MINERAL COMMODITIES LTD — Investor Presentation 2013

Nov 11, 2013

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MINERAL COMMODITIES LIMITED

NOVEMBER 2013

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DISCLAIMER

• This document has been prepared by Mineral Commodities Ltd (MRC) and comprises written materials/slides for a presentation concerning MRC. This is not a prospectus, disclosure document or offering document.

• This document is for information purposes only and does not constitute or form part of any offer or invitation to acquire, sell or otherwise dispose of, or issue, or any solicitation of any offer to sell or otherwise dispose of, purchase or subscribe for, any securities, nor does it constitute investment advice, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.

• Certain statements in this presentation are forward looking statements. You can identify these statements by the fact that they use words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, “may”, “assume” and words of similar import. These forward looking statements speak only as at the date of this presentation. These statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause the actual results, performances and achievements to differ materially from any expected future results, performance or achievements expressed or implied by such forward looking statements.

• No representation, warranty or assurance (express or implied) is given or made by MRC that the forward looking statements contained in this presentation are accurate, complete, reliable or adequate or that they will be achieved or prove to be correct. Except for any statutory liability which cannot be excluded, each of MRC, its related companies and their respective officers, employees and advisers expressly disclaim any responsibility for the accuracy or completeness of the forward looking statements and exclude all liability whatsoever (including negligence) for any direct or indirect loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission therefrom.

• Subject to any continuing obligation under applicable law or any relevant listing rules of the ASX, MRC disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any statement is based. Nothing in these materials shall under any circumstances create an implication that there has been no change in the affairs of MRC since the date of this presentation.

• The information which relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Allen Maynard, who is a Member of the Australian Institute of Geosciences (“AIG”), a Corporate Member of the Australasian Institute of Mining & Metallurgy (“ AusIMM ”) and independent consultant to the Company. Mr Maynard is the Director and principal geologist of Al Maynard & Associates Pty Ltd and has over 30 years of exploration and mining experience in a variety of mineral deposit styles. Mr Maynard has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for reporting of Exploration Results, Exploration Targets, Mineral Resources and Ore Reserves”(JORC Code). Mr Maynard consents to inclusion in the report of the matters based on this information in the form and context in which it appears .

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MRC TODAY

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Overview and History of MRC

Board of Directors and Senior Management

  - Mark Caruso – Executive Chairman

• Over the last 10 years, MRC has been focused on investing in South African mineral sands projects

• Current South African assets

• 50% ownership of Tormin Project plus preference shares (A and B)

• 56% ownership of Xolobeni Project plus preference shares

Capital Structure

• Ordinary Shares: 404 million

• Options: 11 million

• 10 million exercisable at AUD$0.20

• 1 million exercisable at AUD$0.35

• Joseph Caruso – Non-Executive Director

• Peter Torre – Company Secretary / Director

• James Leahy – Independent Non-Executive Director

• Guy Walker – Independent Non-Executive Director

• Andrew Lashbrooke - CEO

• Gavin Kelman - CFO

Shareholder Structure

	Au Mining Limited	19.90%
	Zurich Bay Holdings	19.02%
	Tormin Holdings Limited	14.70%
	M & G Investments	8.84%

• Cash of AUD$7.8million as of 31 October 2013

The top 20 shareholders control 87% of MRC

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EMERGING MINERAL SANDS PRODUCER

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TORMIN

• Beach deposit with targeted resource of 5Mt grading 41.3% heavy mineral containing 3.4% Zircon, 0.7% Rutile, 13.6% Ilmenite and 18.3% Garnet

• Life of mine producing 48Ktpa non-magnetic concentrate and > 100ktpa of each of Ilmenite and Garnet over 5 years

• Rights to offshore source of heavy mineral has

the capacity to significantly extend life of mine

XOLOBENI

Resource Statement

PROJECT	Category	Ore Mt	HM%	Ilmenite (% in HM)	Zircon (% in HM)	Rutile (%in HM)	Garnet (% in HM)
Tormin	Indicated	2.7	49.4%	21.4%	6.9%	1.4%	51,2%
Xolobeni	Measured	224	5.7%	54.5%
	Indicated	104	4.1%	53.7%
	Inferred	18	2.3%	69.6%
		346.0	5.0%	54.0%
Total MRC		348.7	5.3%	51.7%

