2015 Annual Report

Table of contents

1 Corporatedirectory

2 Chairman’sreport

5 Directors’report

21 Financialstatements

22 Consolidatedincomestatement

23 Consolidatedstatementofcomprehensiveincome

24 Consolidatedbalancesheet

25 Consolidatedstatementofcashflows

26 Consolidatedstatementofchangesinequity

27 Notestotheconsolidatedfinancialstatements

63 Directors’declaration

64 Auditor’sindependencedeclaration

65 Independentauditor’sreporttothemembers

67 Statementofcorporategovernance

82 Shareholderinformation

The consolidated financial statements are presented in United States Dollars (“$”), unless otherwise stated,

which is the Company’s presentation currency.

1

DIRECTORSMark Victor Caruso

Executive Chairman and Chief Executive Officer

Joseph Anthony Caruso

Non-Executive Director

Peter Patrick Torre

Non-Executive Director and Company Secretary

Guy Redvers Walker

Senior Independent Non-Executive Director

Colin Ross Hastings

Independent Non-Executive Director

PRINCIPAL REGISTERED OFFICE IN AUSTRALIA40MurrayRoadNorth

WelshpoolWA6106

Telephone:+61(8)62531100

Facsimile: +61(8)92583601

Email: info@mncom.com.au

AUDITORSBDO Audit (WA) Pty Ltd

38StationStreet

SubiacoWA6008

SOLICITORSTDC Legal Pty Ltd

Level15,251AdelaideTerrace

PerthWA6000

ENSafrica

150WestStreet

Sandton

Johannesburg2196

SouthAfrica

Steinepreis Paganin

Level4,TheReadBuildings

16MilliganStreet

PerthWA6000

BANKERSNational Australia Bank

Suite7,51KewdaleRoad

WelshpoolWA6106

SHARE REGISTRYLink Market Services Limited

Level4,CentralPark

152StGeorgesTerrace

PerthWA6000

STOCK EXCHANGE LISTINGTheCompany’ssharesarelistedontheAustralian

SecuritiesExchange(ASX)underASX Code MRC

WEBSITE ADDRESSwww.mineralcommodities.com

COMPETENT PERSON STATEMENTTheinformation,ifany,inthisreportwhichrelatesto

explorationresults,mineralresourcesororereserves

forXolobeniMineralSandsProjectisbasedon

informationcompiledbyMrAllenMaynard,whois

aMemberoftheAustralianInstituteofGeosciences

(“AIG”),acorporatememberoftheAustralasian

InstituteofMining&Metallurgy(“AusIMM”)and

independentconsultanttoMineralCommoditiesLtd.

MrMaynardisthedirectorandprincipalgeologist

ofAlMaynard&AssociatesPtyLtdandhasover

35years’ofexplorationandminingexperience

inavarietyofmineraldepositstyles.MrMaynard

hassufficientexperiencewhichisrelevanttothe

styleofmineralisationandtypeofdepositunder

considerationandtotheactivitywhichheis

undertakingtoqualifyasaCompetentPersonas

definedinthe2004Editionofthe“AustralasianCode

forreportingofExplorationResults,Exploration

Targets,MineralResourcesandOreReserves”

(JORCCode).Thisinformationwaspreparedand

firstdisclosedundertheJORCCode2004.Ithas

notbeenupdatedsincetocomplywiththeJORC

Code2012onthebasisthattheinformationhasnot

materiallychangedsinceitwaslastreported.Mr

Maynardconsentstoinclusioninthereportofthe

mattersbasedonthisinformationintheformand

contextinwhichitappears.

Theinformation,ifany,inthisreportwhichrelates

toexplorationresults,mineralresourcesorore

reservesforTorminMineralSandsProjectisbasedon

informationcompiledbyMrAdriaanduToit,whoisa

MemberoftheAusIMMandanindependentconsultant

toMineralCommoditiesLtd.MrduToitisthedirector

andprincipalgeologistofAEMCOPTYLTDandhas

over23years’ofexplorationandminingexperiencein

avarietyofmineraldepositsandstyles.MrduToithas

sufficientexperiencewhichisrelevanttothestyleof

mineralisationandtypeofdepositunderconsideration

andtotheactivitywhichheisundertakingtoqualify

asaCompetentPersonasdefinedinthe2012Edition

oftheJORCCode.TheinformationfromMrduToit

waspreparedundertheJORCCode2012Edition.

MrduToitconsentstoinclusioninthereportofthe

mattersbasedonthisinformationintheformand

contextinwhichitappears.

Corporate directory

2

Chairman’s report

DearShareholders,

OnbehalfoftheBoardofyourCompany,itiswith

pleasurethatIpresenttheannualreportfortheyear

ended31December2015.

Iswasanothersolidyearofoperationalperformance

attheTorminMineralSandsProject(Tormin)and

itispleasingtoreportanetprofitaftertaxof

US$10.6million.Thekeymetricscontainedwithin

theaccompanyingreport,coupledwiththeBoard’s

optimisticviewonfutureperiods,underpinthe

Board’sdecisiontodeclareamaidendividendof

oneAustraliancentpershare.

AsIcommentedatthetimeofthedividend

declaration,itwasalongandarduousprocessin

gettingtheTorminProjecttodevelopmentstage,and

theoperatingperformancetodatehassomewhat

vindicatedtheBoard’sresolvetocontinueitsstrategy

ofdevelopingthisasset.TheBoardexpectsitscapital

managementstrategy,whichincludesreturnsto

shareholderstocontinueinthecomingperiodsasit

rollsouttheexistingexpansioninitiatives,whichwill

furtheroptimisetheoperatingperformanceofthe

Company.

TheCompany’simpeccablesafetyrecordcontinues

tobeindustrybeststandard,withtheCompany

celebrating1,000,000losttimeinjuryfreehours

duringtheyear.

TheCompanypositioneditselfduringtheyear,

throughthecancellationoftheWogenofftake

agreement,tosellitsnon-magneticheavymineral

concentratetobuyersonanunrestrictedbasis.

ThiswasofbenefittotheCompanyandprovided

fortheopportunitytodirectlymarketitsproduct

inordertoachievethebesteconomicoutcome.

ThelegacyissuesassociatedwithBlastritewere

alsoresolvedduringtheyear,withtheHighCourtof

SouthAfricadismissingBlastrites’CourtApplication.

Garnetconcentrateproductioncontinuedtobe

suppliedandsoldunabatedunderthecontractwith

GMAandstockpiledwithinSouthAfrica.TheGarnet

concentratewillthenbeshippedatGMA’sdiscretion.

Inaddition,theCompanyhascementeditslong

heldbeliefinthepotentialoftheTorminoffshore

andonshoreresourceenhancementbyentering

intoanagreementtopurchasetheGeelwalKaroo

farmtotalingsome1741hectaresfromTronox,where

itsexistingprocessingoperationsarebased.This

underpinsfuturespatialareaforanyexpansion

initiatives.

TheCompanycontinueditsinvestmentin

optimisationandexpansiontoincreaseproduction

ofitscurrentprocessingcapabilities.Duringtheyear,

itcommissionedthefirstphaseoftheseprocessing

upgradesontimeandonbudget,beingtheTailings

ScavengerPlant(TSP)andtheTailingsReturn

Systemtothebeach.ThesecondstageGSPwillbe

commissioninginthesecondhalfof2016andwill

substantiallyincreasefinishedconcentrateproduction

andcontainedvaluableheavyzircon,rutile,ilmenite

andgarnetintherespectivefinishedconcentrates.

Resourcedevelopmentandtenureisalwaysa

matterofimportanceforaminingcompany.Inthe

2014AnnualReport,wewerepleasedtobeable

toreportareplenishmentoftheminedresource,

albeitresultinginareclassificationintotheinferred

category.Giventhenatureofthedepositthe

Companyismining,despitetheCompany’sbest

endeavours,itisdifficulttobeabletoreportanything

greaterthananinferredresourceduetotheconstant

changesoccurringonthebeach.Wecanhowever

reportthatthetonnesminedhaveagainreplenished.

Afullupdateonthisreplenishmentisincludedinthe

CorporateGovernanceSectionofthisAnnualReport.

TheCompanywaspleasedtoadvisethatit’sSouth

Africansubsidiary,MineralSandsResourcesPtyLtd

(“MSR”),wasgrantedanewprospectingrightby

theDepartmentofMineralResources–SouthAfrica.

Theawardedprospectingrightrepresentsanarea

~10,500hainsizeseawardfromtheTorminminearea.

Inadditiontotheawardedrights,MSRhaslodged

twonewprospectingapplicationsalongthebeach

andsurfzonenorthofitscurrentminingoperations

aswellasoverthewholeofthenewlyacquired

GeelwalKaroofarm.Thisfirstapplicationrepresentsa

targetareaof~24km(398ha)alongthecoastlineand

thesecondapplicationanareaof1741ha.Historical

andin-houseexplorationworkhaveindicatedboth

areastobeprospectiveforheavymineralsand

deposits.Theseapplicationsarecurrentlyunder

reviewforapprovalbytheDepartmentofMineral

Resources–SouthAfrica.

The Company’s impeccable safety record continues to be industry best standard, with the Company celebrating 1,000,000 lost time injury free hours during the year.

3

AminingrightapplicationfortheXolobeniMineral

SandsProjectwasalsolodgedinMarch2015.The

Companyholdstheprospectingrightstofourofthe

fiveblocksintheXolobeniMineralSandsProject.

Theminingrightapplicationhasbeenlodged

notwithstandingthepreviouslyadvisedobjections

receivedtotheprospectingrightapplicationtothe

remainingblock,theKwanyanablock.TheCompany

continuestofollowdueprocessinrespecttoits

developmentoftheXolobeniProject.Despitethis,

ithasbeenanunenviabletaskwithopponentsto

thedevelopmentcastingallkindsofdispersions

abouttheactivitiesoftheCompanyinorderto

supporttheircause.Wereiterateoneveryoccasion,

thattheCompanysimplycontinuestofollowthe

properprocessandwearehappytoengageinthe

appropriateforums.

Weseethetangiblebenefitsprovidedtomembers

oftheXolobenicommunitythroughtheirinvolvement

withtheTorminprojectandwecontinuetoactwithin

thespiritoftheBlackEconomicEmpowerment

modeltosociallyupliftdisadvantagedpeople.The

contributionofour50%BEEjointshareholderinthe

Company’ssubsidiaryMSRinassistinginbridgingthe

culturaldividethatcansometimesexistinmanaging

theexpectationsofinterestedandeffectedparties

andcommunitiesissignificant.Wethankthemfor

theirpatienceandguidanceandwehopetobe

abletodeliverontheirdreamofbringingeconomic

benefitstotheircommunity.

TheCompanyrespectsthatwhilstithaslegal

tenuretoconductvariousstudiesunderitsmining

rightsapplication,nopieceofpaperissuedbya

Governmentregulatorderogatestherequirement

ofanapprovedsociallicencetooperate.Withouta

healthyengagementandpresenceinthecommunity,

weareunabletoeffectivelymanageeconomic,

environmentalandsocialexpectations.

TheCompanyacceptsthatsomeenvironmental

andsocialimpactsarenotacceptabletocertain

stakeholders,andthatuncertaintythroughvagueor

limitedinformationabouttheXolobeniprojectexists.

Italsoacceptsthatsomepeoplewillbeideologically

opposed.TheCompanywillcontinuetoactivelyseek

toengagewithallinterestandaffectedparties(IAP)

membersofthelocalcommunityofXolobeni.

