MINERAL COMMODITIES LTD — Capital/Financing Update 2013

Dec 19, 2013

T O R M I N A N N O U N C E M E N T

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C O R P O R AT E D I R E C T O R Y

M I N E R A L C O M M O D I T I E S LT D

ACN 008 478 653 ABN 39 008 478 653

A D D R E S S

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

20 December 2013

Australian Stock Exchange Company Announcements Office

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S U M M A R Y

C O M M I S S I O N I N G C O M M E N C E S AT T O R M I N

T O R M I N M I N E R A L S A N D S P R O J E C T C O M M I S S I O N E D O N T I M E A N D O N B U D G E T

• C O M M I S S I O N I N G O F S E C O N D A R Y & P R I M A R Y P R O C E S S I N G P L A N T S C O M M E N C E D

I N I T I A L R U N O F M I N E H M C G R A D E S E X C E E D E D

• M I N I N G C O N F I R M S N AT U R A L R E S O U R C E R E P L E N I S H M E N T I S E V I D E N T

P O S I T I V E M A R K E T R E S P O N S E T O F I R S T C O N C E N T R AT E

S A F E T Y R E C O R D O F 10 0 , 0 0 0 I N J U R Y F R E E H O U R S A C H I E V E D

Mineral Commodities Limited (“MRC’) is pleased to provide the following update.

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C O M M I S S I O N I N G O F P R I M A R Y A N D S E C O N D A R Y P R O C E S S I N G P L A N T S

MRC’s Tormin Mineral Sands Project (Tormin) development remains on track and the project remains under budget.

The Company is also proud to announce that despite the tight construction schedule, the Project was completed without a single lost time injury (LTI) incident, in over 100,000 man hours.

Commissioning of the beach mining and processing infrastructure commenced as planned in October 2013. Commissioning of the secondary concentration plant has commenced with the result that first production is still expected by the end of December 2013.

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S e c o n d a r y C o n c e n t r a t o r P l a n t ( S C P )

Fabrication and construction of the SCP infrastructure, plant and plate-work has been completed according to schedule. The water supply to the SCP, process water dams, steel structure and mechanical equipment have all been installed and tested.

There are minor finishing works to be completed, including the placement of SCP building cladding and minor pipe and reticulation fastening, none of which will have a material effect on the commissioning, nor the ramp-up to full production capacity.

Initial cold commissioning was undertaken in the first week of December, 2013 and hot commissioning commenced on the 11th December, 2013.

Concentrate feed into the SCP has been ongoing for the last week.

Whilst to date, finished non-magnetic and magnetic concentrate has been produced, the SCP magnetic and spiral processing equipment is being fine-tuned to produce optimal finished specification non-magnetic Zircon/Rutile Concentrate, and magnetic Ilmenite and Garnet Concentrates.

Based on current commissioning progress to date the Company expects to ramp up to a 24-hour continuous operation in the immediate near-term and to achieve nameplate production capacity by the end of December 2013.

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P r i m a r y B e a ch C o n c e n t r a t o r s ( P B C s )

As previously reported mining and commissioning of the PBCs commenced in October 2013.

The seasonal ocean and tidal conditions between August and October also served to provide a natural catalyst to upgrading the beach resource.

The combination of the above events has resulted in the Company being able to mine directly off the beach a heavy mineral resource grade of 86% against the run-of-mine (ROM) resource grade of 41.3% Heavy Mineral Concentrate (HMC).

The extremely high grade of the ROM now being encountered on the beach has allowed the Company to feed ROM Ore directly into the SCP bypassing the requirement to operate the PBCs.

The Company has mined and stockpiled in excess of 60,000 tonnes of HMC at the SCP.

The current naturally occurring ROM beach concentrate grades has translated into a 50% reduction in mining rates and 100% reduction in the requirement to process material through the PBC. Notwithstanding this significant reduction in forecast mining and PBC processing costs it is anticipated that there will be no requirement to run the PBCs for the first 6-months of operation and possibly longer.

In addition the Company has decided to relocate and operate the PBCs at the SCP and not on the beach. This will result in significant de-risking of the PBC operation and the need to only operate one PBC unit due to the fact that the PBCs will not be affected by daily tidal movements and ocean conditions.

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R e s o u r c e R e p l e n i s h m e n t

MRC has previously reported that a prospecting right for the offshore area immediately adjacent to Tormin was awarded towards the end of 2012. The offshore prospecting area covers an area of 12 square kilometres and extends 1km out to sea from the low water mark and covers the full length of the existing 12km Tormin tenement. The established geology of the region confirms that the source of the Tormin beach deposit is a Heavy Mineral-rich offshore zone and that the dynamic coastline serves to replenish the beaches by transporting sediment from deeper waters.

Formal studies, including drilling and sampling, been planned and will commence in January 2014 with a view to identifying and quantifying the extent of beach replenishment and the extent of the offshore resource.

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In the interim beach mining and commissioning activity has confirmed the previous informal tests conducted by the Company. Ore removed by the beach operations is currently being replenished by the sea in one tidal cycle. Within 3 days thereafter natural jigging by the beach returns the deposit to within 10% of the initial resource grading. Certain areas of the beach have already been mined 4 times in an effort to test the extent of replenishment and to date no reduction in overall resource grading has been experienced.

