Mineral Deposits to Form Joint Venture With Eramet and Raise A$151 Million to Fund the Development of the Grande Cote Mineral Sa

Mineral Deposits Limited (TSX:MDM)(ASX:MDL) - 

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES

Highlights



--  Proposed joint venture with ERAMET ("Eramet") to combine Mineral
    Deposit's 90% interest in the Grande Cote Mineral Sands Project ("Grande
    Cote") and Eramet's Tyssedal titanium slag and iron plant in Norway 
--  Proposed joint venture will create a globally significant vertically-
    integrated mineral sands player, secures offtake for the majority of
    Grande Cote's ilmenite production, provides a new future source of
    ilmenite for the Tyssedal plant (giving expansion and product
    diversification opportunities) and means the funding of Grande Cote
    development will be shared with a major mining group 
--  Grande Cote capital cost estimate revised to US$516 million, largely due
    a new self-sufficient rail and port strategy and a greater contingency
    estimate; and annual operating costs now estimated at US$80 - 85
    million, due largely to an increase in power and fuel costs 
--  An equity raising comprising an accelerated non-renounceable pro-rata
    entitlement offer and institutional placement to raise approximately
    $151 million (the "Offer") is being undertaken to largely fund equity
    contributions to the joint venture which will primarily be used for the
    development of Grande Cote 
--  The Offer will consist of a fully underwritten institutional entitlement
    offer to raise approximately A$68 million, a fully underwritten
    placement to raise approximately A$60 million and a retail entitlement
    offer to raise up to A$23 million 



Joint venture with Eramet

Mineral Deposits Limited (TSX:MDM)(ASX:MDL) ("MDL" or the "Company"), is pleased
to announce that it has entered into a Memorandum of Understanding ("MOU"), the
key terms of which are summarised on page 5, with French mining and
metallurgical group Eramet to form a strategic incorporated joint venture.
Eramet is listed on the Euronext Paris with a market capitalisation of
approximately EUR5.8 billion and a portfolio of global mining and smelting
operations.


The proposed joint venture will consist of:



--  MDL's 90% interest in Grande Cote (with the balance held by the Republic
    of Senegal); and 
--  Eramet's wholly-owned subsidiary Eramet Titanium & Iron ("ETI"), which
    holds a 100% interest in the Tyssedal titanium slag and iron plant in
    Norway ("Tyssedal Plant"). 



In accordance with the terms of the MOU, Eramet will also contribute US$30
million in cash and provide a US$45 million unsecured, subordinated debt
facility to the joint venture company.


In announcing this landmark transaction for MDL, the Company's Executive
Chairman, Nic Limb, said "This exciting transaction with Eramet will create a
globally significant vertically-integrated player in the mineral sands sector.
Combining Grande Cote and the Tyssedal Plant within the one entity secures
off-take for the majority of Grande Cote's ilmenite and provides security of
supply to the Tyssedal Plant, which will give rise to expansion and product
diversification opportunities. In addition, funding for the development of
Grande Cote will now be shared with Eramet, a major Paris-based global mining
group, which also has significant mining experience in Africa.


"The geographic location of Grande Cote in Senegal on the west coast of Africa
means it is well positioned to access pigment producers in Europe and North
America. There is a growing trend of pigment producers in mature markets
sourcing more of their feedstock from slag rather than ilmenite. This
transaction provides access to the only available smelting operation in the
region on attractive terms."


The joint venture will exist as a standalone incorporated entity in which MDL
and Eramet will have equal rights in all material aspects in relation to the
joint venture's operation. The joint venture will be governed by a Board of
Directors consisting of six members, with each party nominating three directors
each, and a Shareholders Agreement, which will stipulate that each party will
hold equal voting rights and rights to future capital contributions and in
respect of other mechanisms within the joint venture. 


The capital structure of the joint venture is intended to consist of external
debt funding of up to US$150 million (as agreed within the MOU) with the balance
of capital contributed in equal shares by the joint venture partners. The joint
venture is expected to be formally established in late September 2011.