Intheinterim,theCompanycontinuestoadvocate

negotiatingapeacefulsiteaccesstocompleteits

environmentalimpactassessmentstudies,sothatwe

canprovidethelocalcommunitywiththenecessary

informationtheyneedtoadequatelyassessfor

themselvesthebenefitsoffutureminingoperations

inXolobeni.

4

ThereweresomechangesintheBoardthrough

theyear.Followinganinternalreview,theBoard

identifiedthatwiththedevelopmentoftheTormin

MineralSandsProjectandprogressionofitsXolobeni

project,afurtherdirectorappointmentwiththe

appropriatetechnicalandgeologicalexperience

waswarranted.Followingaprocessofnomination

andinterviewsconductedbytheRemuneration

andNominationCommittee,MrRossHastingswas

offeredandacceptedtheposition.

TheBoardalsoappointedoneofitsexisting

IndependentNon-ExecutiveDirectors,MrGuyWalker,

tothepositionofSeniorIndependentNon-Executive

Director.Followingtheaforementionedinternalreview

andtheappointmentofmyselfastheCEOofthe

CompanyinadditiontomyExecutiveChairmanship.

MrJamesLeahydecidednottostandforelection

attheCompany’slastAnnualGeneralMeetingand

thereforeretiredbyrotation.TheBoardthanksJames

forhiseffortsonceagain,andthecontributionhe

madethroughouthistenureasadirectorofthe

Company.

OnbehalfoftheBoardIwouldagainliketothank

allthededicatedteamonsiteandattheCompany’s

respectiveofficesfortheireffortsanddedication

throughouttheyear.Itisthroughtheseeffortsthat

youasshareholdersarenowbenefitingandwemust

continuetoacknowledgeandrewardtheeffortsof

ouremployees.

Welookforwardtobeingabletoreportthecontinued

growthanddevelopmentoftheCompanyandto

thankyou,ourshareholders,foryoursupportnotonly

throughouttheyear,butfortheentirejourneytodate.

Mark V. Caruso

Chairman

The Company was pleased to advise that it’s South African subsidiary, Mineral Sands Resources Pty Ltd (“MSR”), was granted a new prospecting right by the Department of Mineral Resources – South Africa.

5

Directors’ report

YourDirectorspresenttheirreportontheconsolidated

entity(referredtohereafterasthe“Group”)consisting

ofMineralCommoditiesLtd(the“Company”)andthe

entitiesitcontrolsattheendof,orduring,theyear

ended31December2015.Theconsolidatedfinancial

statementsarepresentedinUnitedStatesDollars

(“$”),unlessotherwisestated,whichistheCompany’s

presentationcurrency.

DIRECTORSThefollowingpersonswereDirectorsofthe

Companyduringthewholeofthefinancialyear

anduptothedateofthisreport,unlessotherwise

indicated:

Mark Victor Caruso

Joseph Anthony Caruso

Peter Patrick Torre

Guy Redvers Walker

Colin Ross Hastings -appointed2April2015

James Gerald Leahy -resigned27May2015

PRINCIPAL ACTIVITIESTheprincipalactivitiesoftheGroupduringtheyear

weremineralsandsminingandprocessingatthe

Group’sTorminMineralSandsProject(“Tormin”or

the“TorminProject”)intheWesternCapeProvinceof

SouthAfrica,undertakingproceduresandevaluation

forthefuturedevelopmentoftheXolobeniMineral

SandsProject(“Xolobeni”orthe“XolobeniProject”)

intheEasternCapeProvinceofSouthAfrica,and

investigationsintoothermineralresources.

DIVIDENDSSubsequenttoyearend,theDirectorsdeclaredafinal

unfrankeddividendfortheyearended31December

2015of1Australiancentperordinaryshare,atotal

distributionofA$4,049,416basedonthenumber

ofordinarysharesonissueasat31December2015.

Asthedividendisunfranked,thereareincome

taxconsequencesfortheownersoftheCompany

relatingtothisdividend.

REVIEW OF OPERATIONSInformationontheoperationsandfinancialpositionof

theGroupanditsbusinessstrategiesandprospectsis

setoutinthereviewofoperationssetoutbelow:

TheTorminProjectsuccessfullycompleteditssecond

fullyearofproductionachievingthefollowingkey

operatingandfinancialmetrics:

Production – Full Year

Mining:1,624,636tonnesminedatagradeof49.57%

HeavyMineralConcentrate(“HMC”)consistingof:

• 28.94%Garnet;

• 16.15%Ilmenite;

• 3.88%Zircon;and

• 0.60%Rutile.

Production and Processing:597,950tonnesprocessed

throughtheSecondaryConcentratorPlant(“SCP”)to

produce:

• 284,990tonnesGarnetconcentrate;

• 109,959tonnesIlmeniteconcentrate;and

• 44,489tonnesZircon/Rutileconcentrate.

Sales – Full Year: $46.2m

Zircon/Rutile concentrate:45,240wetmetrictonnes

Ilmenite concentrate:Nilwetmetrictonnes

Garnet concentrate:372,466wetmetrictonnes

Corporate and Cash

Cash:Cashbalanceof$4.2millionasat31December

2015,plus$7.0millionintradeandotherreceivables.

Debt:Thebalanceof$0.6millionowingonthe

WogenPacificLimitedpre-financingfacilitywas

repaidinfullon2March2015.

$1.2millionofshareholderloansrepaidandabalance

of$1.2millionasat31December2015,repayableby

30September2016.

SAFETYDuringtheyear,theCompanycelebrated1millionlost

timeinjury(“LTI”)freehours.TheCompanyhasnow

workedinexcessof1,270,000manhourswithoutan

LTIsinceoperationscommencedinOctober2013.

TheCompany’ssafetyrecordcontinuestobeindustry

beststandard.

6

MININGForthefullyearto31December2015,1,624,636

tonneswereminedatTormin(approximately1%

abovebudget)ataHMCgradeof49.57%.

MiningcontinuedtoperforminlinewithallKey

PerformanceIndicators(“KPIs”)intermsofproduction

withsignificantreductionsinoperatingcostsinthe

secondhalfoftheyearduetothedepreciatingRand

anddieselfuelcostsasaresultofglobaldepressed

crudeoilpricing.

Duringtheyear,theCompanyhasgainedaccessto

thepreviouslydeemedexcisedConservationareaon

themininglease.Thisarea,totallingsomeadditional

2.8kilometresofaccessibleminingarea,had

previouslybeenunminedandnotonlyallowedhigher

gradeZircontobeaccessed,butalsogaveadditional

replenishmenttimetootherareasundertheRunof

Mine(“ROM”)plan.

Miningtechniquesalsoevolvedtodealwiththe

ongoingreplenishmentprocessofthebeach.

Themobilisationinthelatterhalfoftheyearof

aspecialisedlargerCaterpillarD8Tlowground

pressure(“LGP”)bulldozerallowedasurfacemining

techniquetobedevelopedwhichinvolvesstripping

ofthelowergradesilicadepositionfromthe

replenishedareasthusexposinghighgradelenses

ofHMbearingore.Thisprocessallowsamuchmore

flexibleminingapproachwhichoptimisesandlimits

beachexcavationbelowsealevelandlimitstotal

materialmovement.

Thecommissioningofthetailingsreturnpumping

systemmitigatedandalleviatedtheloadingand

haulageofPrimaryBeachConcentrator(“PBC”)and

SecondaryConcentratorPlant(“SCP”)processing

tailstothebeachbytraditionalearthmoving

methods.Thisresultedinmuchbetterutilisationof

truckandloaderminingequipment.

PROCESSINGPBCbudgetedproductionwasnotachieveddueto

thedelayintheinstallationandcommissioningof

theGarnetStrippingPlant(“GSP”)causedbythe

Blastrite(Pty)Ltdlitigation.

Atotalannualproductionof473,445tonnesofHMC

wasproducedthroughthetwoPBCs.

TheCompanyprocessed597,950tonnesthrough

theSCPforthe2015year,being8%belowbudget.

ThebalanceofSCPfeedof124,505tonneswas

sourcedasdirectfeedfromhighgradeROMmaterial,

whichrequirednoprimaryconcentrationduetoits

extremelyhighgrade.

TheannualizedprocessingthroughputfortheSCP

continuedat80tonnesperhour(“tph”),wellabove

nameplatecapacityof63tph.Onanadjustedbasis

forthedelayintheGSP,theSCPcontinuedto

operateabovebudget.

SCPplantrecoverieswereslightlydownfortheyear,

afteradjustingforthedelayintheGSP,butwerein

linewithexpectationsduetotheincreasedSCPfeed

gradeandadditionalthroughput.

Annualnon-magneticZircon/Rutileconcentrate

productionto31December2015was44,489tonnes.

AnnualIlmeniteandGarnetconcentrateproduction

to31December2015was109,959tonnesand

284,990tonnesrespectively.

Totalprocessingunitcashcostswerewithinbudget

afteradjustingforthebudgetassumptionthattheGSP

wouldbecommissionedbythestartofOctober2015.

Allaspectsofprimaryandsecondaryprocessing

productionthroughthePBCsandtheSCPwere

alsoaffectedbyindustrialactionduringtheyear,

whicheffectivelyresultedinfivetosixweeksof

subduedproductionduetounavailabilityofthefull

labourforceandstrikeactionfromUnionmembers

preventingaccessattimestoprocessingplantona

fulltimebasis.

Inadditiontherewasatotalmainpowerstation

failurewhichresultedin4dayslosttime.

TheCompanyalsodeliveredtheTailingsScavenger

Plant(“TSP”)expansion,thetailingsreturnsystem

capitalprojectandiswelladvancedwiththe

implementationoftheGSPproject.Itisalsowell

advancedwithprogressingtheengineeringdesign

fortheinstallationofEskomMainsPowertothe

site,whichwillsignificantlyreduceoperatingcosts.

Collectivelytheseprojects,whencommissioned,

willdelivernotonlymaximumoptimizationofthe

processingroutesbutlifttheproductionprofileof

theCompanyinrankingamongstitspeers.

Thefocusin2016willnowturntooptimisingrecoveries

fromboththePBCandSPCprocessingcircuits,which

willbemucheasiertocontrolwiththecommissioning

andoperationofthetwoTSPsandtheGSP.

TORMIN SALES AND MARKETINGSalesrevenuefortheyearwas$46.2m,withannual

salesof:

• Zircon/Rutileconcentrates:45,240wetmetric

tonnes

• Ilmeniteconcentrate:Nilwetmetrictonnes

• Garnetconcentrate:372,466wetmetrictonnes

6

7

TheCompanyterminatedthePre-Financeand

MarketingAgreementbetweentheCompanyand

WogenPacificLimitedduringthefirsthalfoftheyear.

ThisallowedtheCompanytofreelymarketandsellits

non-magneticZircon/Rutileconcentratetobuyerson

anunrestrictedbasisfortheremainderoftheyear.

Garnetconcentrateproductionwassuppliedandsold

undercontractwithGMAGarnetGroup(“GMA”)and

stockpiledwithinSouthAfrica.TheGarnetconcentrate

willbeshippedatGMA’sdiscretion.Therevenuefor

stockpileGarnetisinitiallylowerwithfullsalesvalue

receiveduponshipment.

AlthoughtheCompanycontinuedtoreceiveactive

enquiriesforitsIlmeniteproductthroughoutthe

year,itwasunabletosecureanofftakepartnerfor

thisproduct.Thisisnotafunctionofthequalityof

theproduct,ratherafunctionoftheglobalIlmenite

productthroughouttheperiod.TheCompanywill

continuetoengagewithpotentialofftakersduring

thecourseof2016.

