MINERAL COMMODITIES LTD — Environmental & Social Information 2018

Feb 15, 2018

MINERAL COMMODITIES LTD ABN 39 008 478 653 Email: info@mncom.com.au Web: www.mncom.com.au

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Australian Securities Exchange Company Announcements Office

16 February 2018

ANNUAL TORMIN MINERAL RESOURCE UPDATE

Mineral Commodities Ltd (ASX: MRC) (“the Company” or “MRC”) provides the below in respect to its annual Tormin Mineral Sands Operation (“Tormin”) resource audit.

A summary of all material information is set out below. Full details of the resource audit will be included in the Annual Report to shareholders in accordance with ASX Listing Rule 5.21.

Executive Chairman Mark Caruso said , “There continues to be a strong correlation between the inferred resource and the material mined to date. The 2017 Mined Resource demonstrates a continued volumetric natural replenishment with in excess of 6.55MT having been mined to date against the initial indicated resource of 2.7MT. Furthermore, processing optimisations in 2017 have resulted in additional recovery of VHM which was formerly being returned to the beach as tailings and enhancing the resource grade.

Notwithstanding the reduction in the inferred resource grade, the Tormin Mine remains a World Class Resource and the Company remains confident that in conjunction with the granting of the current Prospecting and Mine Extension Applications, the resource will underpin MRC operations into the future.”

Updated Tormin Resource Table

Category	Resource Million Tonnes	Total HM%*	Ilmenite (%HM)	Zircon (%HM)	Rutile (%HM)	Garnet (%HM)
Indicated Resource – Dec 2013	2.70	49.4%	10.6%	3.4%	0.7%	25.3%
Inferred Resource – Dec 2014	2.70	38.14%	10.05%	2.21%	0.46%	25.22%
Inferred Resource – Dec 2015	2.70	28.01%	6.97%	1.56%	0.55%	18.54%
Inferred Resource – Dec 2016	1.80	28.08%	6.15%	1.65%	0.53%	18.99%
Material Mined 2017	2.05	27.57%	5.81%	1.10%	0.50%	19.40%
Inferred Resource – Dec 2017 5% THM cut-off	1.8	15.92%	2.72%	0.79%	0.43%	11.45%

• Includes other valuable heavy minerals e.g. Leucoxene and Magnetite

39 – 43 Murray Road North WELSHPOOL Western Australia 6106 PO Box 235 WELSHPOOL DC WA 6986

Telephone: +61 8 6253 1100 Fax: +61 8 9258 3601 Email: info@mncom.com.au

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The December 2017 inferred resource is based on the reasonable prospect for the economic extraction of the material, as has occurred over the past 4 years. Note that individual minerals are reported as a percentage of the total resource.

Mining has now been ongoing for four years and a total of 6.55 million tonnes of material has been processed. The tonnage processed is more than the original declared resource tonnage (2.7 Mt) which is indicative of the replenishment nature of the resource where resource blocks gets mined more than once per year.

The inferred resources tonnage remains at 1.8 million tonnes. Resource replenishment is occurring but at a rate that is slower than the mining rate. The Company is unable to report a replenishment grade or quantity under the 2012 JORC code. The Company continues to conduct grade reconciliation and sample grading on a daily basis as part of the mining operation to correlate between stated resource and actual resource in terms of quantity, grade and replenishment.

The resource grade has lowered and total heavy mineral content is now 15.92% at a cut-off grade of 5% Heavy Mineral (“HM”).

The nature of the resource replenishment is typical of modern day beach placer deposits found along the West Coast of South Africa and the Southeastern Tamil Nadu coast of India.

