MINERAL COMMODITIES LTD — Interim / Quarterly Report 2007

Sep 13, 2007

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MINERAL COMMODITIES LTD

ABN 39 008 478 653

HALF-YEAR FINANCIAL REPORT 30 JUNE 2007

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2006 and any public announcements made by Mineral Commodities Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act.

MINERAL COMMODITIES LTD

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DIRECTORS’ REPORT

The Directors present their report on the Consolidated Entity, consisting of Mineral Commodities Ltd (the “Company”) and the entities it controlled at the end of or during the half-year ended 30 June 2007.

DIRECTORS

The Directors of the Company in office during or since the end of the half year are:

Joseph Anthony Caruso Non-Executive Chairman Mark Victor Caruso Managing Director Gregory Hugh Steemson Executive Director

RESULTS

The loss of the consolidated entity after income tax attributable to members of the parent entity was $1,022,758. (2006: $1,195,637).

REVIEW OF OPERATIONS

Highlights of the Company’s operations for the period under review are as follows.

South African Projects

The highlight of the period under review was the submission of the Mining Right Applications for both the Xolobeni and Tormin Projects in South Africa. The submissions were a significant step in the progression of these projects. Underpinning the submissions were the Black Economic Empowerment (BEE) partnerships entered into with Xolobeni Empowerment Company (Pty) Ltd (Xolco) and Morodi Mining Resources (Proprietary) Limited (Morodi) for the Xolobeni and Tormin projects respectively.

BEE compliance is a pre-condition to obtaining mining right approval under the South African Mineral and Petroleum Resources Development Act and the Broad-Based Socio Economic Empowerment Charter of South Africa.

During the period, the Company held discussions with interested parties in respect to securing off-take arrangements for the non magnetic heavy mineral concentrates likely to be produced from the Tormin Project.

The Environmental Impact Assessment (EIA) scoping report for the Xolobeni Project commenced during the period with full public participation. The final scoping document was submitted to the Department of Minerals and Energy (DME) in Port Elizabeth on 25 May 2007.

The Company also received comment on the Tormin Mining Right and Steenvas Conversion EIA scoping report from various government departments.

Xolobeni remains regarded as one of the largest undeveloped mineral sands resources in the world.

Sierra Leone Operations

During the first half of the period, ProMet Engineers Africa (Pty) Ltd erected and commissioned the Diamond Recovery Plant that it designed and supplied from South Africa. The plant was designed to treat 80 tonnes of material per hour, however metallurgical constraints have impeded production to less than half this rate. These constraints were identified and evaluated and Promet and the Company commenced discussions to deliver the 80tph or to revise the project plan.

The company suspended operations and put the diamond plant under care and maintenance pending an engineering and design review. The company held discussions with ProMet Engineering Africa to deliver the 80 tph throughput pursuant to the contractual performance guarantee. These discussions continue together with the assistance and co-operation of parent company ProMet Australia and its senior management.

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In addition to the above, MRC engaged independent consultants Consulmet (Pty) Limited from South Africa to undertake an audit of the engineering design and configuration of the existing plant. They concluded that considering the parameters surrounding the dump, the dump material would be more suited to being treated through a Dense Media Separation (“DMS”) plant which has better recovery efficiencies than a pan plant. A DMS can also treat the full spectrum of feed size distribution at this higher efficiency. The present recommendation is to split the coarse fraction at +10mm and divert the oversize direct to the DMS and the - 10mm would report to the pan thus increasing feed tonnage and efficiencies and falling in line with sound diamond value management practices.

In addition to the above, Consulmet recommended to change the pan underflow screen to a larger size to achieve better drainage and incorporate a separate puddle densification circuit.

By the end of the period MRC had identified a number of new DMS plants available for purchase. The company expects to be in full production in the December 2007 quarter.

In consultation with the Chiefdom Council of the Gbense Council, Kono District the Company examined a number of areas for exploration so as to leverage off its operational experience gained thus far in Sierra Leone.

This has resulted in the Company’s Sierra Leone subsidiary, Kariba Kono (SL) Ltd applying for a Mining Lease of some 200 acres at Masondu located approximately 4½ kilometres north east of Koidu. The licence has previously been mapped and indicates the presence of four large kimberlite dykes traversing the property in a north easterly direction, some in excess of 1.25 kilometres in length.