• World class Ilmenite asset, strategically located on the East Coast of South Africa

• Resource of 346Mt grading 5% heavy mineral, including 9Mt Ilmenite, 450kt Zircon, 570kt Rutile and 450kt Leucoxene

• Life of mine exceeding 25 years

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TORMIN PRODUCTS

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Summary Production Table	Unit	Per Annum	5 Year Total
Tonnes ROM Ore Mined	000's tns	1,181	5,000
Grade Zircon (average)	% Zircon	3.42%	2.55%
Grade Rutile (average)	% Rutile	0.70%	0.54%
Grade Ilmenite (average)	% Ilmenite	11.9%	8.5%
Grade Garnet (average)	% Garnet	18.30%	16.4%
Phase 1
Zircon/Rutile Concentrate Produced	000's tns	47.8	180.0
Zircon in Zircon Rutile Concentrate	000's tns	38.7	145.8
Rutile in Zircon Rutile Concentrate	000's tns	5.5	20.9
Phase 2
Ilmenite Concentrate Produced	000’s tns	>125	545.0
Garnet Concentrate Produced	000's tns	134	545.1

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INNOVATION DRIVEN RESULTS

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• Two skid-mounted PBCs will treat 125 tph each. At these feed rates ROM is planned at 1.18Mtpa

• The PBCs will reject most of the silica and non-valuable HMs on the beach and produce a primary concentrate of 500Ktpa recovering >95% of the Zircon and Rutile

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PROCESSING SIMPLIFIED

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• The SCP will process the 500Ktpa primary concentrate producing 48 Ktpa of non-magnetic concentrate, >125 Ktpa Ilmenite concentrate and 134 Ktpa of Garnet concentrate

• The non-magnetic concentrate, grading 81% Zircon and 11.6% Rutile (representing 93% and 71% recovery respectively) will be bagged on site prior to despatch in accordance with offtake

• Ilmenite will require additional processing through a dry plant which will involve a second level of investment

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BLASTRITE SYNERGY

• MRC has managed the development and operation of Tormin in conjunction with Blastrite

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• With its head office in Cape Town and 9 other processing and distribution facilities in South Africa, including wet and dry heavy mineral concentration plants adjacent to Tormin, Blastrite offers MRC an experienced local management team and established local infrastructure

• This has not only facilitated the regulatory approval process for Tormin but also provided MRC with immediate and established in-country support at a lower cost than the Company would be able to achieve as a stand-alone entity.

• Synergistic economic and commercial outcomes from the co-processing of Ilmenite with the Garnet in conjunction with Blastrite will also enhance the non-magnetic concentrate recovery

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TORMIN OFFTAKE | MARKETING

NON-MAGNETIC CONCENTRATE

• MRC concluded a Pre-Finance and Marketing Agreement with Wogen Pacific for 100% of the non-magnetic concentrate, comprising primarily of Zircon and Rutile, to be produced at Tormin

• This agreement provides MRC with significant working capital finance as well as access to the full mineral sands value chain without investment in its own dry processing facilities

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ILMENITE

• MRC remains in negotiations with potential offtake partners in relation to other minerals to be produced at Tormin, with a primary focus on Ilmenite. Negotiations are significantly developed and the Company hopes to be in a position to complete product offtake agreement in the near term

GARNET

• MRC will sell the Garnet concentrate to Blastrite for secondary treatment

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TORMIN PROJECT ENHANCEMENTS

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• MRC holds the offshore prospecting rights for the area extending 1km into the sea adjacent to the existing Tormin tenement

• According to a case study on Tormin undertaken in 1995 by the Stellenbosch University Geology Department*:

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

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

• Further analysis of other minerals in the Tormin suite has indicated the presence of a rare earth in potentially economic quantities

• Initial tests have shown that a rare earth, Xenotime, is being concentrated in the nonmagnetic concentrate of more than 1% which would imply potential production of 500 tpa

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• “The Geelwal Karoo heavy mineral deposit: a modern day beach placer”

• by W.G Macdonald and A. Rozendal

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MINING’S CONTRIBUTION TO TRANSFORMATION

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• Historical inequalities have caught the South African mining sector between the seemingly disparate poles of financial performance and societal transformation

