MINERAL COMMODITIES LTD

MINERAL COMMODITIES LTD A.B.N. 39 007 478 653

APPENDIX 4D HALF YEAR REPORT

RESULTS FOR ANNOUNCEMENT TO THE MARKET

This Preliminary Final Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A.3

Current Reporting Period: Half-year ended 30 June 2015 Previous Corresponding Period: Half-year ended 30 June 2014

For and on behalf of the Directors

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PETER TORRE COMPANY SECRETARY

Dated: 28 August 2015

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenue and Net Profit			USD’000’s
Revenue from ordinary activities	up 146.8%	to	27,419
Profit from ordinary activities after tax
attributable to members	up 160.7%	to	3,924
Net Profit for the period attributable to
members	up 160.7%	to	3,924

Dividends

No dividends have been paid or declared during the interim period. The Directors do not recommend the payment of a dividend in respect of the interim period.

MINERAL COMMODITIES LTD A.B.N. 39 007 478 653

APPENDIX 4D HALF YEAR REPORT

COMMENTARY

The directors report accompanying this preliminary final report contains a review of operations and commentary on the results for the period ended 30 June 2015.

NET TANGIBLE ASSET BACKING

NETTANGIBLEASSETBACKING

	30 June 2015 US$’000’s	30 June 2014 US$’000’s
Net Assets	32,831	31,206

Less intangible assets	-	-

Net tangible assets of the Company	32,831	31,206

Fully paid ordinaryshares on issue at Balance Date	404,941,571	404,941,571

Net tangible asset backing per issued ordinaryshare
as at Balance Date	0.08	0.08

AUDIT DETAILS

The accompanying half yearly financial report has been reviewed. A signed copy of the review report is included in the financial report.

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ABN 39 008 478 653

Half-Year Financial Report 30 June 2015

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 2014 and any public announcements made by Mineral Commodities Ltd during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act, 2001.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Directors’ Report

The Directors present their report on the Consolidated Entity, consisting of Mineral Commodities Ltd (MRC) and the entities it controlled at the end of or during the half-year ended 30 June 2015.

Directors

The following persons were Directors of the Company in office during the half-year, and up to the date of this report:

Mark Victor Caruso	Executive Chairman
Joseph Anthony Caruso	Non-Executive Director
Peter Patrick Torre	Non-Executive Director / Company Secretary
James Gerald Leahy	Independent Non-Executive Director (resigned 27 May 2015)
Guy Redvers Walker	Independent Non-Executive Director
Ross Colin Hastings	Independent Non-Executive Director (appointed 1 April 2015)

Results

The profit of the consolidated entity after income tax attributable to members of the parent entity was US$3,923,795 (2014 profit US$1,505,059).

Review of Operations

Tormin Mineral Sands Project

The Board of the Company is immensely proud of the Company’s safety record with no Lost Time Injuries (LTI’s) reported in the first half of the year. The Company has now achieved 1,066,303 hours up to 30 June 2015 without a LTI since October 2013.

The first half of 2015 has seen another solid performance at the Tormin Mineral Sands Project. The following key metrics were achieved in H1/15:

Production Summary	Half-Year to 30 June 2015	Half-Year to 30 June 2014
Mining Tonnes Grade: - Garnet - Ilmenite - Zircon - Rutile Secondary Concentrator Plant (SCP) Production & Processing Tonnes processed Tonnes produced: - Garnet concentrate - Ilmenite concentrate - Zircon/Rutile concentrate % zircon in concentrate % rutile in concentrate Sales (wmt) - Zircon/Rutile concentrate - Ilmenite concentrate -Garnet concentrate	818,821 43.04% 25.07% 13.73% 3.69% 0.54% 297,107 136,973 61,604 23,038 73.08% 12.89% 24,414 - 228,778	347,269 59.87% 31.58% 21.26% 6.17% 0.87% 246,368 103,480 45,227 20,387 78.55% 5.22% 19,734 - 6,636

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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An increased understanding of the mining methodology consistent with the dynamics of the beach replenishment cycle has provided for a more refined mining operation towards the later part of the period. This will result in a more dedicated pre-stripping of the light-heavy sands which are deposited as part of the replenishment cycle moving forward.

Proposals were received by various international and local South African consultants to conduct bathometric offshore surveys and wave refraction studies with a view to providing requisite information to identify the best method of undertaking surf zone sampling for offshore resource definition and to investigate mining techniques of the surf zone area that lies between the low tide mark and wave break zone. The studies intend to be commenced during the second half of 2015.

The primary purpose of these studies is to determine the deposition of Very Heavy Minerals (VHM), which is known, and develop a sampling and exploration technique which will allow a Resource Categorization.

Whilst the processing performance was acceptable for the period, a number of areas were identified to optimise the process.

