Operational Delays and Business Rescue Cloud Mineral Commodities’ Skaland and Tormin Assets

Strategic Asset Realignment

Mineral Commodities Ltd (ASX: MRC) has outlined key developments in its December 2024 quarterly report, emphasizing a strategic pivot towards its battery minerals division. Central to this is the ongoing effort to consolidate ownership of the Munglinup Graphite Project in Western Australia, where the company currently holds a 51% stake and is negotiating to acquire the remaining 49% from joint venture partner Gold Terrace Pty Ltd for A$7.5 million in cash.

These negotiations, while progressing in good faith, have yet to culminate in a formal binding agreement. Completion remains contingent on regulatory approvals, including Foreign Investment Review Board clearance, ministerial consent, and shareholder approval if external funding is involved. The acquisition would grant Mineral Commodities full control over a project with a definitive feasibility study projecting a 14-year mine life producing approximately 52,000 tonnes per annum of graphite ore at an average grade of 12.8%.

Skaland Sale and Operational Challenges

In a significant move to streamline its portfolio, Mineral Commodities has entered into a binding share purchase agreement to sell its wholly owned subsidiary Skaland Graphite AS to Norge Mineraler Holding AS for a total consideration of USD 11.75 million. The transaction includes a non-refundable exclusivity fee already received and is subject to standard conditions precedent such as repayment or conversion of intercompany loans and receipt of third-party consents.

Operationally, Skaland faced production disruptions during the quarter due to the failure of a drill rig in September 2023, with replacement delayed by funding constraints. Production was suspended in November and December 2024, resulting in concentrate output of 1,106 tonnes for the quarter, below budgeted levels. A rental rig has been deployed with production expected to resume in January 2025. Sales revenue for the quarter was US$0.99 million, reflecting the impact of these operational challenges.

Financial Position and Funding

Mineral Commodities strengthened its financial position by securing A$2.4 million in convertible loan facilities from existing shareholders, including a significant A$2 million contribution from its largest shareholder, Au Mining Limited. These funds are earmarked for working capital needs at Skaland, corporate expenses, and payments under a standstill agreement with Garnet International Resources Pty Ltd (GMA), which protects the company from action on a parent guarantee related to a loan to Mineral Sands Resources (MSR), owner of the Tormin mineral sands asset in South Africa.

The Tormin operation remains under a business rescue process following a maritime incident in July 2024, with creditors agreeing to extend the deadline for a rescue plan to 31 January 2025. Mineral Commodities holds a 50% interest in MSR and is a major creditor through intercompany loans.

Advancing Battery Minerals and Pilot Plant Progress

The company continues to focus on its battery minerals strategy, with commissioning ongoing at its pilot-scale graphite anode plant in Australia. Preliminary results are encouraging, achieving battery-grade purity in a single pass. However, minor electrical faults have delayed full operation, with repairs expected to complete by early February 2025. Collaboration with Mitsubishi Chemical Corporation and CSIRO remains active, supporting technology development and scale-up.

Environmental approvals and further studies for the Munglinup project are targeted for completion by the September 2025 quarter, following some delays. These milestones are critical for advancing the project towards production and aligning with the company’s repositioning as a graphite-focused entity with integrated upstream and downstream assets.