MINERAL COMMODITIES LTD — Interim / Quarterly Report 2010

Jan 28, 2010

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

Unit 15, Level 1, 51-53 Kewdale Road Welshpool, Western Australia 6106 PO Box 235, Welshpool DC 6986 Telephone: 61 8 9353 4890 Facsimile: 61 8 9353 4894 Email: info@mncom.com.au Web: www.mncom.com.au

29[th] January 2010 Australian Stock Exchange Company Announcements Office

QUARTERLY ACTIVITIES REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2009

SUMMARY

During the Quarter activities were centred around discussions with parties interested in acquiring an interest in the Tormin Mineral Sands Project.

No work was undertaken at Xolobeni and future activities await an outcome from the appeal process.

The Company investigated other projects and conducted site visits during the quarter.

TORMIN MINERAL SANDS PROJECT (SOUTH AFRICA)

Background

The Tormin Mineral Sands Project is located on the west coast of South Africa, approximately 400km north of Cape Town. The main minerals of interest are zircon and rutile which are contained in a high grade beach placer deposit north of the Oliphants River outfall. Previous studies have demonstrated that the Tormin Project can produce an enriched non-magnetic saleable concentrate containing predominately zircon and rutile. The base case production model consists of an annual production of 30,000 to 40,000 tonnes of concentrates grading up to 80% zircon and 10% rutile.

As announced on the 24[th] of June 2009, the Company commissioned K’Enyuka, a South African engineering firm, to undertake a Definitive Feasibility Study for the Project. The results of the study have been incorporated in a financial model developed on behalf of the Company by MSP Engineering Pty Ltd, a Perth based resource consultancy firm specialising in industrial minerals.

The Base Case investigated by K’Enyuka is based on hydraulic mining of the beach deposits and hydraulically transferring the sand from the beach to a stockpile ahead of a primary gravity circuit. Mining operations are to be conducted on a day shift basis only and surplus mining and stockpile capacity has been incorporated to accommodate for tidal and adverse weather events.

The primary spiral plant is designed for a nominal throughput capacity of 1.6 Mtpa and comprises a primary spiral circuit for removal of silica and light heavies followed by a wet high intensity magnetic separation (WHIMS) circuit for removal of magnetic minerals including ilmenite and garnet which are subsequently hydraulically transferred back to the beach for deposition as tailings with the silica fraction.

The resultant non-magnetic concentrates, rich in zircon and rutile, are exported as a combined concentrate.

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The salient results of the K’Enyuka study were released in the previous quarterly report and are shown again in Table 1.0 below. During the course of the study there was a number of value adding opportunities identified which have been modeled at desktop level by MSP as part of trade off and optimisation studies.

The trade off and optimisation studies considered the following two primary opportunities. The Project also has substantial garnet resources. The plant design allowed for the extraction of the +200 micron garnet but this aspect was not included in the operating costs (“OPEX”) and the operating synergies arising.

Table 1.0 – Project Development Option

Parameter	Unit	Study Base Case	Optimised Base Case	Beach Processing Option
Mining method Primary beach upgrade Ore transport method Secondary processing Plant throughput Concentrate throughput Concentrate grade Concentrate transportation CAPEX(1) OPEX OPEX	Mtpa tpa % zircon % rutile US$ US$ per t ore US$ per t concentrate	Mining DOP pump in excavator None 5 stage pumping (5km) 4 stage spirals, LIMS, WHIMS 1.60 25 – 40,000 ~75 ~10 Truck to Cape Town. Shipped $21M $8.57 $588	Mining DOP pump on excavator None 2 stage pumping (1km) 4 stage spirals, LIMS, WHIMS, wet tabling 1.60 40-60,000 ~80 ~10 Truck to Cape Town. Shipped $21M $9.57 $417	Mining suction pump on floating pontoon Rougher & Scavenger spirals on beach Truck haul to De Pump (15km) 2 stage spirals, LIMS, WHIMS, wet tabling 1.42 16-50,000 ~80 ~10 Truck to Cape Town. Shipped $9.0M $6.48 $283

(1) Capital Expenditure – includes owner’s costs

(2) Operating costs – excludes depreciation and amortisation

Both the optimised and beach processing study showed favorable economics. The Company is currently in discussions with potential investors and its existing Black Empowerment Partner to determine the economics of an upfront divestment of this Project versus the risk/reward to the Company of its development.

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XOLOBENI PROJECT (SOUTH AFRICA)

Background

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

The Xolobeni Mineral Resource is 346 million tonnes of 5.0% heavy mineral, with 65% of this resource in the Measured category (Table 1).

Area	Status	Tonnes (million)	% HM	% Ilmenite
Sikombe	Measured	85	5.5	3.1
Kwanyana	Measured	139	5.8	3.1
Mnyameni	Indicated	104	4.1	2.2
Mpahlane	Inferred	18	2.3	1.6
TOTAL		346	5.0	2.7

Table 1: Xolobeni Mineral Resource, 2003 at 1% Heavy Mineral Cut off Grade

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

Mining Right Application

As noted in previous ASX announcements, the Company is awaiting the outcome of an appeal lodged with the Minister of the Department of Minerals and Energy (“DME”) against the grant of the Mining Right over the Kwanyana block. This appeal was lodged in September 2008.

CORPORATE

Investment in Africa Uranium Limited

As advised in the previous quarter, MRC elected to not proceed to stage 2 funding of Africa Uranium’s (“AUL”) exploration activities in Africa. During the quarter, MRC was issued with a further 10% interest in AUL as compensation for the exploration undertaken by MRC during the stage 1 funding.

