MINERAL COMMODITIES LTD — Capital/Financing Update 2011

Jul 26, 2011

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Mineral Commodities Ltd

ABN 39 008 478 653

Unit 17, Level 1, 133 Kewdale Road, Welshpool WA 6105, Australia PO Box 235, Welshpool DC WA 6986, Australia Telephone: 61 8 9353 4890 Facsimile: 61 8 9353 4894 Email: info@mncom.com.au Web: www.mncom.com.au

26 July 2011

Company Announcements Platform Australian Stock Exchange Limited

MRC to Transition to Second Largest Independent Vertically Integrated Mineral Sands Producer in Australia

Mineral Commodities Ltd. ( ASX: MRC ) ( MRC or the Company ) is pleased to announce that it has entered into binding agreements to acquire existing mineral sands producing assets, which will transform the Company into the second largest independent, vertically integrated and diversified Titanium and Zircon mineral sands producer in Australia.

Overview of the Transactions

• Acquisition of Cable Sands - entered into a Share Sale Agreement with subsidiaries of Cristal Australia Pty Ltd ( Cristal ) pursuant to which the Company will acquire 100% of the issued capital in Cable Sands (W.A.) Pty Ltd and Cable Sands Pty Ltd (together Cable Sands ) for a total consideration of A$96 million, with a further A$5 million payment contingent upon Zircon prices reaching US$2,700 by the end of 2013.

• Right of First Refusal - entered into a Right of First Refusal Deed to purchase all or a substantial part of Cristal’s Murray Basin mineral assets, including the Ginkgo and Snapper mines and the Broken Hill mineral separation plant, only if Cristal initiates a sale process for such assets.

• Toll Processing Agreement with Cristal - as part of the acquisition of Cable Sands, MRC entered into a commercial arrangement to process at least 248K tonnes per annum of Cristal’s non-magnetic mineral concentrate.

• Proposed Acquisition of Simto Resources Limited (Simto) - entered into a Heads of Agreement to acquire up to 100% of the issued capital in Simto. The Simto tenements include an estimated 2.4 million tonnes of Measured, Indicated and Inferred contained heavy minerals[(1)] on granted mining leases located in close proximity to Cable Sands’ existing operations and infrastructure in the south west of Western Australia.

Highlights

These highly strategic acquisitions are expected to deliver a number of important benefits to MRC and its shareholders:

• Cable Sands adds existing production in excess of 100K tonnes per annum of Zircon, Ilmenite and Leucoxene

• MRC intends to expand this to more than 320K tonnes per annum by running a two-mine strategy

• � The strategically located Bunbury Mineral Separation Plant ( Bunbury MSP ) provides a platform for processing MRC’s existing high value, Zircon-rich mineral sands projects located in South Africa

• Opportunity for operational efficiencies by increasing capacity utilisation and expanding the Bunbury MSP

• Attractive growth potential funded through strong expected cash flows and low-cost expansion potential at the Bunbury MSP

• The Toll Processing Agreement provides steady cash flows and significantly contributes to fixed cost coverage

• Cost saving opportunities from a combination of Cable Sands and Simto tenements through added scale and proximity

• Opportune time to acquire producing mineral sands assets given the current and expected continued favourable pricing environment

• Attractive vendor financing for the Cable Sands acquisition

Morgan Stanley Australia Limited has acted as the Company's lead advisor on these transactions and will further act as lead manager for the equity raising.

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Details of the Transactions

Cable Sands

Cable Sands owns and operates the Bunbury MSP, located in Bunbury, Western Australia and has rights to associated vertically integrated infrastructure, including port access and storage facilities. The Bunbury MSP has two independent processing routes, with a combined nameplate capacity to process close to 600K tonnes per annum of Titanium and Zircon concentrates. In addition, Cable Sands has ownership of significant private land holdings and mineral sands tenements in close proximity to the Bunbury MSP, within the south west region of Western Australia (see map). The Company has purchased the operations as a going concern, with all employees and existing contractual arrangements.

Toll Processing Agreement

The Toll Processing Agreement with Cristal is an arm’s length, commercial arrangement to continue to process, at the Bunbury MSP, at least 248K tonnes per annum of non-magnetic mineral concentrate, sourced from Cristal’s operations in the Murray Basin. The material will be treated on a take or pay, cost plus 15% margin basis for a period up to 30 years (subject to Cristal option extensions).

Right of First Refusal over Cristal’s Murray Basin Assets

The right is exercisable for 5 years and only if Cristal initiates a sale process for all or a substantial part of the assets. Cristal’s Murray Basin assets include the current operations at the Ginkgo and Snapper mines, some 220 kilometres from Broken Hill, and the Mineral Separation Plant located in Broken Hill, where non-magnetic concentrates are separated, before being shipped to Bunbury for upstream processing.

Simto Resources Limited

Simto owns a number of strategic, granted heavy mineral mining leases in close proximity to the Bunbury MSP and Cable Sands tenements (see map), making this a highly complementary addition to the acquisition of Cable Sands. Total JORC compliant Measured, Indicated and Inferred Resources are estimated to exceed 2.4 million tonnes of contained heavy minerals[(1)] , including Zircon (178K tonnes), Ilmenite (1,737K tonnes) and Rutile (26K tonnes) heavy minerals.