- ENDS -

For enquires regarding this release please contact: Peter Torre – Company Secretary Ph +61 8 6253 1100

39 – 43 Murray Road North WELSHPOOL Western Australia 6106 PO Box 235 WELSHPOOL DC WA 6986

Telephone: +61 8 6253 1100 Fax: +61 8 9258 3601 Email: info@mncom.com.au

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Competent Persons Statement

The work in this report was prepared by Adriaan du Toit who is a Member of the Australian Institute of Mining and Metallurgy (AusIMM) who is an independent consultant to MRC. Mr du Toit is the Director and Principle Geologist of AEMCO Pty Ltd. He has over 26 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 he is undertaking to qualify as a Competent Person as defined by the 2012 JORC Edition. 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.

The following table provides a summary of important assessment and reporting criteria used for the Tormin Mine in accordance with the Table 1 checklist in The Australian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012 Edition). Criteria in each section apply to all preceding and succeeding sections.

Estimation and Reporting of Mineral Resources

Criteria	JORC Code explanation	Commentary
Database	• Measures taken to ensure that data has not been corrupted	• All field and lab results obtained and entered into the onsite database is
integrity	by, for example, transcription or keying errors, between its	verified by a supervisor. All results are double checked and verified. A
	initial collection and its use for Mineral Resource estimation	standard is made on the site and sent to the laboratory with each batch
	purposes.	of samples as a quality check. External calibration is done every 6
	• Data validation procedures used.	months.
		• The current mine grade database for 2017 consist of 3,428 grades
		analyses suites for mined blocks and 119 grade control samples taken
		(50m x 50m grid) to verify remaining grades over the resource area
		during December 2017 to January 2018.
Site visits	• Comment on any site visits undertaken by the Competent	• No site visits was undertaken for this resource audit although the
	Person and the outcome of those visits.	Competent Person (“CP”) did visit the mine on a number of occasions
	• If no site visits have been undertaken indicate why this is the case.	during 2016 and 2017 and is therefore familiar with the site and resource conditions.
Geological	• Confidence in (or conversely, the uncertainty of) the	• Resource reconciliation from 2017 production data indicates that
interpretation	geological interpretation of the mineral deposit.	production grades were very close (average of 90%) to the resource
	• Nature of the data used and of any assumptions made.	grade. This is due to strict grade control procedures on the mine site. The mine also actively targets replenishment areas after high storm or
	• The effect, if any, of alternative interpretations on Mineral	tide surges that contains grades higher than the background resource
	Resource estimation.	grade.
	• The use of geology in guiding and controlling Mineral	• The variable, unstable and replenishment nature of the resource makes it
	Resource estimation.	impossible to classify the resource in any category higher than inferred.
	• The factors affecting continuity both of grade and geology.	• The overall trend in the grade mined from 2014 to the end of 2017 is
		negative as the original resource of 2.7 Mt has now been mined at least
		3 times (total tonnage mined/processed of 6.55 Mt up to December
		2017).
		• Replenishment of the resource is still taking place but at a slower than
		mining rate.
		• The bottom of the resource (being a placer deposit) is limited by the
		bedrock contact and coastal cliffs. The resource is open towards the
		ocean and surf zone.
Dimensions	• The extent and variability of the Mineral Resource expressed	• The deposit has a strike length along the coastline within the mining
	as length (along strike or otherwise), plan width, and depth	lease of ~9000m and an average width from the cliff to within the surf
	below surface to the upper and lower limits of the Mineral	zone of 123m. It is developed from surface to a maximum depth of
	Resource.	6.25m. The average resource thickness used to be 3.5m but is only
		about 2.6m currently resulting in a narrower dry beach zone during low
		and high tide.
Estimation and	• The nature and appropriateness of the estimation	• The 2007 Steemson resource was interpreted using the data and results
modelling	technique(s) applied and key assumptions, including	from 236 hand auger holes (402.3m) and 336 reverse circulation holes
techniques	treatment of extreme grade values, domaining, interpolation parameters and maximum distance of	(1049.35m) drilled during 1989 to 1991 by Trans Hex. The original resource was signed off on 31 October 2011 by Mr Allen Maynard as the
	extrapolation from data points. If a computer assisted	competent person. Mr Maynard is the director and principle geologist of
	estimation method was chosen include a description of	Al Maynard & Associates Pty Ltd (Perth, WA).
	computer software and parameters used.	• All original analyses were conducted by MINTEK using microscopic point
	• The availability of check estimates, previous estimates	counting, x-ray and scanning electron microprobe techniques.
	and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.	• Bulk sampling done by MSR in 2005 were sent to SGS Johannesburg for grain counting. Bulk sampling was used to confirm the historical Trans
	• The assumptions made regarding recovery of by-products.	Hex drill data and results. The bulk sample results were generally the
	• Estimation of deleterious elements or other non-grade	same or better than the Trans Hex drilling results.

