Category: Corporate

Munglinup Graphite Announcement

Mineral Commodities will acquire a 51% interest in the advanced High Grade Munglinup Graphite Project in Western Australia

Mineral Commodities have executed a binding term sheet with Gold Terrace Pty Ltd with respect to the high-grade Munglinup Graphite Project, located 105km from Esperance in Western Australia.

MRC have agreed to an initial majority stake of 51%  for a total upfront consideration of A$3.2million in cash and 10 million ordinary shares in MRC, with the opportunity for MRC to earn up to 100% of the project, located in a Tier 1 Global mining jurisdiction.

The Munglinup graphite deposit’s grade is in the top quartile for global flake graphite resources, with a high-grade Measured and Indicated JORC compliant Mineral Resource of 3.625Mt at 15.3% graphite for 554kt of contained graphite, with the deposit open at strike and depth.

The Project has a fully granted mining lease valid until August 2031 and an adjoining exploration licence. The tenements are located in a fully gazetted mining reserve, with no native title or private land ownership issues.

Significant studies have been undertaken, including a feasibility study completed by Gwalia Consolidated Ltd in 1991 and a recent due diligence study by Battery Limits, a recognised graphite industry engineering leader.

The studies have indicated that the Project could be in the lowest cost operating quartile and in the highest-grade quartile, as compared against global flake graphite deposits.

The Project has excellent course flake distribution, supported by the Gwalia study and recent petrographic analysis, which have assessed the graphite flake size distribution at 67% greater than 150μm, including 35% Jumbo flake size greater than 300μm and 24% large flake size greater than 180μm.

Testwork has been undertaken, supporting excellent expandability characteristics of the graphite.

MRC will be uniquely placed to proceed with the development of the Munglinup Graphite Project when the acquisition transaction and relevant feasibility studies are finalised.

To read the full announcement, click here.

Mineral Commodities flags $60m revenue

South Africa focused mineral sands producer Mineral Commodities will generate at least $60-million in revenue over the next five years from the sale of existing stockpiled garnet concentrate to offtake partner GMA Group. Mineral Commodities and GMA have amended the existing life of mine garnet offtake agreement, with Mineral Commodities now expected to supply garnet stockpile at a rate of 240 000 t for 2017, rather than the original rate of 210 000 t/y.

Source: Mineral Commodities flags $60m revenue

Quarterly Activities Report – Q1 2017




Binding HOA to amend GMA Garnet Concentrate Oftake Agreement

 

MRC is pleased to advise that it has executed a Binding Heads of Agreement with its garnet offtake partner, GMA Group, to amend the existing Offtake Agreement previously entered into between the parties.

 

Under the existing Offtake Agreement, GMA had committed to take a minimum 210,000 tpa for the LOM and MRC had agreed to provide interim stockpile capacity of up 300,000 tonnes at MRC’s Tormin Mine Site. GMA had also agreed to pay stockpiling costs for product stockpiled, but not delivered under the minimum offtake arrangement.

At the request of GMA, since early 2015 MRC had agreed to defer the delivery of the minimum annual contracted tonnage, and consequently increased its garnet concentrate stockpile and the stockpile capacity. MRC is currently holding circa 180,000 tonnes of stockpiled garnet concentrate, that is in addition to garnet concentrate sold to GMA under bill and hold arrangements.

Under the terms of the HOA now agreed between the parties, MRC will continue to produce and supply to GMA’s stockpile at a rate of 240,000 tonnes for 2017, reverting back to the original 210,000 tonnes contracted for the balance of the LOM.

Furthermore, GMA has committed to take delivery of 210,000 tpa of stockpiled garnet concentrate from and including the calendar year 2017. MRC will deliver this contracted offtake tonnage from the current garnet concentrate stockpiled at the Tormin Mine Site and from forecast annual production (circa 200,000 to 250,000 tonnes for 2017).

Minimum revenue of US$60 million will be generated from the final delivery over the next five years of the existing stockpile of garnet concentrate and forecast annual production for 2017.

This minimum revenue has been determined using a broad range of exchange rate and price assumptions stipulated in the Offtake Agreement and garnet characteristics including moisture and silica content. Specific information in respect to these assumptions is considered to be commercially sensitive.

