Announcement PDF 1 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Annual Report MRG Metals Ltd ABN: 83 148 938 532 For the Year ended 30 June 2023 2 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Contents Page Review of Operations Directors’ Report Auditor’s Independence Declaration Corporate Governance Statement Statement of Financial Position Statement of Profit or Loss and Other Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information Corporate Directory 3 68 79 80 88 89 90 91 92 112 113 117 120 3 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Review of Operations MRG Metals is pleased to provide a summary of the Company’s activities for the 2023 financial year across its portfolio of Heavy Mineral Sands (HMS) projects, located in southern Mozambique. MRG has defined a JORC Resource over 2 billion tonnes with further upside from a JORC Exploration Target. The Company believes that this could potentially be one of the largest HMS discoveries worldwide in the last decade. Through the Company’s extensive activities at its Corridor Projects, MRG is in a position with multiple pits demonstrating Mineral Resource Estimates which could lead to a mine start-up operation. 4 MRG Metals Limited Consolidated Financial Statements 30 June 2023 During the financial year, MRG’s activities were highlighted by the release of results from the Scoping Study and Preliminary Economic Assessment for the Corridor Central and Corridor South Projects, specifically the Koko Massava, Nhacutse and Poiombo deposits. Corridor Projects The Corridor Projects covers 2 licences, Corridor Central and Corridor South covering a total of 387km2. MRG’s key focus of the last financial year has been the Koko Massava, Nhacutse and Poimobo targets. The Nhacutse and Poiombo deposits sit adjacent, approximately 4 km apart, and a similar distance between the Nhacutse and Koko Massava deposit to the northwest. All three deposits are in a very close economic radius and approximately 40 km from the proposed port at Chongoene. 5 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Corridor Projects Scoping Study and Preliminary Economic Assessment Within the December 2022 quarter, MRG announced the results of the Scoping Study and Preliminary Economic Assessment by IHC Mining for the Corridor Central (11142C) and Corridor South (11137C) Projects, specifically the Koko Massava, Nhacutse and Poiombo deposits. This was released following the earlier Pre-Feasibility Metallurgical Process Development Test Work carried out by IHC Mining on the Koko Massava prospect which returned excellent results. Cautionary Statement The Scoping Study and Preliminary Economic Assessment referred to in this report has been undertaken to determine the potential viability of an open pit mine and ilmenite processing plant constructed onsite at the Corridor Sands project in Mozambique and to reach a decision to proceed with more definitive studies. The Scoping Study and Preliminary Economic Assessment has been prepared to an accuracy level of +30-35%. The results should not be considered a profit forecast or production forecast. The Scoping Study and Preliminary Economic Assessment is a preliminary technical and economic study of the potential viability of the Corridor Sands project. In accordance with the ASX Listing Rules, the Company advises it is based on low-level technical and economic assessments that are not sufficient to support the estimation of Ore Reserves. Further evaluation work including infill drilling and appropriate studies are required before MRG Metals Ltd (MRG) will be able to estimate any Ore Reserves or to provide any assurance of an economic development case. 82% of the scheduled throughput over the first 11 years of production, at Nhacutse and Poiombo deposits, is in the Indicated Mineral Resource category, with 18% in the Inferred Mineral Resource category. 50% of the scheduled throughput over years 12 to 25 of production, at Koko Massava deposit, is in the Indicated Mineral Resource category, with 50% in the Inferred Mineral Resource category. The Company has concluded that it has reasonable grounds for disclosing a production target which includes a modest amount of Inferred material. However, MRG, in consultation with IHC Mining, intends to conduct infill drilling to increase the confidence of the Inferred Mineral Resources to Indicated Mineral Resources and to increase the confidence of the Indicated Mineral Resources to Measured Mineral Resources. There is a low level of geological confidence associated with Inferred Mineral Resources, and there is no certainty that further exploration work 6 MRG Metals Limited Consolidated Financial Statements 30 June 2023 will result in the determination of Indicated Mineral Resources or that the production target itself will be realised. The Scoping Study and