receivables, due to the short term nature of these receivables the carrying values represent their respective fair values as at 31 December 2015 and 2014. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. The non-current receivables have a fair value of $3,937,487 as at 31 December 2015, compared to a carrying amount of $4,200,000 (2014: fair value of $Nil and carrying amount of $Nil).

The fair values were calculated based on cash flows discounted using a current lending rate. Refer to note 20 for more information on the risk management policy of the Group and the credit quality of the entity’s receivables.

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 20.

8. Inventories

ventories
Raw materials at cost Finished product at cost Spare parts and consumables at cost	31 Dec 2015 $ 31 Dec 2014 $
	84,121 162,186 857,157 5,660,311 1,360,525 300,524
	2,301,803 6,123,021

The costs of individual items of inventory are determined using weighted average cost.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

9. Property, plant and equipment

	Freehold land and buildings Furniture, fittings and equipment Plant and machinery Mine vehicles Decom- missioning asset Capex work in progress $ $ $ $ $ $	Total $
Year ended 31 December 2015
Cost at fair value As at 1 January 2015 Additions Re-classifications Exchange differences As at 31 December 2015 Accumulated depreciation and amortisation As at 1 January 2015 Depreciation and amortisation Disposal Re-classifications Exchange differences As at 31 December 2015 Net book amount Cost at fair value Accumulated depreciation and amortisation Net book amount	22,567 381,829 15,892,012 10,412 72,133 - - 111,536 2,271,263 41,698 - 1,887,976 - - (109,412) - - - (6,054) (65,228) (4,554,465) 14,356 (19,349) (323,391) 16,513 428,137 13,499,398 66,466 52,784 1,564,585 (795) (183,468) (1,536,079) (8,807) (7,564) - - (127,153) (2,943,844) (11,420) (6,424) - - - 10,941 - - - - (1,858) (716,948) - - - 240 72,949 1,132,384 (1,060) 3,431 - (555) (239,530) (4,053,546) (21,287) (10,557) - 16,513 428,137 13,499,398 66,467 52,784 1,564,585 (555) (239,530) (4,053,546) (21,287) (10,557) - 15,958 188,607 9,445,852 45,180 42,227 1,564,585	16,378,953 4,312,473 (109,412) (4,954,131)
		15,627,883
		(1,736,713) (3,088,841) 10,941 (718,806) 1,207,944
		(4,325,475)
		15,627,883 (4,325,475)
		11,302,408

Year ended 31 December 2014
Cost at fair value As at 1 January 2014 Additions Re-classifications Exchange differences As at 31 December 2014 Accumulated depreciation and amortisation As at 1 January 2014 Depreciation and amortisation As at 31 December 2014 Net book amount Cost at fair value Accumulated depreciation and amortisation Net book amount	- 144,248 5,121,331 - - - 23,663 256,131 1,828,759 10,918 75,637 - - - 9,713,992 - - - (1,096) (18,550) (772,070) (506) (3,504) - 22,567 381,829 15,892,012 10,412 72,133 - - (107,427) (127,448) - - - (795) (76,041) (1,408,631) (8,807) (7,564) - (795) (183,468) (1,536,079) (8,807) (7,564) - 22,567 381,829 15,892,012 10,412 72,133 - (795) (183,468) (1,536,079) (8,807) (7,564) - 21,772 198,361 14,355,933 1,605 64,569 -	5,265,579 2,195,108 9,713,992 (795,726)
		16,378,953
		(234,875) (1,501,838)
		(1,736,713)
		16,378,953 (1,736,713)
		14,642,240

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

9. Property, plant and equipment (continued)

Leased assets

The carrying amounts above include $3,134,220 (2014: $3,912,664) where the Group is a lessee under a finance lease.

Details of amounts due under equipment acquisition agreements are detailed under borrowings. Refer to note 16.

10. Mine development expenditure

10. Mine development expenditure
As at 1 January Expenditure during the year Re-classification: transfer from/ (to) property, plant and equipment 9 Re-classification: transfer from mine properties 12 Amortisation expense Exchange differences 11. Exploration expenditure As at 1 January Expenditure during the year Write off discontinued projects Re-classification: transfer to mine properties 11 Exchange differences As at 31 December 12. Mine properties As at 1 January Expenditure during the year Re-classification: transfer to mine development expenditure 10 Re-classification: transfer from exploration expenditure 11 Amortisation expense Exchange differences As at 31 December 13. Deferred tax assets / liabilities Recognised deferred tax assets Tax losses Provisions/accrued expenditure Business related expenditure and borrowing costs Unrealised foreign exchange loss Property, plant and equipment Set-off against deferred tax liabilities	31 Dec 2015 $ 31 Dec 2014 $
	5,003,743 13,606,814 918,578 3,198,386 718,806 (9,713,992) 947,134 - (785,962) (1,298,411) (1,585,227) (789,054)
	5,217,072 5,003,743
	6,019,727 11,008,541 876,641 96,407 - (51,297) - (4,299,929) (1,573,306) (733,995)
	5,323,062 6,019,727
	4,617,463 - - 1,115,159 (947,134) - - 4,299,929 (365,246) (470,487) (932,796) (327,138)
	2,372,287 4,617,463
	1,842,733 3,158,290 142,773 58,082 75,412 235,828 1,646,220 440,212 - 495,631
	3,707,138 4,388,043 (189,769) (351,087)
	3,517,369 4,036,956