Upon grant of the Mining Lease the company will design and initiate a programme of work to test the dykes for diamonds and diamond indicator minerals.

During the period the Company was also granted a small concession at Bayama, along the banks of the Baya and Konsuyi streams. This was evaluated by minor excavations using hand tools, then hand sieved and screened, however results were not encouraging.

Blackhawk Oil and Gas Limited

The roll-up of the company’s shareholding in subsidiary, Blackhawk Oil & Gas Limited, to Petro Ventures Plc as announced during the period did not proceed. However, MRC remains a significant seed capitalist investor in Petro Ventures Plc and it is the intention to support a listing of Petro Ventures International Limited on the Australian Stock Exchange instead of the Alternative Investment Market in due course.

Investment in Allied Gold Limited

Allied Gold Limited (ALD) is a listed gold development and exploration company with the Tabar Islands Gold Project in Papua New Guinea as its principal asset. This comprises the Simberi Oxide Gold Project and all exploration property on the Tabar Islands. ALD has committed around 80% of the budgeted AUD$83m construction and development programme to build a 2.2 million tonne per annum gold mining operation. First gold production is anticipated in the December 2007 quarter.

ALD currently has Measured, Indicated and Inferred Resources of 2.389 million ounces of gold at the Simberi Project.

MRC is one of the largest shareholders in ALD and currently holds a direct interest in 5.75% (approximately 19.5 million shares) of ALD’s issued fully paid ordinary shares.

The market value of MRC’s share and option holdings at 30 June 2007 was $8.4 million (previous quarter reported $7.43 million).

Corporate

There were 183,500 options at $0.40 and 3,178,404 options at $0.30 converted into ordinary fully paid shares during the period.

There were a further 1,195,116 options at $0.30 converted immediately following the period end.

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Auditor’s Independence Declaration

A copy of the auditors Independence Declaration as required under section 307C of the Corporations Act 2001 is attached to the Interim Financial Report.

Dated at Perth this 13th day of September 2007

Signed in accordance with a resolution of the Directors.

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Mark Caruso Managing Director

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CONSOLIDATED INCOME STATEMENT

FOR THE HALF-YEAR ENDED 30 JUNE 2007

Revenues 2 Other Income 3 General & administration expenses Exploration and evaluation costs Other expenses 4 Share of net loss of associates accounted for using the equity method Loss before income tax Income tax expense Loss for the half year from continuing operations Loss / (profit) attributable to minority interest Loss attributable to members of Mineral Commodities Limited Earnings per share for profit / (loss) attributable to the ordinary equity holders of the Company. Basic earnings (loss) per share (cents) Diluted earnings (loss) per shares (cents)	Half-year ended 2007 $ 2006 $ 55,370 187,756 539,419 10,440 (812,719) (527,286) - - (744,070) (732,160) (60,758) (134,387) (1,022,758) (1,195,637) - - (1,022,758) (1,195,637) - - (1,022,758) (1,195,637) (0.96) (1.7) n/a n/a	Half-year ended 2007 $ 2006 $ 55,370 187,756 539,419 10,440 (812,719) (527,286) - - (744,070) (732,160) (60,758) (134,387) (1,022,758) (1,195,637) - - (1,022,758) (1,195,637) - - (1,022,758) (1,195,637) (0.96) (1.7) n/a n/a
		(1,195,637) - (1,195,637) -
		(1,195,637)
		(1.7) n/a

The above statement should be read in conjunction with the accompanying notes.

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CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Available-for-sale financial asset Other current assets Total Current Assets NON-CURRENT ASSETS Property, plant and equipment Exploration & evaluation expenditure Investments accounted for using the equity method Other financial assets Other receivables Total Non-current Assets Total Assets CURRENT LIABILITIES Trade and other payables Short term provisions Total Current Liabilities Total Liabilities Net Assets EQUITY Issued capital Reserves Accumulated losses Parent entity interest Minority equity interest Total Equity	Half-Year ended 30 June 2007 $ 1,557,261 475,710 90,000 51,427 2,174,398 2,972,251 13,505,157 5,866,418 - - 22,343,826 24,518,224 526,975 37,961 564,936 564,936 23,953,288 36,113,964 3,718,440 (16,013,456) 23,818,948 134,340 23,953,288	Financial Year ended 31 December 2006 $ 2,561,364 244,729 663,574 19,640
		3,489,307
		2,544,443 8,863,985 3,623,988 2,296,935 2,261,727
		19,591,078
		23,080,385
		333,108 39,920
		373,028
		373,028
		22,707,357
		35,087,042 2,476,672 (14,990,697)
		22,573,017 134,340
		22,707,357

The above statement should be read in conjunction with the accompanying notes.