Preliminary Economic Assessment is based on the material assumptions outlined elsewhere in the announcement. These include assumptions about the availability of funding. While MRG considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study and Preliminary Economic Assessment will be achieved. To achieve the range of outcomes indicated in the Scoping Study Preliminary Economic Assessment, initial funding in the order of USD$239 million will likely be required. Investors should note that such funding may only be available on terms that dilute or otherwise affect the value of MRG’s existing shares. Debt funding via offtake pre-funding will be investigated. It is also possible that the Company could pursue other value realisation strategies such as a sole, partial sale or joint venture of the project. If it does, this could materially reduce the Company’s proportionate ownership of the project. The Company has concluded it has a reasonable basis for providing the forward-looking statements included in this announcement and believes that it has a reasonable basis to expect it will be able to fund the development of the Project. Given the uncertainties involved, Investors should not make any investment decisions based solely on the results of the Scoping Study Preliminary Economic Assessment. No Ore Reserve has been declared. This ASX release has been prepared in compliance with the current JORC Code (2012) and the ASX Listing Rules. All material assumptions, including sufficient progression of all JORC Modifying Factors, on which the production target and forecast financial information are based have been included in this ASX release. 7 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Figure 2: Map of the MRG HMS Projects MLA’s Corridor Central (11142C) and Corridor South (11137C), showing roads and towns. 8 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Figure 3: Cash flow over the life of the project 9 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Table 1: Scoping Study and PEA key economics summary Corridor Sands Scoping Study Project Summary Mining Physics Total Mining Inventory Contained THM Average Grade Mining Rate Mine Life Pricing (Average life of mine) Titano-Magnetite Ilmenite Non mag Production Titano-Magnetite Ilmenite Non-mag Capital Expenditure CAPEX (start up capital) Key Financial Metrics Revenue Free cash flow (After tax) Cash costs CAPEX (including deferred) NPV (after-tax) IRR (after-tax) Payback (discounted, after-tax) Life of Mine Mt Mt % Mtpa Years 513 27.8 5.4 19.7 26 USD/t USD/t USD/t 90 256 320 ktpa ktpa ktpa 262 369 48 USD M 239 $M $/t Ore $/t HMC $M $/t Ore $/t HMC $M $/t Ore $/t HMC $M $M % Year Years 3262 6.4 139.6 938 1.8 40.1 -1603.3 -3.1 -68.6 279 258 21% 5.5 26 Background The Scoping Study and Preliminary Economic Assessment Report (Report) has been prepared for MRG Metals Limited (MRG) by IHC Mining (IHC), based on assumptions as identified throughout the text and upon information and data supplied by others. IHC has, in preparing the Report exercised due care consistent with the intended level of accuracy, using its professional judgment and reasonable care. However, no warranty should be implied as to the accuracy of estimates or other values and all estimates and other values are only valid as at the date of the Report and will vary thereafter. Parts of the Report have been prepared or arranged by third party contributors, as detailed in the document. While the contents of those parts have been generally reviewed by IHC for inclusion into the Report, they have not been fully audited or sought to be verified by IHC. IHC is not in a position to, and does not, verify the accuracy or completeness of, or adopt as its own, the information and data supplied, either from the request for information (RFI) process or free issued by others and disclaims all liability, damages or loss with respect to such information and data. In respect of all parts of the Report, whether or not prepared by IHC, no express or implied representation or warranty is made by IHC or by any person acting for and/or on behalf of IHC to any third party that the 10 MRG Metals Limited Consolidated Financial Statements 30 June 2023 contents of the Report are verified, accurate, suitably qualified, reasonable or free from errors, omissions or other defects of any kind or nature. Third parties who rely upon the Report do so at their own risk and IHC disclaims all liability, damages or loss with respect to such reliance. IHC disclaims any liability, damage and loss to MRG and to third parties in respect of the publication, reference, quoting or distribution of the Report or any of its contents to and reliance thereon by any third party. Scoping Study and PEA Summary 1. Introduction MRG Metals Limited (MRG) is looking at developing a mining and processing operation