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

13. Deferred tax assets (continued)

Recognised deferred tax assets (continued)

Movements At 1 January 2015 (charged) / credited - to profit or loss - to other comprehensive income At 31 December 2015	Tax losses Provisions/ accrued expenditure Business related expenditure and borrowing costs Unrealised foreign exchange losses Property, plant and equipment Total $ $ $ $ $ $ 3,158,290 58,082 235,828 440,212 495,631 4,388,043 (1,315,557) 84,691 (160,416) 1,206,008 (495,631) (680,905) - - - - - -
	1,842,733 142,773 75,412 1,646,220 - 3,707,138

Movements At 1 January 2014 (charged) / credited - to profit or loss - to other comprehensive income At 31 December 2014	Tax losses Provisions/ accrued expenditure Business related expenditure and borrowing costs Unrealised foreign exchange losses Property, plant and equipment Total $ $ $ $ $ $ - - - - - - 3,158,290 58,082 235,828 - 495,631 3,947,831 - - - 440,212 - 440,212
	3,158,290 58,082 235,828 440,212 495,631 4,388,043

Recognised deferred tax liabilities Unrealised foreign exchange gain Property, plant and equipment Prepayments Interest receivable Set-off against deferred tax assets	31 Dec 2015 $ 31 Dec 2014 $
	1,761,557 - 443,295 - 2,462 4,572 187,306 346,515
	2,394,620 351,087 (189,769) (351,087)
	2,204,851 -

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

13. Deferred tax assets / liabilities (continued)

Recognised deferred tax liabilities (continued)

Movements At 1 January 2015 (charged) / credited - to profit or loss - to other comprehensive income At 31 December 2015 Movements At 1 January 2014 (charged) / credited - to profit or loss - to other comprehensive income At 31 December 2014	Unrealised foreign exchange gain Property, plant and equipment Prepayments Interest receivable Total $ $ $ $ $ - - 4,572 346,515 351,087 1,761,557 443,295 (2,110) (159,209) 2,043,533 - - -
	1,761,557 443,295 2,462 187,306 2,394,620
	Unrealised foreign exchange gain Property, plant and equipment Prepayments Interest receivable Total $ $ $ $ $ - - - - - - - 4,572 346,515 351,087 - - - - -
	- - 4,572 346,515 351,087

Mineral Commodities Ltd and its wholly owned Australian subsidiaries have applied the tax consolidation legislation which means these entities are taxed as a single entity. As a consequence, the deferred tax assets and deferred tax liabilities of these entities has been offset in the consolidated financial statements.

14. Trade and other payables

rade and other payables
Trade payables Other payables and accruals	31 Dec 2015 $ 31 Dec 2014 $
	2,310,593 4,013,390 842,704 1,670,453
	3,153,297 5,683,843

(i) 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 2015 and 2014.

(ii) 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 20.

15. Unearned revenue

Unearned revenue from product sales

4,130,000

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

16. Borrowings

Current

Current
Short term borrowings – unsecured (1) Amounts due under equipment acquisition agreements (2),(3) Non-current Amounts due under equipment acquisition agreements (2),(3)	31 Dec 2015 $ 31 Dec 2014 $
	1,263,416 3,291,363 1,706,794 3,944,050
	2,970,210 7,235,413
	988,584 -

(1) Short term borrowings included a pre finance and marketing agreement facility of USD2.0 million which was drawn down in September 2013. This facility was repayable over a twelve month period in quarterly instalments commencing three months after production has commenced. As at 31 December 2015, the outstanding balance on this facility was Nil. The short term borrowings at 31 December 2015 was in relation to shareholder loans (note 25(vi)). Repayment of the outstanding balance of these loans has been extended to 30 September 2016.
(2) The Group entered into Master Rental Agreements to acquire mobile mining equipment and generators. Under the terms of these agreements, there is an option to purchase with the Group intends to exercise for the mobile mining equipment.
(3) The Group entered into Instalment Sale Agreements to acquire mobile mining equipment. Under the terms of these agreement, the Group will become the owner of the mobile mining equipment on final payment under the agreements.

17. Provisions

Current Annual leave provision Non-current Environmental rehabilitation provision (1) Long service leave provision	252,938 141,768
	63,000 77,167 15,086 -
	78,086 -

(1) The provision has been raised to ensure that adequate provision has been made for the environmental rehabilitation and decommissioning obligation of the Tormin mine.

18. Equity

(a) Contributed equity

(i) Share capital

Ordinary shares Fully paid	2015 2014 2015 2014 Number of shares Number of shares $ $ 404,941,581 404,941,581 63,437,092* 63,437,092

*The comparative figure has been amended to align with the total number of shares recorded on the Share Register.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

18. Equity (continued)

(ii) Movements in ordinary share capital Details At 1 January 2015 Conversion of listed options Placement of ordinary shares Proceeds from rights issue Share issue costs At 31 December 2015 Transaction costs arising on share issue At 31 December 2015	Number of shares $
	404,941,581 63,437,092 - - - - - - - -
	404,941,581 63,437,092 - -
	404,941,581 63,437,092

(iii) 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.

(iv) 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.

(b) Reserves

The following table shows a breakdown of the balance sheet line item ‘other reserves’ and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below the table.

