Development Timing

The main focus of the Company is to a rapidly advance the development plans for the Ranobe Mine. The engineering studies required for a development decision have been completed and the final approvals are expected in early 2013.

Engineering

The DES was completed in August 2012. Minor engineering work will continue until October 2012 with the focus on preparing the tender for project engineering, procurement, construction and management (EPCM).

Additional geotechnical and marine studies required for the detailed design of the jetty will commence immediately to ensure that results are available before the end of the first quarter of CY2013 prior to the commence of Front End Engineering and Design.

The development execution plan assumes a 6 month engineering and procurement phase followed by 12 months of construction. Assuming the development phase commences during Q2 2013 then commissioning and first production should be achieved in Q4 of CY2014.

Environmental and Social Impact Assessment

Coastal and Environmental Services, a South African environmental consultancy with extensive experience in mineral sands and other mining projects in Africa, has completed a draft scoping study. A public consultation process has been completed with group and one-on-one meetings held in Antananarivo, Toliara and the villages near the mine site and associated Project infrastructure.

These meetings sought feedback from key stakeholders, including the Government, NGO’s and community, on the potential impacts of the Project. This feedback is being incorporated into the Final Scoping Report, which will be submitted to the Office for National Environment (ONE).

Based upon the Final Scoping Report, the scope for the required specialist studies has been defined and these studies will be completed during the third quarter 2012. Once the specialist studies are complete the Specialist Report, Environmental and Social Impact Report (ESIR) and Social and Environmental Management Plan (SEMP) will be drafted.  A public consultation process will be undertaken before finalisation and submission to the ONE for approval. Final environmental approval is currently expected to be received in the first quarter 2013.

Surface Rights

The process of securing access agreements for roading, loading facilities, surface infrastructure and the mining area is well advanced. The identification of traditional owners and users of the land which will be required for the proposed mine site and associated infrastructure is almost complete. Once all owners and users are identified, the Company will formalise access agreements with them.

This activity is being facilitated by the Regional Coordination Committee, chaired by the Chef du Region. This committee comprises representatives from the Company, the Ministry of Mines, other ministries, and the mayors of the districts and communities that will be impacted by the Project.

The Company continues to receive support from all levels of the local community, from the Toliara regional government down to the individual villagers. Their support, including formal representations by the Chef du Region, district and commune Mayors and the Chiefs of each village to the Government of Madagascar was important in securing the mining licences.

Product Off-take

The Company has engaged with a number of potential off-take customers for all three of the proposed products from Ranobe – sulphate ilmenite, chloride ilmenite and a zircon rich non-magnetic concentrate. These discussions include straightforward supply agreements, as well as the potential for customers to provide prepayment as a source of development capital for the Project. These discussions are ongoing and the Company will update shareholders once they are finalised.

Funding

In additional to the potential for customer pre-payment to partially fund the development capital, the Company is also exploring strategic partner options, at both the asset and the corporate levels.

The balance of funding is expected to come from an equity raising later in 2012 or early 2013 but will only be undertaken once the capital requirement and funding from other sources has been defined.

At the end of June 2012 the company had $9.9 million in cash, sufficient to fund all pre-development activities and to maintain the Company’s presence in Madagascar and corporate activities until at least the end of 2013.