TIVAN LIMITED — Capital/Financing Update 2012

Jul 8, 2012

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ASX ANASX ANNOUNCEMENT OUNCEMENT

9[TH] JULY 2012

ASX CODE: TNG ASX CODE: TNG

REGISTERED OFFICE

REGISTERED OFFICE TNG Limited TNG Limited Level 1, 282 Rokeby Road Level 1, 282 Rokeby Road Subiaco, Western Australia 6008 Subiaco, Western Australia 6008 T +61 8 9327 0900

T +61 8 9327 0900 F +61 8 9327 0901 F +61 8 9327 0901

W www.tngltd.com.au W www.tngltd.com.au E corporate@tngltd.com.au E corporate@tngltd.com.au

ABN 12 000 817 023 ABN 12 000 817 023

DIRECTORS

DIRECTORS Neil Biddle Jianrong Xu - Chairman Paul Burton Paul Burton – Managing Director Stuart Crow Neil Biddle Stuart Crow COMPANY SECRETARY Rex Turkington Simon Robertson Wang Zhigang PROJECTS

COMPANY SECRETARY Mount Peake: Fe-V-Ti Simon Robertson Manbarrum: Zn-Pb-Ag East Rover: Cu-Au

PROJECTS McArthur: Cu Mount Peake: Fe-V-Ti Mount Hardy: Cu-Au CONTACT DETAILS Sandover : Cu-Au Paul Burton | +61 8 9327 0900 McArthur : Cu Nicholas Read | +61 419 929 046 Manbarrum: Zn-Pb-Ag Simon Robertson | +61 8 9327 0900 East Rover: Cu-Au

CONTACT DETAILS

Paul Burton | +61 8 9327 0900 Nicholas Read | +61 419 929 046 Simon Robertson | +61 8 9327 0900

PRE-FEASIBILITY STUDY RESULTS BOOST POTENTIAL FOR ROBUST OPERATION AT MOUNT PEAKE

HIGHLIGHTS

• Pre-Feasibility Study (PFS) results demonstrate exceptionally robust cash flows and positive returns from Mount Peake IronVanadium-Titanium Project (NT):

• Pre-tax Nett annual cash flow of $294M

• Life-of-mine revenues of $11.8B

• Pre-tax IRR of 31.8%

• Exchange rate 1USD to 1AUD

• Initial 20-year life with significant extensions available

• 2.5Mtpa operation expanding to 5Mtpa after 3 years

• Average annual production of 15,300tpa V2O5, 375,000tpa TiO2 concentrate and 1.13Mtpa Fe2O3

• Year 1 pre-production capital cost estimate of A$339M

• Year 2 pre-production capital cost estimate of A$224M

• o Potential pay back in 4 years

• PFS compiled by independent consultants Snowden Mining, Sinclair Knight Merz (SKM) and METS.

• Robust project at exchange rate of 1USD to 1AUD.

• TIVAN™ a hydrometallurgical process that is being proven to be commercially viable: achieves excellent product recoveries of high purity vanadium and iron which will attract premium pricing.

• Potential offshore location for the TIVAN™ processing facility to be considered, optimising CAPEX and OPEX and bringing additional strategic and financial benefits.

• Potential to further value-add by downstream processing to produce higher-value Ferrovanadium (FeV) and Titanium products.

• Chinese partners provide significant competitive advantage in ability to access Chinese finance, EPCM and end user markets.

• Discussions with commodity traders and potential end-users has commenced.

Australian resources company TNG Limited (ASX: TNG ) is pleased to announce the results of the Pre-Feasibility Study for its Mount Peake Iron-Vanadium-Titanium Project in the Northern Territory, outlining a very robust project capable of generating revenues of A$12 billion and operating cash flows of over A$5 billion over its initial 20-year life.

On the strength of these results, the Board of TNG remains committed to continuing to evaluate the potential development of a substantial and financially robust strategic metals business at Mount Peake incorporating its new TIVAN™ hydrometallurgical process.

The PFS results show an increase in life-of-mine revenues and potential cash flows which build on and enhance all previous results from the Scoping Study and interim PFS completed in 2011. The PFS results are summarized in Appendices 1-3.