	General reserve Financial asset revaluation reserve Foreign currency translation reserve Listed option reserve Total $ $ $ $ $
At 1 January 2014 Exchange differences on translation of foreign operations At 1 January 2015 Issue of unlisted options Exchange differences on translation of foreign operations Change in fair value of available-for- sale financial assets At 31 December 2015	1,363,393 (232,908) (9,300,809) 317,048 (7,853,276) - - (2,549,618) - (2,549,618)
	1,363,393 (232,908) (11,850,427) 317,048 (10,402,894) - - - 128,296 128,296 - - (10,240,709) - (10,240,709) - 6,387 - - 6,387
	1,363,393 (226,521) (22,091,136) 445,344 (20,508,920)

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

18. Equity (continued)

(b) Reserves (continued)

Nature and purpose of reserves

General reserve

The General reserve arose from the issue of shares in MRC Resources Proprietary Limited to an entity outside the economic entity.

Financial asset revaluation reserve

The financial asset revaluation reserve arises from the revaluation at reporting 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.

Listed options reserve

Records the amounts received in a prior year together with the amounts amortised for employee options in the current year from the issue of listed options.

(c) Accumulated losses

(c) Accumulated losses
At 1 January Profit for the year At 31 December (d) Non-controlling interest At 1 January Movement for the year At 31 December	31 Dec 2015 $ 31 Dec 2014 $
	(21,942,116) (30,318,460) 10,576,785 8,376,344
	(11,365,331) (21,942,116)
	113,639 113,639 - -
	113,639 113,639

19. Cash flow information

(a) Reconciliation of profit after income tax to cash flow from operating activities

Profit for the year Depreciation and amortisation Proceeds from the sale of available-for-sale investments Interest income Assets written off Impairment loss Finance costs Share based payments Net exchange differences Change in operating assets and liabilities: Decrease / (increase) in trade debtors Decrease / (increase) in inventories (Decrease) / increase in trade payables and unearned revenue Increase in provisions	31 Dec 2015 $ 31 Dec 2014 $ 10,575,064 8,376,344 4,232,928 3,270,737 - (502) (8,113) (12,889) 98,471 - 172,398 7,896 668,002 477,927 132,252 - (6,464,912) (1,206,251) 2,866,394 (5,842,132) 2,773,023 (5,351,261) (6,082,914) 8,500,817 175,546 218,935
	9,138,139 8,439,621

Profit for the year
Depreciation and amortisation
Proceeds from the sale of available-for-sale investments
Interest income
Assets written off
Impairment loss
Finance costs
Share based payments
Net exchange differences
Change in operating assets and liabilities:
Decrease / (increase) in trade debtors
Decrease / (increase) in inventories
(Decrease) / increase in trade payables and unearned revenue
Increase in provisions

31 Dec 2015
$
31 Dec 2014
$ 10,575,064
8,376,344
4,232,928
3,270,737
-
(502)
(8,113)
(12,889)
98,471
-
172,398
7,896
668,002
477,927
132,252
-
(6,464,912)
(1,206,251)
2,866,394
(5,842,132)
2,773,023
(5,351,261)
(6,082,914)
8,500,817
175,546
218,935

9,138,139
8,439,621

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

19. Cash flow information (continued)

(i) Non-cash investing and financing activities

During the period the Group entered into Instalment Sale Agreements to acquire mobile mining equipment. Under the terms of these agreements the Group will become the owner of the mobile mining equipment on final payment under the agreement. Refer to note 16 for further details.

The Group has available and unutilised, as at 31 December 2015, a United States denominated Foreign Currency Overdraft Facility of $0.5 million.

20. Financial risk management

This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial performance. Current year profit or loss information has been included where relevant to add further context.

The Group’s activities expose it to a variety of financial risks, as detailed in the below table:

Risk	Exposure arising from	Measurement	Management
Market risk – foreign exchange risk	Future commercial transactions Recognised financial assets and liabilitiesnot denominatedinUSD	Cash flow forecasting Sensitivity analysis	Monitoring the prevailing exchange rates and entering into forward foreign exchange contracts, if deemed necessary by theBoard of Directors
Market risk – interest rate risk	The Company’s borrowings are at fixed interest rates, therefore, it is not exposed to changes in variable interest rates	N/A	N/A
Market risk – pricerisk	Investments in equity securities	Sensitivity analysis	Portfolio diversification
Market risk – commodity price risk	Sale of products	Cash flow forecasting Sensitivity analysis	Monitoring the prevailing commodity prices and entering into longer term fixed price sales contracts, if deemed necessarybythe Board of Directors
Credit risk	Cash and cash equivalents and trade and other receivables	Aging analysis Creditratings	Credit limits, retention of title over product sold andletters ofcredit
Liquidity risk	Borrowings and other liabilities	Rolling cash flow forecasts	Availability of committed credit lines and borrowingfacilities

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 with assistance from the Audit, Risk and Compliance Committee.

The Group does not hold any derivative financial instruments.

(a) Market risk

(i) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures.