BLACK ECONOMIC EMPOWERMENT (“BEE”)TheCompanyworkedcloselywithitsjointshareholder

initsSouthAfricansubsidiaryMineralSands

ResourcesPtyLtd(“MSR”)andBEEpartner,Blue

BantryInvestments255(Pty)Ltd(“BlueBantry”),in

continuingtoassistinbridgingtheculturaldividethat

cansometimesexistinmanagingtheexpectationsof

interestsandeffectedpartiesandcommunities.

Investmentcontinuesinpersonaldevelopment

throughprogrammesthatarefocusedoneducation,

trainingandgainfulemployment,includinginternships

inthePerthCorporateofficeformentoringand

traininginmanagementreportingandaccounting.

Thecompletionoftheupgradeonthelocal

KoekenaapSchool/CommunityResourceCentre,

whichincludesanewlibraryandcomputerclassroom,

wasachievedduringthesecondhalfoftheyearand

wasofficiallyopenedinJanuary2016.Inadditionto

itsSocialLabourPlan(“SLP”)commitmentsatTormin,

theCompanyalsocontinuestoprovidesupporttothe

Xolobenicommunitythroughthebuildingofnurseries

andsupportingcattleandpoultryprogrammeswhich

willresultinsustainableprovisionofbasicfoodneeds.

TORMIN RESOURCEWorkwasundertakenduringFebruary2016onthe

annualTorminResourceReview.

Approximately1.625milliontonnesweremined

fortheyearended31December2015.Thebeach

replenishmentcontinueswithmultipleminingof

designatedoreblocksoccurringuptofivetimes.

Sincecommencement,theCompanyhasminedcirca

2.7milliontonnesatgreaterthan4%containedzircon.

ThistonnageandgradeexceedstheoriginalLOM

statedintheJORCResourcesandReservestatement

andisconsistentwiththebeachreplenishment

processwhichiscurrentlyoccurring.Theupdated

2015InferredJORCResourceandReserveconfirms

that2.7milliontonnesofmaterialata28.01%Heavy

Mineralisremaining.

7

Supplementary, nutritional food programme

8

TORMIN - PROSPECTING ACTIVITIESTheCompanywaspleasedtoadviselateintheyear

thatMSRhasbeengrantedanewprospectingright

bytheDepartmentofMineralResources–South

Africa(“DMR”).

Theawardedprospectingrightrepresentsanarea

ofapproximately10,500hainsizeseawardfromits

currentmining(Torminmine)andprospectingareas.

TheawardingofthisrightextendsMSR’sprospecting

areaupto10kmoffshorefromitscurrentmining

area.Theprospectingareaistobeinvestigated

foritsoffshoreheavymineralsandpotentialthatis

currentlythesourceofreplenishmenttakingplaceon

thebeachheldunderminingrights.

MSRhasconductedabathymetricandsub-bottom

seafloorprofilinggeophysicalsurveyoverthe

surfzoneareaheldunderPR10036.Thesurvey,

conductedbyanindependentfirm,willprovide

detailedinformationthatistobeusedtoplanan

underwaterexplorationdrillsamplingcampaign.

Thissurveyisinsupportoftheaeromagneticand

radiometricaerialsurveyworkdoneduring2014by

XcaliburGeophysics.The2014surveyidentifiedoff-

shoreheavymineralsandexplorationtargets.

Inconjunctionwithoffshorebathymetricstudies,

theCompanyfinalisedtheselectionofaspecialised

offshoredrillingandminingsamplercontractorwho

willmobilisetositeinthesecondquarterof2016to

conductresourcedrillingandsamplingofthesurf

zoneareai.e.theareabetweenthelowtideandthe

wavecrestformation.Theobjectiveofthisprogram

istoachieveanoffshoreInferredJORCresource.

Inadditiontotheawardedrights,MSRhaslodgeda

newprospectingandbulksamplingapplication(WC

30/5/1/2/10226PR)alongthebeachandsurfzone

northofitscurrentminingoperations.Thisapplication

representsatargetareaofapproximately24kmalong

thecoastline.Historicalexplorationworkbynon-

relatedpartieshasindicatedtheareaisprospective

forheavymineralsanddeposits.Thisapplicationis

subjecttoafullpublicparticipationprocessandan

environmentalimpactassessmentforbulksampling

asisrequiredunderSouthAfricanlegislation.

Theaboveactivitiesareindicativeofthelongterm

plansofMSRtoextendtheheavymineralsand

resourceofitsTorminminingoperationandunderpin

theeconomicviabilityofitscurrentoperations.

XOLOBENI MINERAL SANDS PROJECTTheCompanyholdstheprospectingrightstofourof

thefiveblocksintheXolobeniMineralSandsProject.

AMiningRightApplicationwasacceptedinApril

2015andtriggeredthePublicParticipationProcess

fortheEnvironmentalScopingReportSubmission.

ThePublicParticipationProcessresultedinthe

submissionoftheEnvironmentalScopingReport

duringthefirsthalfof2015.

TheCompanymadegoodprogressthroughoutthe

yearwithitsconsultantstoconductallnecessary

baselineandtechnicalstudiestomovetheproject

throughtothesubmissionofanEnvironmental

ImpactAssessment(“EIA”)Report,whichisrequired

aspartoftheMiningRightApplicationprocess.

AnextensionforthesubmissionofthefinalEIA

hasbeengrantedtotheCompanyuntilApril2016.

9

AreassessmentoftheMiningRightApplicationwill

takeplaceintheMarch2016quarter,whichmay

delaythefinalsubmissionoftheEIA.

TheCompanyismaintainingitseffortstoconclude

baselinestudieswithintheregulatorytimeframes.

CORPORATE AND FINANCIALItwasanactiveyearfortheCompanycorporately.

AsdisclosedtotheASXinDecember2014,an

applicationwasmadeintheHighCourtofSouth

Africa(WesternCapeDivision,CapeTown)by

Blastrite(Pty)Ltd(“Blastrite”)toseekrelieffor

anorderthatMSRmaynotdealwithanyentity

orpersonotherthanBlastriteinrelationtothe

discussionandconsiderationrelatingtoanypotential

Garnetand/orotherabrasivemediaresourcethat

maybepresentinoronthebeachdepositlocated

withintheTorminProject;andanorderthatMSRmay

notrenewitsexistingofftakeagreementwithGMA

fortheperiod1July2015to30June2016.

Followingahearingon19December2014,Blastrite

withdrewitsapplicationtoseekinterimreliefand

wereorderedtopaytheCompany’scostsoccasioned

bytheapplication.Blastriteproceededtomakean

applicationforfinalreliefwhichwasdeferredtooral

evidenceandheardinJune2015.

InOctober2015,theCompanywaspleasedtoadvise

thatBlastite’sCourtApplicationhadbeendismissed.

ThedismissalfollowsBlastrite’swithdrawalofits

initialapplicationtoseekinterimreliefinDecember

2014.BlastritehasbeenorderedtopayMRC’scosts

occasionedbytheemploymentoftwolegalcounsel,

allofthecostsoccasionedbythereferraltooral

evidence,thecostsoccasionedbythediscovery

applications,includingthecostsoccasionedbythe

Company’spartiesdiscoveryapplications.

Asstatedwhentheinitialapplicationwasmade

byBlastriteinDecember2014,theCompany’s

viewwasthattheApplicationwasanabuseofthe

Courtprocess,foundedonincorrectfactsandwas

ofnomeritand,assuch,theCompanyandother

respondentsstrenuouslyopposedtheApplication.

TheCompanywasverypleasedwiththeBlastrite

litigationoutcome.

TheShareholderloansobtainedin2014wereextended

to30September2015,andthensubsequentlypaid

downby50%laterintheyearwiththebalance

extendedto30September2016.

Thereductionofshareholderdebtispartofthe

Company’soverallcapitalmanagementstrategy.

WhilsttheCompanyhadthecapacitytorepaythe

debtintotal,itspreferredpositionwastoretain

50%toprovidefurtherflexibilityinworkingcapital

management.

TheCompanyassessedfinancingoptionsforits

GarnetStrippingPlant(“GSP”)expansioninitiative

andwaspleasedtoadvise,subsequenttoyearend,

thatithadenteredintoa$4.5millionfinancing

arrangementwithGMA.

TheCompanyalsoconcludedthepurchase

agreementofthe1,787hectarefarmonwhich

itsTorminprocessingfacilitiesarelocated.The

purchaseremovesallrestrictionsthatwereformally

inplaceunderthepreviousLandUseagreement

andincreasestheavailablelandusagefromthe

existing9.89hectareswhich,subjecttoregulatory

authority,providessignificantlymorelandtoexpand

theprocessingfacility’sfootprintandstockpiling

area,allowingforoptimisationoftheoperational

performance.

CONSOLIDATED RESULT AND FINANCIAL POSITIONTheprofitoftheGroupafterincometaxandnon-

controllinginterestswas$10.6m(2014:$8.4m).Thenet

assetsoftheGrouphaveincreasedfrom$31.2masat

31December2014to$31.7masat31December2015.

Revenuefortheyearwas$46.5m(2014:$35.0m),

withprofitbeforeincometaxexpenseof$12.9m

(2014:$3.9m).

OUTLOOK TheCompanywillproceedtocompletethe

constructionoftheGSPbyJune2016.

TheCompanyisinapositiontotakeadvantageof

anyincrementalincreaseinZirconpricingandhas

significantupsideinthesaleofIlmeniteconcentrate.

Operationally,theCompanywillcontinuetoenjoy

thebenefitsofaweakerRandonitsSouthAfrican

costbaseinconjunctionwithUSdenominatedsales

revenue.

WiththeGSPprocessingplantupgrade,the

Companyisanticipatingsignificantgrowthin

productionin2016.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRSDetailsoftheyear’soperationalperformanceandthe

resultingfinancialimpactissetoutintheReviewof

Operationsabove.

Noeventortransactionhasarisenintheinterval

betweentheendofthefinancialyearandthedate

ofthisreportofamaterialandunusualnaturelikely,

otherthanwhathasbeendisclosedelsewhereinthis

financialreport,intheopinionoftheDirectorsofthe

Company,toaffectsignificantlytheoperationsofthe

Group,theresultsofthoseoperationsorthestate

ofaffairsoftheCompanyortheGroupinfuture

financialyearsunlessotherwisedisclosedinthis

Directors’Report.

10

EVENTS SINCE THE END OF THE FINANCIAL YEARTheCompanywaspleasedtoadvise,inFebruary2016,thatMSRhassecured$4.5millionviaaloanfacilityfrom

GMAtofundthecompletionofitsGSP.TheGSPwillbeinstalledatthefrontoftheexistingSCP.Theinstallation

oftheGSPwillincreasethenon-magneticfeedgradetotheSCPbyremovingtheGarnetfractionfromtheHMC

priortotheSCP.This,inturn,willallowahighgradeZirconconcentratetobefedtotheexistingmagneticcircuit,

andtherebyincreasenon-magneticconcentrateproduction.

CompletionoftheGSPisexpectedonoraround30June2016.

TheloanagreemententeredintowithGMAprovidesfor$4.5millionfundingwith3yearrepaymentterms

commencingonthere-startofshippingofgarnetconcentrateproducttoGMA(plannedforJanuary2017).

