MINERAL COMMODITIES LTD

==> picture [96 x 76] intentionally omitted <==

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: [email protected] Web: www.mncom.com.au

17 October 2013

MARKET UPDATE

TORMIN MINERAL SANDS PROJECT ON TIME AND ON BUDGET
MINING TO COMMENCE OCTOBER 2013
SECONDARY PROCESSING PLANT TO BE COMMISSIONED IN NOVEMBER 2013
o FIRST CONCENTRATE SOLD AND PROCESSED
PROJECT FULLY FUNDED

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

Tormin Mineral Sands Project

MRC’s Tormin Mineral Sands Project (Tormin) is on track and the project remains under budget. Based on the development schedule, commissioning of the beach mining and processing infrastructure is due to commence in October 2013 with commissioning of the secondary concentration plant to follow in November. Full production is therefore still expected in December 2013.

==> picture [477 x 196] intentionally omitted <==

Main developments to date include:

Engineering, Design and Procurement

All engineering designs, plant designs and infrastructure designs have been completed and issued to contractors. Purchase orders for all equipment and – construction packages have also been awarded all at or below budget.

==> picture [34 x 25] intentionally omitted <==

==> picture [249 x 161] intentionally omitted <==

==> picture [245 x 161] intentionally omitted <==

Primary Beach Concentrators (PBCs)

Pre-assembly of the PBCs has been completed and they have started arriving on site. Commissioning of the PBCs will commence immediately with the first product expected to be processed before the end of October 2013.

==> picture [253 x 176] intentionally omitted <==

==> picture [238 x 175] intentionally omitted <==

Secondary Concentrator Plant (SCP)

Fabrication and construction of the SCP infrastructure, plant and plate-work is on schedule. The process water dams have been completed and erection of the steel is progressing well. The first floor is completed and the Derrick Screen, Trash Screen and Spirals are already installed. The remaining mechanical equipment installation is being undertaken as the equipment arrives on site according to a pre-agreed schedule. Commissioning of the SCP will commence in November 2013 with full processing expected in December.

==> picture [246 x 176] intentionally omitted <==

----- Start of picture text -----

2
----- End of picture text -----

==> picture [244 x 174] intentionally omitted <==

==> picture [34 x 25] intentionally omitted <==

Mobile Equipment and Generators

MRC has concluded an agreement for the supply of Caterpillar generators and equipment for Tormin. Delivery of the equipment has commenced to assist with construction and road building activity and all equipment will be on site by the end of October 2013.

==> picture [253 x 189] intentionally omitted <==

==> picture [246 x 189] intentionally omitted <==

Human Resources

MRC is proud of its safety record at Tormin with work at third party suppliers and at the construction of the SCP having taken place to date without a lost time injury. Both to retain the safety record that exceeds 50,000 injury free man hours and ensure an effective flow through from commissioning to full production, recruitment of all senior personnel for Tormin has been completed. Operators, drawn where possible from the local community, have also mostly been recruited, have undergone induction and medical assessments and have commenced training.

==> picture [484 x 215] intentionally omitted <==

==> picture [34 x 25] intentionally omitted <==

Funding - Entitlement Issue

MRC successfully completed its recent Entitlement Issue (Offer) with the new shares issued and allotted on 14 October 2013. The Offer comprised of a 1 for 4 nonrenounceable entitlement issue of approximately 80,988,228 fully paid ordinary shares to raise approximately $6.4 million. The price of the new shares under the Offer was $0.08 each.

The purpose of the Offer was to raise up to $6.4 million to fund the completion, commissioning and start up working capital for the Tormin Mineral Sands Project.

The Offer included a shortfall offer allowing eligible shareholders to subscribe for any shortfall shares over and above their entitlement. The Offer was also fully underwritten by the Company’s two largest shareholders prior to the offer, Zurich Bay Holdings Pty Ltd and Au Mining Limited.

MRC is pleased to advise that the Offer and shortfall offer was oversubscribed with subscriptions received for approximately 102 million shares for $8.1 million. The Board is very pleased with this outcome and the continued support of its shareholders.

Phase 1 of the Tormin Zircon / Rutile Mine Development and Secondary Processing Plant and associated infrastructure is therefore now fully funded.