in Mozambique. The Corridor Sands project (CSP) incorporates the Corridor Central (6620L) and Corridor South (6621L) licences. These two licences are now under mining licence application (MLA) (refer ASX release 21 October 2022), with INAMI having accepted the MLAs and changing the licence numbers accordingly, Corridor Central to 11142C (17.31956 Ha) and Corridor South to 11137C (18.23168 Ha). The MLAs were accepted by INAMI on the 6th of October 2022 and 3rd of October 2022 respectively for Corridor Central and Corridor South. The two licences are currently 100% owned by MRG Metals Limited (MRG) through its ownership of its subsidiaries, Sofala Mining & Exploration Limitada and Sofala Mining & Exploration I Limitada, in Mozambique. MRG is committed to working with INAMI to further the application process to the approval of Mining Licences, with Environmental Management Plan (EMP) and Social and Labour Plan (SLP) studies and reports, as well as the land-use licence / licences (DUAT) to take place after Mining Licences have been granted. All land in Mozambique is owned by the Mozambican government and land-use administered through rental and DUAT’s. Studies on existing DUAT’s will take place in the process, but no heritage sites within the mining areas or native title is applicable. The project comprises the Koko Massava, Nhacutse and Poiombo deposits. The envisioned strategy for the initial operation has been developed with the aim of enabling MRG to identify a clear path towards project execution. MRG plans to mine and process Run of Mine (ROM) material by establishing Mining Unit Plant (s) (MUP) and a Wet Concentrator Plant (WCP) initially capable of processing 20.1mtpa. The WCP will produce two streams, namely a Heavy Mineral Concentrate (HMC) that will be transported to a proposed Mineral Separation Plant (MSP) and a Titano-Magnetite final product that will be also transported to the MSP for offsite storage prior to loading on bulk carriers – sea freight. The MSP will be sized to handle 536Ktpa. Within the bounds of this Study, products will be stored on the MSP site for onward transport by others by road and sea on an FOB basis. 2. Basis of Study The purpose of this section is to set out the Scoping Study inputs, methods, key activities, deliverables, results and recommendations clearly for MRG Metals and its intended parties. The Study report generally brings together the technical scoping outcomes, capital and operating costs and financial modelling. IHC Mining provided a proposal outlining the scope of the study to be performed. The scope of work outlined in the proposal broadly included the following: • • • • • • In-house assessment of IHC Mining historical works of similar projects; Desktop metallurgy (in addition to existing test work); Desktop investigative engineering; Preliminary calculations; Concept sketch layouts; and Study management. 11 MRG Metals Limited Consolidated Financial Statements 30 June 2023 This was to comprise two packages of work, specifically, a Scoping Study and associated financial modelling for: • • • • Mining Unit Plant (MUP); Wet Concentrator Plant (WCP); Mineral Separation Plant (MSP); General Process Infrastructure. In undertaking the study, the following items were excluded: • • • • Detailed building layouts (to support local authority applications); 3D Modelling for buildings, designs and any other equipment; Permitting and approvals; and Investigations as described in section 14 Capital Cost Estimate. Deliverables and activities undertaken during this scoping study include: • General review, registration and management of client data and key input information; • Convene internal and external kick-off meetings; • Development of a basis of study guiding document; • Prepare preliminary requests for information (RFI’s) and develop a register; • Scoping of mining strategy and mining unit(s); • Development of a basic mining inventory and schedule; • Scoping of process plants; • Undertaking of mining options investigation; • Drafting of concept sketch site layouts of mining, wet processing, dry processing and port facilities; • Development of a Block Flow Diagram outlining high level plant Interaction; • Compiling mass and water balances • Assessing stockpile strategies and volumes, water consumption, reticulation and management, plant consumables (power, diesel, gas etc) and man power requirements; • Undertaking preliminary engineering calculations sufficient to compile a Class 5 estimate; • Completing preliminary equipment selections; • Preparing mechanical equipment list with power draws; • Compiling a Class 5 Capital Budget Estimate (+/-35% accuracy); • Compiling a Class 5 Operating Cost Estimate (+/-35% accuracy); • Development of preliminary project execution schedule; • Development of a preliminary financial model; and • Preparation of final scoping study report. 