The minimum equity contribution required of each of the joint venture partners
under the MOU is approximately US$138 million. MDL intends to fund its minimum
equity contribution via the Offer announced today. The majority of the joint
venture's capital requirements relate to Grande Cote. ETI is expected to be a
largely self-funded operation, with its forecast maintenance and expansionary
capital expenditure expected to be primarily funded through its operating cash
flows.


In preparing for the announcement today, MDL has undertaken due diligence
investigations on each of the respective assets to be contributed to the joint
venture, which investigations are continuing. The establishment of the joint
venture is subject to some procedural conditions, including the negotiation,
agreement and execution of formal documentation in relation to the joint
venture, obtaining certain regulatory and contractual counterparty approvals and
no material adverse changes occurring. Formal documentation is to be negotiated
with execution expected to occur in late July 2011 and completion of the
transaction scheduled to occur in late September 2011.


ETI and the Tyssedal Plant

Eramet's Tyssedal Plant currently produces approximately 200,000 tonnes per
annum of sulphate TiO(2) slag and approximately 110,000 tonnes per annum of high
purity pig iron ("HPPI") as a significant co-product.


Approximately 345,000 tonnes of ilmenite (both rock and sand varieties) is used
as feedstock in the Tyssedal Plant, primarily sourced from the Tellnes mine in
Norway.


The Tyssedal Plant is located in Tyssedal, Norway approximately 180 kilometres
south-east of Bergen and approximately 145 kilometres from Oslo. The Tyssedal
Plant's location is highly beneficial to its operation for a number of reasons:




--  base load ilmenite has historically been sourced from the Tellnes hard-
    rock ilmenite mine located nearby in south-west Norway; 
--  power is sourced from a nearby hydroelectric power plant as well as the
    local electricity grid; 
--  it is located next to the Hardangar Fjord, which is positioned off the
    North Sea in the southern part of Norway, which allows for all shipping
    discharges and loads directly at the Tyssedal Plant; and 
--  it is located in close proximity to the majority of its European-based
    customers. 



Other than ilmenite, the Tyssedal Plant also uses approximately 115,000 tonnes
per annum of coal, which is imported from Scotland and Poland.


Grande Cote update

Rather than utilise third party infrastructure as proposed under the Definitive
Feasibility Study, a strategy of logistics self- sufficiency is now being
pursued. A 25 year concession has been received from the Government of Senegal
for largely exclusive use of an existing rail line which will be upgraded by
MDL. When combined with a proposed 22 km rail spur from the Mineral Separation
Plant, this will allow full rail of all products to the Dakar port. A concession
is also being negotiated for a large area of land at the Dakar port for bulk
storage and exclusive use of a mole for ship loading.


The capital cost estimate for Grande Cote has been revised to US$516 million, an
increase from US$406 million in the Definitive Feasibility Study, due largely
to: 




--  US$55 million of additional infrastructure spend (now approx.US$75
    million in total) associated with the new self-sufficient rail and port
    strategy - including a new 22 kilometre rail spur, existing rail
    refurbishment, owner locomotives and port storage and ship loading
    facilities; 
--  US$18 million increase in the estimation/design allowance and
    contingency (now US$49 million in total); 
--  US$11 million increase in the wet concentrator plant, due to equipment
    price increases and A$ appreciation; and 
--  US$6 million cost of additional material removal in the start-up pond
    for increased flexibility. 



The capital cost estimate is becoming increasingly robust as bids for
substantial components of the build are being received.


In addition, annual operating costs for Grande Cote are now estimated at
US$80-85 million, up from US$75 million in the Definitive Feasibility Study, due
largely to:




--  US$11 million increase in power and fuel costs (due to higher assumed
    Heavy Fuel Oil price); 
--  US$3 million increase in social and environmental costs; 
--  offset by a US$9 million reduction in transportation costs due to the
    self-sufficient rail and port strategy. 