Importantly, the PFS has confirmed the TIVAN™ process for the Mount Peake project development following a highly successful pilot plant testwork program completed in Perth. All testwork conducted to date has provided sufficient confidence that the TIVAN™ process is both economically scalable and feasible at this level of study and stage of the project.

Consequently, TNG and its metallurgical consultant METS are satisfied that TIVAN[TM] will provide a commercial process for the Mount Peake operation.

In addition, the results allow progression to larger throughput confirmatory testwork which will be undertaken with the Australian Commonwealth Scientific Industrial Research Organisation (CSIRO) prior to commissioning.

The PFS has also highlighted a number of other optimisation opportunities for the Mount Peake Project.

Following recent discussions with potential Asian Engineering Procurement and Construction (EPC) companies, TNG will now give consideration to identifying potentially suitable offshore locations for the plant, which could bring both strategic and financial benefits to the Mount Peake Project.

TNG will consider this option as part of any further evaluation of the project including moving to a decision on a Definitive Feasibility Study. The current PFS results are based on the original scenario of locating the plant adjacent to the mine site.

The positive PFS results follow the recent completion of a strategic agreement with the Jiangsu East China Mineral Investment & Development Bureau (“ECE”) for a $13.4 million investment and strategic partnership in TNG. This provides the Company with significant competitive advantages in the future development of Mount Peake and its other projects – including potential access to Chinese finance, EPCM and final product end-users.

Commenting on the PFS results, TNG’s Managing Director Mr Paul Burton said the Board was very pleased and encouraged with the outcome of the final Pre-Feasibility Study, which provided a strong foundation to progress the development of a long-life strategic metals business for TNG.

“Over the past 12 months we have continued to deliver and significantly de-risk the project by upgrading the JORC resource inventory to more than 70 per cent in the Indicated category, moving from a Scoping Study accuracy of +- 50% to a Pre-Feasibility Study of +-25% accuracy, and securing two high-quality Chinese partners to support development of this project. Importantly the deposit remains open to the east which provides immediate additional tonnage potential to increase the mine life” (see figure 1).

“In addition, TNG is advantageously placed with two experienced Chinese executives on our Board. We believe this will provide us an additional significant competitive advantage in being able to access a range of development and construction options in China, as well as providing access to finance, engineering, procurement and construction expertise and the ability to secure off-take agreements with key Chinese and other end-users.”

“Our consultants confirm that demand for vanadium and titanium is forecast to continue to increase strongly as a result of rapidly expanding markets for both of these products, which provides significant foundation for any future development of the project,” he added .

The next stage:

“The Board will immediately consider the results of the PFS with a view to proceeding to a full Definitive Feasibility Study in the shortest possible time frame,” Mr Burton said.

Any DFS will consider all commercial options for product value-add and plant location options, which, following recent discussions with Chinese EPCM and financing companies, indicate that the option of building a plant offshore in Asia is a potential advantage. This could result in lower Capex and Opex, a simpler mining operation where magnetite concentrate is transported from site to the plant, and other strategic benefits.

TNG LIMITED

Paul E Burton Managing Director 9[th] July 2012

COMPETENT PERSON STATEMENT

The information in this report that relates to Exploration Results and Targets are based on information compiled by Mr Paul Burton, B.Sc, M.Sc, is also a Member of The Australasian Institute of Mining and Metallurgy , and an employee and Director of TNG Limited. Mr Burton has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Burton consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Mr Damian Connelly, FAAusIMM, Chartered Processional (MET), MMICA, MSME, MSAIMM was responsible for the preparation of the metallurgical test work results reported herein. Mr Connelly has sufficient experience to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of the Exploration Results, Mineral Resources and Ore Reserves. Mr Connelly consents to the inclusion in the report of the matters based on his information in the form and context in which is appears.

The information in this report that relates to Mineral Resources is based on information compiled by Lynn Olssen who is a Member of The Australasian Institute of Mining and Metallurgy and a full time employee of Snowden Mining Industry Consultants Pty Ltd. Lynn Olssen has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Lynn Olssen consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Financial and Mining analysis is based on information compiled by Jeremy Peters who is a Member of The Australasian Institute of Mining and Metallurgy and a full time employee of Snowden Mining Industry Consultants Pty Ltd. Jeremy Peters has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Jeremy Peters consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

DISCLAIMER

The Pre-Feasibility Study has been prepared based on the Company’s presently delineated mineral resource estimate and any investment decision should be considered based on this information.