The reduced Heavy Metal Concentrate (HMC) production towards the end of the period was due to bottle necking of the tailings return system which was found to be installed with incorrect motor sizing, which limited Primary Beach Concentrator (PBC) throughput by some 25%-30% around the middle of the period. Further performance stability on the PBCs should be evident in the second half due to the installation of an Anaconda mobile feeder screener unit which arrived in early June, and which will assist in the removal of gravel oversize material.

The discharge of tailings to the shorter route in front of the Secondary Concentrator Plant (SCP) is working well. Sea water intake is stabilised and final construction of the extension to the sea water groyne by some 20 metres took place.

SCP plant recoveries were well above budget for Rutile and Ilmenite and slightly below for Zircon and Garnet.

The deposition of heavy minerals via the replenishment cycle during the aggressive winter storm season also resulted in some Zircon/Garnet recovery issues in the PBCs due to the changing dynamics of the ROM material and the requirement to adjust spiral settings on the PBCs. This was further exacerbated by the stockpiling of some Garnet and Ilmenite concentrates on the beach, which resulted in the mobilization of the stockpile through tidal movements and some contamination of mining areas. Access to the EMP102 Amendment expanded footprint area to facilitate bulk concentrate stockpiling at the plant site, as opposed to the beach, will assist in alleviating most of these issues.

The construction of the Tailings Scavenger Spiral circuit (TSP) was commenced during the period and is on schedule and budget to be completed and commissioned by end-September 2015. Whilst the TSP capital cost is able to be financed out of operating cash flow, an in principle agreement has been reached with a financier for a sale and leaseback arrangement on commissioning of the plant.

The test work has shown that the introduction of the TSP will result in an increase in total heavy mineral recovery from 66% to 89% with the incorporation of the scavenger circuit. This equates to 147.0 ktpa of additional HMC production for both PBC units, grading 87.4% HM, which includes 57,861 tonnes Garnet, 58,350 tonnes Ilmenite, 1,783 tonnes Rutile and 10,546 tonnes Zircon.

The test work also showed an increase in Zircon recovery from 83.8% to 95.2%.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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The Garnet Stripping Plant (GSP) expansion initiatives were delayed due to the EMP102 Amendment regulatory approval processes. Now that the approvals are in place and subject to final financing, the GSP is now expected to be implemented in the first half of 2016. Initial engineering design and ordering of some long lead items has commenced.

The Company is well advanced with the development of its finance options for the GSP. The major Shareholders who previously provided a working capital facility and have extended the term of the loan to 30 September 2015 will be consulted to allow the Company to continue to explore all options with traditional financiers and to provide sufficient time to conclude the initiatives.

The Environmental Management Program (EMP) Amendment for the Tormin mine was granted by the Department of Mining and Resources (DMR) on 14 April 2015.

The Company proceeded to finalise the rezoning of the additional area granted under the EMP with the Matzikama Municipality and finalised all other authorizations to access the additional land area. The Company has been advised that it can proceed to develop the expanded area and has commenced to clear the 9.8ha of land as approved in the EMP102 amendment.

In addition the Company is in advanced discussions with Tronox Limited (Tronox) to potentially purchase the entire Geelwal Karoo 262 Farm. The Tormin tenement area is located on the beach adjacent to the Geelwal Karoo 262 Farm and overlies the Trans Hex diamond concession areas.

Mineral Sands Resources (MSR), a subsidiary of MRC, has fully granted mining rights to mine and process the heavy mineral sands that overlie the Trans Hex Group’s concession areas and has entered into an agreement with Trans Hex. Trans Hex currently mines the area for diamondiferous gravel which underlies the heavy mineral sands deposit mined by MSR.

As announced during the quarter, the Pre-Finance and Marketing Agreement between the Company and Wogen Pacific Limited (Wogen) dated 31 July 2013 (Agreement) was terminated.

The termination of the Agreement meant that the Company was free to sell its non-magnetic Zircon/Rutile concentrate to buyers on an unrestricted basis. The Company completed Quarter 2 Sales through a marketing agent and expects to undertake Quarter 3 sales directly with customers, with no commissions being paid on these sales.

The Company’s Zircon/Rutile concentrate product remains in strong demand, with demand outstripping supply for the forthcoming quarter. The Company produces the highest grade Zircon/Rutile concentrate imported into China. The strong demand for Q3 production of circa 12,000 tonnes from Chinese Buyers and independent marketing of the Company’s production continues to see incremental increases in pricing.

In addition the Company has initiated a Scoping Study in conjunction with the GMA Garnet Group (GMA) for the construction of a Mineral Separation Plant (MSP) plant to produce final Ilmenite, Zircon, Rutile and Garnet products from its Tormin mine. The Company is of the opinion that this will be a significant value add opportunity.

