TITANIUM SANDS LIMITED — Capital/Financing Update 2008

Oct 15, 2008

ASX / MEDIA ANNOUNCEMENT

16 October 2008

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MARKET UPDATE

Windimurra Production on Schedule for Q1 2009

Key points

• The Project on target to produce Ferrovanadium in the March Quarter of 2009

• Funding in place to complete construction

• Mining to commence in November 2008 following approval received from DOIR

• Project economics supported by strong vanadium prices and a lower A$

• Operational procurement and staff recruitment is well advanced

• All production has been sold to Noble Group via marketing agreement

Windimurra Vanadium Limited (ASX:WVL) is pleased to provide an update on the development of its world class vanadium project near Mt Magnet, where it continues to make excellent progress with construction and remains on schedule for production early next year.

Windimurra Managing Director, Dr Iain Scott said the Company expected to produce the first Ferrovanadium from the processing facility in March Quarter 2009.

“We are on schedule, and by the first quarter of 2009 expect to recommence as one of the world’s premier suppliers of high grade ferrovanadium,” Dr Scott said.

WVL is pleased to confirm that its Mining Proposal has been approved by the Department of Industry and Resources (DOIR).

This is a key milestone in the development of the project, and will allow WVL to commence mining next month.

However, as has been the case with a number of other development projects in WA, WVL’s ability to advance the project has been affected by time taken to obtain regulatory approvals such as the Mining Proposal.

The delay in obtaining the Mining Proposal has impacted the commencement of mining and

tailings dam construction. This has pushed out some commissioning activities into early 2009.

“Nevertheless, our key objective for ferrovanadium production in Quarter 1 2009 remains in place,” Dr Scott said.

“Construction is now approximately 85% complete, and we remain in a strong cash position,” Dr Scott said.

Construction and Procurement

At the end of September, 59% of the total budget had been spent. With a further 22% committed under contract awards, WVL has now spent or committed 81% of the overall project construction budget.

The Company now has more than 350 people working on site engaged in construction. Labour productivity has also been improved as a result of a change in contracting strategy that resulted in one contractor being substituted for a number of smaller, self sufficient work teams operating on multiple work fronts.

Critical long lead items have been delivered to site, including the kiln off-gas equipment, the reduction furnace and the electric arc furnace. All the gas power station equipment is on site and being installed.

With the Mining Proposal in place, preparation has commenced for mining to start in

Windimurra Vanadium Limited ABN 65 009 131 533

Level 4, 76 Kings Park Road, West Perth, Western Australia 6005 Tel: +61 8 9423 1900 Fax: +61 8 9423 1999

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November. As planned, this will deliver an optimal ore blend from the start of commissioning of the beneficiation plant. The crushing and screening facility will be available for commissioning in December, with magnetite concentrate production commencing in January, coincident with completion of the tailings dam construction.

Piping and steelwork in the Vanadium Refinery is being installed rapidly and is in line to accept the mechanical equipment.

Overall project progress reached 85% in September as indicated below.

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Operational Readiness

The operational contracts awarded to date represent approximately 72% of the Project’s operating costs. Key contracts for gas, the operation and maintenance of the beneficiation plant and the supply of soda ash are at fixed prices, mitigating the risk of significant cost increases in these areas.

Recruitment of the site operations team is now well advanced. Personnel for key management and leadership roles have been recruited, including experienced personnel from South African ferrovanadium operations. These employees are now actively engaged in supporting construction and developing systems and processes in readiness for operations.

More than 85% of the key site based personnel have already been appointed. Plant operators and maintenance personnel are scheduled to start closer to production.

The mining fleet has been purchased with all equipment either on site or in storage. Part mobilisation of the mine contractor, BGC, has

occurred with full mobilisation scheduled to align with the commissioning of the Magnetite Concentrator in January.

The Vanadium Refinery commissioning scope and schedule has been developed and optimised. Commissioning resources have been identified and have been scheduled to mobilise for commissioning activities. Vanadium Refinery feed will commence in March based on current process commissioning and production ramp-up schedules.

All major reagent supplies have been secured and the transport and logistics contract awarded. Reagent deliveries will commence in December in readiness for commissioning.

Milestones

• Mining – November 08

• Crushing – December 08

• Gas and power station – December 08

• Beneficiation – January 09

• Vanadium processing - March 09

Finance

The Company is in a very strong cash position, with $165 million cash in the bank at the end of September.

Based on the latest cost-to-complete forecasts, WVL has sufficient funding to complete construction of the plant.

Consistent with the funding plan for the project, the Company has recently secured $40 million of lease finance for the accommodation camp, power station assets and mining fleet.

As part of its risk mitigation process the Company has entered into an interest rate swap agreement to effectively fix the interest rate on the existing US$90m senior loan for a period of three years.