The Binding HOA contemplates US$5.2 million being paid by GMA to MRC within 2 days of HOA execution, as pre-payment for initial garnet concentrate to be delivered to GMA during 2017.

MRC will provide a segregated and dedicated leased area located on the Tormin Mine Site at which GMA can take delivery of garnet concentrate following payment.

Furthermore, GMA have agreed to pay for all historically incurred and future stockpile capital and maintenance costs relating to the increased stockpiling capacity required by GMA.

The original Loan Agreement with GMA provided for repayment and interest charges to commence on the continuous delivery of garnet concentrate in accordance with the Offtake Agreement. The parties have now agreed that the loan repayment and interest charges will commence 30 days following execution of the HOA.

Whilst the HOA is legally binding, the parties have agreed to:-

  • formally amend the Offtake Agreement (and enter into other documentation necessary to give effect to the matters in the HOA) within 1 month of execution of the HOA, and
  • give physical effect to the stockpiling and security arrangements within 1 month of execution of the HOA.

 

If these milestones are not achieved and alternate arrangements are not agreed, the arrangements contemplated in the HOA may be unwound, provided always that MRC will retain the US$5.2m prepayment and GMA will remain entitled to that volume of garnet concentrate as is represented by the US$5.2m prepayment.

 

Executive Chairman Mr Mark Caruso stated:

The significant value of the stockpiled garnet concentrate has now been realised under the HOA. 

On completion of agreement amendments, the GMA Offtake Agreement will provide definitive commercial outcomes and a certainty in terms of sales tonnage into the future. The GMA Offtake commitment effectively underpins the financial viability of the Tormin Mine Site into the future and recognises the importance of the Tormin Project as a world class garnet producer.

The arrangements agreed in the HOA enhance the strong working relationship that has developed between GMA and MRC.”



The Delphic Provision

MSR successful in court ruling over Search & Seizure warrent

Mineral Commodities Ltd (ASX: MRC) (“the Company”) advises that its South African Subsidiary Mineral Sands Resources (Pty) Ltd’s (“MSR”) application to set aside the search and seizure warrant, issued by the Department of Environment Affairs (“DEA”) in South Africa, was successful.

In the Judgement delivered, the High Court of South Africa (Western Cape Division, Cape Town) (“Court”) declared the said warrant to be invalid and is set aside.

Judge Rodgers advised that “MSR has achieved substantial success” and ordered that the respondents pay MSR’s legal costs, including MSR’s legal Counsels costs. The Judgement confirms as previously advised, that the Company operates its Tormin Mining operation under the South African Governments One Environmental System which came into effect on December 8th, 2014. This legislation provides that the Competent Authority for all matters relating to environmental authorisations and compliance of the National Environmental Management Act, 1998 (“NEMA”) is the Department of Mineral Resources (“DMR”) insofar as the activities relate to mining or prospecting. Despite the legislative and vested authority resting with the DMR and ongoing compliance inspections by the DMR, the Company received an unsolicited inspection by the Department of Environmental Affairs (“DEA”) during the September 2016 quarter under the auspices of a search and seizure warrant.

Despite ongoing cooperation with the DMR and all other Government Regulatory Authorities the Company was perplexed by the manner (via search warrant) and the authority on which the DEA relied on to conduct such inspections as well as the nature of the alleged breaches and charges made against the Company. MSR had since December 2014 held the view that the DMR had exclusive authority to investigate environmental complaints and the Court held that this challenge to the DEA’s jurisdiction should have been disclosed to the Magistrate when the DEA applied for the warrant.

Such failure to make this disclosure was fatal to the lawfulness of the warrant. It is important to note that no charges have been laid against the Company in relation to the search and seizure warrant and the Company has operated with an unblemished record with no prosecution ever been made against the Company or its officers since its commencement of the Tormin operation in 2013.

The Company is hopeful that the Judgement provides the regulatory authorities clarity in relation to the DMR being the Competent Authority governing mining operations in South Africa and will continue to operate with full regulatory compliance as it has done since Tormin mining operations commenced.