As detailed in note 1(d)(i), items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in United States dollars, which is the Company’s presentation currency.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

20. Financial risk management (continued)

(a) Market risk (continued)

(i) Foreign exchange risk (continued)

The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in United States Dollars, was as follows:

follows:
	31 December 2015		31 December		2014
	A$	GBP	A$		GBP
Borrowings	597,872	665,544	1,396,819	1,336,192
Sensitivity
	Impact on		Impact on	other
	post tax profits		components of equity
	2015	2014	2015	2014
	$	$	$		$
USD/AUD exchange rate – increase 10%	59,787	139,681	-		-
USD/AUD exchange rate – decrease 10%	(59,787)	(139,681)	-		-
USD/GBP exchange rate – increase 10%	66,554	133,619	-		-
USD/GBP exchange rate – decrease 10%	(66,554)	(133,619)	-		-

The Group does not hold any derivatives or foreign exchange contracts to hedge its 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 United States Dollar to South African Rand (ZAR) was:

Sensitivity

		Impact on	Impact	on other
	post tax profits		components of equity
	2015	2014	2015	2014
	$	$	$	$
USD/ZAR exchange rate – increase 10%	769,511	733,107	-	-
USD/ZAR exchange rate – decrease 10%	(769,511)	(733,107)	-	-

(ii) 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.

(iii) Price risk

The Group has an exposure to equity securities price risk. This arises from investments held by the Group and classified on the balance sheet as available-for-sale financial assets. However, the Company’s investment in equity securities (available-for-sale financial assets) is $63,866 (2014: $64,228), which is monitored by the Board of Directors. Any investment in equity securities, which formed part of any portfolio diversification strategy, would require approval by the Board of Directors.

The Group is also exposed to commodity price risk as a result of fluctuations in the market price of commodities, however, the commodities that the Company produces and sells are not quoted on any recognised exchange.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

20. Financial risk management (continued)

(a) Market risk (continued)

(iv) 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 Group has a strict code of credit and requires the majority of its customers to have letters of credit in place. The maximum exposure to credit risk at the reporting date to trade receivables is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements. The Group does not hold any collateral.

(v) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash to meet obligations when due. At the end of the reporting period, the Group held cash and cash equivalents totalling $4,227,444 (2014: $4,216,052). Management monitors rolling forecasts of the Group’s liquidity reserve (comprising of cash and cash equivalents, note 6) on the basis of expected cash flows. This is carried out at the corporate level for all active companies of the Group in accordance with practice and limits set by the Group.

Financing arrangements

As detailed in note 16, the Company had access to a pre finance and marketing agreement facility of USD2.0 million which was drawn down in September 2013. This facility was repayable over a twelve month period in quarterly instalments commencing three months after production has commenced. The outstanding balance was fully repaid on 2 March 2015.

In addition to the above and as announced by the Company on 30 May 2014, the Company obtained an unsecured short term working capital facility of up to $4m from two major shareholders. Pursuant to the Loan Agreements entered into between the Company and the two major shareholders, the lenders provided a finance facility capped at $2.0m each on the following arm’slength and commercial terms:

Loan is unsecured;
Interest of 13% per annum;
Line fee of 1% and establishment fee of 1%;
Repayment to take in three equal tranches on 31 January 2015, 28 February 2015 and 31 March 2015; and
Default interest of 10% if not repaid on the repayment date.

As announced by the Company on 23 February 2015, the two shareholders agreed to extend the term of the loan they provided to 30 September 2015. As announced by the Company on 5 August 2015, the Shareholders agreed to a repayment of 50% of the Principal and to extend the term of the remaining balance of the loan to 30 September 2016.

On 2 February 2016, the Company announced debt funding arrangements for its expansion initiatives relating to a Garnet Stripping Plant (“GSP”) at its Tormin mine.

Maturity of financial assets

The Group manages liquidity risk by maintaining sufficient cash reserves and through the continuous monitoring of budgeted and actual cash flows. At the reporting date there is no significant liquidity risk. The table below analyses the Group’s maturity of financial assets:

31 December 2015 Trade and other receivables Total financial assets	< 6 months 6 – 12 months 1 – 5 years 5+ years Total $ $ $ $ $ 2,240,647 - 4,200,0000 - 6,440,647
	2,240,647 - 4,2000,000 - 6,440,647

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

20. Financial risk management (continued)

(a) Market risk (continued)

(v) Liquidity risk (continued)

Maturity of financial assets (continued)

31 December 2014 Trade and other receivables Total financial assets	< 6 months 6 – 12 months 1 – 5 years 5+ years Total $ $ $ $ $ 2,907,940 - - - 2,907,940
	2,907,940 - - - 2,907,940

Maturity of financial liabilities

31 December 2015 Trade and other payables Borrowings:  Short term borrowings  Equipment acquisition agreements Total financial liabilities 31 December 2014 Trade and other payables Unearned revenue Borrowings:  Short term borrowings  Equipment acquisition agreements Total financial liabilities		< 6 months 6 – 12 months 1 – 5 years 5+ years Total $ $ $ $ $ 3,153,297 - - - 3,153,297 - 1,263,416 - - 1,263,416 994,764 994,764 1,268,110 - 3,257,638
		4,779,769 1,626,472 1,268,110 - 7,674,351
		< 6 months 6 – 12 months 1 – 5 years 5+ years Total $ $ $ $ $ 5,683,843 - - - 5,683,843 4,130,000 - - - 4,130,000 558,352 2,733,011 - - 3,291,363 2,963,469 980,581 - - 3,944,050
		13,335,664 3,713,592 - - 17,049,256

(vi) Fair value hierarchy

AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The Group’s only assets and liabilities held at fair value are its available-for-sale financial assets with a current carrying value of $63,866 (2014: $64,228). These are measured using quoted active market prices and are therefore Level 1 instruments.