39 – 43 Murray Road North WELSHPOOL Western Australia 6106 PO Box 235 WELSHPOOL DC WA 6986

Telephone: +61 8 6253 1100 Fax: +61 8 9258 3601 Email: info@mncom.com.au

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Criteria	JORC Code explanation			Commentary
	variables of economic significance (eg sulphur for acid mine			• An analysis cut off of 0.1% zircon (MINTEK) was used and a resource
	drainage characterisation).			cutoff grade of 0.3% zircon (Steemson, 2007).
	• In the case of block model interpolation, the block size in			• Original resource modelling was done using only Reverse Circulation
	relation to the average sample spacing and the search			(“RC”) drilling results using a polygonal method. Resource blocks were
	employed.			constructed in the southern mining area so that they were orthogonal to
	• Any assumptions behind modelling units.		of selective mining	the drill traverses. In the northern area, resource block are trapezoidal in plan view. Resource blocks were extended half way between drill lines and 10m from the drill holes in section.
	• Any assumptions about correlation between variables.			• Current resource audit modelling were done using grade control
	• Description of how the geological interpretation was used			samples taken from 119 test pits excavated during November to January
	to control the resource estimates.			2018 to verify the remaining in-situ grade. Remaining volumes were
	• Discussion of basis for using or not using grade cutting or capping.			based on surveying data done in January 2018 and observed mined depths in 541 mine or test pits from 2017.
	• The process of validation, the comparison of model data to reconciliation data if available.	checking process used, the drill hole data, and use of		• Recovery studies (three stage spiral circuit) by Multotec and Mintek in 2012 showed that an overall circuit can produce a concentrate of 11.66% Zircon into 60.8% of the feed mass with a Zircon recovery of 86.6%. Metallurgical sizing work was done in 2005 by Bateman Minerals Ltd.
				• Mine production during 2017 achieved a 70.9% Zircon / Rutile recovery
				(22,111 tonnes from a head feed containing ~31,200 tonnes) – not
				taking into consideration processing losses.
				• Reconciliation of 2017 mine production data (January to December
				2017) with the December 2016 resource statement indicates a negligible
				difference of 0.51% in the total Heavy Mineral Sand (“HMS”) grade
				(27.57% mined against 28.08% inferred).
Moisture	• Whether the tonnages are estimated on a dry basis or with			• The resource tonnages are based on a dry basis. Most of the material is
	natural moisture, and the method of determination of the			fully saturated when mined but are free draining.
	moisture content.
Cut-off	• The basis of the adopted cut-off		grade(s) or quality	• In the original Steemson resource, a 0.3% zircon cut-off grade was based
parameters	parameters applied.			on a 70% zircon recovery and a zircon price of US$700/tonne.
				• A 5% cut-off on total heavy mineral content was applied to the current
				resource.
Mining factors	• Assumptions made regarding possible mining methods,			• A definitive feasibility study on the deposit was done in 2006 by
or assumptions	minimum mining dimensions and internal (or, if applicable,			K’Enyuka and a Bankable Feasibility Study (“BFS”) review by HBH
	external) mining dilution. It is	always	necessary as part of	consultants.
	the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the			• The dynamic beach environment results in a cyclic depositional and erosion of the beach surface. Historical studies by Trans Hex have found a weighted average change over 9 months of up to ~9% loss or up to ~7% increase. This variability is also evident in the replenishment rate and grade of material observed.
	basis of the mining assumptions made.			• Mining is opencast using coffer type dams constructed with excavators.
				The pits generally only remain open during low tide, except where beach
				conditions allow larger more stable protection bunding to be
				constructed. Construction and mining methods are similar to that being
				used for beach diamond mining along the west coast of South Africa and
				Namibia.
				• There is no stripping ratio as material is from surface onto bedrock.
				• Natural replenishment of the resource is taking place as the open pits
				are filled with HMS material from the surf zone during the next high tide.
				Data indicates no correlation (R2=0.04) between the original resource
				grade and the replenishment grade for the same mine block area.
				• In general it appears that replenishment is erratic and unpredictable. In
				some areas zircon grade replenishment may only be 35%, while in other
				areas there are a 34% increase over and above the original zircon
				concentration. Replenishment appear to be mainly a function of time
				and the number of sea storm events. Given enough time between
				mining events the resources is currently still replenishing although the
				long term trend is a lowering in grade.
				• The overall lowering of the beach surface (due to mining) have resulted
				in the faster movement of large volumes of material between the beach
				and the surface zone than before mining started.
				• Over the past 4 years some mining blocks have now been mined up to
				20 times or more.
Metallurgical	• The basis for assumptions	or predictions regarding		• Extensive metallurgical testing has been done before the current
factors or	metallurgical amenability. It is	always	necessary as part of	processing plant that is now in operation were designed. These include
	the process of determining	reasonable prospects for		the following studies:

