Mineral Commodities

Financials:

Primary ticker: ASX:MRC
Stage of development: Exploration, Development, Production
Primary minerals: Battery Minerals (Graphite), Heavy Minerals (Mineral Sands), transitioning to graphitic anode
Project to promote: Battery Minerals expansion, transition from graphite concentrate producer to graphitic anode supplier in Europe, Munglinup Australian Graphite project, Tormin heavy mineral sands and Skaland graphite operations
Project location: Europe, Australia, Africa
Website: www.mineralcommodities.com/

Mineral Commodities Ltd (ASX: MRC) is a global mining and development company with a primary focus on the development of high-grade mineral deposits within the critical and industrial minerals sectors.

The Company is a leading producer of zircon, rutile, garnet, and ilmenite concentrates through its Tormin Heavy Minerals Operation, located on the Western Cape of South Africa.

In October 2019, the Company completed the acquisition of Skaland Graphite AS, the owner of the world’s highest-grade operating flake graphite mine and a significant producer in Europe.

The planned development of the Munglinup Graphite Project, located in Western Australia, builds on the Skaland acquisition and is a further step toward an integrated, downstream value-adding strategy which aims to capitalise on what the Company anticipates will be fast-growing demand for sustainably manufactured Lithium-Ion Batteries.

As part of its battery minerals strategy, MRC is also investing in a downstream value-adding strategy targeting the production of low CO2 emission, environmentally sustainable natural battery anode material from both the Skaland and Munglinup natural flake concentrates. MRC’s anode strategy is targeting the production of natural anode material from dedicated anode plants in Europe and Western Australia as early as 2023, which aims to capitalise on the fast-growing demand for sustainably manufactured Lithium-Ion Batteries.

Cash: USD$2.2M (31 Mar 2022)
Debt: USD$9.3M (31 Mar 2022)

Major Shareholders:
AU Mining Limited – 28%
HSBC Custody Nominees (Australia) Limited – 22%
Citicorp Nominees Pty Limited – 15.16%

Management Profile

Jacob Deysel – Managing Director and Chief Executive Officer

Jacob has extensive executive, mining, and project development experience, having held senior executive and board positions in the mining industry across numerous commodities in Africa, South America, Europe and Australia. Importantly, he has close to 20 years’ experience in the heavy minerals industry and was formerly the Vice President of the Titanium division of Uranium Energy Corp, Operations Director and Chief Operations Officer of Kenmare Resources plc, one of the world’s largest mineral sands producers and General Manager of Rio Tinto’s Richards Bay Minerals, the world’s largest single producer of titanium feedstocks. Jacob has recently held senior positions within Newmont Gold in Australia and previously with Gold Fields Ltd in South Africa. He is a member of the Southern African Institute of Mining and Metallurgy and the Australian Institute of Company Directors.

Jacob Deysel holds a BSc in Mining Engineering and an MBA, both from the University of the Witwatersrand in South Africa.

Adam Bick – Chief Financial Officer

Adam is a Chartered Accountant with over 22 years of experience in CFO and/or senior managerial positions in the resources industry. His commodities experience incorporates oil, gas, mineral sands and iron ore with companies including Fortescue Metals (where he oversaw $3.5B in capital management), ARC Energy Ltd and New Zealand Oil & Gas. He was appointed Chief Financial Officer in June 2019.

What is your rationale for taking part 121 Mining Investment?

On 29 April 2022 MRC unveiled its Five Year Strategic Plan 2022-2026 (Strategic Plan). The Strategic Plan aims to significantly improve shareholder value through:

• Expansion of MRC’s graphite production through accelerating the development of the Munglinup graphite project in Australia and completing an expansion study and a Final Investment Decision (FID) for potential expansion beyond current mining right of 16Ktpa, targeted for Q2 2023;

• Transition this expanded graphite production into graphitic anode production, feeding the unprecedented increases in planned Li-ion battery production capacity in Europe;

• Expansion of Tormin mineral sands production, subject to permitting, through upgrading and expanding resources for the Inland Strands and potential exploration upside at De Punt and Klipvley Karoo;

• Intention to transition current Tormin concentrate production into higher value finished products targeted for 2023

• Re-branding with a significant focus on ESG

This aggressive Strategic Plan will require significant funding for the proposed Skaland expansion, Munglinup development and commercial anode plant construction. The Company is investigating the possibility of dual listing in Europe in Q2, 2023 to support these expansion plans.

What recent news would you like to highlight to investors attending?

15 Sep 2022 – MRC and Green Graphite Green Graphite Technologies Equity Agreement & Graphite Purification Collaboration

• MRC executes equity and licence agreement with Green Graphite Technologies

• Green Graphite Technologies successful in C$1M Canadian grant funding from Sustainable Development Canada for pilot-scale development of the GraphPureTM process

• With GraphPureTM and the CSIRO purification process, MRC has access to two natural graphite purification technologies advancing into pilot-scale testing and qualification materials supply

14 Sep 2022 – MRC Transitioning into Higher Value Finished Products at Tormin

Mineral Commodities Ltd (“MRC” or “the Company”) is pleased to announce that it has entered into a non-binding Offtake and Funding agreement with Garnet International Resources Pty Ltd, a member of the GMA Group (“GMA Group”) whereby:

(a) MRC agrees to supply GMA Group with finished garnet product in the following volumes:

(i) 2024-2025 – 80ktpa;

(ii) 2026-2028 – 105ktpa; and

(iii) 2029-2033, subject to renewal at GMA’s election – 125ktpa; and

(b) GMA Group agrees to provide MRC with US$10,000,000 in loan funding, repayable over 5 years from 1 January 2024, on commercial terms to fund the design and construction of a 250-300ktpa Garnet and Ilmenite Mineral Separation Plant (MSP) in the Western Cape Region of South Africa.