TheofftakeagreementpreviouslyenteredintowithGMAhasalsobeenamendedtoincreasethetermofthe

agreementtothelifeofmine,andanincreaseintheannualofftaketonnageto210,000tonnesupfrom150,000

tonneswithanoptiontotakeallotherremainingGarnetconcentrateproduction.TheCompanyproduced

approximately285,000tonnesofGarnetfortheyearended31December2015.

Therehavebeennoothermaterialmattersarisingsubsequenttotheendofthefinancialyear.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONSLikelydevelopmentsintheoperationsoftheGroupthatwerenotfinalisedatthedateofthisreportareincluded

intheReviewofOperationsaboveandasdetailedintheOutlooksection.

TheBoardwillcontinuetoreviewotherprojectsandopportunitiesintheinterestsofincreasingshareholdervalue.

ENVIRONMENTAL REGULATIONTheGroupissubjecttovariousenvironmentalregulationsinrespecttoitsexploration,developmentand

productionactivities.

Inthecourseofitsnormalminingandexplorationactivities,theGroupadherestoenvironmentalregulations

imposeduponitbytherelevantregulatoryauthorities,particularlythoseregulationsrelatingtoground

disturbanceandtheprotectionofrareandendangeredfloraandfauna.

SCHEDULE OF MINING AND PROSPECTING TENEMENTSMiningandprospectingtenementscurrentlyheldorunderapplicationbytheGroupare:

Country Location Number Type of Right Status Interest

South Africa Tormin (WC)30/5/1/2/2/163MR Mining Approved 100%

South Africa Tormin (WC)30/5/1/2/2/162MR Mining Approved 100%

South Africa Tormin (WC)30/5/1/1/2/10036PR Prospecting Approved 100%

South Africa Tormin (WC)30/5/1/1/2/10199PR Prospecting Approved 100%

South Africa Tormin (WC)30/5/1/1/2/10226PR Prospecting Under Application 100%

South Africa Tormin (WC)30/5/1/1/2/10229PR Prospecting Under Application 100%

South Africa Xolobeni EC30/5/1/1/2/6PR Prospecting Approved 100%

South Africa Xolobeni EC30/5/1/1/2/10025PR Prospecting Under Application 100%

South Africa Xolobeni EC 10025 MR Mining Under Application 100%

GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTSTheDirectorshaveconsideredcompliancewiththeNationalGreenhouseandEnergyReportingAct2007which

requiresentitiestoreportannualgreenhousegasemissionsandenergyuseinAustralia.Forthemeasurement

period,theDirectorshaveassessedthattherearenocurrentreportingrequirements,butmayberequiredtodo

sointhefuture.

11

INFORMATION ON DIRECTORSMark Victor Caruso

Executive Chairman and Chief Executive Officer

Age54

Experience and expertiseMrCarusohasextensiveexperienceinmining,

earthmovingandcivilengineeringconstruction

earthworks.HehasbeenaDirectoroftheCompany

sinceSeptember2000.HewaspreviouslyChairman

ofAlliedGoldMiningPLC(AGMP),responsiblefor

thedeliveryoftheGoldRidgeProjectintheSolomon

IslandsandtheSimberiGoldProjectinPapuaNew

Guinea.AfterresigningfromAGMP,hetransitioned

intothepositionofExecutiveChairmanofthe

CompanyinAugust2012.

Other current directorshipsPerpetualResourcesLimited

Former directorships in the last 3 yearsNone

Special responsibilitiesChairmanoftheBoard

ChiefExecutiveOfficer

Interests in shares and options78,554,014ordinarysharesintheCompany–indirect

holding1

15,784ordinarysharesintheCompany–directholding

5,000,000optionsoverordinarysharesinthe

Company

Joseph Anthony Caruso

Non-Executive Director

Age70

Experience and expertiseMrCarusowasappointedasNon-ExecutiveDirector

oftheCompanyinSeptember2000.Heisadirector

ofZurichBayHoldingsPtyLtdandConstruction

ManagerofSimtoAustraliaPtyLtd,bothofwhichare

involvedinmining,earthmovingandcivilengineering

constructionearthworks.Hehasconsiderable

experienceinmanagingandadministrationof

engineering,mining,rawmaterialsproduction

operations,earthmovingandrelatedinfrastructure

utilitiesservicesresourcecontracts.

Other current directorshipsNone

Former directorships in the last 3 yearsNone

Special responsibilitiesMemberoftheRemunerationandNomination

Committee

Interests in shares and options77,007,485ordinarysharesintheCompany1

1 J A Caruso and M V Caruso are both directors of and have a relevant interest in Zurich Bay Holdings Pty Ltd, which holds 77,007,485 shares in the Company. Mr Mark Caruso also holds shares indirectly through Regional Management Pty Ltd.

12

Peter Patrick Torre

CA, AGIA, MAICD

Non-Executive Director and Company Secretary

Age44

Experience and expertiseMrTorrewasappointedCompanySecretaryof

theCompanyinJuly2006,andasaDirectorof

theCompanyon1April2010.HeisaChartered

Accountant,aCharteredSecretaryandamemberof

theAustralianInstituteofCompanyDirectors.Hewas

previouslyapartnerofaninternationallyaffiliatedfirm

ofCharteredAccountants.MrTorreistheCompany

SecretaryofseveralASXlistedcompanies.

Other current directorshipsNone

Former directorships in the last 3 yearsNeoResourcesLimited,MissionNewEnergyLimited

Special responsibilitiesCompanySecretaryandmemberoftheAudit,

ComplianceandRiskCommittee

Interests in shares and options

Guy Redvers Walker BCA, CA, CFA, CMInstD

Senior Independent Non-Executive Director

Age46

Experience and expertiseMrWalkerisahighlyaccomplisheddirectorand

seniorinvestmentmanagementexecutivewithover

20years’financialmarketsexperience.Hecurrently

andinthepasthassatontheboardsoflistedmining

companiesincludingexploration,developmentand

productioncompanies.Hehasextensiveexperience

incapitalraisingthroughbothtraditionalbanksand

alternativelenders.

Other current directorshipsMetalsExplorationplc

Former directorships in the last 3 yearsBacanoraMineralsLtd

ENKplc

NavigatorResourcesLimited

Special responsibilitiesSeniorIndependentNon-ExecutiveDirector,

ChairmanoftheAudit,ComplianceandRisk

CommitteeandmemberoftheRemunerationand

NominationCommittee

Interests in shares and options125,000ordinarysharesintheCompany

Colin Ross HastingsBSc (Geology), MSc (Economic Geology), MAusIMM

Independent Non-Executive Director

Age65

Experience and expertiseMrHastingswasappointedasanon-executive

DirectorinApril2015.Heisageologistwithover30

years’experienceinminingandexploration,project

generationandprojectdevelopment,covering

Australiaandoverseas.Hehasastronggeotechnical

backgroundwith10years’experienceinthisfieldand

hasextensiveexperienceinminingrelateddisciplines

andprocesses.From1996to2014,MrHastingswas

involvedwithAlliedGoldPLC’sSimberiGoldProject

wherehisrolesincludedmanagementofexploration

andthefeasibilityandpre-developmentstudiesfor

mineconstruction.MrHastingsthenprogressed

toGeneralManagerResourceDevelopmentand

concludedhistenureatStBarbarasubsequenttothe

mergerbetweenitandAlliedGoldMiningPLC.

Other current directorshipsPerpetualResources

Former directorships in the last 3 yearsNone

Special responsibilitiesChairmanoftheRemunerationandNomination

CommitteeandmemberoftheAudit,Complianceand

RiskCommitteesincehisappointmenton2April2015.

Interests in shares and optionsNil

13

MEETINGS OF DIRECTORSThenumberofmeetingsoftheCompany’sBoardofDirectorsandeachoftheBoardcommitteesheldduringthe

yearended31December2015,andthenumberofmeetingsattendedbyeachDirectorwere:

Meetings of committees

NameDirectors’ Meetings

Audit, Compliance and Risk

Remuneration and Nomination

Number of meetings held

A being total of meetings eligible to attend B being total of meetings actually attended

A B A B A B

Mark Victor Caruso 5 5 - - - -

Joseph Anthony Caruso 5 4 - - 4 4

Peter Patrick Torre 5 5 4 4 - -

Guy Redvers Walker 5 5 4 4 4 4

James Gerald Leahy (resigned 27 May 2015) 3 2 2 1 2 2

Colin Ross Hastings (appointed 2 April 2015) 4 4 2 2 2 2

OthermattersofBoardbusinesshavebeenresolvedbycircularresolutionsofDirectors,whicharearecordof

decisionsmadeatanumberofinformalmeetingsoftheDirectorsheldtocontrol,implementandmonitorthe

Company’sactivitiesthroughouttheyear.

REMUNERATION REPORT (AUDITED)ThisremunerationreportsetsouttheremunerationinformationfortheCompany’snon-executiveDirectors,

executiveDirectors,otherkeymanagementpersonnelandthekeyexecutivesoftheGroupandtheCompany.

Theremunerationreportissetoutunderthefollowingmainheadings:

A. Principlesusedtodeterminethenatureandamountofremuneration

B. Detailsofremuneration

C. Serviceagreements

D. Share-basedcompensation

E. Additionalinformation

F. Othertransactionswithkeymanagementpersonnel

A. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION Inordertoretainandattractexecutivesofsufficientcalibretofacilitatetheefficientandeffectivemanagement

oftheCompany’soperations,theBoardreviewstheremunerationpackagesofallkeymanagementpersonnel,if

any,onanannualbasisandmakesrecommendations.Remunerationpackagesarereviewedwithdueregardto

performanceandotherrelevantfactors.

Remunerationpackagesmaycontainthefollowingkeyelements:

(a)Directors’fees;

(b)Salaryandconsultancy;and

(c)Benefits,includingtheprovisionofamotorvehicleandsuperannuation.

Feespayabletonon-executiveDirectorsreflectthedemandswhicharemadeon,andtheresponsibilitiesofthe

Directors.TheBoardreviewsnon-executiveDirectors’feesandpaymentsonannualbasis.

Executivesareofferedacompetitivebasepaywhichisreviewedannuallytoensurethepayiscompetitivewith

themarket.

TherewereshorttermcashincentivesprovidedtoboththeExecutiveChairmanandChiefFinancialOfficer

(“CFO”).Long-termincentivesareprovidedtoDirectorsandotherkeymanagementpersonneltoincentivise

themtodeliverlong-termshareholderreturns.ThesearedeterminedbasedonwhattheBoardviewsas

reasonablebasedonmarketconditions.AnygrantofsecuritiestoDirectorsoftheCompanymustbeapproved

byshareholdersinageneralmeeting.

TheDirectorsarenotrequiredtoholdanysharesintheCompanyundertheconstitutionoftheCompany;

however,toalignDirectors’interestswithshareholders’intereststheDirectorsareencouragedtoholdsharesin

theCompany.

14

Asat31December2015,theshorttermcashbonusincentivesareupto25%ofbasepaycalculatedonCompany

performanceandotherkeyperformanceindicators.Directors’feesarefixed.

2015 2014 2013 2012 2011 2010

Profit /(loss) for the year after tax (USD) 10,576,785 8,376,344 (1,569,980) (1,233,344) (2,206,055) (1,494,207)

Closing share price (AUD) 10.0 cents 11.0 cents 18.5 cents 9.9 cents 7.5 cents 8.1 cents

Voting and comments made at the Company’s 2015 Annual General MeetingTheCompanyreceivedtheunanimoussupportofshareholderspresentontheremunerationreportattheAGMfor

the2014financialyearand99.7%ofproxyvoteswereinfavouroftheresolutiontoapprovetheremunerationreport.

