TITANIUM SANDS LIMITED — Interim / Quarterly Report 2021

Jan 28, 2021

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ASX RELEASE

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29 January 2021

TITANIUM SANDS LIMITED ACN 009 131 533

Level 11, London House 216 St. Georges Terrace Perth Western Australia 6000 Tel: +61 (08) 9481 0389 Facsimile: +61 (08) 9463 6103 Website http://titaniumsands.com.au

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Contact:

Dr James Searle Managing Director james.searle@titaniumsands.com.au

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Directors

Lee Christensen Dr James Searle Jason Ferris

Ticket ASX: TSL

QUARTERLY OPERATIONS REPORT TO 31 DECEMBER 2020

• COVID-19 related conditions in Sri Lanka continue to limit project activity to offsite work.

• A six week resource upgrade drilling program remains in obeyance pending improvement in COVID-19 related conditions.

• The project mineral resources remain wholly open at depth and partially laterally, further drilling will support project optimisation in future more definitive studies.

• Product offtake discussions advancing with a range of interested parties.

• Requests for larger product samples from potential offtake customers will be prepared as part of further process optimisation test work.

RESOURCE CONVERSION DRILLING

Further RC-aircore drilling is planned in the higher grade resource zone on which the project scoping study was based ( [1] ASX Announcement 16/06/2020 ). A program of 350 holes are planned to infill the existing resource drilling. This is expected to enable a remodelling of the mineral resources in this zone to increase the proportion of indicated category resources. The program will take around 6 weeks to complete, with results and a recalculation of the mineral resource estimate for this zone available within 2 months of the program being completed. Commencement remains subject to local COVID-19 conditions which continue to be uncertain.

Increasing the indicated resources in this manner will enable the release of further scoping study results with respect to production rates, OPEX, CAPEX and other project parameters that will guide the further development of the project.

METALLURGICAL TEST WORK

Further metallurgical test work is being planned to optimise the process design and produce larger product samples that have been requested by potential offtake partners. This will commence when further samples in storage in Sri Lanka can be transported to metallurgical test facilities.

OFFTAKE DISCUSSIONS

The Company has been approached by a number of potential offtake partners on an introductory basis discussing the TSL resource. Discussions to date have included parties from China, Japan, India and UAE. No formal MOU’s or agreements have been entered into at this stage, and subject to the recommendations of the Scoping Study, the board is continuing offtake discussions with each of the above parties.

COVID-19 IMPACT ON OPERATIONS

During the December Quarter 7 day averages of daily new COVID-19 infections rose from less than 10 on the 5[th] of October climbing to over 700 daily cases in December. Latest 7 day averages remain over 600 new cases per day in mid-January.

While in Sri Lanka proactive and early co-ordinated responses to COVID-19 have been effective in keeping infections at a very low level until the start of October, the situation has worsened since then. There remains considerable uncertainty with this fresh wave of infections.

Health authorities are very active in testing, tracking, tracing and managing COVID-19 hot spots as they develop. This has involved selective lockdowns and restrictions on movement. International travel to and from Sri Lanka remains effectively curtailed.

Titanium Sands is continuing to monitor the COVID-19 situation in Sri Lanka but will not recommence field work until regulatory constraints permit and it is considered safe for our personnel to recommence operations.

Corporate activities in Australia are being handled in keeping with local recommendations with everything being done via the internet with no significant change from normal.

TENURE

The Company has 9 exploration licenses on Mannar Island which is adjacent to the mainland coast, covering an area of 204 square kilometres (Table 1). There were no changes in interest in the exploration licenses during the quarter.

Functions of regulatory agencies in Sri Lanka and particularly in Colombo have been severely disrupted by infections and resultant repeated home quarantine requirements for officials. This continues to impact on routine renewals of explorations licenses. However the Company has taken all steps to ensure renewal applications for tenure have been lodged and is in regular contact with the regulatory authorities in this regard.