Garnet concentrate production will continue to be supplied and sold under the contract with GMA and stockpiled within South Africa. The Garnet concentrate will then be shipped at GMA’s discretion. The cash receipts for stockpiled Garnet are initially lower with full sales value received upon shipment.

The Ilmenite market remains in oversupply, which has stalled the Company’s moves to sell its product. Notwithstanding this, there is still a demand for the Company’s Ilmenite concentrate product, if it is able to tertiary process finished Ilmenite.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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The Company published its full annual resource assessment in its Annual Report for the year ended 31 December 2014. Full details can be viewed in the Annual Report which was lodged with the Australian Securities Exchange (ASX) on 24 April 2015.

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.

Whilst initial exploration work has been undertaken on the replenished areas, the fact remains that the beach constantly changes with both tidal movement and mining.

The Company completed all Regulatory requirements in relation to its Prospecting Right Application which extends its prospecting area 10km seaward, or a total of 120km2.

A decision relevant to the granting of the Prospecting Permit is still pending.

During the latter part of the period, the Company’s subsidiary MSR submitted a prospecting application for heavy mineral sands over 24km stretch of coastline just to the north of its Tormin Mine. The application was accepted by the Department of Mineral Resources – Western Cape.

The area under application encompasses approximately 398ha and extends from the northern boundary of the Tormin Mining Licence area up to 24km northwards near Jakkalshok – only a few kilometres south of the Tronox heavy mineral sand mine – Namakwa Sands. The area under application is known to host heavy mineral sand deposits and has been the subject of previous exploration work done by Trans Hex.

MSR is currently busy with a scoping level environmental assessment and full public participation exercise. This is required as the prospecting application includes bulk sampling which is a listed activity requiring environmental authorisation under the National Environmental Management Authority (NEMA).

Xolobeni Mineral Sands Project

The Company lodged a Mining Right Application for the Xolobeni Mineral Sands Project during the period. The Company also commenced the Xolobeni Project Mining Right Application Public Participation Process for the Environmental Scoping Report, which was submitted in April 2015 with all interested and affected parties’ comments.

Good progress has been made on the ground at Xolobeni between the anti-mining and pro-mining protagonists who have collectively and of their own volition, formed a Steering Committee to manage all aspects of the Mining Right Application.

Notwithstanding a negative public press campaign, incorporating intense lobbying by anti-mining and proenvironmentalist groups that resulted in an interruption to the commencement of the next phase of the project development studies, for a period of four weeks the Company made good progress with its consultants to conduct all necessary baseline and technical studies to move the project through to the submission of an Environmental Impact Assessment Report, which is required as part of the Mining Right Application process.

Encouragingly, meetings were held in June between the Amadiba Crisis Committee (ACC) and pro-mining members, resulting in the formation of a Steering Committee which has allowed a peaceful and coordinated access for consultants undertaking public participation processes. The Steering Committee will meet regularly to deal with all aspects of the mining right approval process that affects the community.

The Company is maintaining its efforts to conclude baseline studies within the regulatory timeframes.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Corporate

As disclosed to the ASX in December 2014, an application was made in the High Court of South Africa (Western Cape Division, Cape Town) by Blastrite to seek relief for an order that MSR may not deal with any entity or person other than Blastrite in relation to the discussion and consideration relating to any potential Garnet and/or other abrasive media resource that may be present in or on the beach deposit located within the Tormin Project; and an order that MSR may not renew its existing offtake agreement with GMA for the period 1 July 2015 to 30 June 2016. Following a hearing on 19 December 2014, Blastrite withdrew its application to seek interim relief and were ordered to pay MRC’s costs occasioned by the application. Blastrite proceeded to make an application for final relief which was deferred to oral evidence and heard in June 2015. The Company’s Advocates strenuously opposed the application and the Company is confident of a positive verdict. Judgment is expected in September 2015.

The existing Garnet offtake agreement with GMA and the supply of Garnet concentrate pursuant to that agreement continues unabated.

On 2 March 2015, a US$2.0m Pre-Finance and Marketing Agreement dated 31 July 2013 between the Company and Wogen (Wogen Agreement) was repaid in full.

As previously disclosed to the ASX, the Wogen Agreement was terminated in May 2015. This development followed a breakdown in the relationship between the Company and Wogen, which included amongst other matters an inability for the Company to reach satisfactory terms with Wogen for the sale of shipments of the Company’s product in Q2 2015. The termination of the agreement meant that the Company was free to sell its non-magnetic zircon / rutile concentrate to buyers on an unrestricted basis. The Company took immediate steps to secure suitable arrangements for sale of its product and did not experience any significant delays or disruptions in sales.