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CASH FLOW STATEMENT

FOR THE HALF-YEAR ENDED 30 JUNE 2007

CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Exploration and development expenditure Interest Received Net cash outflow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant and equipment Proceeds from sales of investments Purchase of equity investments Purchase of investment in associate Loans advanced to other entities Net cash inflow/(outflow) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares, net of capital raising costs Net cash inflow from financing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalent held at the beginning of the half-year Differences arising from movements in foreign currency Cash and cash equivalent held at the end of the half-year	Half year ended 2007 2006 $ $ (1,119,060) (519,885) (1,204,836) (341,414) 40,370 42,634 (2,283,526) (818,665) (315,690) (966,605) 1,226,310 129,406 (619,598) (87,967) - (339,049) - (698,458) 291,022 (1,962,673) 1,026,921 8,437,500 1,026,921 8,437,500 (965,583) 5,656,162 2,561,364 937,261 (38,520) - 1,557,261 6,593,423	Half year ended 2007 2006 $ $ (1,119,060) (519,885) (1,204,836) (341,414) 40,370 42,634 (2,283,526) (818,665) (315,690) (966,605) 1,226,310 129,406 (619,598) (87,967) - (339,049) - (698,458) 291,022 (1,962,673) 1,026,921 8,437,500 1,026,921 8,437,500 (965,583) 5,656,162 2,561,364 937,261 (38,520) - 1,557,261 6,593,423
		(818,665)
		(966,605) 129,406 (87,967) (339,049) (698,458)
		(1,962,673)
		8,437,500
		8,437,500
		5,656,162 937,261 -
		6,593,423

The above statement should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 30 JUNE 2007

Total equity at the beginning of the half year Exchange differences on translation of foreign operations and unrealised foreign exchange losses Changes in the fair value of available for sale financial assets Gain on deemed disposal on equity accounted investment Net income recognised directly in equity Loss for the half year Total recognised income and expense for the year Transactions with equity holders in their capacity as equity holders Contributions of equity net of transactions costs Share based payments Total equity at the end of the half year Total recognised income and expense for the half-year is attributable to: Members of the Company Minority interests	2007 $ 22,707,357 (554,240) (47,000) 1,843,008	2006 $ 12,412,496 (261,754) - 514,028
	1,241,768 (1,022,758) 219,010 1,026,921 - 23,953,288 (219,010) - (219,010)	252,274 (1,195,637)
		(943,363)
		12,051,081 34,244
		23,554,458
		(943,363) -
		(943,363)

The above statement should be read in conjunction with the accompanying notes.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2007

1. BASIS OF PREPARATION

This general purpose financial report for the interim half-year reporting period ended 30 June 2007 has been prepared in accordance with Australian Accounting Standard 134 "Interim Financial Reporting" and the Corporations Act 2001.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 31 December 2006 and any public announcements made by Mineral Commodities Limited during the half year in accordance with the continuous disclosure requirements arising under the Corporations Act 2001.

This interim report does not include all the notes of the type normally included in an annual financial report.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

2. REVENUE Revenue from operating activities: Interest – other persons Other revenue Total Revenue 3. OTHER INCOME Profit on the sale of investments in listed companies 4. LOSS FOR THE HALF YEAR Loss before income tax has been determined after: Depreciation and amortisation Site maintenance costs Increase/(decrease) provision for impairment in listed securities Unrealised foreign exchange losses on translation of inter-company loan accounts of foreign subsidiaries	Half year 2007 $ Half year 2006 $ 40,370 42,634 15,000 145,122
	55,370 187,756
	539,419 10,440
	51,352 13,645 686,639 - - (110,000) - 828,515

