TITANIUM SANDS LIMITED — Capital/Financing Update 2004

Dec 19, 2004

Dear Shareholder

PRECIOUS METALS AUSTRALIA LIMITED ("PMA") Rights Offer

This letter is to notify you that on 20 December 2004 the Company lodged a Prospectus with the Australian Securities and Investments Commission for a 1 for 5 renounceable rights offer of new shares in PMA ("Rights Offer"). The record date for the Rights Offer is 30 December 2004 ("Record Date") and the closing date is 17 January 2005. The issue price is \$0.07cents per new share.

The Rights Offer is seeking to raise approximately \$461,968 (before costs) and is fully underwritten by Patersons Securities Limited. The purpose of the Rights Offer is to enable PMA to provide funding to meet the continuing costs of the Xstrata litigation set out in detail in the Prospectus and for future working capital purposes.

Summary of Key Information

The key information and dates are set out below for your information:

Type of Offer	Fully underwritten renounceable Rights Offer of approximately 6,599,543 fully paid ordinary shares to shareholders with a registered address in Australia or New Zealand as at the Record Date.
Offer Price	\$0.07 cents per new share
Offer Ratio	1 new shares for each 5 existing shares held at the Record Date
Underwriter and Underwriting Fee	Patersons Securities Limited has agreed to fully underwrite the Rights Offer for an underwriting fee of 5% of the total amount raised by the Rights Offer and a lead management fee of \$30,000.

Proposed Timetable

The current proposed timetable for the Rights Offer is as follows:

Prospectus date	20 December 2004
Rights trading commences	22 December 2004
Record Date	30 December 2004
Prospectus despatched to shareholders	31 December 2004
Last day of rights trading	10 January 2005
Closing date	17 January 2005
Issue of new shares and despatch of holding statements	20 January 2005

The dates in the above timetable are indicative only and PMA reserves the right, subject to the Corporations Act, ASX Listing Rules and other applicable law, to vary the dates of the Rights Offer, including to extend the Rights Offer, close the Rights Offer early or accept late applications, either generally or in particular cases, without notifying you.

Prospectus

The Prospectus will be issued in paper form by contacting (08) 9321 3514.

Dealing with Rights

On the basis that the Rights Offer is renounceable, provided you are a qualifying shareholder (registered address Australia or New Zealand) you are able to sell or transfer your rights.

If you wish to sell your rights on ASX, you should contact your stockbroker and when available complete and deliver to them the Entitlement and Acceptance Form which you will receive with the Prospectus.

If you wish to sell only some of your rights on ASX and take up the balance of your entitlement, you should contact your stockbroker and when available complete and deliver to them the Entitlement and Acceptance Form indicating the portion of your rights to sell and the number of shares you wish to take up. Payment for the shares which you wish to take up should also be included.

If you wish to dispose of your rights other than through ASX you will need to send a completed standard renunciation form (obtainable from PMA's share registry) together with the accompanying Entitlement and Acceptance Form completed by the transferee and the transferee's cheque for the amount due in respect of the new shares to PMA's share registry, Advanced Share Registry, in accordance with the instructions on the form.

For further information on your entitlement or how to deal with your rights, please contact PMA's share registrar:

Advanced Share Registry Telephone: 08 9221 7288 Facsimile: 08 9221 7869

Non Oualifying Foreign Shareholder

The Rights Offer is only being extended to shareholders with registered addresses in Australia and New Zealand, and only those shareholders will be offered entitlements and be entitled to deal with their renounceable rights ("Rights").

Should our records indicate that you are a shareholder with a registered address outside Australia and New Zealand ("Non Qualifying Foreign Shareholder") different arrangements will apply to you. Arrangements have been made for Patersons Securities Limited to be appointed by and acting on behalf of PMA to seek to sell all Rights attributable to Non Qualifying Foreign Shareholders, including the Rights attributable to the number of shares you hold on the Record Date.

Any such sale will be at a price and otherwise in a manner determined by the nominee in its sole discretion. The ability to sell Rights and the price obtained for those Rights will be dependent on market conditions. If there is no viable market for the Rights, those Rights will be allowed to lapse.

Your proportion of the net proceeds of sale of all Rights (if any) attributable to all Non Qualifying Foreign Shareholders, calculated in proportion to your shareholding at the Record Date will be dispatched to you in Australian dollars following completion of the Rights Offer, except that individual amounts of less than \$10 will be donated to a charity selected by the Company.

Please contact me if you have any matters which you need to clarify.

Yours faithfully

Ian K Macpherson Company Secretary