Exploration licence Area Renewal date EL 370 14.12.2017 13.12.2019 40km2 13.10.2019 EL 180/R/3 05.03.2019 04.03.2021 45km2 04.01.2021 EL 182/R/3 05.03.2019 04.03.2021 26km2 04.01.2021 EL 372 26.02.2018 25.02.2020 51km2 25.12.2019 EL 371 26.02.2018 25.02.2020 4km2 25.12.2019 EL 351 13.12.2019 12.12.2021 15km2 12.10.2021 EL 352 13.12.2019 12.12.2021 10km2 12.10.2021 EL327/R/1 14.12.2018 13.12.2020 5km2 13.10.2020 EL328/R/1 14.12.2018 13.12.2020 8km2 13.10.2020 Total 204km2 EL validity

Table 1 Mannar Island Project tenure*.

*All necessary applications and submissions for the renewal of tenure have been lodged and are expected to be renewed in due course.

USE OF FUNDS

In accordance with obligations under ASX Listing Rule 5.3.4, Titanium Sands Limited provides the following information with respect to its Use of Funds Statement set out in its Prospectus dated 29 March 2018 and its actual expenditure since its reinstatement to official quotation on 18 December 2018.

Expenditure Item	Use of Funds $’000	Actual Expenditure (18.12.18 – 31.12.20) $’000	Variance $’000	Note
Exploration on Sri Lankan Project	2,266	1,503	763	1
ScopingStudyon the Sri Lankan Project	851	339	512	2
Cash reimbursement to Seller	450	182	268	3
WorkingCapital	1,907	3,259	(1,352)	4
Expenses of the Public Offer	526	546	(20)
Capital raisingincome –post IPO	-	(2,367)	2,367	5
Capital raisingcosts –post IPO	-	218	(218)	5
Total	6,000	3,680	2,320

Notes:

1. Actual Mineral Expenditure is currently under the use of funds budget by $763k. The variance is due to cost savings that the Company has been able to implement through the purchase of its own RC aircore drilling rig in March 2019 for $89k. The acquisition of the drilling rig in conjunction with the training of the local labour force in Sri Lanka has resulted in the Company not requiring the use of an external drilling contractor. The Company has drilled 2,182 drill holes, for 9,313m, and analysed 13,825 samples since its readmission in December 2018. The Company plans to complete a further 300 to 400 drill holes for 3,600 to 4,800m during 2021 subject to the lifting of certain COVID-19 related workplace restriction in Sri Lanka.

2. Actual Scoping Study Expenditure is currently under the use of funds budget by $512k. The variance is due to cost saving associated with early study investigations enabling a focus on fewer project development options for the scoping study to investigate. A significant number of higher cost components of the scoping study are being completed in early 2021 and it is expected that final cost of the entire scoping study will be closer to the budgeted use of funds estimated in 2018.

3. In lieu of cash reimbursement to the Seller (Cuprum Holdings Limited), the Company issued 13,371,450 shares at a deemed issue price of $0.02 on reinstatement to official quotation.

4. Actual working capital expenses are currently over the use of funds budget by $1,352k. The main reasons for the over expenditure is due to the following:

5. The Company completed the acquisition of Bright Angel Limited on 10 March 2020 having entered into a conditional sale agreement in July 2019. The completion process encountered some unforeseen delays including the renegotiation of the share sale agreement following the Company’s due diligence process. The due diligence process required significant technical investigations. The costs associated with the acquisition including the use of both internal and external consultants were not budgeted as part of the use of funds statement set out in the Prospectus.

6. Following the significant resource upgrade in February 2019, January 2020 and May 2020 as well as the acquisition of the adjacent tenure at Mannar Island through the BAL acquisition, the Company has been approached by a number of potential offtake partners. These offtake discussions have commenced earlier than anticipated and resulted in additional costs not budgeted as part of the use of funds statement as set out in the Prospectus.

7. The Company originally lodged its Prospectus on 29 March 2018 to raise $6m to complete the acquisition Srinel Holdings Limited and re-compliance with Chapters 1 and 2 of the ASX Listing Rules to be re-instated to official quotation. Due to delays which resulted in the Company lodging a supplementary and second supplementary Prospectus on 21 June 2018 and 19 September 2018 respectively, the Company incurred legal, corporate and directors’ fees over this period that were repaid on reinstatement.

