TITANIUM SANDS LIMITED — Capital/Financing Update 2017

Sep 27, 2017

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28 September 2017

Company Announcements Office Australian Securities Exchange 10[th] Floor, 20 Bond Street SYDNEY NSW 2000

SRI LANKAN TRANSACTION UPDATE

As announced to ASX on 29 December 2014, Titanium Sands Limited (ASX:TSL) ( Company ) exercised its option to acquire 100% of the issued share capital of Srinel Holdings Limited ( Srinel ) from Cuprum Holdings Limited ( Seller ) in accordance with an option agreement dated 19 March 2014, that was subsequently amended on 29 January 2016 and 18 February 2016 ( Agreement ).

The Company advises that the Agreement has subsequently been further amended by a Deed of Amendment ( Deed ). The Deed amended the Agreement by:

• reducing the number of shares to be issued to the Seller as consideration for 100% of the issued share capital of Srinel from 400,000,000 shares to 58,095,239 shares (post consolidation); and

• replacing the obligation for the Company to make a cash payment of up to US$2,500,000 to the Seller upon the achievement of certain milestones with the obligation to issue performance shares at completion as set out below.

Proposed Transaction

In connection with completion of the Agreement (as amended), the Company will:

• consolidate its securities on a 1 for 3 basis ( Consolidation );

• issue to the Seller:

• 58,095,239 shares;

• 66,666,667 Class A Performance Shares;

• 33,333,333 Class B Performance Shares; and

• 133,333,333 Class C Performance Shares;

Each Performance Share will convert into a Share in the event that the relevant performance milestone ( Milestone ) is satisfied within 5 years of the Performance Shares being issued:

Performance Share	Milestone	Milestone
Class A	In respect of the Sri Lankan Project, the Company achieving
	either:
	(a)	a total Mineral Resource of 20 million tonnes of heavy
		mineral content of not less than 5% discovered (or
		equivalent tonnage to heavy mineral content discovered
		ratio. For example, 10 million tonnes of heavy mineral
		content of not less than 10% discovered); or

Titanium Sands Ltd Level 24 44 St Georges Terrace, PERTH, WESTERN AUSTRALIA 6000 Telephone +61 8 6211 5099, Facsimile +61 8 9218 8875

	(b)	any metal equivalent (as that term is used in paragraph 50
		of the JORC Code) Mineral Resource (including silver,
		copper, lead, zinc, nickel, cobalt, platinum, palladium, iron,
		graphite, lithium, tin, tantalum, niobium and tungsten)
		independently valued by a qualified technical person as
		equivalent to the Mineral Resource in paragraph (a) of this
		definition.
Class B	The	Company obtaining a grant of one or more mining licences in
	respect of all or part of the land the subject of the Sri Lankan
	Project.
Class C	(a)	The Company commencing commercial scale heavy
		mineral sand concentrate production or treatment of
		250,000 tonnes of heavy mineral content of not less than
		5% discovered in respect of any part of the Sri Lankan
		Project; or
	(b)	The Company achieving a Mineral Resource of 70 million
		tonnes of heavy mineral content of not less than 5%
		discovered (or equivalent tonnage to heavy mineral
		content discovered ratio. For example, 35 million tonnes
		of heavy mineral content of not less than 10% discovered).

• pay to the Seller a 5% royalty on the amount received by the Company from the sale of mineral product extracted from mining activities on the Sri Lankan Project, net of all transport and sales costs;

• make a cash payment of $450,000 to the Seller in reimbursement of expenditure in accordance with Listing Rule 1.1 (Condition 11(a)) or, to the extent that the Company is not permitted to pay the full amount of $450,000 in cash to the Seller, shares in lieu of cash valued at $0.02 each;

• raise up to $6,000,000 by issuing up to 300,000,000 shares at an issue price of $0.02 each under a prospectus, with a minimum subscription of $5,000,000 ( Public Offer );

• issue:

• 20,000,000 shares to Trident Capital in consideration of services provided to the Company in connection with the Proposed Transaction; and

• 30,000,000 Options to the directors to remunerate and incentivise their performance; and

• re-comply with Chapters 1 and 2 of the Listing Rules and re-commence trading on the ASX

(together, the Proposed Transaction ).

Shareholder resolutions

A notice of meeting seeking shareholder approval for the resolutions required to give effect to the Proposed Transaction is currently being finalised to facilitate shareholder approval for matters in respect of the Proposed Transaction. Those approvals will include approval of the:

• Consolidation;

• change to nature and scale of activities;

• issue of shares and performance shares to the Seller;

• issue of shares pursuant to the Public Offer;

• right for the directors of the Company to participate in the Public Offer;

• issue of options to the directors of the Company; and

• issue of shares to Trident Capital.

Completion of the Agreement is subject to Shareholders approving the resolutions, obtaining any necessary regulatory approvals, no material adverse change having occurred in relation to Srinel and no default by the Seller under the Agreement.

Sri Lankan Project

Srinel holds a number of exploration licenses and license applications in Sri Lanka which cover areas prospective for heavy mineral sands. The tenure and tenure applications currently consist of 5 areas as set out below.

Sri Lankan tenure and tenure applications to be acquired

Applex Tenements	Applex Tenements
Tenement	Area sq.	Application	Place	District	Validity
	km	Submit Date
					From	To
EL 180	45	09/03/2015	Vankalai	Mannar	28/06/2016	27/06/2018
EL 182	26	09/03/2015	Pesalai	Mannar	28/06/2016	27/06/2018
Kilsythe Tenements
Tenement	Area sq.	Application	Place	District	Validity
	km	Submit Date
					From	To
COM/EL/2015 /110	42.5	18/09/2015	Mannar	Mannar	Pending
Hammersmith Tenements
Tenement	Area sq.	Application	Place	District	Validity
	km	Submit Date
					From	To
EL 203	4	12/06/17	Talaimannar	Mannar	Pending
EL 181	51	12/06/17	Mantai	Mannar	Pending

Notes:

1. COM/EL/2015/110, EL 203 and EL 181 are applications for exploration licences and have not been granted as at the date of this announcement. Applications have been made to extend the validity of these applications.

The Company intends to focus its initial exploration efforts at Mannar Island to increase the definition and scale of the resources. This will involve exploration, resource extension and infill drilling which will provide the basis for an updated resource model for the project. A scoping study will then follow to define in general terms the project configuration and parameters for the project development and production economics.