The Company is looking at financing options for its pending Garnet Stripping Plant (GSP) expansion initiative, to which long lead equipment items have commenced being ordered. Based on the Company’s strong 2015 cash flow projections, this will most likely be funded by traditional debt financing. Major Shareholders have provided a US$3.0m finance facility on commercially arms-length terms, and have extended the term of the loan to 30 September 2015 to allow the Company to explore all options with traditional financiers.

During the period, a ZAR45m (US$3.6m) equipment finance facility was provided by WesBank, a division of FirstRand Limited, to MSR for the financing of new and existing mobile equipment. Further, National Australia Bank Limited provided a US$1.5m overdraft facility to the Company’s trading subsidiary, MRC Trading (Aust) Pty Ltd.

The profit of the consolidated entity after income tax attributable to members of the parent entity for the 2015 half year was US$3.9m (2014 half year profit US$1.5m), a substantial 161% increase on the prior half year.

This result was based on revenue from sales of US$27.4m for the 2015 half year (2014 half year revenue US$11.1m), a 147% increase in revenue on the prior half year. Net profit before income tax (NPBT) of US$5.5m for the 2015 half year was substantially above the 2014 half year NPBT result of US$1.5m.

At 30 June 2015, the Company had US$2.0m in cash. Trade and other receivables at 31 December 2014 of US$3.1m increased to US$8.4m as at 30 June 2015.

The net assets of the Group have increased from $31.2m as at 31 December 2014 to US$32.8m as at 30 June 2015, reflecting a tangible net asset backing of US$0.08 per share as at 30 June 2015.

The Company is assessing its capital management policy and will work towards the declaration of a maiden dividend in early 2016, based on the 2015 full year results.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Events Subsequent to Balance Date

Other than disclosed elsewhere in this report, there have been no other material events subsequent to balance date and up until the date of signing these Financial Statements.

Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 21.

Signed in accordance with a resolution of the Directors.

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Mark Caruso Executive Chairman Perth, Western Australia 28 August 2015

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Consolidated Statement of Profit or Loss and other Comprehensive Income

for the half-year ended 30 June 2015

Note Revenue from continuing operations Sale of product Other revenue Expenses Mining and processing costs 3 Other expenses from ordinary activities: Administration expenses Exploration expenditure impaired Share payment expenses 14 Finance costs Profit before income tax Income tax expense Profit after income tax Profit is attributable to: Owners of Mineral Commodities Ltd Non-controlling interest Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the Company: Basic earnings per share Diluted earnings per share Other comprehensive income items Change in the fair value of available for sale financial assets Exchange differences on translation of foreign operations Other comprehensive profit (loss) for half-year net of tax Total comprehensive profit for the period Total comprehensive profit for the half-year is attributable to Owners of Mineral Commodities Ltd Non-controlling interest	Half-Year to 30 June 2015 US$ Half-Year to 30 June 2014 US$ 27,418,988 11,111,512 246,008 1,569,409
	27,664,996 12,680,921 (20,165,444) (8,950,954) (1,680,142) (1,994,263) - (30,178) (67,788) - (240,909) (200,467)
	5,510,713 1,505,059 (1,586,918) -
	3,923,795 1,505,059
	3,923,795 1,505,059 - -
	3,923,795 1,505,059
	cents cents 0.97 0.37 0.97 0.37 20,100 - (2,386,470) (254,087)
	(2,366,370) (254,087)
	1,557,425 1,250,972
	1,557,425 1,250,972 - -
	1,557,425 1,250,972

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Consolidated Balance Sheet as at 30 June 2015

Note Current assets Cash and cash equivalents Trade and other receivables Inventories Available for sale financial assets 4 Total current assets Non-current assets Receivables Property, plant and equipment Mine development expenditure Exploration expenditure 5 Mine properties 6 Deferred tax assets Total non-current assets Total Assets Current liabilities Trade and other payables 7 Unearned revenue Short-term borrowings 8 Provisions Total current liabilities Non-current liabilities Provisions Long-term borrowings 8 Total non-current liabilities Total liabilities Net assets	30 Jun 15 31 Dec 14 US$ US$ 1,965,964 4,216,052 8,389,374 3,084,929 1,848,413 6,123,021 80,398 64,228
	12,284,149 13,488,230
	730,972 665,553 15,615,664 14,642,240 5,361,055 5,003,743 5,977,349 6,019,727 3,191,062 4,617,463 2,242,862 4,036,956
	33,118,964 34,985,682
	45,403,113 48,473,912
	4,964,414 5,683,843 - 4,130,000 5,782,260 7,235,413 473,499 141,768
	11,220,173 17,191,024
	72,954 77,167 1,279,052 -
	1,352,006 77,167
	12,572,179 17,268,191
	32,830,934 31,205,721