• MRC concluded that these objectives were not necessarily mutually exclusive and has started to make a positive contribution to one of South Africa’s poorest communities:

• Structured loan to Tormin BEE partners to facilitate investment in community projects:

  • Chicken farms; food parcels for the poorest; school uniforms; books and facilities

  • Bursaries and learnerships; clinics and road upgrades

• Net new job creation through Tormin construction, development and operation with specific roles for the local community and Xolobeni partners many of whom have never worked before

• Preferential procurement opportunities enabling >40% of Tormin capex in the immediate project area much of it spent through HDSA structures initiated and supported by MRC

• Recruitment, training and development programmes ensuring >80% of the workforce and >50% of management positions will be held by HDSA’s from the outset

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TORMIN FINANCIALS

	Phase 1	Phase 2
Capital Investment	AUD$ 16,000,000	AUD$ 24,000,000
Average Annual Sales Revenue	AUD$ 55,253,000	AUD$ 67,154,000
Average Annual Operating Costs	AUD$ 15,806,000	AUD$ 25,953,000
Average Annual Operating Cash Flow	AUD$ 27,686,000	AUD$ 29,115,000
Payback Period (Years)	0.6	0.75
IRR	156.79%	129.11%
NPV at 10% Base Case	AUD$ 57,993,000	AUD$ 60,299,000

• Phase 1 excludes Ilmenite production and investment in additional dry plant processing infrastructure

• Phase 2 includes Ilmenite production and an additional AUD$8 million investment in associated plant and equipment

• Both phases exclude potential contribution from Xenotime

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TORMIN TIMELINE

		Jan	Feb	March	April	May	June	July	Aug	Sep	Oct	Nov	Dec
Engineering + Procurement
Construction
PBC’s
SCP
Commissioning + Scale Up
PBC’s
SCP

• Development schedule remains on track and on budget. To date all contracts have been awarded at or below budget

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XOLOBENI PROJECT

Xolobeni	Resource Statement
	Tonnes (Mt)	HM (%)	Ilmenite (% in HM )
Measured	224	5.7%	54.5%
Indicated	104	4.1%	53.7%
Inferred	18	2.3%	69.6%
Total	346	5.0%	54.0%		Strategic location on East
					Coast of South Africa–
					tenements covering	Johannesburg
					~2,900 hectares
					Total resource of 346Mt
					grading 5.00% HM,
					containing 9.3Mt of
					Ilmenite
					Pre-feasibility study also
					indicates rutile and zircon	Xolobeni
					potential
					All products meet market
					specifications

• The Xolobeni project not only has the capacity to be a world-class Ilmenite asset, but also the catalyst for social transformation of one of South Africa’s poorest communities

• Xolobeni is the 10th largest undeveloped heavy mineral deposit in the world. Strategically located on South Africa’s East Coa st, it has a tenement area of almost 2,900 hectares

• The area has a total resource of 346Mt grading 5% HM, containing 9Mt of Ilmenite. Together with Rutile (570kt), Zircon (450kt) and Leucoxene (450kt) potential, a pre-feasibility study indicates a roughly 25 year mine life

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XOLOBENI PROJECT

• MRC was granted Prospecting Rights on 4 blocks which were renewed in February 2012 for a further 3 years

• A conditional Mining Licence on the 5[th] block, Kwanyana, was revoked in May 2011

• MRC withdrew its Mining Right application for the Kwanyana block and submitted a new Prospecting Right application

• With most resource assessment and categorization completed, the prospecting work is aimed at showing that Xolobeni can be sustainably developed:

• Collection of baseline environmental data, including ground and surface water, estuaries, flora and fauna, and soil fertility and migration

• Collection of socio-economic data, including traffic, noise and air quality

XOLOBENI THE NEXT STEPS

• Final consultation with the local community and other stakeholders was undertaken in March and April 2013 Letters of support for Xolobeni have been received by the King of the AmaPondo as well as the local head Chief

• Both local and central government have committed themselves to actively support the project based on its potential to substantially uplift the local community

• The final stakeholder reports have been submitted and MRC is awaiting the DMR’s recommendation to the Minister

• MRC is optimistic that the overwhelming economic value of the project to the country and local community will offset any downsides of a major mineral sands project in the area

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