3. Geology and Resources The deposits are hosted by the palaeodunes in the Chongoene-Chibuto area. The palaeodunes are known to host significant heavy mineral sand mineralisation. Recent drilling has intersected high total heavy mineral (THM) grades, from surface extending to a depth of up to 55m over a strike of 8km. The mineralisation is hosted within the red to brownish, medium grained sand units. The mineralisation zone is geologically continuous along strike, with grades varying along and across strike. In December 2021, MRG released a Mineral Resource Estimate (MRE) for their Koko Massava orebody which delivered a High-Grade Zone of 103Mt @ 6.6% THM at a 5.5% cut-off grade (Table 2.1 and 2.2; refer ASX Announcement 16 December 2021). The updated MRE comprised a total Mineral Resource of 1,534Mt @ 5.1% THM, with 17% slimes, containing 78Mt of THM with an assemblage of 38% ilmenite, 32% titanomagnetite, 1% rutile and 1% zircon. The JORC categories are specifically stated as: • an Indicated Mineral Resource of 557Mt @ 5.1% THM and 17% slimes containing 28Mt of THM with an assemblage of 38% ilmenite, 32% titano-magnetite, 1% rutile and 1% zircon. • an Inferred Mineral Resource of 977Mt @ 5.0% THM and 16% slimes containing 49 Mt of THM with an assemblage of 38% ilmenite, 32% titano-magnetite, 1% rutile and 1% zircon. 12 MRG Metals Limited Consolidated Financial Statements 30 June 2023 In April 2022, MRG then announced the results of the updated JORC Mineral Resource estimates for its Nhacutse and Poiombo deposits at Corridor Sands with a combined Inferred Resource of 860Mt @ 4.9% THM (Table 2.3 and 2.4; refer ASX Announcement 8 April 2022). The MRE included high-grade zones totalling 256Mt @ 6.0% THM. Table 2-1: Mineral Resource estimate for Nhacutse and Poiombo at 4% THM cut-off grade In Situ THM BD OS ILM RUT ZIR TIMAG CHRM MOTH ANDA NMOTH Global Material SLIMES Deposit Mineral Assemblage (2) THM Summary of Mineral Resources(1) (Mt) (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) Indicated 524 26 1.74 5.0 22 1 44 1 1 27 3 2 8 4 Inferred 337 16 1.74 4.7 17 1 41 1 1 27 4 5 10 3 860 42 1.74 4.9 20 1 43 1 1 27 3 3 9 3 Mineral Resource Category Grand Total Notes: (1) Mineral resources reported at a cut-off grade of 4% THM (2) Mineral assemblage is reported as a percentage of in-situTHM Table 2-2: Mineral Resource estimate for Nhacutse and Poiombo at 5.5% THM cut-off grade In Situ THM BD OS ILM RUT ZIR TIMAG CHRM MOTH ANDA NMOTH Global Material SLIMES Deposit Mineral Assemblage (2) THM Summary of Mineral Resources(1) (Mt) (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) Indicated 186 11 1.75 5.9 22 1 43 1 1 27 3 2 8 4 Inferred 71 4 1.75 6.2 18 1 41 1 1 27 4 5 10 3 257 15 1.75 6.0 21 1 43 1 1 27 4 3 9 4 Mineral Resource Category Grand Total Notes: (1) Mineral resources reported at a cut-off grade of 5% THM (2) Mineral assemblage is reported as a percentage of in-situTHM Table 2-3: Mineral Resource estimate for Koko Massava at 4% THM cut-off grade BD ILM RUT ZIR TIMAG CHRM MOTH ANDA NMOTH Grand Total In Situ THM OS Global Material SLIMES Deposit Mineral Assemblage (2) THM Summary of Mineral Resources(1) (Mt) (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) Indicated 557 28 1.74 5.1 17 1 38 1 1 32 4 4 8 3 Inferred 977 49 1.74 5.1 16 1 38 1 1 32 4 4 8 3 1,531 77 1.74 5.1 17 1 38 1 1 32 4 4 8 3 Mineral Resource Category Notes: (1) Mineral resources reported at a cut-off grade of 4% THM (2) Mineral assemblage is reported as a percentage of in-situTHM 13 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Table 2-4: Mineral Resource estimate for Koko Massava at 5.5% THM cut-off grade BD ILM RUT ZIR TIMAG CHRM MOTH ANDA NMOTH Grand Total In Situ THM OS Global Material SLIMES Deposit Mineral Assemblage (2) THM Summary of Mineral Resources(1) (Mt) (Mt) (gcm3) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) Indicated 58 4 1.8 6.4 15 1 39 1 1 33 4 3 7 3 Inferred 45 3 1.8 6.8 12 1 37 1 1 34 4 4 5 2 103 7 1.8 5.1 17 1 39 1 1 33 4 3 6 3 Mineral Resource Category Notes: (1) Mineral resources reported at a cut-off grade of 5.5% THM (2) Mineral assemblage is reported as a percentage of in-situTHM 4. Mining Strategy Review and selection of the appropriate mining methodology was based upon a conventional open pit unconsolidated free-dig, free flowing dry sand mining operation. Wet Mining operations were ruled out due to the mining pits relationship to the water table. At this stage of project development, conventional truck and shovel and dozer trap were considered. Apart from the superior economics, the broad acre deposit, little to no overburden combined with a pit depth of nominally up to 50 metres are well suited to dozer trap mining. This mining methodology is well understood and is currently being employed by a variety of Tier 1 mineral