8. In September 2020 the Company completed a capital raising of $2.2M and Share Purchase Plan to raise $167k to fund further drilling at Mannar Island with the aim of converting part of the inferred resource to a greater category of indicated as well as feasibility, environmental and social impact studies.

PAYMENTS TO RELATED PARTIES

The total amount paid to related parties of the Company and their associates, as per item 6.1 and 6.2 of the attached Appendix 5B was $94k and $34k respectively. These payments are for Directors fees, salaries and superannuation during the quarter.

OTHER ASX REQUIREMENTS

ASX Listing Rule 5.3.1: Exploration and Evaluation expenditure during the Quarter was $106k focussed on completion of the updated mineral resource estimate and the scoping study. ASX Listing Rule 5.3.2: There were no mining production and development activities during the Quarter.

Ends-

The Board of Directors of Titanium Sands Ltd authorised this announcement to be given to ASX.

Further information contact: James Searle Managing Director T: +61 8 9481 0389 E: james.searle@titaniumsands.com.au

COMPLIANCE STATEMENTS

Forward-Looking Statements

This document may include forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning the Company’s planned exploration program and other statements that are not historical facts. When used in this document, the words such as "could," "plan," "expect," "intend," "may”, "potential," "should,", “further” and similar expressions are forward-looking statements. Although the Company believes that its expectations reflected in these forward- looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that further exploration will result in additional Mineral Resources.

Competent Persons

Except where indicated, exploration and technical information above have been reviewed and compiled by James Searle BSc (hons), PhD, a Competent Person who is a Member of the Australian Institute of Mining and Metallurgy, with over 37 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.

Previously Reported information and other foot notes for reference

This report includes information that relates to announcements previously made to the ASX including exploration Results and Mineral Resources prepared and first disclosed under JORC Code 2012. The information was extracted from the Company’s previous ASX announcements as follows:

1 ASX Announcement 16/06/2020 Scoping Study Confirms Potential for Major Dredging Project.

Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Name of entity

Titanium Sands Limited ABN Quarter ended (“current quarter”) 65 009 131 533 31 December 2020

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 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 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	- - - (113) (177) - - - - - -	- - - (219) (436) - - - - - -
	(290)	(655)
2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) tenements (c) property, plant and equipment (d) exploration & evaluation (e) investments (f) other non-current assets	- - - (106) - -	- - - (214) - -

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
2.2 Proceeds from the disposal of: (a) entities (b) tenements (c) property, plant and equipment (d) investments (e) other non-current assets 2.3 Cash flows from loans to 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	- - - - - - - -	- - - - - - - -
	(106)	(214)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 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	167 - - (217) - - - - -	2,367 - - (218) - - - - -
	(50)	2,149
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)	2,766 (290) (106) (50)	1,040 (655) (214) 2,149

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	-	-
	2,320	2,320
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)	2,320 - - -	2,766 - - -
	2,320	2,766
6. Payments to related parties of the entity and their associates		Current quarter $A'000
6.1 Aggregate amount of payments to related parties and their associates included in item 1 94 6.2 Aggregate amount of payments to related parties and their associates included in item 2 34 Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.		94
		34

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

7. 7.1 7.2 7.3 7.4 7.5 7.6	Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 Loan facilities - - Credit standby arrangements - - Other (please specify) - - Total financing facilities - - Unused financing facilities available at quarter end Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-
		-	-

8.	Estimated cash available for future operating activities	$A’000
8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8	Net cash from / (used in) operating activities (item 1.9) (290) (Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) (106) Total relevant outgoings (item 8.1 + item 8.2) (396) Cash and cash equivalents at quarter end (item 4.6) 2,320 Unused finance facilities available at quarter end (item 7.5) - Total available funding (item 8.4 + item 8.5) 2,320 Estimated quarters of funding available (item 8.6 divided by item 8.3) 5.8 Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7. If item 8.7 is less than 2 quarters, please provide answers to the following questions: 8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?	(290) (106) (396) 2,320 -
		2,320
	Answer: N/a
	8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
	Answer: N/a

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer: N/a

Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.

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.

Date: 29 January 2021

Authorised by: By the Board

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow 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 cash flow 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. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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