TheCompanydidnotreceiveanyspecificfeedbackattheAGMorthroughouttheyearonitsremunerationpractices.

B. DETAILS OF REMUNERATIONThekeymanagementpersonneloftheGrouparetheDirectorsoftheCompanyandMrTonySheard,theCFO.

MrTonySheardwasappointedasafulltimeemployeeon1January2015.MrSheardwasactinginhiscapacityas

aconsultantupto31December2014.TheamountsdisclosedareapplicableforboththeCompanyandtheGroup.

DetailsoftheremunerationofDirectorsandthekeymanagementpersonnel(asdefinedinAASB124Related

PartyDisclosures)oftheCompanyandtheGrouparesetoutinthefollowingtables.Therearenolongterm

benefitsamountsduetoDirectorsandkeymanagementpersonnel,otherthanthosedisclosed.Non-cash

benefitsintheformofoptionswereprovidedtokeymanagementpersonnelduringtheyear.Thefollowingfees

areapplicabletoDirectorsandkeymanagementpersonneloftheCompany.

Name YearCash salary

(A$)Cash bonus

(A$)

Annual and long service

leave (A$)

Post-employment

benefits (A$)

Share-based payments (Options)

(A$)Totals

(A$)

Percentage performance

based (%)

Share based payments as a percentage of remuneration

(%)

Directors

Executive Chairman

Mark Caruso (*) 2015 547,945 150,000 43,882 52,055 149,590 943,472 15.9 15.9

2014 293,228 - 86,534 27,124 - 406,886 - -

Non-Executive Director

Joseph Caruso 2015 63,934 - - 6,066 - 70,000 - -

2014 50,248 - - 4,648 - 54,896 - -

Peter Torre 2015 150,000 - - - - 150,000 - -

2014 135,360 - - - - 135,360 - -

Guy Walker 2015 80,000 - - - - 80,000 - -

2014 63,920 - - - - 63,920 - -

Ross Hastings

(appointed 2 April 2015)

2015 52,311 - - 4,828 - 57,139 - -

2014 - - - - - - - -

James Leahy

(resigned 27 May 2015)

2015 32,667 - - - - 32,667 - -

2014 63,920 - - - - 63,920 - -

Total Director

Remuneration

2015 926,856 150,000 43,882 62,949 149,590 1,333,278 11.3 11.2

2014 606,676 - 86,534 31,772 - 724,982 - -

Other Key Management Personnel

Tony Sheard (**) 2015 251,142 59,813 9,981 23,858 26,182 370,976 16.1 7.1

2014 92,045 - - - - 92,045 - -

Andrew Lashbrooke

(resigned 12 Sept 2014)

2015 - - - - - - - -

2014 270,720 - - - - 270,720 - -

Total Key Management

Personnel Remuneration

2015 1,177,998 209,813 53,863 86,808 175,773 1,704,254 12.3 10.3

2014 969,441 - 86,534 31,772 - 1,087,747 - -

15

* Mark Caruso’s comparative remuneration has been re-stated to include annual leave and long service leave previously not included.

**Tony Sheard commenced employment as a consultant on 18 August 2014 and received consultancy fees of $92,045 for the year ended 31 December 2014. Effective from 1 January 2015, he entered into a service agreement with the Company. It has no fixed term, with a total remuneration package of A$275,000 per annum. There are no termination benefits unless made constructively redundant in which case he receives 12 months’ remuneration.

Othershortandlongtermbenefitsformingpartof

theserviceagreementsaredetailedbelow:

Cash bonusTheExecutiveChairmanwasentitledtoan

annualbonusof25%oftheBaseRemuneration,

measuredagainstthefollowingcriteria,20%

weightingforeach:

1. Mineproductionagainstbudget;

2. Securingandenteringintoanofftake

agreementforIlmenite;

3. AchievingBudgetEarningsbeforeInterest,

Tax,DepreciationandAmortisation

(“EBITDA”)takingintoaccountuncontrollable

variablesatthediscretionoftheBoard;

4. Completionofreplenishmentstudieson

minedareassufficienttoallowresultstobe

reportedtotheASX;and

5. SubmissionofaMiningRightApplicationin

2015fortheXolobeniMineralSandsProject.

Futurebonuseswillbeatthesolediscretionof

theBoard.

Themeasurableobjectiveswerechosentoensure

theExecutiveChairmanwasincentivisedtomeet

budgetedproductionandEBITDA;secureofftake

agreementsfortheCompany’sremainingproduct

notcurrentlybeingsoldintothemarket;to

continuetoexpandandreplenishtheCompany’s

Resources,andtoprogresstheCompany’sother

mineralsandsprojectinSouthAfrica.

TheChairmanoftheRemunerationandNomination

Committeeassessedtheperformanceofthe

ExecutiveChairman,andreviewedhisperformance

againsttheabovesetmeasurableobjectives,taking

intoaccountothermitigatingfactorsthroughout

theyear.Objectives1,3,4and5wereassessed

asbeingmet.Objective2wasnotmet,however

theExecutiveChairmanalsoachievedotherkey

strategicandoperationalobjectivesthroughoutthe

yearwhichwerenotsetbytheRemunerationand

NominationCommitteeandtheCommitteehas

useditsdiscretiontoawardthefullbonusof25%

ofbaseremunerationduetothesignificantefforts

oftheExecutiveChairmanthroughouttheyear.

TheCFOwasentitledtoanannualbonusof25%

oftheBaseRemuneration,measuredagainstthe

followingcriteria,onethirdweightingforeach:

1. Performanceagainstscopeofservicesset

outintheemploymentcontractatthesole

discretionoftheExecutiveChairman;

2. BoardReportingwithinsettimingeach

month;and

3. AchievingEBTIDAagainstbudgettaking

intoaccountuncontrollablevariablesatthe

discretionoftheBoard.

Futurebonuseswillbeatthesolediscretionof

theBoard.

Themeasurableobjectiveswerechosentoalign

thetwokeyexecutivesincentivesintermsof

meetingbudgetedEBITDA,thisistoensurethe

CFOperformedeachofthetasksoutlinedinhis

employmentcontractwhicharetypicalofthatfor

aCFOposition,andtimelyreportingtotheBoard

toensurebusinessdecisionscanbemadeona

timelyandinformedbasis.

TheExecutiveChairmanassessedthe

performanceoftheCFOagainsttheabove

measurableobjectivesandawarded33%for

objective1,20%forobjective2and34%for

objective3,beingatotalof87%ofthetotal

achievablebonus.

Grant of optionsThefollowingoptionswereissuedduringtheyear:

• 5,000,000UnlistedOptionstotheExecutive

ChairmanexercisableatA$0.20onorbefore

30May2018andsubjecttothefollowing

vestingconditions:

(i) 1,666,668vestingimmediately;

(ii)1,666,666vestingon8June2016;and

(iii)1,666,666vestingon8June2017.

• 1,000,000UnlistedOptionstotheCFO

exercisableatA$0.20onorbefore31March

2018andsubjecttothefollowingvesting

conditions:

(i) 333,334vestingimmediately;

(ii)333,333vestingon31March2016;and

(iii)333,333vestingon31March2017.

Relative proportions of fixed vs variable remuneration expenseThefollowingtableshowstherelativeproportions

ofremunerationthatarelinkedtoperformance

andthosethatarefixed,basedontheamounts

disclosedasstatutoryremunerationexpensein

theprevioustable:

16

Name

Fixed Remuneration At Risk - STI At Risk - LTI

2015 2014 2015 2014 2015 2014

Directors

Executive Chairman

Mark Caruso 68% 100% 16% n/a 16% n/a

Non-Executive Directors

Joseph Caruso 100% 100% 0% n/a 0% n/a

Peter Torre 100% 100% 0% n/a 0% n/a

Guy Walker 100% 100% 0% n/a 0% n/a

James Leahy 100% 100% 0% n/a 0% n/a

Ross Hastings 100% n/a 0% n/a 0% n/a

Other Key Management Personnel

Tony Sheard 71% 100% 23% n/a 6% n/a

Andrew Lashbrooke n/a 100% n/a n/a n/a n/a

C. SERVICE AGREEMENTS Noformalservicecontractwassignedwiththe

ExecutiveChairmanhowever,thefollowingwere

thetermsunderwhichtheExecutiveChairmanwas

employedthroughouttheyear:

Mark Caruso

Commencement date6August2012

TermNofixedterm

Total Remuneration packageA$600,000perannum,effectivefrom12September

2014,(inclusiveof9.5%superannuation)andcash

bonusassetoutabove

Termination benefits 12months’basesalaryplusanypaymentinlieuof

notice

TheRemunerationandNominationCommittee

engagedtheservicesofaremunerationconsultant,

SherwoodLoveandAssociates,toprovidea

recommendationinrespecttoMrMarkCaruso’s

remuneration.MrCaruso’sremunerationwasset

basedontherecommendationmadebySherwood

LoveandAssociates.

Theremunerationrecommendationswerefree

fromundueinfluenceastheyweremadetoand

directedbytheRemunerationandNomination

CommitteeunderthedirectionoftheChairman

ofthatCommittee.TheBoardissatisfiedthatthe

remunerationrecommendationwasmadefreefrom

undueinfluencebytherelevantmemberofthekey

managementpersonnelashedidnothaveanyinput

intotherecommendations.Therecommendations

weremadetotheRemunerationandNomination

CommitteeandSherwoodLoveandAssociatesonly

tookinstructionsfromtheCommittee.

TheCompanypaidafeeofA$10,000toSherwood

LoveandAssociatesfortheirreportonMrMark

Caruso’sremuneration.

Peter Torre

Commencement date1November2012

TermNofixedterm

Total Remuneration packageA$150,000perannum

Termination benefits12months’basesalaryplusanypaymentinlieuof

notice

Tony Sheard

Commencement date1January2015

TermNofixedterm

Total Remuneration packageA$275,000perannum(inclusiveof9.5%

superannuation)andcashbonusassetoutabove

Termination benefits Nilunlessconstructiveredundancyinwhichcase12

months’salary

Therearenootherserviceagreements.