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

Preliminary Final Report – 2016

Principal activities

The principal activities of the Group during the year were mineral sands mining and processing at the Group’s Tormin Mineral Sands Project (“Tormin” or the “Tormin Project”) in the Western Cape Province of South Africa, undertaking procedures and evaluation for the future development of the Xolobeni Mineral Sands Project (“Xolobeni” or the “Xolobeni Project”) in the Eastern Cape Province of South Africa, and investigations into other mineral resources.

Dividends

During the year ended 31 December 2016, the Directors declared a final unfranked dividend for the year ended 31 December 2015 of 1 Australian cent per ordinary share, for a total distribution of A$4,049,416 based on the number of ordinary shares on issue as at 31 December 2015. As the dividend is unfranked, there are income tax consequences for the owners of the Company relating to this dividend.

Review of operations

The operations and financial position of the Group and its business strategies is set out below. The following key production and sales metrics were achieved by the Tormin Project in 2016.

Production – Full Year 

Mining

1,807,750 tonnes mined at a grade of 45.96% Heavy Mineral Concentrate (“HMC”) consisting of:

  • 29.21% Garnet;
  • 12.97% Ilmenite;
  • 2.78% Zircon;
  • 0.62% Rutile;
  • 0.38% Leucoxene

Production and Processing

658,857 tonnes, including 49,581 tonnes of high zircon content Ilmenite concentrate refeed and 16,109 tonnes of Garnet concentrate refeed, processed through the Garnet Stripping Plant / Secondary Concentrator Plant (“GSP/SCP”) to produce:

  • 270,802 tonnes Garnet concentrate;
  • 211,704 tonnes Ilmenite concentrate;
  • 35,813 tonnes Zircon/Rutile concentrate.

Sales

Full Year: $26.9m

  • Zircon/Rutile concentrate: 38,408 wet metric tonnes
  • Ilmenite concentrate: 4,070 wet metric tonnes
  • Garnet concentrate: 130,308 wet metric tonnes




165,000 tonnes of ilmenite concentrate shipped to Chinese buyers

The first half of 2017 will mark a significant milestone for Mineral Commodities, as they shipment over 165,000 tonnes of ilmenite concentrate to Chinese buyers.

 

The first shipment of 55,000 wet metric tonnes of ilmenite concentrate was shipped via the MV Porthos, which departed Saldanha Port, South Africa on 26th February 2017 and was received in China in March 2017.

The second shipment of 55,000 wet metric tonnes ilmenite concentrate was shipped via the MV Athos, which departed Saldanha Port, South Africa on 15th April 2017 and is expected to arrive in China May 2017.

A third shipment of an estimated 55,000 wet metric tonnes of ilmenite concentrate commenced loading on the MV Zhou Shan Hai in Saldana Port on 30th April 2017, and is expected to sail in early May 2017 for arrival in China end of May / early June 2017.

Environmental and economic costs of producing sulphate ilmenite have led to China to continually reduce domestic production, a factor which has contributed to the overall tightening of global ilmenite supply.

Mineral Commodities Ltd are currently experiencing strong demand for its ilmenite concentrate, as high growth in several end user industries in the emerging economies of India and China are expected to continue to drive market growth in the Asia Pacific region.

The Company is currently producing circa 20,000 tonnes of ilmenite concentrate each month from its Tormin Operations, located in the Northern Cape of South Africa, and is expecting in excess of 200,000 tonnes of ilmenite concentrate to be sold in 2017.




Annual Tormin Mineral Resource Update

Mineral Commodities Ltd have released their Annual Tormin Mineral Resource Update (see below report in full).

