Mineral Deposits : 1Q 2017 Operations Review

1Q 2017 OPERATIONS REVIEW

MDL's primary asset is a 50% interest in the TiZir joint venture (TiZir), which owns the Grande Côte mineral sands operation (GCO) in Senegal, West Africa and the TiZir Titanium & Iron ilmenite upgrading facility (TTI) in Tyssedal, Norway. ERAMET of France is MDL's 50% joint venture partner in TiZir.

KEY POINTS

GCO

• Third successive quarter of positive free cash flow

• Record quarterly ore tonnes mined

• Mine optimisation initiatives delivering results, illustrated by continued higher runtime and throughput rates

• Increase in Ore Reserves to 21.7 million tonnes of heavy minerals (Proven and Probable) and mine life through to 20431

  TTI

• Furnace restart on 7 January ahead of schedule

• First shipments of titanium slag commenced ahead of schedule

  Corporate

• Capital raising successfully completed, raising gross proceeds of approximately A$39.2 million

• ERAMET debt repaid

  Market

• Positive developments continued in the zircon and titanium markets with improved pricing dynamics

GCO

GCO mining operations continued to operate at the higher runtime and throughput rates achieved in 4Q 2016, as demonstrated by the record total ore tonnes mined for the quarter (11,661kt). As disclosed in 4Q 2016, heavy mineral concentrate (HMC) production was impacted during the quarter by a necessary mine path crossover through lower grade tailings. No further such crossovers are scheduled in the current mine plan which was recently updated following completion of the mine optimisation study.

Mine optimisation initiatives at GCO continued to deliver higher levels of utilisation and throughput across the mine. The average runtime for 1Q 2017 of just over 83% was significantly higher than the 2016 average of approximately 73% and just below the approximate 85% achieved in the record breaking 4Q 2016. Throughput rates also steadily increased with rates in excess of 7,000tph achieved on a sustained basis during 1Q 2017.

1 ASX release - 22 February 2017 (Grande Côte Mineral Resource and Ore Reserve Update) and 24 February 2017 (Annual Statement of Mineral Resources

and Ore Reserves as at 31 December 2016). MDL confirms that it is not aware of any new information or data that materially affects the information included in the ASX releases of 22 February 2017 and 24 February 2017 and that all material assumptions and technical parameters underpinning the estimates in the release continue to apply and have not materially changed.

Mineral Deposits Limited ABN 19 064 377 420

Level 17 530 Collins Street Melbourne VIC 3000 Australia T +613 9618 2500 F +613 9621 1460 E mdlmail@mineraldeposits.com.au Wmineraldeposits.com.au

The graph below demonstrates the continued improvement of the mining operation since commissioning in 2014:

Note: Operating time and throughput for 2014, 2015 and 2016 represent annualised figures for each calendar year.

The mineral separation plant continued to operate near design capacity with high plant availability. While the production of all products was down due to lower HMC availability, plant efficiency continued to improve as evidenced by the achievement of a record level of daily zircon production during the quarter.

In addition to its usual zircon production, GCO produced medium-grade zircon sands which were sold to global customers. The reported medium-grade zircon sands reflects the volume of zircon contained in the concentrate and is generally sold at a price based on the level of zircon content within each tonne of sand. Recovery of this product enables GCO to monetise concentrates that were previously not included in definitive feasibility study revenue estimates.

GCO production volumes

GCO sales volumes

As anticipated, GCO sales were lower due to reduced product availability as a result of less finished goods production during the quarter.

GCO achieved its third consecutive quarter of positive cash flows in 1Q 2017 as a result of improved pricing for its products as well as reduced operating costs from ongoing cost reduction initiatives and working capital management.

Unfortunately, GCO's strong recent safety record of 3.92 million man hours without a lost time injury (LTI) was interrupted with a LTI during the quarter; the first since 17 December 2015.

An important event for GCO during the quarter was the inauguration of a new resettlement village. This occasion represents the completion of the first phase of the resettlement program for residents affected by the mine path. The village provides 35 modern concrete houses with a minimum of three rooms, a kitchen and bathroom, complete with solar powered electricity and running water. The village also includes basic community infrastructure such as a mosque, primary school, health unit and fresh drinking water. Furthermore, GCO has partnered with the Republic of Senegal to implement various community projects with the vision of strengthening economic activities in the village such as a livestock trail, irrigation points and the introduction of bio-digesters which produce biogas and organic fertilisers.

Resettlement village, Senegal

TTI

The furnace was restarted on 7 January 2017. Ramp up to commercial volumes progressed during the quarter. The ramp up profile has been similar to the strong ramp up performance achieved in early 2016 following the furnace rebuild as part of conversion from sulphate to chloride slag production.

Shutdown for furnace reline

Shipments of chloride titanium slag commenced in March ahead of schedule. The working capital build up commenced in 1Q 2017 and will continue throughout 2Q and 3Q 2017.

TTI physical volumes

Note: 4Q 2016 production performance was impacted by furnace repairs following an operational incident in August 2016.

TiZir Titanium & Iron ilmenite upgrading facility, Tyssedal, Norway