17

D. SHARE BASED COMPENSATIONThefollowingoptionsweregrantedasremunerationduringtheyearended31December2015(2014:Nil):

MarkCaruso 5,000,000

TonySheard 1,000,000

Thetermsandconditionsofeachgrantofoptionsareasfollows:

Grant Date Expiry dateExercise

priceFair Value

at grant date

Options at the start of the year

Granted during

the year

Exercised during

the year

Forfeited during

the year

Lapsed during the

year

Balance at the end

of the year

Vested at the end

of the year

21 Dec 2012 31 Dec 2015 20 cents 3.35 cents 10,000,000 - - - (10,000,000) - -

21 Dec 2012 31 Dec 2015 35 cents 2.23 cents 1,000,000 - - - (1,000,000) - -

27 May 2015 30 May 2018 20 cents 4.90 cents - 5,000,000 - - - 5,000,000 1,666,668

07 Sept 2015 31 Mar 2018 20 cents 5.40 cents - 1,000,000 - - - 1,000,000 333,334

Total 11,000,000 6,000,000 - - (11,000,000) 6,000,000 2,000,002

TherelevantinterestofeachDirectorandkeymanagementpersonnelinthesharecapitaloftheCompany,

shownintheRegisterofDirectors’andKeyManagementPersonnelShareholdingatthedateoftheDirectors’

Reportisasfollows:

Balance as at 1 January 2015

Received as remuneration

Increase as a result of options

exercised Net change

Balance as at 31 December

2015

Mark Caruso • Indirect 78,354,014 - - 200,000 78,554,014

• Direct 15,784 - - - 15,784

Joseph Caruso 77,007,485 - - - 77,007,485

Peter Torre 625,000 - - - 625,000

Guy Walker 125,000 - - - 125,000

Ross Hastings - - - - -

James Leahy - - - - -

Tony Sheard 100,000 - - 50,000 150,000

DetailsofoptionsoverordinarysharesintheCompanyprovidedasremunerationtokeymanagementpersonnel

areshownbelow:

Balance as at 1 January 2015

Received as remuneration

Options exercised

Options lapsed

Balance as at 31 December

2015

Mark Caruso 1,000,000 5,000,000 - (1,000,000) 5,000,000

Joseph Caruso 1,000,000 - - (1,000,000) -

Peter Torre 1,000,000 - - (1,000,000) -

Guy Walker 1,000,000 - - (1,000,000) -

James Leahy 1,000,000 - - (1,000,000) -

Ross Hastings - - - - -

Tony Sheard - 1,000,000 - - 1,000,000

Total 5,000,000 6,000,000 - (5,000,000) 6,000,000

18

E. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL

MineSiteConstructionServices(“MSCS”),acompany

associatedwithMrMarkCarusoandMrJosephCaruso

hasprovidedthefollowingsservicestotheCompany

during2015:

Provision of office space.TheamountpaidbytheCompanytoMSCSforthe

yearended31December2015was$47,734.Thisis

consideredtobeanarm’slengthcommercialrent.

Thereisnoformalsubleaseinplace.

Provision of secretarial staff to the Executive Chairman.TheamountpaidbytheCompanytoMSCSfor

theyearended31December2015was$57,784.

TheamountspayablearepursuanttoanExecutive

ServiceAgreementandhavebeenreimbursedonan

arm’slengthbasisatnormalcommercialrates.

Provision of technical staff.TheamountpaidbytheCompanytoMSCSfor

theyearended31December2015was$299,422.

Theamountspayablehavebeeninrespecttothe

provisionoftechnicalstaffattheGroups’headoffice

andattheTorminprojectandhavebeenreimbursed

onanarms-lengthbasisatnormalcommercialrates.

Asat31December2015,amountpayabletoMSCSis

$92,105.

AsannouncedbytheCompanyon30May2014,the

Companyobtainedanunsecuredshorttermworking

capitalfacilityofupto$4mfrommajorshareholders.

ThisincludedaA$2millionfacilityprovidedby

RegionalManagementPtyLtd(“RMS”),arelated

partyofMrMarkCaruso,theExecutiveChairmanof

theCompany.

PursuanttotheLoanAgreemententeredinto

betweentheCompanyandRMS,thelenderprovided

afinancefacilitycappedatA$2milliononthe

followingarm’s-lengthandcommercialterms:

• Loanisunsecured;

• Interestof13%perannum;

• Linefeeof1%andestablishmentfeeof1%;

• Repaymenttotakeinthreeequaltrancheson31

January2015,28February2015and31March2015;

and

• Defaultinterestof10%ifnotrepaidonthe

repaymentdate.

AsannouncedbytheCompanyon23February

2015,RMSagreedtoextendthetermoftheloanit

providedto30September2015.Asannouncedby

theCompanyon5August2015,RMSagreedtothan

repaymentof50%oftheprincipalandtoextend

thetermoftheremainingbalanceoftheloanto

30September2016toprovidetheCompanywith

flexibilitywithitsfundingarrangementsfortheGSP.

Asat31December2015,thebalance(including

interestpayable)outstandingis$597,872.Interest

paidamountedto$159,246in2015.

End of the audited remuneration report

19

INSURANCE OF OFFICERSDuringthefinancialyear,theGrouphaspaidan

insurancepremiumtoinsuretheDirectorsand

secretariesoftheCompanyanditscontrolledentities.

Theannualpremiumpaidwas$49,703representing

$9,940perDirector.Theliabilitiesinsuredarelegal

coststhatmaybeincurredindefendingcivilor

criminalproceedingsthatmaybebroughtagainst

theofficersintheircapacityasdirectorsorofficersof

entitiesintheGroup,andanyotherpaymentsarising

fromliabilitiesincurredbytheofficersinconnection

withsuchproceedings.Thisdoesnotincludesuch

liabilitiesthatarisefromconductinvolvingawilful

breachofdutybytheofficersortheimproperuse

bytheofficersoftheirpositionorofinformationto

gainadvantageforthemselvesorsomeoneelseorto

causedetrimenttotheGroup.

PROCEEDINGS ON BEHALF OF THE GROUPNopersonhasappliedforleaveofCourttobring

proceedingsonbehalfoftheGrouporintervenein

anyproceedingstowhichtheGroupisapartyfor

thepurposeoftakingresponsibilityonbehalfofthe

Companyforalloranypartofthoseproceedings.

NON-AUDIT SERVICESTheCompanymaydecidetoemploytheauditoron

assignmentsadditionaltotheirstatutoryauditduties

wheretheauditor’sexpertiseandexperiencewiththe

Companyand/ortheGroupareimportant.

Detailsoftheamountspaidorpayabletotheauditor

forauditandnon-auditservicesprovidedduringthe

yeararesetoutbelow.

TheBoardofDirectorshasconsideredthe

positionand,inaccordancewithadvicereceived

fromtheAudit,ComplianceandRiskCommittee,

issatisfiedthattheprovisionofthenon-audit

servicesiscompatiblewiththegeneralstandard

ofindependenceforauditorsimposedbythe

CorporationsAct2001.TheDirectorsaresatisfied

thattheprovisionofnon-auditservicesbythe

auditor,assetoutbelow,didnotcompromise

theauditorindependencerequirementsofthe

CorporationsAct2001forthefollowingreasons:

• allnon-auditserviceshavebeenreviewedbythe

Audit,ComplianceandRiskCommitteetoensure

theydonotimpacttheimpartialityandobjectivity

oftheauditor;and

• noneoftheservicesunderminethegeneral

principlesrelatingtoauditorindependenceasset

outinAPES110CodeofEthicsforProfessional

Accountants.

20

Duringtheyear,thefollowingfeeswerepaidorpayableforservicesprovidedbyBDOAudit(WA)PtyLtdand

BDOTax(WA)PtyLtd,itsrelatedpracticesandrelatedfirms:

31 Dec 2015 $

31 Dec 2014 $

Audit services

Audit and review of financial reports

BDO Audit (WA) Pty Ltd 60,790 68,281

BDO Cape Town South Africa 48,588 32,871

109,378 101,152

Non-audit services

Taxation and company secretarial (South African entities)

BDO Tax (WA) Pty Ltd 80,366 90,768

BDO Cape Town South Africa 6,964 5,555

87,330 96,323

Auditor’s independence declarationAcopyoftheauditor’sindependencedeclarationasrequiredundersection307CoftheCorporationsAct2001

issetoutonpage64andformspartofthisreport.

AuditorBDOAudit(WA)PtyLtdcontinuesinofficeinaccordancewithsection327oftheCorporationsAct2001.

Thisreporthasbeenmadeinaccordancewitharesolutionofthedirectors.

Mark Caruso

Executive Chairman

Perth,WesternAustralia

29February2016

21

22 Consolidatedincomestatement

23 Consolidatedstatementofcomprehensiveincome

24 Consolidatedbalancesheet

25 Consolidatedstatementofcashflows

26 Consolidatedstatementofchangesinequity

27 Notestotheconsolidatedfinancialstatements

63 Directors’declaration

64 Auditor’sindependencedeclaration

65 Independentauditor’sreporttothemembers

Financial statements

22

Notes31 Dec 2015

$31 Dec 2014

$

Revenue from continuing operations

Sale of product 3 46,180,153 33,270,806

Other revenue 3 278,384 1,689,143

46,458,537 34,959,949

Other income 4 - 502

Expenses

Mining and processing costs 4 (30,546,945) (27,077,759)

Other expenses from ordinary activities

Administration expenditure 4 (2,411,730) (3,425,917)

Exploration and evaluation expenditure written off - (29,601)

Impairment charge (172,398) -

Finance costs 4 (396,315) (477,927)

Profit before income tax 12,931,149 3,949,247

Income tax (expense) / benefit 5 (2,354,364) 4,427,097

Profit after income tax 10,576,785 8,376,344

Profit is attributable to:

Owners of Mineral Commodities Ltd 10,576,785 8,376,344

Non-controlling interest - -

10,576,785 8,376,344

Cents Cents

Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the Company:

Basic earnings per share 28 2.61 2.07

Diluted earnings per share 28 2.57 2.01

The above consolidated income statement should be read in conjunction with the accompanying notes.

Consolidated income statementFortheyearended31December2015

23

Consolidated statement of comprehensive incomeFortheyearended31December2015

Notes31 Dec 2015

$31 Dec 2014

$

Profit for the year 10,576,785 8,376,344

Other comprehensive income

Changes in the fair value of available-for-sale financial assets 18 6,387 -

Exchange differences on translation of foreign operations 18 (10,240,709) (2,549,618)

Other comprehensive income for the year, net of tax 342,463 5,826,726

Total comprehensive income for the year 342,463 5,826,726

Total comprehensive income for the year is attributable to:

Owners of Mineral Commodities Ltd 342,463 5,826,726

Non-controlling interest - -

342,463 5,826,726

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

24

Notes31 Dec 2015

$31 Dec 2014

$

ASSETS

Current assets

Cash and cash equivalents 6 4,227,444 4,216,052

Trade and other receivables 7 2,348,737 3,084,929

Inventories 8 2,301,803 6,123,021

Available-for-sale financial assets 63,866 64,228

Total Current Assets 8,941,850 13,488,230

Non-current assets

Trade and other receivables 7 4,650,398 665,553

Property, plant and equipment 9 11,302,408 14,642,240

Mine development expenditure 10 5,217,072 5,003,743

Exploration expenditure 11 5,323,062 6,019,727

Mine properties 12 2,372,287 4,617,463

Deferred tax assets 13 3,517,369 4,036,956

Total Non-Current Assets 32,382,596 34,985,682

Total Assets 41,324,446 48,473,912

LIABILITIES

Current liabilities

Trade and other payables 14 3,153,297 5,683,843

Unearned revenue 15 - 4,130,000

Borrowings 16 2,970,210 7,235,413

Provisions 17 252,938 141,768

Total Current Liabilities 6,376,445 17,191,024

Non-current liabilities

Provisions 17 78,086 77,167

Long term borrowings 16 988,584 -

Deferred tax liabilities 13 2,204,851 -

Total non-current Liabilities 3,271,521 77,167

Total Liabilities 9,647,966 17,268,191

NET ASSETS 31,676,480 31,205,721

Equity

Contributed equity 18 63,437,092 63,437,092

Reserves 18 (20,508,920) (10,402,894)

Accumulated losses 18 (11,365,331) (21,942,116)

Parent entity interest 31,562,841 31,092,082

Non-controlling interest 18 113,639 113,639

Total equity 31,676,480 31,205,721

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

Consolidated balance sheet asat31December2015

25

Consolidated statement of cash flowsFortheyearended31December2015

Notes31 Dec 2015

$31 Dec 2014

$

Cash flows from operating activities

Receipts from customers (inclusive of goods and services tax) 37,475,013 36,177,065

Payments to suppliers and employees (28,336,874) (27,737,444)

