TITANIUM SANDS LIMITED — Capital/Financing Update 2006

Dec 11, 2006

PMA FINALISES KEY \$50M CAPITAL RAISING TO UNDERPIN WINDIMURRA REDEVELOPMENT HEAVILY OVERSUBSCRIBED INSTITUTIONAL SHARE PLACEMENT ANNOUNCED WITH SHARE PURCHASE PLAN

Australian-based ferro-alloys company Precious Metals Australia Limited (ASX: PMA) has finalised a key component of the finance package for the \$200 million redevelopment of its 90%-owned Windimurra Vanadium Mine in Western Australia after completing a heavily oversubscribed \$48.5 million share placement. PMA also announced its intention to undertake a Share Purchase Plan (SPP), underwritten to \$1.5 million, amounting to a total capital raising of \$50 million.

Following completion of the placement and SPP, PMA will have in excess of \$100 million in available cash resources, effectively underpinning the equity component of the total finance package for redevelopment of the Windimurra Mine. Construction is scheduled to commence early next year with pre-production activities already well advanced.

\$50M Share Placement

The share placement, comprising 24,871,795 shares at an issue price of \$1.95 per share to raise \$48.5 million, has been completed with Australian and international institutional institutions and clients of leading Australian broking firm, Patersons Securities Limited, which acted as Lead Manager to the share placement.

The placement was heavily oversubscribed, with strong support from both new and existing institutional shareholders in Australia and overseas.

The placement will be completed in two tranches, with the first tranche comprising 11,328,064 shares to be completed immediately within PMA's existing placement capacity to raise \$22.1 million. The second tranche, comprising 13,543,731 shares, will require shareholder approval at a meeting to be convened in early 2007. The shares issued pursuant to the placement will rank equally with PMA's existing ordinary shares.

Share Purchase Plan

PMA also that it will make an offer under a Share Purchase Plan ("SPP") for eligible Australian and New Zealand shareholders to purchase up to \$5,000 worth of PMA ordinary shares at the placement price of \$1.95 per share (ranking equally with existing fully paid ordinary shares. Patersons Securities has underwritten the SPP to \$1.5 million.

In the event of shareholder demand in excess of the pool of stock available under the SPP (approximately 13.3 million shares), the Company may elect to accept additional SPP applications. The SPP will be open to all eligible shareholders who are registered holders as at 5.00pm Perth time on 19 December 2006. PMA anticipates closing the SPP on 24 January 2007.

PMA's Managing Director, Mr Roderick Smith, said he was delighted with the exceptional investor response to the share placement, which reflected the robustness of the Windimurra Project and its potential to become a profitable, long-life mining and processing operation delivering a premium quality product to world markets.

"Windimurra will account for around 8% of global vanadium production once it resumes full production by early 2008, with the significant enhancements to the project implemented over the past two years positioning it as a low-cost, competitive producer," Mr Smith said.

"The project has already attracted the support of Noble Group, which has acquired equity in the project and the Company, as well as signed up to a life-of-mine off-take agreement," he added.

ليديد

"I am pleased to welcome a number of substantial new institutional investors to our register and would like to take this opportunity to thank the group of existing institutions who continue to support the Company, and who have supported this capital raising," he added.

"The completion of this raising has significantly strengthened our capital base and added significant liquidity to the share register," Mr Smith added. "The Company is now exceptionally well placed to move forward to complete financing and launch the redevelopment of this important project."

The combined proceeds from the placement and the SPP will be used for working capital and to advance the \$200 million redevelopment of the Windimurra Project.

The raising comes just three months after Noble Group acquired a 10% holding in the Project for A\$13.5 million, at the same time providing an unlisted, unsecured convertible note with a face value of A\$8.2 million, convertible to 3.73 million fully-paid PMA shares at an equivalent issue price of A\$2.20 per share.

The Company expects to finalise the balance of the \$200 million finance package by late January 2007, with project construction scheduled to commence soon after, leading to first production by early 2008.

As part of an innovative strategy to lock in current prices and expedite the construction phase, PMA has already awarded four Front End Engineering and Design (FEED) contracts for the Project and commenced purchasing mining fleet and state-of-the-art processing equipment.

Last week, PMA also announced the commencement of a significant new drilling program targeting a parallel zone of mineralisation alongside the existing Windimurra ore reserve. The drilling program will facilitate pit optimisation designed to widen and deepen the proposed open cut and to further reinforce Windimurra's position as the world's largest reported proven vanadium ore reserve in the world, extend the current 15-20 year mine life and further enhance project economics.

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Released by: Nicholas Read/Susan Bower Jan Hope & Partners Telephone: (+61-8) 9388-1474

On behalf of: Roderick Smith, Managing Director Precious Metals Australia Telephone: (+61-8) 9423 1900 Mobile: +61 (0) 418 959 789 Web: www.pmal.com.au

Background Information - Precious Metals Australia

Precious Metals Australia Limited ("PMA") is an Australian ferro-alloys company based in Perth, Western Australia and listed on the Australian Stock Exchange (ASX: PMA). PMA's focus is the redevelopment of its 100%-owned Windimurra Vanadium Mine, located 600km north-east of Perth in Western Australia's Mid West region.

PMA has a strategic alliance and off-take agreement with leading global supply chain manager, Hong Kong-based Noble Group Limited, which has agreed to purchase the total vanadium output of the Windimurra mine, at prevailing market prices. During the first 7 years of production, Noble will pay the greater of market price or the cash cost of producing vanadium at Windimurra, providing a solid price floor for the project.

Originally discovered by PMA in 1985, Windimurra contains the largest reported vanadium Proven Ore Reserve in the world with current mineable reserves of 56 million tonnes at a bulk grade of $0.46\%$ V₂O₅ (vanadium pentoxide), which will underpin an initial mine life of 16 years at the proposed mining rate of 3.4mtpa. A total of 148 million tonnes of resources have been modelled in order to meet at least the first 20 years of mining.

The current reserve/resource inventory is contained within just 5km of a total 25km strike length of a prospective ore horizon, with significant potential to increase production and/or extend the mine life in future.

The Windimurra mine was built by PMA with a joint venture partner in 1999, and, whilst operating, was the world's largest primary vanadium mine, producing some 30 million pounds of vanadium pentoxide during its 2.5 years of operation (approximately 10% of world production), and gaining recognition as one of the highest-quality sources of vanadium in the world market.

Following the mine's controversial closure in early 2003 and partial de-commissioning in 2004, PMA successfully fought to gain full ownership of the Windimurra mine in August 2005.

PMA has completed a Feasibility Study for the \$200 million redevelopment of the Windimurra mine, with commencement of construction scheduled for early 2007 and first production in early 2008.

It will be based on one of the simplest and most straightforward mining operations in Australia, with the ore commencing at surface. The production process is straightforward, comprising crushing, grinding and classification followed by roasting and leaching. PMA has upgraded the previous production flow-sheet and will now produce a value-added product, ferrovanadium (FeV80) from $V_2O_3$ rather than $V_2O_5$ like the previous operation. Ferrovanadium sells for approximately 60% more (per pound of pure vanadium), which will improve the economics of the operation.

Windimurra will produce 6,200 tonnes per annum of ferrovanadium. This represents annual production of approximately 20 million pounds of vanadium pentoxide equivalent, representing approximately 8% of world demand.

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