sands producers. Mining would be conducted by large bulldozers pushing ore to in pit screening and slurrying units known as mining unit plant (MUP). The MUP receives ROM ore mined by bulldozers. The MUP is designed to be relocatable and is placed adjacent to the lower ore level of the mine face. Process water from the plant reservoir is piped to the MUP and used to slurry and transport the screened ore back to the processing plant. Oversize material is rejected and disposed of in the mine void. Processing of ore will be conducted in two distinct stages. The WCP receives ore as slurry from the mine and after removal of clay, silt and oversize, the sands will be processed by spiral gravity separators to yield a HMC and low intensity magnets (LIMs) to yield a titano-magnetite product. The HMC and titano-magnetite product will be trucked to the MSP, the titano-magnetite will not undergo further processing and be stored as final product. At the MSP, the HMC feed stock will undergo various stages of magnetic, electrostatic separation and pyrometallurgy to isolate and upgrade the TiO2 products. Non-mag containing zircon, rutile and lighter minerals will be removed in wet gravity separation processes and a non-mag concentrate produced. The products will be conveyed to storage shed facilities on the MSP site and then reloaded on a ship loading conveyor as bulk sea freight. Coarse and fine tails will be trucked back to the WCP site and dumped into a tails reclaim hopper, mixed with WCP tailings and pumped back to the mine void. The mining inventory for the Nhacutse-Poiombo & Koko-Massava is included in Table 3. Tonnages and grades are rounded as appropriate and mineral assemblage is reported as a percentage of in situ HM. The reference point for the Mining Inventory is the point of feed to the MUP, i.e., the tonnes and grade reported are in-situ. The production profile over the life of mine (LOM) is shown in Figure 4. 14 MRG Metals Limited Consolidated Financial Statements 30 June 2023 Table 3: Mining Inventory for PEA (showing valuable mineral component) Ore HM HM SLIMES OS BD ILM ILMA LX RUT TIMAG ZIR Mt Mt % % % g/cm3 %HM %HM %HM %HM %HM %HM Nhacutse & Poiombo 248 13.5 5.5 20 0.6 1.75 39.9 4.0 0.3 1.1 26.7 1.3 Koko Massava 265 14.3 5.4 16 0.9 1.75 37.1 2.2 0.3 1.2 32.1 1.2 513 27.8 5.4 18 0.8 1.75 38.5 3.1 0.3 1.1 29.5 1.3 Deposit Total Resource Breakdown :Nhacutse and Poiombo: 82% Indicated,18% Inferred : Koko Massava 50% Indicated, 50% Inferred. Figure 4: Production Profile for Life of Mine (LOM) 5. Metallurgical Testwork IHC Mining completed scoping study level metallurgical test work in August 2020 for the Corridor Sands Project. The test work was conducted on a ~100kg sample of composited drill sample material derived from MRG’s Koko Massava deposit. The sample was characterised as per MRG’s standard methodology developed for the geological modelling, metallurgical evaluation and production forecasting of the CSP. The feed material contained minimal +2.0mm oversize particles/organics, 15.6% fines (-45μm) and 5% heavy mineral (2.85s.g.) content. XRF analysis indicated the HM to contain 24.6% TiO2 and 0.96% ZrO2. QEMSCAN analysis calculated the HM mineralogy to contain 0.2% rutile, 2.0% altered ilmenite, 28.8% ilmenite, 16.6% titano-magnetite and 1.2% zircon. 15 MRG Metals Limited Consolidated Financial Statements 30 June 2023 The material was processed through a simulated feed preparation process to remove fines and oversize particles. The screened sand fraction represented a mass yield of 87.3% with respect to ROM material. A sample of generated fines was used to complete fines handling test work, which confirmed the fines to settle readily and consolidate well when using conventional flocculent. The screened sand fraction was then processed through a two-stage (rougher-cleaner) wet table circuit to simulate a wet concentration process. The material was amenable to upgrading by gravity separation. The circuit produced a HMC containing 83.0% HM, and recovered 93.5% of the TiO2 units and 93.7% of the ZrO2 units. The HMC represented a mass yield of 4.35% with respect to ROM material. The resultant HMC was then processed through a typical mineral sands concentrate upgrade process (CUP), utilising a two-stage LIMS (non-mag scavenger), two-stage WHIMS (non-mag scavenger) and two-stage wet table (rougher-scavenger) to further upgrade the WHIMS non-mags. This circuit produced a titano-magnetite product, a low-Ti concentrate, a magnetic concentrate and a non-magnetic concentrate. The CUP magnetic concentrate was then processed through the ilmenite upgrade process, consisting of electrostatic and dry magnetic separation. The produced magnetic fraction represented a mass yield of 1.60% with respect to ROM material, contained 43.5% TiO2 and was elevated in chrome (1.4% Cr2O3). Further