The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 31 December 2015 and did not transfer any fair value amounts between the fair value hierarchy during the year ended 31 December 2015.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

20. Financial risk management (continued)

(a) Market risk (continued)

(vi) Fair value hierarchy (continued)

Valuation techniques used to derive level 2 and level 3 fair values

The fair value of financial instruments that are not traded in an active market (for example, over–the–counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. The Group did not have any level 2 instruments at year end.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

The use of quoted market prices or dealer quotes for similar instruments;
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves;
The fair value of forward foreign exchange contracts is determined using forward exchange rates at the reporting date; and
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

The Group does not have any level 3 assets or liabilities.

21. Interests in other entities

(i) Material subsidiaries

The Group’s principal subsidiaries at 31 December 2015 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the group. The country of incorporation or registration is also their principal place of business.

Ownership interest held by the
Group
Name of entity
Place of
business /
country of
incorporation
2015
%
2014
%

Ownership interest held by non-
controlling interests
2015
%
2014
%

Rexelle Pty Ltd
Australia
100
100
MRC Trading (Aust) Pty Ltd (1)
Australia
100
100
MRC Cable Sands Pty Ltd
Australia
100
100
Blackhawk Oil and Gas Ltd
Australia
100
100
Queensland Minex NL
Australia
100
100
Q Smelt Pty Ltd
Australia
90
90
Mincom Waste Pty Ltd
Australia
100
100
MRC Africa Pty Ltd
Australia
100
100
Skeleton Coast Resources (Pty) Ltd
Namibia
100
100
MRC Resources Proprietary Limited
South Africa
100
100
Mineral Sands Resources Proprietary Limited
South Africa
50
50
Tormin Mineral Sands Proprietary Limited (2)
South Africa
50
50
Nyati Titanium Eastern Cape Proprietary Limited
South Africa
100
100
MRC Metals (Pty) Ltd
South Africa
100
100
Transworld Energy and Minerals Resources (SA)
Proprietary Limited
South Africa
56
56

-
-
-
-
-
-
-
-
-
-
10
10
-
-
-
-
-
-
-
-
50
50
50
50
-
-
-
-
44
44

(1) MRC Trading (Aust) Pty Ltd was incorporated during the 2014 financial year.

(2) Tormin Mineral Sands Proprietary Limited is a wholly owned subsidiary of Mineral Sands Resources Proprietary Limited

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

21. Interests in other entities (continued)

(ii) Non-controlling interest (“NCI”) Transworld Energy and Minerals Resources (SA) Proprietary Limited Mineral Sands Resources Proprietary Limited Tormin Mineral Sands Proprietary Limited Q Smelt Pty Ltd 2015 2014 2015 2014 2015 2014 2015 2014 $ $ $ $ $ $ $ $	(ii) Non-controlling interest (“NCI”) Transworld Energy and Minerals Resources (SA) Proprietary Limited Mineral Sands Resources Proprietary Limited Tormin Mineral Sands Proprietary Limited Q Smelt Pty Ltd 2015 2014 2015 2014 2015 2014 2015 2014 $ $ $ $ $ $ $ $	(ii) Non-controlling interest (“NCI”) Transworld Energy and Minerals Resources (SA) Proprietary Limited Mineral Sands Resources Proprietary Limited Tormin Mineral Sands Proprietary Limited Q Smelt Pty Ltd 2015 2014 2015 2014 2015 2014 2015 2014 $ $ $ $ $ $ $ $	(ii) Non-controlling interest (“NCI”) Transworld Energy and Minerals Resources (SA) Proprietary Limited Mineral Sands Resources Proprietary Limited Tormin Mineral Sands Proprietary Limited Q Smelt Pty Ltd 2015 2014 2015 2014 2015 2014 2015 2014 $ $ $ $ $ $ $ $
Summarised balance sheet Current assets Current liabilities Current net assets Non-current assets Non-current liabilities Non-current net assets Net assets Accumulated NCI Summarised statement of comprehensive income			56,303 3,700 20,854,641 9,794,472 - - 1 2 4,405 - (12,846,360) (13,051,611) - - - -
			60,708 3,700 8,008,281 (3,257,139) - - 1 2
			4,186,382 4,632,184 19,732,050 27,206,600 5,218,099 5,218,099 - - (4,118,529) (4,511,266) (18,091,240) (21,504,746) - - - -
			67,853 120,918 1,640,810 5,701,854 5,218,099 5,218,099 - -
			128,561 124,618 9,649,091 2,444,715 5,218,099 5,218,099 1 2
			- 58,781 - - - - 39,933 48,544

Revenue Profit/ (loss) for the period Other comprehensive income Total comprehensive income Profit attributable to NCI Summarised cash flows			- - 45,773,169 35,218,171 - - - - (6,147) - 6,894,449 1,627,043 - - - - - - - - - - - -
			(6,147) - 6,894,449 1,627,043 - - - -
			- - - - - - - -

Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increase in cash and cash equivalents			(34,808) (950) (21,195,262) (769,529) - - - - 35,199 950 (5,189,526) (5,580,422) - - - - - - 27,699,986 7,179,795 - - - -
			391 - 1,315,198 829,844 - - - -

As noted above, the Company, via its wholly owned subsidiary MRC Resources Proprietary Limited (“MRCR”), has a 50% interest in the issued capital in MSR. Whilst the Group controls 50% of the share voting power, it has been determined that the Group effectively has 100% control due to its control over the relevant activities for accounting purposes, controls the management of MSR, and also controls the Board of MSR due to provisions set out in the Shareholders Agreement entered into between the shareholders of MSR.