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Note Equity Contributed equity 9 Reserves 10 Accumulated losses Parent entity interest Non-controlling interest Total equity	30 Jun 15 31 Dec 14 US$ US$ 63,437,092 63,437,092 (12,701,476) (10,402,894) (18,018,321) (21,942,116)
	32,717,295 31,092,082 113,639 113,639
	32,830,934 31,205,721

The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Consolidated Statement of Cash Flows for the half-year ended 30 June 2015

Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees Sundry income Interest received Net cash inflow from operating activities Cash flows from investing activities Payments for exploration expenditure Payments for plant and equipment Payments for development expenditure Net cash (outflow) from investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Interest paid Net cash inflow / (outflow) from financing activities Net (decrease) in cash and cash equivalents held Cash and cash equivalents at the beginning of the half-year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the half-year	Half-Year to 30 Jun 15 Half-Year to 30 Jun 14 US$ US$ 17,812,352 9,125,215 (16,176,978) (7,887,052) - 1,569,409 4,198 6,675
	1,639,572 2,814,247
	(301,358) (53,199) (3,335,343) (2,105,775) - (2,982,910)
	(3,636,701) (5,141,884)
	3,787,497 3,000,000 (3,581,303) (1,368,495) (383,748) (207,142)
	(177,554) 1,424,363
	(2,174,683) (903,274) 4,216,052 1,503,316 (75,405) (30,305)
	1,965,964 569,737

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Consolidated Statement of Changes in Equity

Balance at 1 January 2015 Profit for the half-year Other comprehensive loss for the half-year Total comprehensive income for the half-year Transactions with owners in their capacity as owners Contributions of equity net of transaction costs Issue of unlisted options Balance at 30 June 2015 Balance at 1 January 2014 Profit for the half-year Other comprehensive loss for the half-year Total comprehensive income for the half-year Transactions with owners in their capacity as owners Contributions of equity net of transaction costs Balance at 30 June 2014	Contributed equity Accumulated Losses Reserves Total Non- Controlling Interest Total Equity US$ US$ US$ US$ US$ US$ 63,437,092 (21,942,116) (10,402,894) 31,092,082 113,639 31,205,721 - 3,923,795 - 3,923,795 - 3,923,795 - - (2,366,370) (2,366,370) - (2,366,370)
	63,437,092 3,923,795 (2,366,370) 1,557,425 - 1,557,425 - - - - - - - - 67,788 67,788 - 67,788
	63,437,092 (18,018,321) (12,701,476) 32,717,295 113,639 32,830,934
	Contributed Equity Accumulated Losses Reserves Total Non- Controlling Interest Total Equity US$ US$ US$ US$ US$ US$ 63,440,327 (30,318,460) (7,853,276) 25,268,591 113,639 25,382,230 - 1,505,059 - 1,505,059 - 1,505,059 - - (254,087) (254,087) - (254,087)
	- 1,505,059 (254,087) 1,250,972 - 1,250,972 - - - - - -
	63,440,327 (28,813,305) (8,107,459) 26,519,563 113,639 26,633,202

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Consolidated Financial Statements for the half-year ended 30 June 2015

1. Basis of preparation

These general purpose financial statements for the interim half-year reporting period ended 30 June 2015 have been prepared in accordance with Australian Accounting Standard 134 "Interim Financial Reporting" and the Corporations Act 2001.

It is recommended that these financial statements be read in conjunction with the annual financial statements for the year ended 31 December 2014 and any public announcements made by Mineral Commodities Ltd during the half-year in accordance with the continuous disclosure requirements arising under the Corporations Act 2001.

These interim financial statements do not include all the notes of the type normally included in annual financial statements.

(a) Critical accounting estimates and judgements

The Group makes significant estimates and judgements concerning the future. The resulting accounting estimates may not equal the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Significant judgements and critical estimate in applying the entity’s accounting policies

Estimation of useful lives of assets

The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Exploration and development expenditure

Recoupment of the capitalised exploration and evaluation expenditure is dependent on the successful development and commercial exploitation of the Xolobeni Mineral Sands area of interest in South Africa. The capitalised expenditure in relation to the Xolobeni project is expected to be fully recoverable once the grant of the mining right has been affirmed by the Minister of Minerals and Energy in South Africa and the Company proceeds to further develop this project.

Reserves and resources

In order to calculate ore reserves and mineral resources, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as revised in 2012 (the JORC code).

As economic assumptions used to estimate reserves change and as additional geological data is generated during the course of operations, estimates of reserves and mineral resources may vary from period to period. Changes in reported reserves and mineral resources may affect the Group’s financial results and financial position in a number of ways, including the following:

Asset carrying values may be affected due to changes in estimated future cash flows;
Depreciation and amortisation charges in profit or loss may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change; and

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Restoration and rehabilitation provision may be affected due to changes in the magnitude of future restoration and rehabilitation expenditure.