magnetic fractionation test work concluded that the chrome could not be adequately removed by magnetic separation alone and that chemical alteration by ultra-low temperature roasting (ULTR) plant would be required. The roasting process successfully enhanced the magnetic susceptibility of the ilmenite species, allowing for more effective rejection of chrome-bearing minerals by the proceeding dry magnetic separation circuit. The produced ULTR Ilmenite contained 47.1% TiO2, 0.10% Cr2O3, 0.92% SiO2 and negligible U+Th. This product represents 1.42% of the ROM mass and meets typical primary ilmenite specification. Despite the low mass yield, the CUP’s non-magnetic concentrate was further processed by electrostatic, magnetic and gravity separation methods to produce a Ti concentrate and a Zr concentrate. The developed flow sheet is a relatively simple process which uses typical mineral sands separation methodologies. The production of the titano-magnetite product has proven particularly robust and consistent throughout the scoping study and pre-feasibility study metallurgical test work completed to date. The nonmagnetic concentrate, while representing a low mass yield, is a potential value adding stream for future consideration. The production of a primary ilmenite product has proven to be somewhat more demanding, with multiple stages of magnetic separation required in conjunction with ULTR treatment. Each progressive stage of mineral separation introduces ilmenite mineral losses. With ilmenite proving to be a major driver for the project, there is opportunity to optimise ilmenite recovery through alternate process flow sheet options. Two major process routes have been investigated to date – the WHIMS-oriented scoping study test work flow sheet and the current design as presented herein (and as currently being developed during pre-feasibility study test work). The latter’s main advantage is reducing opportunity for ilmenite mineral losses in the WHIMS circuit. It is possible that this may cause a net increase in operating costs due to the increased drying requirements. To identify the optimum choice, a high-level cost-benefit analysis is recommended to be conducted for these two process options once metallurgical test work results are finalised for this processing option. Pending the results of this investigation, further options for reducing ilmenite losses may also be available, such as the removal of the mineral separation steps prior to roasting. While this would increase the energy intensive roasting requirement, it would eliminate the ilmenite mineral losses associated with the pre-ULTR MSP circuit. The ilmenite upgrade (to final product) would then occur entirely through the magnetic separation post-ULTR, wherein the ilmenite magnetic susceptibility has been enhanced and normalised by the roasting process. It is recommended that these option assessments are completed prior to commencement of a bankable feasibility study, such that the bankable feasibility metallurgical test work can confirm and optimise the selected circuit and assess its response to ore variability. 16 MRG Metals Limited Consolidated Financial Statements 30 June 2023 6. Modifying Parameters Mining recovery and dilution have been considered in design and given the bulk, non-selective mining method used, it is not considered that application of further modifying factors is appropriate. No cutting or factoring of grades were made. The same modifying factors were used on both deposits. Exchange Rates: All dollar values referred to in this report are in United States Dollars (USD) unless explicitly stated otherwise. Therefore, no exchange rate has been assumed. Commodity Prices: Product prices are a function of supply and demand, and product quality. Those used for optimisation value modelling purposes are included in Table 4. Prices were based on those supplied by MRG and have subsequently been updated. These updated prices were confirmed by TZMI. TZMI conducted a detailed Market Study for MRG, the study loo ed particularly at incorporating TZMI’s latest supply/demand projections on global sulfate ilmenite, rutile and zircon markets. The study had the following focus: Phase 1 • Introduction to the mineral sands value chain and industry structure. • Overview of existing major producers and likely new projects that are currently under investigation. • Review of supply of sulfate ilmenite, rutile and zircon, outlining the key producers/regions and a supply outlook to 2030. • Demand analysis segmented by end-use markets and key customers by individual feedback type and zircon. An overview of the global TiO2 pigment sector (supply and demand) and forecasts to 2030 will be included, as this TiO2 pigment is the dominant driver for consumption of titanium feedstocks. • Review of sulfate ilmenite requirement for the benefi