TITANIUM SANDS LIMITED — Interim / Quarterly Report 2017

Oct 30, 2017

Ltd

31 October 2017

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

QUARTERLY OPERATIONS REPORT TO 30 SEPTEMBER 2017

HIGHLIGHTS

• The vendor of the Mannar Island project has received assay results from 382 drill holes which outline nearly continuous heavy mineral concentration over a strike length of 12km and a cross strike width of up to 3km.

• The heavy mineral zone has no overburden and extends down to the depth limit of the drilling at the water table.

• Individual drill hole weighted averages are up to 22% THM (total heavy minerals) and numerous plus 8% drill hole averages occur in high grade zones.

• The Company anticipates being able to lodge a notice of meeting seeking shareholder approval for the acquisition of the Sri Lankan heavy minerals sands projects in August.

CORPORATE

Preparations for a General Meeting of shareholders to consider the acquisition of the Mannar Island Project and other matters are nearing completion. A notice of meeting will be lodged shortly.

OPERATIONS

SRI LANKAN MINERAL SANDS PROJECT

The vendor of the Mannar Island Heavy Mineral Sands Project Srinel Holdings Ltd has advised Titanium Sands Ltd that laboratory results for 382 hand auger drill holes have been received from the Mannar Island Project in Sri Lanka (Figures 1 and 2) (ASX announcement 30 October 2017). The results confirm visual logging observations at the time of drilling that there are extensive areas

of heavy mineral concentration in the interior of Mannar Island adjacent to the previously announced heavy mineral resources.

The mineralization defined by the drilling results extends for a strike of 12km and has a cross strike width of up to 3km (Figure 2). It is up to 6m thick and averages around 1.5m. There is essentially no overburden and the mineralisation extends continuously down to the limit of the drilling at the water table. Drilling to date on the Mannar Project only extends down to the water table, the exploration potential for deeper mineralisation remains untested.

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Figure 1 Location of the Mannar Island Project in Sri Lanka

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Figure 2 Summary illustration of 2016 and 2017 drilling and the assay results received.

The drill hole results in summarised in Figure 2 (Full listing of the drill hole results and JORC reporting compliance information are contained in the ASX announcement released 30 October 2017). Sample intervals were 0.5m down hole and all samples from assayed holes were submitted as individual samples with no compositing. All assay results shown in Figure 2 and detailed in Table 1 from each drill hole were used to calculate the weighted average % total heavy mineral content for the hole. No lower or upper cut offs have been applied to the results or to exclude results from any drill hole.

These results are from the initial 800m by 50m drilling pattern and show the remarkable continuity between the 800m spaced lines of the mineralisation. The infill drilling carried out during 2017 will be analysed at a later date. Determination of the mineralogy of heavy mineral assemblages will also be undertaken, but visual logging indications are that it will be similar to the previously reported resources.

BACKGROUND OF THE MANNAR ISLAND PROJECT

Titanium Sands Ltd is seeking to complete the acquisition of the Mannar Island Heavy Mineral Sands Project in Sri Lanka having previously exercised its option of the project. The transaction will see the acquisition of Srinel Holdings Ltd which holds two exploration licences and three exploration license applications in North West Sri Lanka. Completion of the transaction requires approval by the shareholders at a general meeting the Company is still progressing through the regulatory approvals and oversight process associated with calling a general meeting of shareholders. As of the date of this report the meeting remains to be held.

The Company looks forward to completing the acquisition of the Mannar island Project so it can complete the work necessary for an updated mineral resource statement and then to progress with evaluating the major exploration potential of the project both adjacent to the known mineralisation and immediately underlying beneath the water table.

*An initial JORC inferred mineral resource of 10.3 Mt with total heavy mineral (THM) of 11.7% compiled by independent consultants was reported in full to the Australian Securities Exchange on the 22 April 2015. This resource was based on a historical drill hole data base of 785 auger drill holes and from the 115 holes drilled in early 2015. The drilling and the defined resource envelope was largely confined to within 150m of the Mannar Island shoreline. The Company confirms that this resource statement remains current in regards to the areas covered by the drilling used in the resource model.

Except where indicated, exploration results above have been reviewed and compiled by James Searle BSc (hons), PhD, a Member of the Australian Institute of Mining and Metallurgy, with over 34 years of experience in metallic and energy minerals exploration and development, and 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 Titanium Sands Limited and consents to the inclusion of this technical information in the format and context in which it appears.

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas 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, 01/05/13, 01/09/16

Name of entity

Titanium Sands Limited

ABN 65 009 131 533

Quarter ended (“current quarter”)

30 September 2017

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000	Year to date (3 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Research and development refunds 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	- - - - (12) (151) - - - - - -	- - - - (12) (151) - - - - - -
	(163)	(163)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets	- - - -	- - - -

• • See chapter 19 for defined terms

1 September 2016

Page 1

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
2.2 Proceeds from the disposal of: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets 2.3 Cash flows from loans from other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - -	- - - - - - -
	-	-
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	300 - - - - - - - -	300 - - - - - - - -
	300	300
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	4 (163) - 300 -	4 (163) - 300 -
	141	141

• See chapter 19 for defined terms 1 September 2016

Page 2

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	141 - - -	4 - - -
	141	4

6. Payments to directors of the entity and their associates 6.1 Aggregate amount of payments to these parties included in item 1.2 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3	Current quarter $A'000
	43
	-

• 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

• Geological consultancy fees;

• Consultancy fees; and

• Director fees.

7. Payments to related entities of the entity and their Current quarter associates $A'000

7.1 Aggregate amount of payments to these parties included in item 1.2 - 7.2 Aggregate amount of cash flow from loans to these parties included - in item 2.3

• 7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

	8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 8.1 Loan facilities - - 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-

9. Estimated cash outflows for next quarter	$A’000
9.1 Exploration and evaluation 9.2 Development 9.3 Production 9.4 Staff costs 9.5 Administration and corporate costs 9.6 Other - ASX re-compliance, notice of meeting and related costs 9.7 Total estimated cash outflows	- - - - (5) (42)
	(47)

10. Changes in tenements (items 2.1(b) and 2.2(b) above)	Tenement reference and location	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced	-	-	-	-
10.2 Interests in mining tenements and petroleum tenements acquired or increased	-	-	-	-

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

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

Sign here: Date: 31 October 2017 (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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, 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. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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