Funding strategy for Grande Cote

For the purpose of funding the development of Grande Cote, proposed to be via
equity contributions to the joint venture, an equity raising is being undertaken
which comprises:




--  A 1 for 4 accelerated non-renounceable pro-rata entitlement offer
    ("Entitlement Offer"), consisting of a fully underwritten institutional
    entitlement offer to raise approximately A$68 million and a retail
    entitlement offer to raise up to A$23 million; and 
--  A fully underwritten institutional placement to raise approximately A$60
    million ("Placement"). 



The gross proceeds of the Offer will be utilised to fund:



--  MDL's share of the minimum required equity contributions to the joint
    venture, if it proceeds, which will primarily be used for funding the
    development of Grande Cote; 
--  General working capital purposes; and 
--  Costs associated with the Offer. 



MDL's Chief Financial Officer(1), Rick Sharp, said "This capital raising
completes the funding strategy for Grande Cote. The proceeds of the raising,
combined with existing resources will comfortably enable the Company to fund its
equity contributions to the joint venture for the purpose of developing Grande
Cote."


Details of the Offer

The Entitlement Offer will be made on the basis of 1 new MDL ordinary share for
every 4 existing MDL ordinary shares held at 7:00 pm, Melbourne time, on 23 June
2011 ("Record Date").


The Entitlement Offer will raise approximately A$91 million at an issue price of
A$6.00 per share. The Entitlement Offer will consist of an institutional
component ("Institutional Entitlement Offer") and a retail component ("Retail
Entitlement Offer").


The Entitlement Offer price of A$6.00 per share represents:



--  a 12.3% discount to the last closing price of MDL's share price on the
    ASX on 17 June 2011; and 
--  a 10.1% discount to the theoretical ex-rights price ("TERP") of the
    Offer. 



The Placement will raise approximately A$60 million with the Placement price to
be determined by way of a bookbuild process ("Institutional Bookbuild") from an
underwritten floor price of A$6.00 per share. The Institutional Bookbuild will
also incorporate shares equal in number to entitlements not taken up by
institutional shareholders and entitlements that would have been offered to
ineligible institutional shareholders.


New shares issued in the Offer will rank equally with existing MDL ordinary shares.

Investors should refer to the ASX presentation including description of key
risks which is attached to this ASX release.


(1)As announced to the ASX on 20 June 2011, Rick Sharp is to be appointed CEO of
MDL effective from 1 July 2011.




Key dates                                                                   
  Execution of MOU                                Saturday, 18 June         
----------------------------------------------------------------------------
  Institutional Offer opens                       Monday, 20 June           
----------------------------------------------------------------------------
  Institutional Offer closes                      Tuesday, 21 June          
----------------------------------------------------------------------------
  Trading recommences                             Wednesday, 22 June        
----------------------------------------------------------------------------
  Record Date                                     Thursday, 23 June         
----------------------------------------------------------------------------
  Retail Offer opens                              Monday, 27 June           
----------------------------------------------------------------------------
  Retail Offer booklet dispatch completed         Monday, 27 June           
----------------------------------------------------------------------------
  Institutional Offer settlement                  Tuesday, 28 June          
----------------------------------------------------------------------------
  Institutional Offer allotment and trading       Wednesday, 29 June        
----------------------------------------------------------------------------
  Retail Offer closes                             Monday, 11 July           
----------------------------------------------------------------------------
  Issue of New Shares under the Retail Offer      Monday, 18 July           
----------------------------------------------------------------------------
  New Shares under the Retail Offer expected to   Tuesday, 19 July          
   commence trading                                                         
----------------------------------------------------------------------------
  Expected completion of joint venture            Friday, 30 September      



The above timetable is indicative only. References to time and date are
references to time in Melbourne, Australia. MDL reserves the right to amend any
or all of these events, dates and times subject to the Corporations Act, the ASX
Listing Rules and other applicable laws. In particular, MDL reserves the right
to extend the closing dates for the offers, to accept late applications either
generally or, in particular cases, to withdraw the offers without prior notice.
The commencement of quotation of the New Shares is subject to confirmation from
ASX and approval from TSX.