During the Quarter, Cape Lambert Resources Limited obtained a 10% beneficial interest in AUL and in late 2009 undertook two drilling programmes on AUL’s Hoasib Project. In its ASX release on 20 January 2009, Cape Lambert Resources Limited advised that the results from the programmes were promising and in line with expectations.

Investment in Petro Ventures International Limited

The Company holds a 9.31% interest in Petro Ventures International Limited (“Petro Ventures”). Petro Ventures has interests in two project areas which are located in offshore Romania and onshore Hungary. Petro Ventures’ working interest in the projects is 20% and 10% respectively.

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Petro Ventures and its partners continue to develop these projects. Based on results to date, the Romanian project is likely to be commercial. The project in Hungary is in the early stages of exploration.

Investment in Allied Gold Limited (ASX listed: ALD)

MRC currently holds approximately 9.5 million shares of ALD’s issued fully paid ordinary shares.

Allied Gold undertook a significant level of corporate activity during the quarter with the successful takeover of Australian Solomons Gold Limited, the listing of its securities on the Toronto Stock Exchange and the completion of a $150 million capital raising to undertake the expansion initiatives at its Simberi Oxide Project and the Development of the Gold Ridge Project in the Solomon Islands.

The market value of MRC’s shareholding at 31 December 2009 was $3.4 million (previous Quarter reported $5.3 million).

During the quarter, 1 million shares were divested and a further 1 million was divested subsequent to quarter end.

Cash and Marketable Securities

At 31 December 2009, MRC had $0.15 million in cash with a further $3.5 million in marketable securities. In aggregate this represents 2.5 cents per MRC share.

Securities on Issue

Issued securities at quarter-end comprise;

143,393,021 fully paid ordinary shares listed on the ASX.

57,357,208 listed options exercisable at $0.20 expiring 31 December 2012.

Yours faithfully

Greg Steemson Managing Director

For enquiries in connection with this release please contact:

Mineral Commodities Limited +61 8 9353 4890 telephone +61 8 9353 4894 facsimile e-mail: info@mineralcommodities.com.au

Competent Persons

The information in this report that relates to Mineral Resources and Exploration Results for the Tormin Mineral Sands Project is based on information compiled by Greg Steemson who is a Fellow of the Australian Institute of Geoscientists. Greg Steemson 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, Mineral Resources and Ore Reserves. Greg Steemson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Mineral Resources and Exploration Results of the Xolobeni Project is based on information compiled by Daniel Guibal (SRK Consulting) a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

MINERAL COMMODITIES LTD

	ABN 39 008 478 653 Consolidated statement of cash flows	Quarter ended	Quarter ended
		31 December 2009
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration, evaluation and development (b) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7.1 Other (discontinued operations cost) 1.7.2 Other - Promet Settlement 1.7.3 Other – Costs on Promet Settlement		Current quarter $’000	Year to date (12months) $’000
		(493) (242) 8 (12) - -	(2,008) (795) 51 (375) 2,000 (94)
Net Operating Cash Flows		(739)	(1,221)
Cash flows related to investing activities 1.8 Payment for purchases of (a) prospects (b) equity investments (c) investment in associate (d) fixed assets (e) Investments in controlled entities 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Deposit of Bonds Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		- (21) - 465 - -	(1,289) (28) 2,154 (423)
		444	414
		(295)	(807)

Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

1.13	Total operating and investing cash flows (brought
	forward)	(295)			(807)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	16			286
1.15	Proceeds from sale of forfeited shares
1.16	Proceeds from borrowings
1.17	Repayment of borrowings	-			(123)
1.18	Dividends paid
1.19	Other
	Net financing cash flows	16			163
	Net increase (decrease) in cash held	(279)			(644)
1.20	Cash at beginning of quarter/year to date	442			797
1.21	Exchange rate adjustments to item 1.20	(10)			-
1.22	Cash atend of quarter	153			153
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the				related entities
				Current quarter
					$’000
1.23	Aggregate amount of payments to the parties included in item 1.2				84
1.24	Aggregate amount of loans to the parties included in item 1.10				-
1.25	Explanation necessaryforanunderstanding ofthe transactions
	$24,000 is directors’ fees for non-executive directors.
	$60,000 is consulting fees paid to Mr Greg Steemson.
Non-cash financing and investing activities

2.1	Details of financing and investing transactions which have had a material effect on consolidated
	assets andliabilities butdidnot involve cash flows

Nil

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Nil

Appendix 5B Page 2

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1	Loan facilities
3.2	Credit standby arrangements

Amount available $’000	Amount used $’000
N/A	N/A
N/A	N/A

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development	$’000
	100
	-
Total	100

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to therelateditemsinthe accountsis asfollows.	Current quarter $’000	Previous quarter $’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Bank Bill	153	442
Total: cash at end of quarter(item 1.22)	153	442

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number Quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases – issues (b) Decreases through returns of capital, buy- backs,redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	143,393,021	143,393,021
7.5 +Convertible debt securities(description) 7.6 Changes during quarter (a) Increases - issues (b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	Listed 57,357,208	-	Exercise price $0.20	Expiry date 31/12/2012
	17,358,146	-	$0.20	31/12/2012
7.11 Debentures
7.12 Unsecured notes

Appendix 5B Page 4

Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

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Sign here: (Company Secretary)

Date: 29 January 2010

Print name: Peter Torre

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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Appendix 5B Page 5