TITANIUM SANDS LIMITED — Interim / Quarterly Report 2016

Jul 28, 2016

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QUARTERLY OPERATIONS REPORT TO 30 JUNE 2016

OPERATIONS

SRI LANKAN MINERAL SANDS PROJECT

Windimurra Vanadium Ltd (the “ Company ”) has exercised an option to acquire 100% of the issued capital of Srinel Holdings Ltd (“ Srinel ”) from Cuprum Holdings Ltd (“ Cuprum ”). Srinel holds exploration licences covering the 348km[2] of the Mannar Island Heavy Mineral Sands Project in Sri Lanka (Figure 1). As announced to the market on 26 January 2016 the Company and Cuprum entered into an Amended and Restated Option Deed to include and expanded project area and to revise the consideration payable to Cuprum.

As previously announced, the Company intends to raise a further amount of $300,000 under Tranche 2 of its placement for working capital to enable the Company to complete the acquisition of Srinel from Cuprum (“ Transaction ”). This placement was not completed during the quarter as the Company is awaiting clarification from the Australian Stock Exchange on its regulatory changes that may impact on the proposed placement and future capital raisings to be undertaken by the Company. A notice of meeting to obtain shareholder approval for the Transaction will be issued once these outstanding matters have been resolved.

As further reported in the Quarter ending 31 March 2016, the Mannar Island project is a high grade ilmenite and leucoxene deposit with the potential for the currently defined and reported mineral resource to be significantly increased cost effectively.

As announced to the ASX on 26 April 2016, laboratory results from due diligence drilling carried out in November and December 2015 on the Mannar Island Heavy Mineral Sand Project. The known heavy mineral resource at the Mannar Project previously reported of 10.4 Mt at 11.7% THM* is based on drilling along the shoreline largely only up to 150m inland. The latest total heavy mineral results have shown that the high grade mineralisation envelope can locally extend at least 400m inland with THM (Total Heavy Mineral) contents of up to 27% (Figures 2 and 3). It is anticipated that the mineralogy of the latest results will be similar to the reported resource, with a very high proportion of VHM (Valuable Heavy Minerals) and dominantly ilmenite and leucoxene with subsidiary zircon and rutile. Further mineralogical work will be undertaken after the next phase of drilling.

Windimurra Vanadium Limited ABN 65 009 131 533 Level 24,44 St Georges Tce, Perth WA 6000 Tel: 08 6211 5099 Fax: 08 9218 8875

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Figure 1 Mannar Island Heavy Mineral Sand Project location.

Landform analysis has indicated that a large portion of the interior of Mannar Island consists of a level plain formed by accretion of beach sediments fed by a consistent pattern of longshore drift from the adjacent mainland to the south and westward along the southern and northern shorelines of Mannar Island. As the sands have migrated along the accreting shoreline of Mannar Island the lighter components have been preferentially winnowed westward leaving the heavy ilmenite, leucoxene and the other heavy minerals preferentially concentrated. High heavy mineral grades from the reconnaissance drill holes in the centre of the island (Figure 3) evidence that this process has developed an extensive plain of paleo beach sediments potentially hosting areas of high grade heavy mineral sands analogous to the resources along the North West and South East shorelines of the island. This zone of prospective paleo beach sediments covers in excess of 42km[2] of Mannar Island (Figure3).

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Figure 2 Mannar Island Project all drill holes and expanded mineralisation zone on the North West coast.

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Figure 3 Prospective paleo beach ridge plain, high grade reconnaissance holes and the high grade zones of the current resource along the south east and North West coasts.

A 1,000 drill hole program of pattern drilling is proposed to test the entire 42km[2] target zone, with drilling lines 800m apart and drill holes every 50m along the lines. Subsequent infill drilling in areas of heavy mineral concentration will be necessary to provide sufficient data density for resource then reserve modelling. Due to the consistent blanket geometry of the beach plain sediments it is possible to drill using shell sand augers down the present water table and to obtain uncontaminated samples from precise intervals. This form of drilling can be completed quickly and at exceptionally low cost in this terrain.

The Company looks forward to updating shareholders on the project and drilling plans as soon as possible after a General Meeting to formally approve the acquisition of the project.

ABOUT THE MANNAR ISLAND HEAVY MINERAL SAND PROJECT

Srinel Holdings Ltd is an unlisted company registered in Mauritius which holds via subsidiary companies 13 exploration licences (covering 348km[2] )and an exploration license application (covering 42km[2] ). Windimurra has exercised its option to acquire 100% of the issued capital of Srinel under the updated terms as released to ASX on 29 January 2016.