Recovery of deferred tax assets

Deferred tax assets has been recognised for deductible temporary differences as the Group considers that it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Rehabilitation provision

A provision has been made for the present value of anticipated costs for future rehabilitation of land explored or mined. The Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognises management's best estimate for assets retirement obligations and site rehabilitations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision.

2. Segment information

(i) Description of segments

Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the board of directors which makes strategic decisions.

There is no goodwill attaching to any of the segments. There has been no impact on the measurement of the assets and liabilities reported for each segment.

The chief operating decision maker has identified three reportable segments to its business, being:

Mineral Sands mining and production (Tormin Mineral Sands project) – Republic of South Africa;
Mineral Sands exploration (Xolobeni Mineral Sands project) – Republic of South Africa; and
Corporate (management and administration of the Company’s projects) – Australia and Republic of South Africa.

(ii)

Segment results

The segment information provided to the chief operating decision maker for the reportable segments for the period ended 30 June 2015 is as follows:

Half-Year 2015 Revenue from operations Total segment revenue Inter-segment revenue Revenue from external customers Adjusted EBITDA Depreciation and amortisation Total segment assets Total segment liabilities	Tormin Project Xolobeni Project Corporate Consolidation eliminations Totals
	US$ US$ US$ US$ US$ 26,884,605 - 27,456,804 - 54,341,409 (26,676,412) - - - (26,676,412)
	208,193 - 27,456,804 - 27,664,997
	4,558,726 - 3,053,280 470,864 8,082,870
	1,921,879 - 39,658 - 1,961,537 37,122,836 6,016,204 43,092,057 (40,827,985) 45,403,113
	33,157,667 4,717,389 16,229,197 (41,532,075) 12,572,179

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Half- Year 2014 Revenue from operations Total segment revenue Inter-segment revenue Revenue from external customers Adjusted EBIDTA Depreciation and amortisation Total segment assets Total segment liabilities	US$ US$ US$ US$ US$ 12,678,477 - 1,571,853 - 14,250,330 (1,569,409) - - - (1,569,409)
	11,109,068 - 1,571,853 - 12,680,921
	4,395,716 (35,769) (430,699) (550,447) 3,378,801 1,639,271 - 27,329 - 1,666,600
	27,340,321 6,885,841 26,292,670 (32,161,198) 38,541,705
	27,117,855 4,885,199 16,062,792 (36,157,343) 11,908,503

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) reconciles to operating profit before income tax as follows:

Adjusted EBITDA Interest expense Depreciation and amortisation Profit before income tax	30 Jun 15 30 Jun 14 US$ US$ 8,082,870 3,378,801 (610,620) (207,142) (1,961,537) (1,666,600)
	5,510,713 1,505,059

3. Mining and processing costs

Mining and processing costs include the following material expenditure items:

Transport of product	2,053,729	1,430,540
Fuel	1,876,496	1,394,346
Wages and salaries	3,723,765	1,422,271
Repairs and maintenance	1,814,948	1,902,832
Depreciation and amortisation – mining and processing assets	1,921,879	1,639,271

4. Available for sale financial assets

Listed securities Equity securities Total listed equity securities Unlisted equity securities Equity securities Total unlisted equity securities Total available for sale securities	80,398 64,228
	80,398 64,228
	- -
	- -
	80,398 64,228

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Available for sale financial assets comprise investments in the ordinary share capital of various entities. There are no fixed returns or fixed maturity dates attached to these investments. Listed securities held for resale have been adjusted to market value at balance date. The investment in unlisted securities has been fully impaired and charged to the statement of profit or loss and other comprehensive income in prior periods.

Fair value hierarchy

AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

(i) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(ii) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2); and
(iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The Group’s only assets and liabilities held at fair value are its available for sale financial assets with a current carrying value of US$80,398 (2014: US$64,228). These are measured using quoted active market prices and are therefore Level 1 instruments.

The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June 2015 and did not transfer any fair value amounts between the fair value hierarchy during the period ended 30 June 2015.