To mitigate risk on US dollar denominated ferrovanadium sales, the Company previously purchased 86 cent foreign currency call options sufficient to cover 75% of Australian dollar operating costs to December 2011. The Company has not entered into any forward foreign exchange contracts and consequently

Windimurra Vanadium Limited ABN 65 009 131 533

Level 4, 76 Kings Park Road, West Perth, Western Australia 6005 Tel: +61 8 9423 1900 Fax: +61 8 9423 1999

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does not have any associated foreign exchange risk.

We are now looking beyond completion of construction to any working capital requirements during production ramp up. The majority of the Company’s working capital requirements are catered for under the Noble off-take agreement. Noble pays for the product FOB, removing the need to raise funding to cover the subsequent period until the end customer makes payment. In addition, WVL has a floor price guarantee whereby Noble pays the higher of the cost of production and market price, effectively meaning that the Company does not need to fund any early stage production losses before production volumes reach the break-even point.

Vanadium Market

The economics of the Windimurra Project continue to be boosted by historically high vanadium price levels of around US$60/kg and the reduction in the A$ exchange rate to below 70 cents.

During 2008, vanadium prices have traded at historically high prices, fuelled by continuing strong world demand and tightening of global supply. Global production has been disrupted by power shortages in South Africa that look set to continue for a number of years and which have lead to the cancellation of some growth projects.

Although a number of commodity prices have reduced significantly recently, vanadium prices have remained strong, as illustrated in the graph below.

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Ferrovanadium Prices
100
90
80
70
60
USD Prices
50
40 A$ Prices
30
20
10
0
Month
Oct 07Nov 07Dec 07Jan 08Feb 08Mar 08April 08May 08June 08July 08Aug 08Sept 089-Oct-08
$
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It is anticipated that demand for vanadium will continue to be supported by the trend towards higher intensity of use in developing countries, offsetting the effects of a possible reduction in growth in steel consumption in developed countries.

Noble has continued marketing activities of the Company’s vanadium product in Europe and USA. Strong market interest from several steel mills has supported the Company’s contention that future vanadium supply will be tight. Negotiations between Noble and these mills are in progress with one significant base load contract with a major US mill well advanced.

For further enquiries call:

Dr Iain Scott Managing Director Tel: +61 (0) 8 9423 1900

Warrick Hazeldine Purple Communications Tel +61 (0) 89485 1254 or 0417 944 616

Windimurra Vanadium Limited ABN 65 009 131 533

Level 4, 76 Kings Park Road, West Perth, Western Australia 6005 Tel: +61 8 9423 1900 Fax: +61 8 9423 1999

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HIGH PRESSURE GRINDING ROLLS BALL MILL
KILN OFF GAS SCRUBBER AND STACK GAS TURBINE POWER STATION
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Background

Windimurra Vanadium Limited (WVL) is a mining company based in Perth, Western Australia and is listed on the Australian Stock Exchange (ASX:WVL). The Company’s focus is the development of the world class Windimurra Vanadium Mine, located 600km north east of Perth in WA’s Mid-West region.

WVL has a strategic alliance and off-take agreement with leading global supply chain manager, Noble Group Limited, based in Hong Kong. Noble has agreed to purchase the total vanadium output of the Windimurra mine, at prevailing market prices for the life of the mine.

Windimurra contains one of the largest reported proven vanadium Ore Reserves in the world with current mineable reserves of 79 million tonnes at a bulk grade of 0.47% V205 (vanadium pentoxide), which will underpin an initial mine life of 20 years at the proposed mining rate of 3.9mtpa. A total of 176 million tonnes of resources have been modelled at a bulk grade of 0.46%.

Windimurra Vanadium Limited ABN 65 009 131 533

Level 4, 76 Kings Park Road, West Perth, Western Australia 6005 Tel: +61 8 9423 1900 Fax: +61 8 9423 1999

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The quality of the ore body, the opportunity to use the latest proven technology and the scale of the project, that will produce 8% of the worlds’ vanadium, combine to ensure that Windimurra will be a low cost producer.

The Windimurra mine was originally built by the Company with a joint venture partner in 1999, and, whilst operating, was the world’s largest primary vanadium mine, gaining recognition as one of the highest-quality sources of vanadium in the world market.

Since 2003, world demand for vanadium and the price of the commodity have increased strongly, largely driven by growth in Chinese steel production. Marketing studies commissioned by WVL forecast that vanadium demand will continue to increase through 2015 at a compound annual growth rate of 7.8%.

For more information, please visit www.windimurra.com.au

Windimurra Vanadium Limited ABN 65 009 131 533 Level 4, 76 Kings Park Road, West Perth, Western Australia 6005 Tel: +61 8 9423 1900 Fax: +61 8 9423 1999