A comparative table below shows the Feasibility ROM Mineral Grades Vs. the current beach material.

	Feasibility Study	Feasibility Study	Current Beach Material	Current Beach Material	Current Beach Material
Description	ROM Beach Material	PBC Concentrate	ROM Beach Material (untreated)
	%	%	Min %	Max %	Ave %
Grade : Zircon	3.4	8.0	3.9	20.3	11.7
Grade : Rutile	0.7	1.1	1.0	3.4	1.6
Grade : Limenite	11.9	17.1	11.7	62.4	33.7
Grade : Garnet	25.3	39.4	9.5	64.4	35.3
Grade : Quartz	49.4	6.9	0	22.7	8.7

The Company has mined in excess of 60,000 tonnes to date. By its own assessment, the ore blocks mined have replenished comparatively by an amount of 25,000 tonnes.

The Company is therefore optimistic that replenishment of the beach will at least double the expected life of mine at Tormin and, based on the above empirical data, could extend much longer.

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H u m a n R e s o u r c e s

MRC has previously announced an exemplary safety record at Tormin having achieved 50,000 hours without a lost time injury (LTI) by October 2013. The Company is proud to announce that by the commencement of the commissioning of the SCP, MRC has achieved in excess of 100,000 man hours on site without an LTI. This record is even more impressive given the tight schedule, the number of separate contractors on site towards the end of the project and that the vast majority of workers on site were drawn from the local community, were relatively inexperienced and were working shifts as the site operated 24 hours per day.

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S a l e s a n d M a r k e t i n g

The Tormin mine plan and engineering processing design provides for primary beach concentration of 1.2 Mtpa producing approximately 48,000 tonnes of Zircon/Rutile Concentrate grading up to 80% Zircon and 10% Rutile.

Phase Two of the Tormin Project Development provides for further processing through construction of a dry mineral separation plant (MSP) to produce various magnetic concentrates, including up to 125,000 tonne per annum Ilmenite and 100,000 tonne per annum of Garnet.

The first shipment of 100 tonnes of Zircon/Rutile Concentrate has been processed and sold under the Marketing Agreement with Wogen Pacific. This product was shipped successfully to China for tertiary processing. The results confirmed previous expectations, recording recovery of Zircon and Rutile rates of 93% and that the Zircon and Rutile are of premium quality and suitable for ceramics and welding rods respectively.

The Company has also received a number of proposals for the Ilmenite to be produced from Tormin. MRC is in advanced negotiations with two of these parties and therefore hopes to be in a position to finalise an offtake for 100% of the Ilmenite early 2014. The Ilmenite concentrate will be stockpiled until an offtake if finalised and the additional plant required to produce this product is acquired and installed.

The Company is therefore confident of its product sales forecast; with most major suppliers indicating that the prices of Zircon / Rutile appearing to have reached the bottom of the cycle and that prices are expected to stabilise at current levels before increasing slightly during 2014 on the back of enhanced demand.

Based on current commissioning progress and production ramp up the Company is expecting its first shipment of Zircon/Rutile Concentrate in early January 2014.

MRC has also previously indicated the presence of a small but valuable rare earth, Xenotime, within the Tormin mineral suite. Given the value of Xenotime at approximately $11,000 per tonne, recovery of it has the capacity to add significant value to the Project. The Company is currently undertaking tests to ascertain how the Xenotime can be commercially recovered.

The Company attended and presented at the TZMI Conference in Hong Kong in mid-November and thereafter completed a roadshow in the United Kingdom. The developments with Tormin were very positively received and the Company is expected to benefit substantially as the first significant new mineral sands operation to enter the market with premium products at the bottom of the cost curve.

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B a c k g r o u n d

T O R M I N

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 DFS commissioned by MRC demonstrated that Tormin can produce an enriched 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 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.

The engineering design provides for primary beach concentration of 1.2 Mtpa producing approximately 48,000 tonnes of Zircon/Rutile Concentrate grading up to 80% Zircon and 10% Rutile. Provision was also made to produce various magnetic concentrates for further processing through a dry plant.

X O L O B E N I M I N E R A L S A N D S P R O J E C T ( S O U T H A F R I C A )

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

The Xolobeni resource is 346 million tonnes of 5.0% heavy mineral, with 65% of this resource in the Measured category.

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

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TORMIN
CAPE TOWN
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F O R F U R T H E R I N F O R M AT I O N P L E A S E C O N TA C T:

M r A n d r e w L a s h b r o o k e - C E O

Mineral Commodities Limited alashbrooke@mrc-res.co.za +27 21 4171700

C o m p e t e n t P e r s o n s

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 2012 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.

M R C R E S O U R C E S TAT E M E N T

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Ilmenite Zircon Rutile Garnet
PROJECT Category Ore Mt HM%
(% in HM) (% in HM) (%in HM) (%i HM)
Tormin Indicated 2.7 49.4% 21.4% 6.9% 1.4% 51,2%
Xolobeni Measured 224 5.7% 54.5%
Indicated 104 4.1% 53.7%
Inferred 18 2.3% 69.6%
346.0 5.0% 54.0%
Total MRC 348.7 5.3% 51.7%
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