Therefore these financial statements include 100% of the results of MSR. In addition to the holding of the issued capital, the Group also holds Class A and B preference shares in MSR which effectively provides for the repayment of the capital investment and deemed investment by the Company’s Black Empowerment partner. Due to the terms attached to these A and B preference shares, they are categorised as an equity instrument. As the A preference shares and B preference shares would be redeemed out of distributable profits and net assets of MSR before all other ordinary shareholders, until such time as the net assets exceed the value of the unredeemed A and B preference shares, no value has been attributed to the non-controlling interest. Until that time, the non-controlling interest has no rights to the assets or results of the Company, and therefore has not been allocated any value in these financial statements.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

22. Contingent assets and contingent liabilities

a) Contingent assets

Blastrite sought interdictory relief against MSR, MRC and seven others in the High Court (Cape Town) in terms of which, Blastrite sought, inter alia, an order that: (a) MSR not deal with any entity or person other than Blastrite in relation to the discussion and consideration by the parties of ideas, plans products, formulations etc. relating to any potential Garnet and/or other abrasive media resource that may be present in or on the beach deposit located within the Tormin Mineral Sands Project; and (b) that MSR not renew the written Garnet offtake agreement to which it and MRC and others were a party for the period 1 July 2015 to 30 June 2016 or thereafter.

The interdictory relief sought both interim and final relief. The matter was opposed. Both Blastrite’s interim and final relief was dismissed with costs. An amount of ZAR170 000 was paid by Blastrite towards costs in respect of the interim relief. An amount of approximately ZAR3 million is being claimed for costs for the final relief. It is anticipated that less than 100% of this latter amount will be recovered from Blastrite and that the monies due will be paid within the course of 2016.

b) Contingent liabilities

Bank guarantees

FirstRand Bank Ltd has issued a Bank Guarantee, in favour of the South African Department of Mineral Resources, in respect of MSR’s obligations under the Tormin Mining Right for an amount of ZAR2,730,000 (USD175,539) (2014: ZAR2,730,000 (USD230,748)).

There have been no other changes to contingent assets or liabilities since 31 December 2015.

23. Commitments

	31 Dec 2015	31 Dec 2014
	$	$
a) Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment	1,117,471	-

b) Finance lease commitments

Commitments in relation to minimum lease repayments under equipment acquisition agreements:

Within one year Later than one year but no later than five years Greater than 5 years Minimum lease payments Less: Future Finance Charges	1,989,527 3,944,050 1,268,110 - - -
	3,257,637 3,944,050 (225,658) -
	3,031,979 3,944,050

Finance lease commitments includes contracted amounts for various plant and equipment with a written down value of $3,134,220 (2014: $3,912,664) secured under finance leases expiring within one to five years. Under the terms of the leases, the Group has the option to acquire certain leased assets on the expiry of the leases, under master rental agreements and will become the owner of certain leased assets on the final payment under instalment sale agreements.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

23. Commitments (continued)

c) Operating lease commitments

Non-cancellable operating leases contracted for but not capitalised in the accounts:

Within one year Later than one year but no later than five years Greater than 5 years	741,445 3,944,050 2,166,578 - - -
	2,908,023 3,944,050

Operating lease commitments includes contracted amounts for offices and plant and equipment under non-cancellable operating leases expiring within one to five years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.

d) Blue Bantry funding support

The Company, via MRCR, and Blue Bantry are both 50% shareholders in MSR, the entity which owns the Tormin Project.

The Company agreed to provide Blue Bantry access to an amount of funding to support the original Tormin Project objectives by advancing through a loan, certain benefits Blue Bantry would expect to receive from the Tormin Project. Blue Bantry will repay the ZAR 8.25 million loan from dividend distributions that it will receive in the future from MSR.

24. Events since the end of the financial year

Events since the end of the financial year were as follows:

(i) On 2 February 2016, the Company advised that MSR has secured USD4.5 million via a loan facility from GMA to fund the completion of its GSP. The GSP will be installed at the front of the existing SCP. The installation of the GSP will increase the non-magnetic feed grade to the SCP by removing the Garnet fraction from the HMC prior to the SCP. This, in turn, will allow a high grade zircon concentrate to be fed to the existing magnetic circuit, and thereby increase nonmagnetic concentrate production. Completion of the GSP is expected on or around 30 June 2016.

The loan agreement entered into with GMA provides for USD4.5 million funding with 3 year repayment terms commencing on the re-start of shipping of garnet concentrate product to GMA (planned for January 2017). The offtake agreement previously entered into with GMA has also been amended to increase the term of the agreement to life of mine, and an increase in the annual offtake tonnage to 210,000 tonnes up from 150,000 tonnes with an option to take all other remaining Garnet concentrate production. The Company produced approximately 285,000 tonnes of Garnet for the year ended 31 December 2015.