An initial JORC inferred mineral resource of 10.3 Mt with total heavy mineral (THM) of 11.7% (Table 2) was reported to the Australian Securities Exchange on the 22 April 2015 *. This resource was based on an historical drill hole data base of 785 auger drill holes and from the 115 holes drilled in 2014. The drilling and the defined resource envelope were largely confined to within 150m of the Mannar Island shoreline.

Tonnes	%THM	%Silt	%Oversize	%Ilm.	%Leuc.	%Rut.	%Zir
10.33Mt	11.71	2.08	8.69	5.54	1.34	0.18	0.26

Table 2 JORC inferred mineral resource Mannar Island Project *.

The reported mineral resource at Mannar indicates a high grade deposit with leucoxene grades alone approaching that of specialised leucoxene producers, but also having in addition very high (by industry standards) ilmenite grades and significant subsidiary amounts of the premium value minerals of rutile and zircon.

WINDIMURRA VANADIUM PROJECT

The Company retains a mining lease M58/272 in the Mid-West Region of Western.

Changes to the Tenement Schedule in the March 2016 Quarter

PROJECT	LOCATION	TENMENT NUMBER	ECONOMIC ENTITIES INTEREST AT QUARTER END	CHANGE IN ECONOMIC ENTITIES INTEREST DURING QUARTER
Windimurra Vanadium Project	Mid-West Region Western Australia	M58/272	100%	No change

• The JORC resource referred to here was reported by the Company to the Australian Securities Exchange in full on the 22 April 2015 and remains current.

Except where indicated, technical comments and descriptions above have been compiled by James Searle BSc (hons), PhD, a Member of the Australian Institute of Mining and Metallurgy, with over 34 years experience in metallic and energy minerals exploration and development, and coastal geology research, as such has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr Searle is the Managing Director of Windimurra Vanadium Limited and consents to the inclusion of this technical information in the format and context in which it appears.

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

	Name of entity	Name of entity
	Windimurra Vanadium Limited
	ABN 65 009 131 533 Consolidated statement of cash flows
			30 June 2016
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other Net Operating Cash Flows		Current quarter $A’000		Year to date (12 months) $A’000
		- (10) - - (21) - - - - -		- (73) - - (115) - 2 - - -
		(31)		(186)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Payment for other financial assets Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		- - - - - - - - -		- - - - - - - - (50)
		-		(50)
		(31)		(236)

• See chapter 19 for defined terms.

Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

	Current quarter $A’000	Year to date (12 months) $A’000
1.13 Total operating and investing cash flows (brought forward)	(31)	(236)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other: Net financing cash flows	- - - - -	180 - - - - -
	-	180
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(31) 39 -	(56) 64 -
	8	8

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
			11
			-
1.25 Explanation necessaryforanunderstanding ofthe transactions 1. Director fees; and 2. Consultancy fees. Includes amounts paid to entities associatedwiththeDirector. Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets andliabilities but didnotinvolve cash flows Nil 2.2 Details of outlays made by other entities to establish or increase their share in projects in whichthereporting entityhas an interest Nil		Explanation necessaryforanunderstanding ofthe transactions
		1. Director fees; and 2. Consultancy fees. Includes amounts paid to entities associatedwiththeDirector.
	Nil
	Details of outlays made by other entities to establish or increase their share in projects in whichthereporting entityhas an interest
	Nil

• See chapter 19 for defined terms.

Appendix 5B Page 2

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

• 3.1 Loan facilities

• 3.2 Credit standby arrangements

	Amount available	Amount used
	$A’000	$A’000
	-	-
	-	-

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	50
	-
	-
	100
Total	150

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) – Term Deposit	8	39
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	8	39

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter
	Nil
	Nil

• See chapter 19 for defined terms.

Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions	Nil	Nil
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs	474,893,655	449,179,366	-	-
	- -	- -	- -	- -
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	Nil	Nil
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	Nil	Nil
7.11 Debentures (totals only)	Nil	Nil
7.12 Unsecured notes (totals only)	Nil	Nil

• See chapter 19 for defined terms.

Appendix 5B Page 4

Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: Date: 29[th] July 2016 (Director) Print name: Jason Ferris

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms.

Appendix 5B Page 5