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

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

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

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Expected Combined Production Profile

The Bunbury MSP currently has two independent processing routes, which provide an annual processing capacity of 330K tonnes of ore body magnetic and non-magnetic concentrates to be treated through one processing circuit and 250K tonnes of Murray Basin non-magnetic mineral sands concentrate to be treated through the second circuit. MRC intends to expand the non-magnetic processing circuit by 50K tonnes to enable the processing of mineral sands sourced from its Tormin project in South Africa.

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

Concentrate Processing Split 2013E

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Finished Product Split 2013E
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Total: ~620kt Total: ~310kt (Excl. Toll Processing)
Tormin Rutile
Zircon
2%
8%
17%
Leucoxene
2%
Toll
Cable 43%
Processing
Sands 49% Ilmenite
79%
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Transaction Funding

Cristal has agreed to provide MRC with A$35 million vendor financing. This loan carries an interest rate of 9.375% per annum and is repayable on or before (without penalty) 1 May 2014.

The balance of the funding requirement is anticipated to be met through a placement of new equity to institutional investors. Shareholder approval for the equity raising is required under ASX Listing Rule 7.1 and a Notice of Meeting containing further details of the transaction and the placement will be despatched to MRC shareholders late July to early August.

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

Transaction Conditions

The acquisition of Cable Sands is conditional upon MRC obtaining the required funding and all necessary shareholder and regulatory approvals.

MRC’s existing South African Mineral Sands Assets

MRC’s current primary asset is the Zircon-rich Tormin project on the West Coast of South Africa. MRC currently has an estimated Inferred Resource of 2.71 million tonnes[(1)] and expects to produce 40K to 50K tonnes of nonmagnetic concentrate per annum for a minimum 3-5 year mine life. There is significant upside potential through further exploration and permit expansion. In addition to the non-magnetic resource at Tormin, initial work has also indicated a potential substantial Ilmenite resource within the tenements.

In addition, MRC owns the Xolobeni project, which is strategically located on the East Coast of South Africa. Xolobeni is the 10th largest heavy mineral deposit in the world and has tenements covering ~2,900 hectares. The current Resource at the project is 346 million tonnes[(1)] . Although further prospecting, design and financial work is required prior to environmental assessment, an initial feasibility study has indicated that the project is economically viable and has an expected 25 year mine life.

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Board and Management Changes

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

The Board of the Company will be restructured to ensure it comprises the necessary skill-set and independence to meet the additional scope of activities and scale expected from the transaction, being cognisant of the ASX's Corporate Governance principals in this regard.

Commenting on the acquisitions, Mark Caruso said:

“The acquisition of Cable Sands represents a step-change for MRC: it maximises the potential of our existing South African assets by quickly adding processing capacity at an attractive cost, and it expands and diversifies our overall position in the mineral sands sector. As a result, the Company and our shareholders will be able to take greater advantage of the prevailing favourable price dynamics in the mineral sands sector.”

“The proposed acquisitions are highly synergistic and complementary to each other and to our existing business and they will provide an excellent opportunity to create significant value for our shareholders.”

For further information please contact:

Mineral Commodities

Limited

Mark Caruso Managing Director +61-(0)417-964-234

Cristal

Tony Shirfan or Lynette Jones ASINTA Investment Group Pty Ltd +61-(0)413-705-072 or +61-(0)409-347-106

The information in this announcement which relates to Exploration Results, Mineral Resources or Ore Reserves 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 the Company. Mr Maynard is the Director and principal geologist of Al Maynard & Associates Pty Ltd and has over 30 years of exploration and mining experience in a variety of mineral deposit styles. Mr Maynard has sufficient experience which is relevant to the 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). Mr Maynard consents to inclusion in the report of the matters based on this information in the form and context in which it appears.

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(1) Resource Statement

Property Name	Resource Category	Tonnes (Mt)	HM (%)	Ilmenite (% in HM)	Zircon (% in HM)	Rutile (% in HM)	Garnet (in HM %)
MRC
Tormin	Inferred	2.7	49.4%	21.4%	6.9%	1.4%	51.2%
Xolobeni	Measured	224.0	5.7%	54.5%	-	-	-
	Indicated	104.0	4.1%	53.7%	-	-	-
	Inferred	18.0	2.3%	69.6%	-	-	-
		346.0	5.0%	54.0%	-	-	-
Total MRC		348.7	5.3%	51.7%	0.5%	0.1%	3.7%
Simto
Tutunup West	Indicated	11.7	% 8.7	64.5%	6.7%	1.1%	-
Coolup	Indicated	4.9	7.0%	77.7%	7.9%	2.5%	-
Grice	Indicated	3.2	6.7%	80.3%	7.9%	0.7%	-
North Capel Extended	Inferred	0.5	6.5%	87.2%	3.9%	1.2%	-
Stratham	Measured	0.8	6.7%	87.5%	4.5%	1.7%	-
	Indicated	0.2	5.3%	87.5%	4.5%	1.7%	-
		1.0	6.4%	87.5%	4.5%	1.7%	-
Wonnerup	Inferred	6.4	5.2%	69.8%	7.2%	0.8%	-
okernup Co	Indicated	4.2	5.5%	79.0%	8.7%	0.0%	-
	Inferred	3.2	5.9%	74.0%	11.4%	0.0%	-
		7.4	5.7%	76.8%	8.8%	0.0%	-
Total Simto		35.1	6.9%	71.5%	7.3%	1.1%	-

Overview of Tenements

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