Update highlights;

  • Resource reconciliation from the 2016 production data indicates that production grade exceeded the resource grade. This is due to strict grade control procedures on the mine site. The mine also actively targets replenishment areas after high storm or tide surges that contains higher than the background resource grade.
  • The average total HMS mined grade during 2016 was 64% higher than that of the December 2015 inferred resource statement (45.97% joined against 28.01% inferred). The higher grade is partly a function of the processing and recycling of ilmenite that was not sold during 2015.
  • The average Zircon grade mined during 2016 was 78% higher than that of December 2015 inferred resource statement (2.78% mined against 1.56% inferred).
  • The remaining resource that has not been mined is inferred to be 680,000 tonnes or 37.7& of the remaining resource of 1.8 million tonnes (Du Toit, 2016)
  • Mine production during 2016 achieved a 52.8% Zircon recovery (26 537 tonnes from a head feed containing ~ 50 255 tonnes)
  • Reconciliation of the 2016 mine production data indicates a 64% higher total HMS grade (45.97% mined against 28.01% inferred).
  • The mine has an approved environmental management programme and has been subject to an environmental impact assessment. There are no environmental directives in place against the mining operation.
  • Tailings are returned to the beach, where they are distributed and settled along the coastline naturally by the wave and sea current action. There are no pollutants introduced with the tailings and the material is inert.




Xolobeni Sale Announcement

MRC ENTERS INTO MOU WITH BEE PARTNER TO DIVEST INTEREST IN XOLOBENI MINERAL SANDS PROJECT 

Mineral Commodities Ltd (“MRC” or “the Company”) advises that it has entered into a Memorandum of Understanding (“MOU”) with its Black Economic Empowerment (“BEE”) Partner for the Xolobeni Project, Keysha Investments 178 Pty Ltd (Keysha), to divest its 56% interest in Transworld Energy and Resources (SA) Pty Ltd (“TEM”), the entity which owns the Xolobeni Mineral Sands Project, to Keysha on terms to be agreed between the parties. 

MRC has committed significant financial, technical and social resources toward the development of the Xolobeni Mineral Sands Project (“Xolobeni Project”) since 2003. Throughout the past thirteen years, MRC has successfully worked with the regulatory development programme and IAP stakeholders. The Company has engaged in many years of ongoing and meaningful consultations with the local community at Xolobeni, and has always prioritised the wellbeing of the Amadiba Community. The Company has accepted that attempts to facilitate peaceful and safe site access by independent environmental consultants to adequately assess the possible environmental impacts of the Xolobeni Project continues to cause undue tensions and conflict, something that the Company has openly tried to avoid.

The Company has, and always will have an ambition to bring prosperity and economic upliftment to the local Amadiba Pondo land inhabitants and the greater Mbizana district, and continues to believe that the Xolobeni Project offers significant value to enable economic upliftment. In light of the ongoing violence and threats to the peace and harmony of the local Xolobeni community, the Company accepts that the future viability of the Xolobeni Project should be managed by stakeholders and organisations exclusively owned by South African people. As such and after due consideration, the Company has decided, subject to satisfactory commercial negotiations, agreement with the other remaining shareholder, and any regulatory or shareholder approvals that may be required, to divest of its interest in the Xolobeni Project. Accordingly the Company is pleased to announce that the Company and its wholly owned subsidiary MRC Resources Pty Ltd has entered into an MOU with its BEE partner, Keysha, for the sale of the Company’s shareholding interest in TEM. The decision was made after extensive consultation with Keysha, who shares the view that the development of the Xolobeni Project is critical to the social and economic upliftment of the local Amadiba Pondo land inhabitants and the greater Mbizana district, and that the Xolobeni Project’s development should not be influenced directly or indirectly by the stakeholder focus being placed on an international mining company, as opposed to legitimate debate surrounding the economic benefits (or otherwise) and the environmental issues concerning the development of the Xolobeni Project. The Company fully supports the ongoing development of the Xolobeni Project and its decision to divest is in no way a reflection of its commitments of its mining interests in South Africa. Further details of the terms of the proposed divestment in the Xolobeni Project will be notified upon signing of definitive sale agreements.

The Company continues to invest in and operate the Tormin Mineral Sands Operation (“Tormin”) on the West Coast of South Africa, which currently employs over 200 local community members of the Matzikama region. In addition, the Tormin operation employs 40 local members of the Amadiba Pondo region surrounding Xolobeni, which has been appointed as the Company’s designated labor sending area in accordance with Tormin’s Social Labour Plan and Mining Charter Agreement. The Company remains dedicated to providing the training, education and employment initiatives to the local members of the Amadiba Pondo region, in addition to the various community programmes such as the agricultural farming and primary livestock developments.

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