Net cash inflow from operating activities 19 9,138,139 8,439,621

Cash flows from investing activities

Exploration expenditure (845,318) (96,407)

Payments for property, plant and equipment (3,356,090) (1,863,340)

Payments for development expenditure (1,869,848) (3,198,386)

Payments for general fixed assets - (256,131)

Proceeds from sales of investments - 17,647

Interest received 8,113 12,889

Net cash outflow from investing activities (6,063,143) (5,383,728)

Cash flows from financing activities

Proceeds from the issue of shares and options (net of costs) - (3,235)

Proceeds from borrowings 3,203,052 2,907,010

Repayment of borrowings (5,139,048) (2,236,045)

Interest paid on borrowings (669,586) (944,926)

Net cash outflow from financing activities (2,605,582) (277,196)

Net increase in cash and cash equivalents 469,414 2,778,697

Cash and cash equivalents at beginning of financial year 6 4,216,052 1,503,316

Effects of exchange rate changes on cash and cash equivalents (458,022) (65,961)

Cash and cash equivalents at end of financial year 6 4,227,444 4,216,052

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

26

Consolidated statement of changes in equity

For the year ended 31 December 2015

Contributed equity

$Reserves

$

Accumulated losses

$Totals

$

Non-controlling

interest $

Total equity $

At 1 January 2015 63,437,092 (10,402,894) (21,942,116) 31,092,082 113,639 31,205,721

Profit for the year - - 10,576,785 10,576,785 - 10,576,785

Other comprehensive loss

for the year - (10,234,322) - (10,234,322) - (10,234,322)

Total comprehensive income / (loss) for the year - (10,234,322) 10,576,785 324,463 - 324,463

Transaction with owners in

their capacity as owners

Contribution of equity net

of transactions

Issue of unlisted options - 128,296 - 128,296 - 128,296

Balance at the end of the year 63,437,092 (20,508,920) (11,365,331) 31,562,841 113,639 31,676,480

For the year ended 31 December 2014

Contributed equity

$

Reserves

$

Accumulated losses

$

Totals

$

Non-controlling

interest

$

Total equity

$

At 1 January 2014 63,440,327 (7,853,276) (30,318,460) 25,268,591 113,639 25,382,230

Profit for the year - - 8,376,344 8,376,344 - 8,376,344

Other comprehensive loss

for the year - (2,549,618) - (2,549,618) - (2,549,618)

Total comprehensive income / (loss) for the year - (2,549,618) 8,376,344 5,826,726 - 5,826,726

Transaction with owners in their

capacity as owners

Contribution of equity net of

transactions

Issue of unlisted options (3,235) - - (3,235) - (3,235)

Balance at the end of the year 63,437,092 (10,402,894) (21,942,116) 31,092,082 113,639 31,205,721

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

27

Notes to the consolidated financial statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Theprincipalaccountingpoliciesadoptedin

thepreparationoftheseconsolidatedfinancial

statementsaresetoutbelow.Thesepolicieshave

beenconsistentlyappliedtoalltheyearspresented,

unlessotherwisestated.Thefinancialstatements

arefortheconsolidatedentityconsistingof

MineralCommoditiesLtd(the“Company”)andits

subsidiaries(togetherarereferredtohereafterasthe

“Group”).MineralCommoditiesLtdisanAustralian

domiciledpubliclistedcompany.

(a) Basis of preparationThesegeneralpurposefinancialstatementshave

beenpreparedinaccordancewithAustralian

AccountingStandardsandInterpretations

issuedbytheAustralianAccountingStandards

BoardandtheCorporationsAct2001.Mineral

CommoditiesLtdisafor-profitentityforthe

purposeofpreparingthefinancialstatements.

(i) CompliancewithIFRS

Theconsolidatedfinancialstatementsofthe

GroupalsocomplywithInternationalFinancial

ReportingStandards(IFRS)asissuedbythe

InternationalAccountingStandardsBoard(IASB).

(ii) Historicalcostconvention

Thefinancialstatementshavebeenpreparedona

historicalcostbasis,exceptforthefollowing:

• available-for-salefinancialassets,financial

assetsandliabilities(includingderivative

instruments)

• certainclassesofproperty,plantand

equipmentandinvestmentproperty–

measuredatfairvalue

• assetsheldforsale–measuredatfairvalue

lesscostofdisposal,and

(iii)Newandamendedstandardsadoptedbythe

Group

Therewerenonewstandardsoramendmentsto

standards,whichrequiredadoptionforthefirst

timefortheannualreportingperiodcommencing

1January2015.

(iv)Newstandardsandinterpretationsnotyet

adopted

Certainnewaccountingstandardsand

interpretationshavebeenpublishedthatare

notmandatoryfor31December2015reporting

periodsandhavenotbeenearlyadoptedbythe

Group.IthasbeendeterminedbytheGroupthat

thereisnoimpact,materialorotherwise,ofthe

abovestandardsonitsbusinessand,therefore,

nochangeisnecessarytotheGroupaccounting

policies.Refertonote1(x)forfurtherdetails.

(b) Principles of consolidation(i) Subsidiaries

Subsidiariesareallentities(includingstructured

entities)overwhichtheGrouphascontrol.The

GroupcontrolsanentitywhentheGroupis

exposedto,orhasrightsto,variablereturnsfrom

itsinvolvementwiththeentityandhastheability

toaffectthosereturnsthroughitspowertodirect

theactivitiesoftheentity.Subsidiariesarefully

consolidatedfromthedateonwhichcontrolis

transferredtotheGroup.Theyaredeconsolidated

fromthedatethatcontrolceases.

Intercompanytransactions,balancesand

unrealisedgainsontransactionsbetweenGroup

companiesareeliminated.Unrealisedlossesare

alsoeliminatedunlessthetransactionprovides

evidenceofanimpairmentofthetransferredasset.

Accountingpoliciesofsubsidiarieshavebeen

changedwherenecessarytoensureconsistency

withthepoliciesadoptedbytheGroup.

Non-controllinginterestsintheresultsand

equityofsubsidiariesareshownseparatelyinthe

consolidatedincomestatement,statementof

comprehensiveincome,statementofchangesin

equityandbalancesheetrespectively.

Asnotedinnote21(ii),theCompany,viaits

whollyownedsubsidiaryMRCResources

ProprietaryLimited(“MRCR”),hasa50%interest

intheissuedcapitalinMineralSandsResources

ProprietaryLimited(“MSR”).WhilsttheGroup

controls50%ofthesharevotingpower,ithas

beendeterminedthattheGroupeffectivelyhas

100%controlduetoitscontrolovertherelevant

activitiesforaccountingpurposes,controls

themanagementofMSR,andalsocontrolsthe

BoardofMSRduetoprovisionssetoutinthe

ShareholdersAgreemententeredintobetween

theshareholdersofMSR.

Thereforethesefinancialstatementsinclude

100%oftheresultsofMSR.Inadditiontothe

holdingoftheissuedcapital,theGroupalso

holdsClassAandBpreferencesharesinMSR

whicheffectivelyprovidesfortherepaymentof

thecapitalinvestmentanddeemedinvestment

bytheCompany’sBlackEmpowermentpartner.

DuetothetermsattachedtotheseAandB

PreferenceShares,theyarecategorisedasan

equityinstrument.AstheApreferenceshares

andBpreferenceshareswouldberedeemed

outofdistributableprofitsandnetassetsof

MSRbeforeallotherordinaryshareholders,until

suchtimeasthenetassetsexceedthevalueof

theunredeemedAandBpreferenceshares,no

valuehasbeenattributedtothenon-controlling

interest.Untilthattime,thenon-controlling

interesthasnorightstotheassetsorresults

oftheCompany,andthereforehasnotbeen

allocatedanyvalueinthesefinancialstatements.

28

(ii) Associates

Associatesareentitiesoverwhichthegroup

hassignificantinfluencebutnotcontrolorjoint

control.Thisisgenerallythecasewherethegroup

holdsbetween20%and50%ofthevotingrights.

Investmentsinassociatesareaccountedforusing

theequitymethodofaccounting(see(iii)below),

afterinitiallybeingrecognisedatcost.

(iii)Equitymethod

Undertheequitymethodofaccounting,the

investmentsareinitiallyrecognisedatcostand

adjustedthereaftertorecognisetheGroup’sshare

ofthepost-acquisitionprofitsorlossesofthe

investeeinprofitorloss,andthegroup’sshare

ofmovementsinothercomprehensiveincome

oftheinvesteeinothercomprehensiveincome.

Dividendsreceivedorreceivablefromassociates

andjointventuresarerecognisedasareduction

inthecarryingamountoftheinvestment.

WhentheGroup’sshareoflossesinanequity-

accountedinvestmentequalsorexceedsitsinterest

intheentity,includinganyotherunsecuredlong-

termreceivables,theGroupdoesnotrecognise

furtherlosses,unlessithasincurredobligationsor

madepaymentsonbehalfoftheotherentity.

Unrealisedgainsontransactionsbetweenthe

Groupanditsassociatesandjointventures

areeliminatedtotheextentoftheGroup’s

interestintheseentities.Unrealisedlosses

arealsoeliminatedunlessthetransaction

providesevidenceofanimpairmentofthe

assettransferred.Accountingpoliciesofequity

accountedinvesteeshavebeenchangedwhere

necessarytoensureconsistencywiththepolicies

adoptedbytheGroup.

TheGrouptreatstransactionswithnon-controlling

intereststhatdonotresultinalossofcontrolas

transactionswithequityownersoftheGroup.

Achangeinownershipinterestresultsinan

adjustmentbetweenthecarryingamountsof

thecontrollingandnon-controllingintereststo

reflecttheirrelativeinterestsinthesubsidiary.Any

differencebetweentheamountoftheadjustment

tonon-controllinginterestsandanyconsideration

paidorreceivedisrecognisedinaseparate

reservewithinequityattributabletoownersofthe

Company.

(c) Segment reportingOperatingsegmentsarereportedinamanner

thatisconsistentwiththeinternalreporting

providedtothechiefoperatingdecisionmaker.

Thechiefoperatingdecisionmakerhasbeen

identifiedasthedirectorsthatmakestrategic

decisions.

(d) Foreign currency translation(i) Functionalandpresentationcurrency

Itemsincludedinthefinancialstatementsofeach

oftheGroup’sentitiesaremeasuredusingthe

currencyoftheprimaryeconomicenvironment

inwhichtheentityoperates(‘thefunctional

currency’).Theconsolidatedfinancialstatements

arepresentedinUnitedStates(USD)dollars,

whichistheCompany’spresentationcurrency.

• assetsandliabilitiesforeachbalancesheet

presentedhavebeentranslatedattheclosing

rateatthedateofthatstatementofbalance

sheet;

• resultsforthecashflowstatementwere

translatedataveragedailyexchangerates

from1January2015to31December2015;and

• exchangedifferencesontranslatingincome,

expensesandmovementsinequityand

reservesatannualaverageexchangerates

andassetsandliabilitiesatclosingexchange

ratesfromfunctionalcurrencytopresentation

currencyaretakentotheforeigncurrency

translationreserveintheequitysectionand

underothercomprehensiveincome/(expense)

inthestatementofcomprehensiveincome.

