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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

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.


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 


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.


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


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.

2016 AGM

2016 Annual General Meeting

Mineral Commodities Annual General Meeting was held at the offices of BDO in Subiaco on the 25th of May 2016, where the Company’s Board, Shareholders and Senior Management came together to review the operational performance of 2015, and discuss the performance results as released in the 2015 Annual Report.

Mark Caruso, Chairman and CEO of Mineral Commodities conducted a comprehensive review of the Company’s performance in 2015, and provided additional insight into the Company’s impressive safety and environmental standards and record since it began operations late 2013.

During the presentation, Mr. Caruso took the time to review all the Social Labor Plan (SLP) initiatives the Company has taken over the past year, including projects that included building a resource centre at local primary school, offering ABET Training to all staff and community members surrounding the Tormin area, as well as offering Maths ad Accountancy skills to Year 12 students to assist them in their final years in secondary school.

Mirabaud: MRC’s growth is twofold as Tormin expands

The below post is a direct extract from the report released by Mirabaud on the 29th of April. The full report can be downloaded in full below

During March quarter MSR (MRC’s 50% owned South African subsidiary) concluded the financing arrangements (a loan facility provided by the GMA group – MSR’s garnet off-take partner) for the garnet stripping plant (GSP) at its Tormin mineral sands project in SA. The plant has been budgeted at US$4.5m and is planned for an early Q3 2016 commissioning.

The GSP, which will be installed in front of the existing secondary concentrator plant (SCP), will enable MRC to produce a higher-value garnet concentrate by stripping out the garnet prior to the SCP, improving the grade of non-mag feed into the SCP. That, coupled with the commissioning of the tailings scavenger plant (TSP – will re-treat the PBC tailings stream increasing the PBC’s throughput by ~15%), will boost overall zircon recoveries to >75% from current levels of ~55% as well as yielding a higher grade garnet by-product.

Moreover, the granting of the offshore prospects and the prospecting rights to the north of the current beach operations is an important step towards achieving an increase in the resource base, which in our view could re-rate the company’s share price

New resource replaces tonnage mined

MRC has recently announced (26 April) an updated inferred JORC resource of 2.7Mt which indicates that since mining started (early 2014) the action of the sea has replaced the entire mined volume (2.7Mt over a period of two years). However, resource replenishment is happening at a constantly diminishing grade particularly after the third time an area is mined.

Thus, we have now adopted a declining grade profile for our Tormin model, which assumes a 15% annual reduction in the HM grade from 2017 onwards (see p5 – for 2016 we are maintaining our grade assumption). However, a further understanding of how the replenishment happens and its likely future pattern can only be confirmed after the finalisation of the offshore exploration (early 2017).

Maiden dividend makes MRC more attractive

As a result of the strong annual results, the company declared a maiden dividend of A$0.01/share which offers a very attractive yield of ~7% (based on MRC’s current share price). That would put MRC at the top of the select group of those few mineral sands producers paying a dividend.

Valuation update

We have updated our model mainly by adjusting our (more conservative) Tormin LoM grade profile according to the company’s new resource estimate as well as our operating assumptions according to the Q1 2016 results. Our revised valuation has also been impacted by a short-term correction of our assumed product prices as well as by a ~9% strengthening of the A$ since our last note (2 September 2015). Our TP is now A$¢17.1 (~4% down from A$¢17.9 previously) offering >20% upside to MRC’s current share price and we thus retain our stance on the stock at SPECULATIVE BUY.

Community Engagement at Xolobeni

MRC is committed and strives to be a responsible corporate citizen, uplifting and investing our achievements into the local communities around our areas of operation.

Over the period of time from 2002 to 2016, Mineral Commodities have been involved in at least four public participation processes to engage with interested and affected parties in relation to various prospecting right applications and Mining Right Applications. Consultations included the local royal family, the Eastern Cape Cabinet, the district municipality, the local municipality and the local Chamber of Commerce. The consultation was undertaken and a full report submitted to the DMR.

In 2015, the Company facilitated a public participation event, facilitated by an independent company and nominated Environmental Consultant. This provided the perfect opportunity for opponents to voice their concerns and place their comments on record.  The results of this well-advertised process were as follows;

  • 498 comments/issues raised by roughly 200 people

Based on the comments received the following:

  • 77% either fully support the mine or want the mine to build infrastructure (schools, roads, clinics etc) to upgrade the region
  • 10% are against the mine in principle
  • 5% Are undecided or have no opinion
  • 8% Wanted further studies to be done or more information

Accordingly on any statistical evaluation as well as the public participation process that has been conducted, the majority of the population supports the mining project, or at least wishes it to be assessed. 

Whilst the most recent official engagement, the 2015 efforts were not the first.

Since 2002, the Company has been involved in at least four public participation processes that engaged with interested and affected parties in relation to various prospecting right applications and Mining Right Applications. Consultations included the local royal family, the Eastern Cape Cabinet, the district municipality, the local municipality and the local Chamber of Commerce. For each consultation undertaken, a full report submitted to the DMR.

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