Sales and Marketing

The Tormin mine plan and engineering processing design provides for primary beach concentration of 1.2 Mtpa producing approximately 48,000 tonnes of Non-Magnetic 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 of Garnet. The Company is well-advanced with final marketing offtake for the Ilmenite Product and, subject to final pricing, the Company expects to be in a position to commence construction early in 2014 with first product shipment by the last quarter.

MRC advises that the first shipment of Non-Magnetic Concentrate has been processed through the Company’s Pilo t Plant. A shipment of 100 tonnes of this Concentrate has been sold under the Marketing Agreement with Wogen Pacific Limited and has been shipped successfully to China for tertiary processing. The Company is awaiting final processing results of the Concentrate to confirm the final recoveries from the downstream processing in China.

The Concentrate also includes the valuable rare earth, Xenotime, which reports to the non-magnetic fraction of the ore body.

The Company is encouraged that the final processing in China will further enhance the economics of the Tormin Project.

==> picture [34 x 25] intentionally omitted <==

The Company is confident of its product sales forecast; with the prices of Zircon / Rutile holding in accordance with the Company’s financial model projections and market indications showing that the Zircon supply chain has substantially de-stocked and that output from various producers have started to increase. This would appear to point to the bottom of the cycle having been reached and that prices are expected to stabilise at current levels before increasing slightly on the back of enhanced demand.

The Company is about to embark on an international road-show in early November to the United Kingdom and Australia.

In addition the Company will be attending and presenting at the TZMI Conference, to be held on November 12[th] in Hong Kong.

Resource Enhancement

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 kilometers 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.

The offshore prospecting right represents the first step in MRC’s initiatives to significantly extend the Tormin Life of Mine. Consequently, since the award of the prospecting right, the Company has undertaken a series of informal replenishment tests. These tests involved excavating trenches at various intervals along the beach deposit and then allowing them to be filled from the offshore ore body. Assays of the samples taken at each stage were compared to each other and the original Tormin resource test work.

==> picture [286 x 182] intentionally omitted <==

==> picture [34 x 25] intentionally omitted <==

MRC is very encouraged by the results which indicated replenishment to within 10% of the existing heavy mineral gradings. The Company has used the results from the tests to plan formal replenishment studies in conjunction with various specialists, including Professor A Rozendal (Economic Geologist, Stellenbosch University) who coauthored the re search study, “The Geelwal Karoo heavy mineral deposit: a modern day beach placer”.

The study indicated that:

“The locally high, total heavy mineral content and the favourable ore to gangue mineral ratio, coupled with the possibility of replenishment style mining, make this an attractive resource.

A prominent headland, forming a J-bay just south of the source, prevents large scale dispersion of these sediments by the northward flowing littoral current. The result is an offshore trail of heavy mineral-enriched sand, which is then transported to the beach by wave action. There it is repeatedly sorted and further upgraded to be re-deposited on the beach face during mild weather conditions.

The implementation of replenishment mining of this active beach appears to be a realistic possibility. It is, after all, regularly practised by off-shore diamond mining in several favourable localities. This alternative could considerably increase the reserves and sustain mining for an extended period.”

Formal studies will commence in parallel with the commissioning of the PBCs and commencement of mining in October and November 2013 with a view to identifying and quantifying the extent of beach replenishment. The Company is optimistic that these tests will show that replenishment from, or exploitation of this area, could at least double the expected Life of Mine of Tormin.

Background

TORMIN

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 Non-Magnetic 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 Non-Magnetic 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.

==> picture [34 x 25] intentionally omitted <==

XOLOBENI MINERAL SANDS PROJECT (SOUTH AFRICA)

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.

==> picture [479 x 250] intentionally omitted <==

----- Start of picture text -----

TORMIN
CAPE TOWN
----- End of picture text -----

FOR FURTHER INFORMATION PLEASE CONTACT:

Mr Andrew Lashbrooke CEO Mineral Commodities Limited [email protected] +27 21 4171700

==> picture [33 x 25] intentionally omitted <==

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)
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%

AI assistant

MINERAL COMMODITIES LTD Capital/Financing Update 2013

65371_rns_2013-10-16_b040ac9f-717b-43c8-bf3c-23fa6349cf99.pdf