5. SEGMENT INFORMATION

Primary Reporting Geographic Segments Revenue Total segment revenue Segment result	Africa Australia Intersegment elimination Consolidated
	2007 2006 2007 2006 2007 2006 2007 2006
	$ $ $ $ $ $ $ $ 1,027 334 789,606 197,862 (195,844) - 594,789 198,196
	(1,664,980) (564,031) 352,034 (631,606) (290,188) - (1,022,758) (1,195,637)

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6. ISSUED CAPITAL

6. ISSUED CAPITAL
Ordinary Shares Fully Paid Balance at beginning of period - Placement of shares - May 2006 - Issue of shares as part consideration for acquisition of remaining interest in subsidiary – May 2006 - Issue of Shares as Part of Erebus Plc acquisition – June 2006 - Conversion of $0.30 options – June 2007 - Conversion of $0.40 options – June 2007 Transaction Costs on the issue of shares Balance at the end of the period	30 June 2007 30 June 2006 30 June 2007 30 June 2006 Number of Shares Number of Shares $ $ 106,436,002 62,029,124 35,087,042 23,001,718 - 30,000,000 - 9,000,000 - 5,000,000 - 1,450,000 - 9,406,878 - 2,163,581 3,178,404 - 953,522 - 183,500 - 73,400 - - (562,500)
	109,797,906 106,436,002 36,113,964 35,052,799

The following are the balances of options over fully paid ordinary shares at balance date:

Category	No of Options	Exercise Price	Expiry Date
		Cents per Share
Listed Options	1,195,116	30	30 June 2007 (these were
			converted immediately
			following the period end)
Unlisted Options	1,350,000	35	11 May 2008
(issued as part of the
Erebus Plc Acquisition)

Subsequent to the period end, the Company completed a private placement of 12,000,000 ordinary shares at a subscription price of $0.26 per share to clients of UK based broker Mirabaud Securities Limited. This raised approximately $3 million to fund the company’s resources project developments.

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7. BUSINESS COMBINATION

On the 23rd June 2006, Mineral Commodities Limited completed a takeover of Erebus Plc group. The value of the consideration paid for Erebus Plc Group was $2,296,937 comprising 9,406,878 shares and 3,135,626 unlisted options. The entity did not consolidate Erebus until 1 January 2007 as acquisition date balance sheet were not reliable at that stage. Accordingly, the 31/12/06 balance sheet of Erebus Group Plc was used for the purpose of purchase price allocation below.

The purchase price was allocated as follows

The purchase price was allocated as follows
Purchase consideration Cash Paid Value of equity instruments provided Total purchase consideration Fair value of the net identifiable assets acquired (refer below) Goodwill	$ - 2,296,937
	2,296,937 2,296,937 -

The assets and liabilities arising from the acquisition are as follows:

Cash Property, plant & equipment Exploration and evaluation expenditure Payables Net assets acquired	Carrying Amount $ 127,898 163,370 1,937,739 (319,551) 1,909,456	Fair Value $ 127,898 163,370 2,325,220 (319,551) 2,296,937

8. CONTINGENT LIABILITIES

The Company has provided bank guarantees with a total value of $31,471 to the Department of Minerals & Energy (Queensland) and Department of Minerals & Energy South Africa as security on tenements. These guarantees are backed by term deposits.

9. INVESTMENT IN ASSOCIATED ENTITY

During the half year the Company increased its shareholding in Allied Gold Limited by converting 3,097,493 options at $0.20. The Company also sold 3,000,000 ordinary shares in Allied Gold Limited. The Company owned 5.75% of the issued share capital of Allied Gold Limited at 30 June 2007.

Due to the significant share placements to external parties by Allied Gold Limited, the company’s interest has been diluted which has given rise to a gain on deemed disposal.

The new issue of capital represents an equity transaction and has been accounted for as such in the consolidated financial statements of the group. The gain on deemed disposal is estimated at $1,843,008, which is reflected by an increase in the investment, and the equity accounting reserve.

On 23 May 2007, the Company acquired 50% of Leonaust Mining Pty Ltd by converting a previous loan of $74,174 into equity. The company has been dormant from the date of acquisition to the reporting date and therefore the Company’s share of its profits and losses for this period was Nil.

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10. RELATED PARTY TRANSACTIONS

There were no transactions or balances with directors or director related entities during the period other than the payment of director’s remuneration.

Transactions between Mineral Commodities Limited and other entities in the wholly owned group during the period consisted of loans advanced and payments received and made on intercompany accounts. These transactions were made on normal commercial terms and conditions and at market rates.