(ii) Subsequent to year end, the Directors declared a final unfranked dividend for the year ended 31 December 2015 of 1 Australian cent per ordinary share, a total distribution of A$4,049,416 based on the number of ordinary shares on issue as at 31 December 2015. As the dividend is unfranked, there are income tax consequences for the owners of the Company relating to this dividend.

Except for the above, there have been no other material matters arising subsequent to the end of the financial year.

25. Related party transactions

(i) Parent entity

Transactions between the Company and other entities in the Group during the years ended 31 December 2015 and 31 December 2014 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.

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

25. Related party transactions (continued)

(ii) Subsidiaries

Interests in subsidiaries are set out in note 21(i).

(iii) Key management personnel disclosures

Compensation

The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:

Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments	31 Dec 2015 $ 31 Dec 2014 $
	1,387,810 969,441 86,808 31,772 53,863 86,534 175,773 -
	1,704,254 1,087,747

Detailed remuneration disclosures are provided in the remuneration report in the director’s report on page 11.

(iv) Transactions with other related parties

Mine Site Construction Services (“MSCS”), a company associated with Directors Mark Caruso and Joseph Caruso has provided the followings services to the Company during 2015 and 2014:

Provision of office space.
The amount paid by the Company to MSCS for the year ended 31 December 2015 was $47,734 (2014: $54,144). This is considered to be an arm’s length commercial rent. There is no formal sub lease in place.
Provision of secretarial staff to the Executive Chairman.
The amount paid by the Company to MSCS for the year ended 31 December 2015 was $57,784 (2014: $46,564). The amounts payable are pursuant to an Executive Service Agreement and have been reimbursed on an arm’s length basis at normal commercial rates.
Provision of technical staff.
The amount paid by the Company to MSCS for the year ended 31 December 2015 was $299,422 (2014: $150,144). The amounts payable have been in respect to the provision of technical staff at the Groups’ head office and at the Tormin project and have been reimbursed on an arms-length basis at normal commercial rates.

(v) Receivable from and payable to related parties

The following balances are outstanding at the reporting date in relation to transactions with related parties:

MSCS	31 Dec 2015 $ 31 Dec 2014 $
	92,105 46,568

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

25. Related party transactions (continued)

(vi) Loans to / from related parties

On 30 May 2014, the Company obtained an unsecured short term working capital facility of up to $4m from major shareholders. This included a A$2 million facility provided by Regional Management Pty Ltd (“RMS”), a related party of Mark Caruso, the Executive Chairman of the Company.

Pursuant to the Loan Agreement entered into between the Company and RMS, the lender provided a finance facility capped at A$2 million on the following arm’s-length and commercial terms:

Loan is unsecured;
Interest of 13% per annum;
Line fee of 1% and establishment fee of 1%;
Repayment to take in three equal tranches on 31 January 2015, 28 February 2015 and 31 March 2015; and
Default interest of 10% if not repaid on the repayment date.

As announced by the Company on 23 February 2015, RMS agreed to extend the term of the loan they provided to 30 September 2015. As announced by the Company on 5 August 2015, RMS agreed to repayment of 50% of the Principal and to extend the term of the remaining balance of the loan to 30 September 2016.

26. Share based payments

The issue of employee options was approved by shareholders at a general meeting of the Company held on 21 December 2012. The employee option plan (“the Plan”) is designed to provide long-term incentives for senior managers and above (including directors) to deliver long-term shareholder returns. Options granted under the plan carry no dividend or voting rights. When exercisable each option is convertible into one ordinary share at the predetermined exercise price.

On 27 May 2015, at the AGM of the Company, shareholders approved the issue of 5,000,000 employee options to the Executive Chairman, Mr Mark Caruso. The options were issued in three tranches exercisable at 20 cents each and subject to the following vesting conditions:

(i) 1,666,668 vesting immediately; (ii) 1,666,666 vesting in 12 months; and (iii) 1,666,666 vesting in 24 months.

Pursuant to his employment contract, the Board approved the issue of 1,000,000 employee options to the CFO, Mr Tony Sheard. The options were issued in three tranches exercisable at 20 cents each and subject to the following vesting conditions: (i) 333,334 vesting immediately; (ii) 333,333 vesting on 31 March 2016; and (iii) 333,333 vesting on 31 March 2017.

Set out below are summaries of options granted under the Plan and unexpired at 31 December 2015:

Grant date Expiry date Exercise price Fair Value at grant date	Options at the start of the year Granted during the year Exercised during the year Forfeited during the year Lapsed during the year Balance at the end of the year Vested at the end of the year
21 Dec 2012 31 Dec 2015 20 cents 3.35 cents 21 Dec 2012 31 Dec 2015 35 cents 2.23 cents 27 May 2015 30 May 2018 20 cents 4.90 cents 07 Sept 2015 31 Mar 2018 20 cents 5.40 cents	10,000,000 - - - (10,000,000) - - 1,000,000 - - - (1,000,000) - - - 5,000,000 - - - 5,000,000 1,666,668 - 1,000,000 - - - 1,000,000 333,334
	11,000,000 6,000,000 - - (11,000,000) 6,000,000 2,000,002

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

26. Share based payments (continued)

Fair value of options granted

The assessed fair value at grant date of options during the year ended 31 December 2015 was independently determined using a Black-Scholes 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. The total share based payment expense for the year ended 31 December 2015 was $128,296 (2014: $Nil).

