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    Todays Announcement - Mineral

    Xolobeni Project Update

    Document date: Tue 25 Jun 2002 Published: Tue 25 Jun 2002 10:57:01
    Document No: 218403 Document part: A
    Market Flag: Y
    Classification: Progress Report
    MINERAL COMMODITIES LTD 2002-06-25 ASX-SIGNAL-G

    HOMEX - Perth

    +++++++++++++++++++++++++
    Mineral Commodities Ltd (ASX: MRC) has received final approvals to
    secure a key investment by the South African Export Development Fund
    (SAEDF) which is expected to underpin the funding and development of
    the world class Xolobeni mineral sands project on South Africa's east
    coast.

    The Australian-based resource group said today (Tuesday) that it
    would proceed with a pre-feasibility study on the strategically
    located Xolobeni Project, in the Eastern Cape some 200 kilometres
    south of the major east coast port of Durban, after finalising an
    agreement for an initial funding injection by SAEDF.

    The wide-ranging agreement includes the option for SAEDF to acquire
    equity both directly in the Xolobeni Project and a stake in Mineral
    Commodities. It also gives the fund - which was established as a
    joint initiative between ABSA Bank Ltd and the South African
    Department of Trade and Industry - a 6-month mandate to present a
    funding proposal for the development of the Xolobeni Project,
    including a new smelting operation.

    Mineral Commodities has completed all formal documentation, and
    received written confirmation that all conditions precedent have been
    fulfilled or otherwise dealt with, for the agreement, which
    comprises:

    * an initial R18 million (A$2.9 million) investment by SAEDF in
    Mineral Commodities' wholly-owned subsidiary, the South African
    registered MRC Resources (Proprietary) Limited to acquire 10% of its
    issued capital. MRC Resources is currently increasing its interest in
    the holding company which owns the Xolobeni Project (Transworld
    Energy and Minerals Resources, TEM) from 49% to 80% by meeting
    certain funding commitments;

    * the right for the SAEDF to convert this equity in MRC Resources
    into fully-paid shares in Mineral Commodities up until 31 December
    2003 on the basis of converting the R18 million investment into 5.17
    million shares at approximately 56 cents a share. On conversion, the
    SAEDF's equity in MRC Resources will be cancelled;

    * the right for the SAEDF to acquire a direct 20% interest in the
    Xolobeni Project by subscribing for shares in TEM between 30 June
    2003 and the completion of a Bankable Feasibility Study. The value
    of equity in TEM will be determined by an independent valuation to be
    commissioned at the time and will be discounted by the initial
    investment plus 10%;

    * the award of an exclusive 6-month mandate to the SAEDF to present a
    funding proposal for the development of the Xolobeni Project,
    including a new smelting operation; and

    * a first right of refusal for the SAEDF to provide funding for other
    projects in Africa held by MRC Resources.

    Mineral Commodities' Managing Director, Mr Mark Caruso, said the
    transaction was based on an agreed value for the Xolobeni Project of
    approximately R225 million (approximately A$36 million).

    "This agreement creates an association between Mineral Commodities
    and one of Africa's leading development funds that will underpin the
    development of the Xolobeni Project," Mr Caruso said.

    "We are delighted to have attracted the support and backing of the
    SAEDF to develop this important project, which has the potential to
    generate significant benefits for the Transkei economy in the Eastern
    Cape including employment, new infrastructure and amenities and
    education & training," be added.

    "There is significant support for the Xolobeni Project within the
    Eastern Cape and South Africa because of its potential contribution
    to black empowerment and upliftment in the currently depressed
    Eastern Cape region and its ability to generate a long-life royalty
    stream," Mr Caruso said.

    He went on to say that the Project development would deliver enormous
    value to Mineral Commodities shareholders, giving the Company
    significant ownership of a top-10 titanium feedstock producer.

    The Xolobeni deposit comprises a current resource of 196 million
    tonnes at 6.7% Total Heavy Minerals (THM) with a 15.2% slimes
    content. The ilmenite content is estimated at 3%, while the rutile
    and zircon contents are estimated at 0.2% each. The chrome content of
    the ilmenite is very low and it requires no pre-processing prior to
    smelting.

    Independent assessments conducted by Mintek in South Africa have
    confirmed that the ilmenite is suitable for smelting to produce an
    enriched slag (86% TiO2) which is suitable for pigment production by
    the chlorination process.

    Mineral Commodities today also announced the signing of a Memorandum
    of Understanding (MoU) with the East London Development Zone
    Corporation (ELDZC) to jointly undertake a pre-qualification study
    into the establishment of an ilmenite smelter at East London, on the
    South Africa's east coast south of Xolobeni.

    The ELIDZ is one of several 'Industrial Development Zones' or IDZ's
    being gazetted by the South African Government to promote industrial
    development in parts of the country requiring new investment and
    economic upliftment, such as the depressed Eastern Cape region. Phase
    1A of the ELIDZ comprises a 250-hectare site, due to become a
    duty-free area, and Phase 1B is earmarked for a 110-hectare
    industrial park.

    Under the MoU, Mineral Commodities has been granted an exclusive
    option to enter into a 30-year lease with an option to renew for 20
    years on 10 hectares of land within the proclaimed IDZ at East
    London.

    The Xolobeni Project comprises a geographically strategic resource of
    heavy minerals which is slated conceptually for development as a 5
    million tonne per annum start-up mining operation producing some
    250,000 tonnes per annum of ilmenite concentrate to supply a new
    smelting operation.

    At this production rate, the project would yield 146,000 tonnes per
    annum of 86% TiO2 slag and 76,000 tonnes per annum (tpa) of pig iron,
    placing it in the top 10 titanium dioxide feedstock producers in the
    world. The operation will also produce a minimum of 10,000 tpa each
    of rutile and zircon concentrate.

    Based on this conceptual production rate, the integrated Xolobeni
    Project would generate an operating revenue of $150 million per annum
    over a long project life, currently estimated at in excess of 20
    years.

    "Having completed this funding agreement with the SAEDF, we will
    commence an extensive drilling program in July 2002 which we are
    confident will significantly increase this resource base and the
    current valuation of the project," Mr Caruso said.

    "We will also commence work immediately, in conjunction with the
    ELDZC on the parameters of a possible ilmenite smelting operation at
    East London."

    The Xolobeni deposit is ideally suitable for a large-scale
    conventional dry mining operation, followed by processing in a wet
    concentrate facility, secondary treatment and dry separation with the
    initial target of supplying one slag furnace offsite.

    Mineral Commodities, through MRC Resources, currently owns 49% of the
    Xolobeni Project and has expended $420,000 of its $1 million
    expenditure commitment to earn an additional 26%.

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