During the period, the Company provided management, accounting and administration services to other entities in the wholly-owned group.

11. SUBSEQUENT EVENTS

Subsequent to the period end, the Company completed a private placement of 12,000,000 ordinary shares at a subscription price of $0.26 per share to clients of UK based broker Mirabaud Securities Limited. This raised approximately $3 million to fund the company’s resources project developments.

Subsequent to the period end, there were a further 1,195,116 options at $0.30 converted.

No other matters or circumstances have arisen since the end of the half-year which significantly affected or may significantly affect the economic entity’s operations, the results of those operations or the economic entity’s state of affairs in future financial years.

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DIRECTORS’ DECLARATION

Declaration by Directors

The directors of the company declare that:

1. The financial statements, comprising the Income Statement, Balance Sheet, Cash Flow Statement, Statement of Changes in Equity and accompanying notes:

2. (a) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

3. (b) give a true and fair view of the consolidated entity's financial position as at 30 June 2007 and of its performance for the half-year ended on that date; and

4. there are reasonable grounds to believe that Mineral Commodities Limited will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and behalf of the directors by:

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____ Mark Caruso Managing Director

Dated at Perth this 13th day of September 2007

12 HALF-YEAR FINANCIAL REPORT

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13 September 2007

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The Directors Mineral Commodities Limited PO Box 235 Welshpool Delivery Centre PERTH WA 6986

Dear Sirs

DECLARATION OF INDEPENDENCE BY BDO KENDALLS TO THE DIRECTORS OF MINERAL COMMODITIES LIMITED

To the best of my knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• no contraventions of any applicable code of professional conduct in relation to the review.

Yours faithfully

BDO Kendalls Audit & Assurance (WA) Pty Ltd

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Peter Toll Director

BDO Kendalls is a national association of separate partnerships and entities.

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF MINERAL COMMODITIES LIMITED

We have reviewed the accompanying half-year financial report of Mineral Commodities Limited, which comprises the condensed balance sheet as at 30 June 2007, and the condensed income statement, condensed statement of changes in equity and condensed cash flow statement for the half-year ended on that date, other selected explanatory notes and the directors’ declaration of Mineral Commodities Limited comprising the disclosing entity and the entities it controlled at the half-year end or from time to time during the halfyear.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the disclosing entity are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the disclosing entity’s financial position as at 30 June 2007 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Strategic Minerals Corporation Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

BDO Kendalls is a national association of separate partnerships and entities.

Qualification

As disclosed in the audit report to the financial statements for the year ended 31 December 2006, the Company had not consolidated two subsidiaries being Erebus Plc and Kariba Kono Ltd into the income statement, balance sheet, cash flow statement, statement of changes in equity or notes to the financial report as at 31 December 2006 due to the fact that the financial information was not considered reliable by the Board of Directors and ourselves.

As Erebus Plc and Kariba Kono Ltd are controlled by Mineral Commodities Ltd at the 31 December 2006, all assets and liabilities of these subsidiaries should have been recorded within the consolidated balance sheet of Mineral Commodities Ltd. These assets and liabilities should have been recorded at their fair value at the date of acquisition, with any excess of consideration over the net assets acquired being recorded as exploration and evaluation expenditure (goodwill). In addition the results of these subsidiaries from the date of acquisition (23 June 2006) should have been included in the consolidated income statement and the cash flows since acquisition should have been included within Mineral Commodities Ltd’s consolidated cash flow statement.

As at 1 January 2007 the company has now consolidated Erebus Plc and Kariba Kono Ltd. As Erebus Plc and Kariba Kono Ltd incurred losses from the date of acquisition (23 June 2006) until 31 December 2006 which were not recorded in the consolidated entity, this has had the effect of overstating the exploration and evaluation expenditure and understating accumulated losses as at the date of consolidation (1 January 2007). The Company and ourselves are unable to quantify this amount.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

Conclusion

Based on our review, which is not an audit, other than the matters mentioned in the qualification, we have not become aware of any matter that makes us believe that the halfyear financial report of Mineral Commodities Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2007 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

BDO Kendalls Audit & Assurance (WA) Pty Ltd

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Peter Toll Director

Perth, Western Australia Dated this 13[th] day of September 2007