5. Exploration expenditure

5. Exploration expenditure	5. Exploration expenditure
Exploration expenditure – costs carried forward in respect of areas of interest in: Exploration and evaluation phases 6. Mine properties Balance at beginning of period Expenditure during the period Re-classification: transfer from exploration expenditure Re-classification: transfer to mine development expenditure Amortisation expense Exchange differences Balance at end of period 7. Trade and other payables Trade creditors Other payables Trade and other payables		30 Jun 15 31 Dec 14 US$ US$ 5,977,349 6,019,727
		4,617,463 - - 1,115,159 - 4,299,929 (1,015,979) - (195,875) (470,487) (214,547) (327,138)
		3,191,062 4,617,463
		3,504,431 5,683,843 1,459,983 -
		4,964,414 5,683,843

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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8. Borrowings

8. Borrowings
Short-term borrowings Short term borrowings - unsecured (a) Amounts due under equipment acquisition agreements (b) Finance lease (c) Long-term borrowings Finance lease (c)	30 Jun 15 31 Dec 14 US$ US$ 2,690,098 3,291,363 1,987,662 3,944,050 1,104,500 -
	5,782,260 7,235,413
	1,279,052 -
	1,279,052 -

(a) Short term borrowings include a pre finance and marketing agreement facility of US$2.0m which was drawn down in September 2013. This facility was repayable over a twelve month period in quarterly instalments commencing three months after production has commenced. As at 31 December 2014, the outstanding balance was $0.6m and was repaid in full on 2 March 2015.
(b) The Group has in place finance lease agreements to acquire mobile mining equipment and generators. Under the terms of these agreements there is an option to purchase which the Group intends to exercise in the second half of 2015. Interest is charged at 13.5% on the Rand denominated borrowing.
(c) For period ended 30 June 2015, the Group has entered into finance lease agreements to acquire mobile mining equipment with a term of 34 months. Interest is charged at 9.25% on the Rand denominated borrowing.

9. Issued capital

9. Issued capital
Ordinary shares fully paid Balance at beginning of period Balance at end of period	30 Jun15 31 Dec 14 30 Jun 15 31 Dec 14 No. of Shares No. of Shares US$ US$ 404,941,935 404,941,935 63,437,092 63,437,092
	404,941,935 404,941,935 63,437,092 63,437,092

10. Reserves

30 June 2015 Balance at 1 January 2015 Issue of unlisted options Change in fair value of available- for-sale financial assets Exchange differences on translation of foreign operations Balance at 30 June 2015	Currency Translation Reserve US$ Financial Asset Revaluation Reserve US$ General Reserve US$ Listed Options Reserve US$ Total Reserves US$ (11,850,427) (232,908) 1,363,393 317,048 (10,402,894) - - - 67,788 67,788 - 20,100 - - 20,100 (2,386,470) - - - (2,386,470)
	(14,236,897) (212,808) 1,363,393 384,836 (12,701,476)

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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30 June 2014 Balance at 1 January 2014 Exchange differences on translation of foreign operations Balance at 30 June 2014	Currency Translation Reserve US$ Financial Asset Revaluation Reserve US$ General Reserve US$ Listed Options Reserve US$ Total Reserves US$
	(9,300,905) (232,908) 1,363,393 317,048 (7,853,372) (254,087) - - - (254,087)
	(9,554,992) (232,908) 1,363,393 317,048 (8,107,459)

11. Contingent liabilities

Bank guarantees

FirstRand Limited has issued a Bank Guarantee, in favour of the South African Department of Mineral Resources, in respect of MSR’s obligations under the Tormin Mining Right for an amount of ZAR2,730,000 (US$222,222) (2014: ZAR2,730,000 (US$230,748)).

There have been no other changes to contingent liabilities since 31 December 2014.

12. Commitments

Exploration tenement leases – commitments for expenditure

In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to outlay lease rentals and to meet the minimum expenditure requirements which are not considered to be material.

Commitments in relation to equipment acquisition agreements and finance lease are as follows:

Within one year Later than one year but no later than five years	30 Jun 15 31 Dec 14 US$ US$ 3,092,162 3,944,050 1,279,052 -
	4,371,214 3,944,050

There have been no other changes to commitments since 31 December 2014.

13. Related party transactions

There were no transactions with directors or director related entities during the financial period other than:-

a) The payment of directors’ remuneration.
b) Minesite Construction Services Pty Ltd (MSCS), a company associated with directors Messrs Mark Caruso and Joseph Caruso has provided office space to Mineral Commodities Ltd (MRC) during the half-year. The amount paid by MRC was US$23,475 (2014 US$54,144). This is considered to be an arms-length commercial rent. There is no formal sub lease agreement in place.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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c) MSCS has provided secretarial staff to the Executive Chairman pursuant to an executive service agreement during the half-year. The cost was US$20,189 (2014 US$46,564). These have been reimbursed on an arm’s length basis at normal commercial rates.
d) MSCS has provided technical staff during the half-year to the Company’s subsidiary which operates the Tormin Mineral Sands project at a total cost of US$66,599 (2014 US$150,144) these have been reimbursed on an arms-length basis at normal commercial rates.
e) Under the terms of a loan facility agreement, and as approved by shareholders, Regional Management Pty Ltd, a company associated with Mr Mark Caruso advanced A$1,620,220 (US$1,500,000) to MRC in June 2014. This loan carries interest at the rate of 13%. As at 30 June 2015, the balance owing was A$1,637,712 (US$1,253,996).