39 – 43 Murray Road North WELSHPOOL Western Australia 6106 PO Box 235 WELSHPOOL DC WA 6986

Telephone: +61 8 6253 1100 Fax: +61 8 9258 3601 Email: info@mncom.com.au

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Criteria	JORC Code explanation	Commentary
assumptions	eventual economic extraction to consider potential	• 2002 -2003 Spiral test work and trials by Multotec Process Equipment
	metallurgical methods, but the assumptions regarding	(Pty) Ltd and Mintek – Johannesburg
	metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical	• 2003 Grain analysis by SGS Lakefield including Total Heavy Mineral (“THM”), Magnetic Separation and XRF analyses. Also ilmenite fraction analyses for smelter feedstock
	assumptions made.	• 2003 Magnetic separation work by Diamantina laboratory in Perth
		• 2005 Bateman Minerals (Pty) Ltd electrostatic separation study
		• 2007 Processing and recovery tests by Titanatek Pty Ltd - Queensland
		• 2007 & 2009 Metallurgical testwork by AMMTEC Ltd – Australia
		• 2007 Metallurgical upgrade test work by Multotec Process Equipment
		Pty Ltd – Kempton Park, RSA.
		Some of the studies done to improve the current recoveries and grades
		are:
		• 2014 Processing improvement study by MSP Engineering
		• 2014 Garnet stripping testwork by R Simmons, N Sibishi & C Moetjie
		using a twin start Mineral Technology VHG, a Multotec SC20 & SC21
		spirals
		• 2015 Magnetic Mineral Separation plant study by MSP Engineering
		• 2015 Integrated Mineral Separation Plant study by MSP Engineering
Environmental	• Assumptions made regarding possible waste and process	• The mine has an approved environmental management programme and
factors or	residue disposal options. It is always necessary as part of	has been subject to an environmental impact assessments and audits.
assumptions	the process of determining reasonable prospects for eventual economic extraction to consider the potential	The mine is currently busy with a Section 24G application to the Department of Mineral Resources (Republic of South Africa) to obtain
	environmental impacts of the mining and processing	environmental approval for a number of listed activities that have been
	operation. While at this stage the determination of	constructed.
	potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential	• The mine has also applied for a Section 102 application to increase the mining area substantially.
	environmental impacts should be reported. Where these	• There is a 10m stability buffer zone between the coastal cliffs and the
	aspects have not been considered this should be reported	beach where no mining is allowed. It would appear that the original
	with an explanation of the environmental assumptions	resource model allowed for at least a 5m buffer zone.
	made.	• All mining voids get naturally filled with beach sand material during high
		tide and there is therefore no rehabilitation liability in this regard.
		• Tailings get dumped onto the beach where it is distributed and settled
		along the coastline under natural wave and sea current action. There are
		no pollutants introduced with the tailings and the material is inert.
Bulk density	• Whether assumed or determined. If assumed, the basis for	• The bulk density is based on an accurate calculation of the specific
	the assumptions. If determined, the method used, whether	gravity (“SG”) of the silica and heavy mineral sand content fraction of
	wet or dry, the frequency of the measurements, the nature,	each sample. It is therefore not a fixed density and appears to fluctuate
	size and representativeness of the samples.	between 1.9 and 2.4 as per the formula below:
	• The bulk density for bulk material must have been	• SG=1.5+(0.009 x HM).
	measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences	• A conservative SG of 1.9 was applied in the current resource modelling.
	between rock and alteration zones within the deposit.
	• Discuss assumptions for bulk density estimates used in the
	evaluation process of the different materials.
Classification	• The basis for the classification of the Mineral Resources into	• The original resource classification was an indicated resource.
	varying confidence categories.	• It was based on historical drilling and bulk sampling.
	• Whether appropriate account has been taken of all relevant factors (ie relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the	• The original resources were signed off in 2011 by Mr Allen Maynard of Al Maynard & Associates Pty Ltd as the competent person on the resource statement.
	data).	• A review of the resource during 2014 by Mr du Toit of AEMCO resulted
	• Whether the result appropriately reflects the Competent Person’s view of the deposit.	in the resource being downgraded into an inferred category due to the impact from mining and replenishment.
		• Due to the removal of material from mining the current resources
		volumes have been downgraded to 1.8 million tonnes from the original
		2.8 million tonnes resource.
Audits or	• The results of any audits or reviews of Mineral Resource	• The original indicated JORC resource of 2.7 million tonnes compares very
reviews	estimates.	favourably with the June 1992 Historical Foreign Estimate (“HFE”) by A
		van den Westhuizen and PD Danchin that classified the Geelwal
		(Steenvas) and Karoo (Geelwal) area into 3,003,881 tonnes proven,
		221,088 tonnes indicated and 891 528 tonnes inferred. A total HFE

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Criteria	JORC Code explanation	Commentary
		resource of 4.1 million tonnes @ 30% HM.
		• Another HFE in 1998 by Trans Hex (Barnex – RBM) reported an estimated
		resource of 6 million tonnes @ 2.78% zircon.
		• Anglovaal reported in 1983 a resource of 11.8 million tonnes @ 8.4%
		zircon over 5m depth over the same area.
		• The last resource audit statement by du Toit in December 2016 has been
		reviewed and the resource will remain in the inferred category but the
		grades have been lowered as per the resource table.
		• Over the past three years 6.55 million tonnes of material have been
		mined. Some of this material has been replaced through beach
		replenishment.
Discussion of	• Where appropriate a statement of the relative accuracy and	• The Geelwal Karoo HMS deposit have been known and investigated over
relative	confidence level in the Mineral Resource estimate using an	the past 57 years with the earliest detailed investigation by Trans Hex in
accuracy/ confidence	approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a	1989. The deposit was first documented in 1931 by Haughton. • The deposit is well understood due to being mined over the past 4 years, but because of the dynamic and replenishment nature of the environment, resource block grades are not stable and change over time.
	qualitative discussion of the factors that could affect the	• The current JORC resource audit statement represents the lowest
	relative accuracy and confidence of the estimate.	tonnage reported in comparison to HFE and appear to be conservative.
	• The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic	Estimated resource grades appear to be realistic as previous production grades of HMS during 2017 was in line with that of the December 2016 inferred resource statement.
	evaluation. Documentation should include assumptions
	made and the procedures used.
	• These statements of relative accuracy and confidence of the
	estimate should be compared with production data, where
	available.

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