The model inputs for options granted during the period, as well as prior periods, included:

		1	2	3	4
(a)	Options granted for no consideration with the expectation that		the majority of the options would be exercised towards the end of the term of the
	options and there are no market based vesting conditions.
(b)	Exercise price (AUD)	20 cents	35 cents	20 cents	20 cents
(c)	Grant date	21 December 2012	21 December 2012	27 May 2015	7 September 2015
(d)	Risk-free interest rate	2.50%	2.57%	2.06%	1.77%
(e)	Exercise date	31 December 2015	31 December 2015	30 May 2018	31 March 2018
(f)	Share price at grant date (AUD)	8.1 cents	8.1 cents	11.0 cents	12.5 cents
(g)	Expected price volatility of the	86%	86%	90%	90%
	shares
(h)	Expected dividend yield	Nil	Nil	Nil	Nil

The expected price volatility is based on the historic volatility and the general trend in share prices of the companies in similar businesses and trading on the ASX over the past 12 months.

27. Remuneration of auditors

During the year, the following fees were paid or payable for services provided by BDO Audit (WA) Pty Ltd and BDO Tax (WA) Pty Ltd, its related practices and related firms:

28.

Audit services Audit and review of financial reports BDO Audit (WA) Pty Ltd BDO Cape Town South Africa Non-audit services Taxation and company secretarial (South African entities) BDO Tax (WA) Pty Ltd BDO Cape Town South Africa Earnings per share (a) Basic earnings per share From continuing operations attributable to the ordinary equity holders of the Company Total basic earnings per share attributable to the ordinary equity holders of the Company	31 Dec 2015 $ 31 Dec 2014 $
	60,790 68,281 48,588 32,871
	109,378 101,152
	80,366 90,768 6,964 5,555
	87,330 96,323
	2015 US Cents 2014 US Cents
	2.61 2.07
	2.61 2.07

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

28. Earnings per share (continued)

(b) Diluted earnings per share From continuing operations attributable to the ordinary equity holders of the Company Total diluted earnings per share attributable to the ordinary equity holders of the Company (c) Reconciliation of earnings used in the calculation of earnings per share Basic earnings per share Profit attributable to the ordinary equity holders of the Company used in calculating basic earnings per share: From continuing operations Diluted earnings/(loss) per share Profit attributable to the ordinary equity holders of the Company used in calculating diluted earnings per share: From continuing operations (d) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustment for calculation of diluted earnings per share: Options Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	2015 US Cents 2014 US Cents
	2.57 2.01
	2.57 2.01
	2015 $ 2014 $
	10,576,785 8,376,344
	10,576,785 8,376,344
	2015 Number 2014 Number
	404,941,581 404,941,581 6,000,000 11,000,000
	410,941,581 415,941,581

The table below details the number of options that have been granted and are on issue as at 31 December 2015. These potential ordinary shares are considered dilutive and accordingly were used to calculate dilutive earnings per share.

Number of options	Exerciseprice	Expiry date
5,000,000	AUD $0.20	30 May 2018
1,000,000	AUD $0.20	31 March 2018

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Notes to the consolidated financial statements (continued)

29. Parent entity financial information

The individual financial statements for the parent entity show the following aggregate numbers:

Balance sheet Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Shareholders’ equity Issued capital Reserves Accumulated losses Total equity Profit for the year	2015 $ 2014 $
	546,439 1,534,560 35,327,540 31,863,780
	35,873,979 33,398,340
	1,840,821 3,802,725 7,425,240 2,366,711
	9,266,061 6,169,436

	26,607,918 27,228,904
	63,437,092 63,437,092 (11,719,886) (8,928,563) (25,109,288) (27,279,625)
	26,607,918 27,228,904
	2,170,337 936,152

Mineral Commodities Ltd Annual Financial Statements for the year ended 31 December 2015

Directors’ declaration

The Directors of the Company declare that:

The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 including;
(a) complying with Australian Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(b) give a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and of its performance for the year ended on that date.
The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.
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 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 Executive Chairman Dated at Perth, Western Australia this 29[th] day of February 2016

Tel: +61 8 6382 4600 38 Station Street Fax: +61 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 balance sheet as at 31 December 2015, the consolidated income statement, 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 gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Stat ements, 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 company’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 company’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.

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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.

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 2015 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.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report on pages 11 to 17, for the year ended 31 December 2015. 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 2015 complies with section 300A of the Corporations Act 2001 .

AI assistant

MINERAL COMMODITIES LTD — Annual Report 2016

65371_rns_2016-02-29_33b51ea6-0ea7-4a32-b00a-98ca6ac7aefb.pdf

APPENDIX 4E: PRELIMINARY FINAL REPORT

RESULTS FOR ANNOUNCEMENT TO THE MARKET

PETER TORRE COMPANY SECRETARY

RESULTS FOR ANNOUNCEMENT TO THE MARKET

COMMENTARY ON RESULTS AND OTHER SIGNIFICANT INFORMATION

COMMENTARY

Dividends

NET TANGIBLE ASSET BACKING

AUDIT DETAILS