14. Share based payments

The issue of Employee options was approved by shareholders at a general meeting of the Company held on 21 December 2012. The Employee option plan is designed to provide long-term incentives for senior managers and above (including directors) to deliver long-term shareholder returns. Options granted under the plan carry no dividend or voting rights. When exercisable each option is convertible into one ordinary share at the predetermined exercise

On 27 May 2015, at the annual general meeting of the Company, shareholders approved the issue of 5,000,000 employee options to the Executive Chairman, Mr Mark Caruso.The options are were issued in three tranches exercisable at 20 cents each and subject to the following vesting conditions:

(i) 1,666,668 vesting immediately; (ii) 1,666,666 vesting in 12 months; (iii) 1,666,666 vesting in 24 months.

Set out below are summaries of all options granted under the Plan and unexpired at 30 June 2015:

Grant Date Expiry date Exercise price AUD Fair Value at grant date AUD	Options at the start of the half-year Granted during the half-year Exercised during the half-year Forfeited during the half-year Balance at the end of the half-year Vested at the end of the half-year
21 Dec 2012 31 Dec 2015 20 cents¹ 3.35 cents 21 Dec 2012 31 Dec 2015 35 cents² 2.23 cents 27 May 2015 30 May 2018 20 cents 4.90 cents	10,000,000 - - - 10,000,000 10,000,000 1,000,000 - - - 1,000,000 1,000,000 - 5,000,000 - - 5,000,000 1,666,666
	11,000,000 5,000,000 - - 16,000,000 12,666,666

Fair value of options granted

The assessed fair value at grant date of the options issued during the period ended 30 June 2015 was determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The total share based payment expense for the period ended 30 June 2015 was $67,788 (2014: $nil).

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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The model inputs for options granted during the period, as well as prior periods, included:

a)	Options granted for no consideration with the expectation that the	Options granted for no consideration with the expectation that the	majority of the options would be exercised towards	majority of the options would be exercised towards
	the end of the term of the options and there are no market based vesting conditions.
b)	Exercise price (AUD)	¹ 20 cents	² 35 cents	20 cents
c)	Grant date	¹ 21 December 2012	² 21 December 2012	27 May 2015
d)	Risk-free interest rate	¹ 2.50%	² 2.57%	2.06%
e)	Exercise date:	31 December 2015	31 December 2015	30 May 2018
f)	Share price at grant date (AUD)	8.1 cents	8.1 cents	11.0 cents
g)	Expected price volatility of the shares	86%	86%	90%
h)	Expected dividend yield	Nil	Nil	Nil

The expected price volatility is based on the historic volatility and the general trend in share prices of the companies in similar businesses and trading on the ASX over the past 12 months.

14. Events occurring after the reporting period

Other than as disclosed elsewhere in this report and up until the date of signing these financial statements, there have been no other material events.

Mineral Commodities Ltd Half-Year Financial Report – 30 June 2015

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Directors’ Declaration

Declaration by Directors

The Directors of the Company declare that:

The consolidated financial statements, comprising the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity and accompanying notes:
(a) Comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and
(b) Give a true and fair view of the consolidated entity's financial position as at 30 June 2015 and of its performance for the half-year ended on that date.
In the directors' opinion, there are reasonable grounds to believe that the Company 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 Executive Chairman Perth, Western Australia 28 August 2015

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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DECLARATION OF INDEPENDENCE BY IAN SKELTON TO THE DIRECTORS OF MINERAL COMMODITIES LTD

As lead auditor for the review of Mineral Commodities Ltd for the half-year ended 30 June 2015, I declare that, 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.

This declaration is in respect of Mineral Commodities Ltd and the entities it controlled during the period.

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Ian Skelton

Director

BDO Audit (WA) Pty Ltd

Perth, 28 August 2015

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Mineral Commodities Ltd

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Mineral Commodities Ltd, which comprises the consolidated balance sheet as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year ended on that date, notes comprising a statement of accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

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 a 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 half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 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 Mineral Commodities Ltd, 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.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Mineral Commodities Ltd, would be in the same terms if given to the directors as at the time of this auditor’s review report.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Mineral Commodities Ltd 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 2015 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.

AI assistant

MINERAL COMMODITIES LTD — Interim / Quarterly Report 2015

65371_rns_2015-08-30_47128315-163e-4437-b3ea-87a77cff3048.pdf

RESULTS FOR ANNOUNCEMENT TO THE MARKET

PETER TORRE COMPANY SECRETARY

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Dividends

COMMENTARY

NET TANGIBLE ASSET BACKING

AUDIT DETAILS