MINERAL COMMODITIES LTD — Capital/Financing Update 2012

Dec 20, 2012

==> picture [80 x 51] intentionally omitted <==

Mineral Commodities Ltd ACN 008 478 653 ABN 39 008 478 653

40 Murray Road North Welshpool WA 6106, Australia PO Box 235, Welshpool DC WA 6986, Australia Telephone: 61 8 6253 1100 Facsimile: 61 8 9258 3601 Email: info@mncom.com.au Web: www.mncom.com.au

21 December 2012

Company Announcements Platform Australian Stock Exchange Limited

• MRC appoints EPCM contractor for the development of the Tormin Mineral Sands Project

• **Product

Off-­‐take discussions advanced**

Mineral Commodities Limited (ASX:MRC) (MRC or the Company) is pleased to advise that its subsidiary, Mineral Sands Resources (Pty) Ltd (MSR), has appointed Perth-based MSP Engineering Pty Ltd (MSP Engineering) as EPCM contractor to complete the construction and commissioning of the plant required for the Tormin Mineral Sands Project (“Tormin”).

The EPCM contract forms part of the Company’s plans to undertake accelerated development of Tormin and will ensure that full production will commence by the end of the third quarter of 2013

The Company has appointed MSP Engineering as engineering contractor to complete the process and engineering design, and support the construction management and commissioning of the Tormin Development and Processing Plants. The decision to engage MSP Engineering as engineering contractor was based on the quality of the previous and ongoing project work undertaken, and its detailed understanding of the ore body and development of process flow design and plant requirements. In addition, MSP Engineering has a strong track record in engineering and delivering projects in the mineral sands sector. The appointment of MSP Engineering and its historical and continuing involvement with Tormin significantly shortens the overall delivery timetable for the Project and will provide greater certainty that the budgeted capital expenditure for the Project of $16 million will be maintained..

MSP Engineering has prepared scope specifications and tender documents have been distributed. The company therefore believes that all major contracts will be awarded by the end of January 2013 which will enable Tormin to be in full production by the end of the third quarter of 2013.

Project Economics and Development Costs

Based on TZMI product pricing and DFS estimates, the project economics for Tormin are robust. On an initial 5-year Life of Mine extracting primarily Zircon and Rutile non-magnetic concentrate, economic models suggest an NPV of AUD$68.9m with an IRR of 87.9% and that the full development costs can be funded from the previously announced equity placement.

Engineering plans are substantially progressed for dry separation of the magnetic concentrates, which would enable the separation and sale of Ilmenite and Garnet which will further enhance the Project economics i.e an NPV of AUD$94m and IRR of 97%. Development of the required dry processing facilities is expected to cost approximately AUD$ 4 million which is expected to be funded in due course by the Company’s internal resources.

-2-

•Product Off-take discussions

Tormin will produce approximately 48,000 tonnes pa of enriched Non-Magnetic concentrate containing 38,000 tonnes of Zircon and 5,500 tonnes of Rutile. This material will require secondary treatment through a third party dry separation plant . In addition, the Company will produce approximately 100,000 to 125,000 tonnes of finished IImenite product once MRC installs its own dry processing infrastructure in early 2014. Garnet concentrate will also be sold to Blastrite for secondary treatment.

MRC has used the time since receipt of final regulatory approvals and completion of the equity placement to prepare samples of the products it proposes to produce and engage with potential take-off partners. Demand for the Tormin Ilmenite and non-magnetic concentrate has been strong and the Company is advanced with the negotiations for all products. The Company is confident that it will be in a position to complete product off-take agreements and product off-take financing, if required, for the majority of the products in the near term.

Executive Chairman Mark Caruso commented that the awarding of the engineering contract is a significant milestone in the Company’s transition from explorer to producer.

Tormin remains on track for production in the third quarter of 2013 and the demand for the Company’s product is encouraging.

Importantly, the Company also believes there is a change in the mindset of all interested and affected parties to genuinely assess the development potential of the world class Xolobeni Project. Given the near term development and robust economics of Tormin and the significant latent value of Xolobeni, the Company remains undervalued by any financial investment metric.

Background

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

A Definitive Feasibility Study (DFS) commissioned by MRC demonstrated that Tormin can produce an enriched non-magnetic saleable concentrate containing predominately Zircon and Rutile. The base case derived from the DFS provides for hydraulic mining and primary concentration of the deposit through spiral plants on the beach. Thereafter, the concentrate will be transferred to a secondary concentration plant (SCP) where it will be further upgraded by spirals, wet magnetic separation (LIMS and WHIMS), and screens before being bagged prior to shipment to destination markets. Tailings from the SCP will be subsequently transferred back to the beach for deposition.

MSP Engineering completed the process engineering, including PFD’s, P&ID’s, Mass Balances and Process Design Criteria, based on the DFS and submitted designs for the primary wet concentrators based on the beach and the SCP.

For further information please contact:

Andrew Lashbrooke Chief Executive alashbrooke@mrc-res.co.za

-3-

Competent Persons

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.

**MRC

-­ Resource Statement**

PROJECT	Category	Ore Mt	HM%	Ilmenite(% in HM)	Zircon(% in HM)	Rutile(%in HM)	Garnet(%i HM)
TorminXolobeni Total MRC	IndicatedMeasuredIndicatedInferred	2.722410418346.0348.7	49.4%5.7%4.1%2.3%5.0%5.3%	21.4%54.5%53.7%69.6%54.0%51.7%	6.9%	1.4%	51,2%