Eligible retail shareholders will be sent details of the Offer shortly. Retail
shareholders with questions in relation to the Offer should contact the MDL
Information Line on 1300 583 860 (for calls within Australia) and +61 3 9415
4689 (for calls outside Australia) between 8:30am and 5:00pm (Melbourne time)
Monday to Friday during the Offer Period for further information.


This release does not constitute an offer to sell, or a solicitation of an offer
to buy, securities in the United States. The securities to be issued in the
proposed offering have not been and will not be registered under the U.S.
Securities Act of 1933 (the "Securities Act"), or under the securities laws of
any state or other jurisdiction of the United States. Securities may not be
offered or sold in the United States, unless the securities have been registered
under the Securities Act, or in a transaction exempt from, or not subject to,
the registration requirements of the Securities Act and applicable U.S. state
securities laws.


Overview of Eramet 

Eramet is a French-based mining and metallurgical processing group - with a
focus on integrating world class ore bodies and upscale metallurgical
facilities. Eramet is listed on Euronext Paris, with a market capitalisation of
EUR5.8bn, revenue (CY2010) of EUR3.6bn and net cash (as at Dec-2010) of
EUR1.3bn.


Eramet has operations in manganese, nickel and alloys where it enjoys strong
world leadership positions:




--  World #2 in manganese high-grade ore and alloys and #1 in refined
    manganese alloys; 
--  World #6 in nickel, #2 in ferronickel, and one of the three world
    producers of high-purity nickel; 
--  World #1 in high-speed steels. 



Eramet has operated in Africa since it acquired a stake in Comilog (Gabon) in
1995-1996.


Overview of the MOU

The MOU was executed on 18 June 2011 by MDL and Eramet (the "JV Partners"). The
MOU sets out the key terms and conditions to be included in final agreements to
establish the joint venture company ("JVCo") and to govern its operations.


The JVCo is to be owned and operated in equal shares (50/50) by MDL and Eramet
pursuant to a Shareholders' Agreement, with equal board representation and
voting rights. Disputes on decisions of strategic importance are to be
ultimately determined through a deadlock mechanism.


The asset contributions to be made by the JV Partners to JVCo are:



--  100% of MDL's shares in Mineral Deposits Mauritius Limited ("MDML"), the
    holder of 90% of the shares in Grande Cote Operations SA ("GCO"), which
    owns the Grande Cote Mineral Sands Project (2); and 
--  100% of Eramet's shares in ETI, which owns the Tyssedal Plant. 



JVCo is to have no outstanding liabilities to the JV Partners or their
respective subsidiaries, with all liabilities owed by MDML or GCO to MDL or its
subsidiaries, or ETI to Eramet or it subsidiaries, to be capitalised prior to
transfer (excluding an outstanding receivable owed to MDL by CGO, which is to be
transferred to JVCo).


ETI is to be transferred to JVCo with working capital of NOK 250 million and no
external debt.


The MOU sets out details of JVCo's intended funding plan, which is to include:



--  Eramet paying an amount equal to expenditures incurred by the MDL Group
    in connection with Grande Cote between 31 December 2010 and completion
    of the transaction, as agreed by the JV Partners ("Pre-Completion
    Expenditure"); 
--  US$137.5m (less Pre-Completion Expenditure) as equity or shareholder
    loans from each of MDL and Eramet; 
--  US$30m in cash plus an unsecured subordinated loan of US$45m to JVCo
    from Eramet; and 
--  MDL and Eramet to seek third party non-recourse financing of at least
    US$150m. 



Eramet will grant JVCo an option to purchase the land on which the Tyssedal
titanium slag and iron plant is located, at an independently appraised price,
exercisable by MDL between completion of the joint venture with Eramet and the
expiry of ETI's current long term lease.


The MOU expressly provides for legally binding rights of exclusivity between MDL
and Eramet with respect to the negotiation and conclusion of the transaction
until 30 September 2011 but no such express provision is made in respect of any
other material aspect of the MOU.


(2)This does not include MDML's 50% interest in Tayssir Resources SAS or its
wholly owned subsidiaries MDML (Capital) Limited, Mineral Deposits (Operations)
Senegal SARL and MDL Senegal SARL. 


ABN 19 064 377 420