(ii) Transactionandbalances

Foreigncurrencytransactionsaretranslatedinto

functionalcurrencyusingtheexchangeratesat

thedatesofthetransactions.Foreignexchange

gainsandlossesresultingfromthesettlement

ofsuchtransactionsandfromthetranslationof

monetaryassetsandliabilitiesdenominatedin

foreigncurrenciesatyearendexchangeratesare

generallyrecognisedinprofitorloss.Theyare

deferredinequityiftheyrelatetoqualifyingcash

flowhedgesandqualifyingnetinvestmenthedges

orareattributabletopartofthenetinvestmentin

aforeignoperation.

Foreignexchangegainsandlossesthatrelate

toborrowingsarepresentedintheincome

statement,withinfinancecosts.Allotherforeign

exchangegainsandlossesarepresentedinthe

incomestatementonanetbasiswithinother

incomeorotherexpenses.

Non-monetaryitemsthataremeasuredatfair

valueinaforeigncurrencyaretranslatedusing

theexchangeratesatthedatewhenthefairvalue

wasdetermined.Translationdifferencesonassets

andliabilitiescarriedatfairvaluearereportedas

partofthefairvaluegainorloss.Forexample,

translationdifferencesonnon-monetaryassets

andliabilitiessuchasequitiesheldatfairvalue

throughprofitorlossarerecognisedinprofit

orlossaspartofthefairvaluegainorloss

andtranslationdifferencesonnon-monetary

assetssuchasequitiesclassifiedasavailable-

for-salefinancialassetsarerecognisedinother

comprehensiveincome.

29

(ii) Groupcompanies

Theresultsandfinancialpositionofforeign

operations(noneofwhichhasthecurrencyofa

hyperinflationaryeconomy)thathaveafunctional

currencydifferentfromthepresentationcurrency

aretranslatedintothepresentationcurrencyas

follows:

• assetsandliabilitiesforeachbalancesheet

presentedaretranslatedattheclosingrateat

thedateofthatbalancesheet;

• incomeandexpensesforeachincome

statementandstatementofcomprehensive

incomearetranslatedataverageexchange

rates(unlessthisisnotareasonable

approximationofthecumulativeeffectofthe

ratesprevailingonthetransactiondates,in

whichcaseincomeandexpensesaretranslated

atthedatesofthetransactions);and

• allresultingexchangedifferencesare

recognisedinothercomprehensiveincome.

Onconsolidation,exchangedifferencesarising

fromthetranslationofanynetinvestmentin

foreignentities,andofborrowingsandother

financialinstrumentsdesignatedashedges

ofsuchinvestments,arerecognisedinother

comprehensiveincome.Whenaforeignoperation

issoldoranyborrowingsformingpartofthenet

investmentarerepaid,theassociatedexchange

differencesarereclassifiedtoprofitorloss,aspart

ofthegainorlossonsale.

Goodwillandfairvalueadjustmentsarisingonthe

acquisitionofaforeignoperationaretreatedas

assetsandliabilitiesoftheforeignoperationand

translatedattheclosingrate.

(e) Revenue RecognitionRevenueismeasuredatthefairvalueofthe

considerationreceivedorreceivable.Amounts

disclosedasrevenuearenetofreturns,trade

allowances,rebatesandamountscollectedon

behalfofthirdparties.

Revenueisrecognisedtotheextentthatitis

probablethattheeconomicbenefitswillflow

totheentityandtherevenuecanbereliably

measured.Thefollowingspecificrecognition

criteriamustalsobemetbeforerevenueis

recognised:

(i) Saleofgoods

Revenuefromthesaleofgoodsisrecognised

whenthereispersuasiveevidenceindicatingthat

therehasbeenatransferofrisksandrewards

tothecustomer,generallyfortheGroup,thisis

basedonfree-on-boardsaleswheretransferof

risksandrewardspassesatportoforigin.Sales

revenuecomprisesgrossrevenueearnedfrom

theprovisionofproducttocustomers.Salesare

initiallyrecognisedatestimatessalesvaluewhen

theproductisdelivered.Adjustmentsaremade

forvariationsinmetalsprice,assay,weightand

moisturecontentbetweenthetimeofdelivery

andthetimeoffinalsettlementofsalesproceeds.

(ii) StockpiledRevenue

Revenuefromthestockpilingofgoodsis

recognisedwhenthereisevidencethatthere

hasbeenatransferofrisksandrewardsto

thecustomer.Thisisbasedonacontractual

obligationofthecustomertotakefinaldelivery

andmakefullandfinalpaymentforallamounts

deliveredtothestockpile.

(iii)Unearnedrevenue

Unearnedrevenuerepresentsrevenuethat

hasbeenreceivedbytheGroupforrequested

goodswheretherisksandrewardshavenot

yetbeentransferredasthegoodshavenot

beensubstantiallyprovided.Deferredrevenue

isrecognisedasrevenuesubsequenttothisin

accordancewiththeGroup’srevenuerecognition

policy.

(iv)Interestincome

Interestandotherincomearerecognisedasit

accruesonatimeproportionbasisusingthe

effectiveinterestmethod.

(f) Income taxTheincometaxexpenseorrevenuefortheperiod

isthetaxpayableonthecurrentperiod’staxable

incomebasedontheapplicableincometax

rateforeachjurisdictionadjustedbychangesin

deferredtaxassetsandliabilitiesattributableto

temporarydifferencesandtounusedtaxlosses.

Thecurrentincometaxchargeiscalculatedon

thebasisofthetaxlawsenactedorsubstantively

enactedattheendofthereportingperiodinthe

countrieswheretheCompany’ssubsidiariesand

associatesoperateandgeneratetaxableincome.

Managementperiodicallyevaluatespositions

takenintaxreturnswithrespecttosituations

inwhichapplicabletaxregulationissubjectto

interpretation.Itestablishesprovisionswhere

appropriateonthebasisofamountsexpectedto

bepaidtothetaxauthorities.

Deferredincometaxisprovidedinfull,usingthe

liabilitymethod,ontemporarydifferencesarising

betweenthetaxbasesofassetsandliabilitiesand

theircarryingamountsintheconsolidatedfinancial

statements.However,deferredtaxliabilitiesarenot

recognisediftheyarisefromtheinitialrecognition

ofgoodwill.Deferredincometaxisalsonot

accountedforifitarisesfrominitialrecognition

ofanassetorliabilityinatransactionotherthan

abusinesscombinationthatatthetimeofthe

transactionaffectsneitheraccountingnortaxable

profitorloss.Deferredincometaxisdetermined

usingtaxrates(andlaws)thathavebeenenacted

orsubstantiallyenactedbytheendofthe

30

reportingperiodandareexpectedtoapplywhen

therelateddeferredincometaxassetisrealisedor

thedeferredincometaxliabilityissettled.

Deferredtaxassetsarerecognisedfordeductible

temporarydifferencesandunusedtaxlossesonly

ifitisprobablethatfuturetaxableamountswill

beavailabletoutilisethosetemporarydifferences

andlosses.Deferredtaxliabilitiesandassets

arenotrecognisedfortemporarydifferences

betweenthecarryingamountandtaxbases

ofinvestmentsinforeignoperationswherethe

Companyisabletocontrolthetimingofthe

reversalofthetemporarydifferencesanditis

probablethatthedifferenceswillnotreversein

theforeseeablefuture.

Deferredtaxassetsandliabilitiesareoffset

whenthereisalegallyenforceablerighttooffset

currenttaxassetsandliabilitiesandwhenthe

deferredtaxbalancesrelatetothesametaxation

authority.Currenttaxassetsandtaxliabilitiesare

offsetwheretheentityhasalegallyenforceable

righttooffsetandintendseithertosettleonanet

basis,ortorealisetheassetandsettletheliability

simultaneously.

From1January2014,theCompanyanditswholly-

ownedAustraliancontrolledentitieshaveformed

anincometaxconsolidatedgroupunderthetax

consolidationregimewithMineralCommodities

Ltdastheheadentity.Theheadentityandeach

subsidiaryinthetaxconsolidatedgroupcontinue

toaccountfortheirowncurrentanddeferredtax

amounts.Thetaxconsolidatedgrouphasapplied

the“separatetaxpayerwithingroup”approachin

determiningtheappropriateamountoftaxesto

allocatetomembersofthetaxconsolidatedgroup.

Inadditiontoitsowncurrentanddeferredtax

amount,theheadentityalsorecognisesthe

currenttaxliabilities(orassets)andthedeferred

taxassetsarisingfromunusedtaxlossesand

unusedtaxcreditsassumedfromeachsubsidiary

inthetaxconsolidatedgroup.

Assetsorliabilitiesarisingunderthetaxfunding

agreementswiththetaxconsolidatedentities

arerecognisedasamountsreceivablefromor

payabletootherentitiesinthetaxconsolidated

group.Thetaxfundingarrangementensurethat

theintercompanychargeequalsthecurrenttax

liabilityorbenefitofeachtaxconsolidatedgroup

member,resultinginneitheracontributionbythe

headentitytothesubsidiariesnoradistribution

bythesubsidiariestotheheadentity.

(i) Investmentallowancesandsimilartax

incentives

CompanieswithintheGroupmaybeentitled

toclaimspecialtaxdeductionsforinvestments

inqualifyingassetsorinrelationtoqualifying

expenditure(eg.theResearchandDevelopment

TaxIncentiveregimeinAustraliaorother

investmentallowances).TheGroupaccounts

forsuchallowancesastaxcredits,whichmeans

thattheallowancereducesincometaxpayable

andcurrenttaxexpense.Adeferredtaxasset

isrecognisedforunclaimedtaxcreditsthatare

carriedforwardasdeferredtaxassets.

(g) LeasesLeasesofproperty,plantandequipmentwhere

theGroup,aslessee,hassubstantiallyalltherisks

andrewardsofownershipareclassifiedasfinance

leases.Financeleasesarecapitalisedatthelease’s

inceptionatthefairvalueoftheleasedproperty

or,iflower,thepresentvalueoftheminimumlease

payments.Thecorrespondingrentalobligations,

netoffinancecharges,areincludedinothershort-

termandlong-termpayables.Eachleasepayment

isallocatedbetweentheliabilityandfinancecost.

Thefinancecostischargedtotheprofitorloss

overtheleaseperiodsoastoproduceaconstant

periodicrateofinterestontheremainingbalance

oftheliabilityforeachperiod.Theproperty,plant

andequipmentacquiredunderfinanceleasesis

depreciatedovertheasset’susefullifeoroverthe

shorteroftheasset’susefullifeandtheleaseterm

ifthereisnoreasonablecertaintythattheGroup

willobtainownershipattheendoftheleaseterm.

Leasesinwhichasignificantportionoftherisks

andrewardsofownershiparenottransferredto

theGroupaslesseeareclassifiedasoperating

leases.Paymentsmadeunderoperatingleases

(netofanyincentivesreceivedfromthelessor)

arechargedtoprofitorlossonastraight-line

basisovertheperiodofthelease.

Leaseincomefromoperatingleaseswherethe

Groupisalessorisrecognisedinincomeon

astraight-linebasisovertheleaseterm.The

respectiveleasedassetsareincludedinthe

balancesheetbasedontheirnature.

(h) Impairment of assetsGoodwillandintangibleassetsthathavean

indefiniteusefullifearenotsubjecttoamortisation

andaretestedannuallyforimpairment,ormore

frequentlyifeventsorchangesincircumstances

indicatethattheymightbeimpaired.Other

assetsaretestedforimpairmentwheneverevents

orchangesincircumstancesindicatethatthe

carryingamountmaynotberecoverable.An

impairmentlossisrecognisedfortheamount

bywhichtheasset’scarryingamountexceeds

itsrecoverableamount.Therecoverableamount

istheh