25 Aug 2022 – Strandline Extension Targets Identified at De Punt

• Extension of Western and Eastern Inland Strandlines to the De Punt exploration lease detected by Airborne Magnetic and Radiometric survey

• Seven major drilling targets in De Punt identified along magnetic anomalies

• Drilling contractor mobilised for 5000m resource definition drilling program

6 June 2022 – Mitsubishi Chemical Holdings Group Announces Enhancement Strategy

Mineral Commodities Ltd (ASX: MRC) is pleased to advise shareholders of the release of Mitsubishi Chemical Holding Group’s (MCHG) Anode Material Enhancement Strategy which refers to the recent MOU and collaboration with our Company1. A copy of the announcement is annexed hereto. MRC recently announced a strategic collaboration with Mitsubishi Chemical Corporation (MCC)2, which is one of the main operating companies of MCHG. The low swelling natural graphite anode material described in the MCHG announcement is equivalent to the SFMPG targeted in the MRC-MCC Phase 2 collaboration.

MRC is pleased to note that the product surpasses artificial (synthetic) graphite performance and MCHG’s increase from qualification level to commercial scale production, indicating market acceptance of the new product.

What are your key goals in 3 months, 6 months, 12 months?

3 Months:

• Funding for graphitic anode pilot plant, resource and reserve drilling and expansion studies;

• Technology partnerships and acceleration of the technology qualification process

6 Months:

• Cultural change towards ESG, zero harm and people focus – from Board to operations

• Exploration permitting and initial resource drilling at De Punt, adjacent to the Tormin heavy mineral sands operation

• Munglinup reserve drilling and resource expansion drilling at the adjacent E74/505

• Skaland down dip reserve drilling

12 Months:

• Feasibility study completed for targeted Skaland expansion and Munglinup development

• FID for accelerated Munglinup development, subject to permitting, and targeted Skaland expansion

• Graphitic anode offtake qualification, then commercial plant construction and production

• Vertical integration of business units from mine to downstream higher value products

• Funding for targeted Munglinup development, Skaland expansion and first commercial anode plants at Skaland and Munglinup;

What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?

• Environmental permitting approval for Munglinup. All required final documents have been sent for final environmental review;

• Targeted Skaland expansion permitting approval;

• Mining Right approval for expanded production of the Inland Strands at Tormin. Management are actively engaged with the regulator;

• Sufficient funding to meet expansion targets. Increased investor relations focus on pivot to a potential European dual list strategy in Q2, 2023;

• Operational cash flow variability resulting from the COVID-19 pandemic, particularly associated with sporadic global shipping of our Tormin exported product. Management are actively engaged with several shipping companies to best manage continuity of product delivery and have significantly diversified sales away from export sales to domestic sales

What do you think makes your company such a compelling investment?

Early Mover Advantage To Supply European EV/ Battery Storage Space

• Electric vehicles (EV) and battery storage require graphite, hence graphite is a global strategic critical mineral

• European based world class Skaland graphite mine and future graphitic anode production

• Successfully produced battery grades from Skaland and Munglinup graphite using environmentally friendly process

• Munglinup being accelerated, FID Q2 2023. DFS in Jan 2020 at 52ktpa

Diversified cash flows from World Class Assets

• Operating heavy minerals mine, strong operating cash flows, transitioning to vertical integration to finished product

• Operating battery minerals graphite mine, being returned to profitability, license to expand production by 60%,

• Munglinup graphite near-term development (FID Q2 2023) provides further diversification

• Vertically integrated graphitic anode PFS in September 2020 valued the graphitic anode business NPV at US$1Bn

Significantly Undervalued Market Capitalisation

• Focus on sustainable and responsible mining, sustainability frameworks, providing opportunities for ESG investors

• Current share price A$0.125, market high A$0.430. Underlying business has not changed

• Current market value A$66M. Battery Minerals vertically integrated graphitic anode PFS in September 2020 valued the graphite downstream anode business at US$1Bn, excluding the significant NPV of our Heavy Minerals asset

• Structural mispricing of company assets – current valuation easily justified by Mineral Sand business with no value attributed to graphite strategy.

Significant resource development and exploration upside potential

• Heavy Minerals resources at 562Mt, reserves in play only 21.8Mt. Further upside expanding and upgrading resources for the Western and Eastern Strandlines, De Punt and Klipvley Karoo Inland Strands prospecting applications

• Battery Minerals resources at 9.8Mt, reserves in play only 4.9Mt. Targets for increased resources at Skaland at depth, Munglinup along strike. Exploration upside at Bukken, Hesten and Vardfjellet prospects near Skaland and E74/565 adjacent to Munglinup

• Strategic M&A opportunities. Secondary focus diversifying into other critical and industrial minerals and technologies.