SKM has had a role in managing the study process and compiling the final document, and has provided direct input into the environmental, implementation and risk technical sections of the study. SKM has not reviewed the capital and operating cost estimates which have been based on the confidential TIVAN[TM] process

Enquiries:

Paul E Burton, Managing Director + 61 (0) 8 9327 0900 Nicholas Read, Read Corporate + 61 (0) 419 929 046

Appendix 1:

2012 Pre-Feasibility Study Results

The 2012 Pre-Feasibility Study was prepared by key consulting companies Snowden Mining Industry Consultants Pty Ltd (“Snowden”), Mineral Engineering Technical Services (“METS”) and Sinclair Knight Mertz (“SKM”) to an accuracy level of ±25 per cent, required for PFS.

The Pre-Feasibility Study (PFS) is based on the updated JORC Indicated and Inferred Resource for Mount Peake published on 12 October 2011 of 160Mt @ 0.3% V2O5, 5% TiO2 and 23% Fe (Indicated 110Mt @ 0.29% V2O5, 5.3% TiO2 and 23% Fe; Inferred 48Mt @ 0.24% V2O5, 4.5% TiO2 and 21% Fe).

In addition to this resource, TNG has published an Exploration Target[1] of 500-700Mt grading 0.2-0.4% V2O5 and 25-35% Fe.

The updated resource model compiled by Snowden Mining Consultants revealed that the Mount Peake deposit itself remains open to the east (see Figure 1 attached). In addition, recent regional drilling has highlighted the potential to further increase the Company’s resource inventory in the region.

The key points of the final PFS are:

• Total material mined: 147.9Mt

• Total waste movement: 72Mt  Total ore mined: 75.9Mt  Strip ratio: 0.95  Mine life: 20 years (including pre-production)  Processing rate (life-of-mine): 2.5Mt/annum, increasing to 5Mt/annum in year 4  Average head grade: 0.39% V2O5, 27.09% Fe, 7.02% TiO2  Average recoveries: 80% V2O5, 66% Fe, 55% TiO2  Total metal production: 236kt V2O5, 17.4Mt Fe, 5,822kt TiO2

The key financial outcomes of the final PFS are:

• Total revenue (life-of-mine): A$11.8 billion

• Operating cash flow (life-of-mine): A$5.8 billion  Nett cash flow (life-of-mine): A$5.05 billion  Pre-production capital cost estimate (including all infrastructure: A$563 million

• Total operating costs (including mining, processing, transport & royalties): A$75.5/tonne of plant feed

• Nett annual cash flow: A$294M[2]

• IRR pre-tax: 31.8%

Key assumptions at commencement of operations include:

• Operating costs and pit slope angles related to mining estimated to a Pre-Feasibility Study level (±25%)

• V2O5 price of US$19,841/tonne (>99% grade)

• TiO2 price of US$400/tonne (> 64% grade)

• Fe2O3 price of US$200/tonne (>99.9% grade)

• Royalty rate of 2.5% per tonne of plant feed

• Discount rate of 8%

• A$/US$ exchange rate of 1 US$ = 1A$

1 The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

2Nett annual Cash Flow is defined as the average discounted cash flow per annum after all CAPEX (pre-strip CAPEX, initial CAPEX, and expansion CAPEX) has been deducted, but ignores cost or source of capital, hedging, tax, depreciation, rehabilitation and salvage.

Pricing:

Product pricing was supplied by Independent Commodities Analysts based on all available forecasts and current and forecast price trends.

Forecast increases in demand and pricing for V05 and Ti02 have not been fully included; but base case product markets were used for all commodities with pricing increasing to 2016 as per forecasts.

Specialized markets such as Iron-pigment (paint), where prices exceed US$500/tonne for high purity Fe2O3, have not been included at this stage but will be identified and quantified in future studies. These provide potential significant upside to base case pricing.

Exchange Rate:

An exchange rate of 1 US for 1 AUD was used.

Capital Cost (CAPEX):

The details of the estimated capital expenditure are shown in Appendix 2.

Process Plant – Process plant direct costs are $365 million the capital cost required to expand the plant from 2.5Mtpa to 5Mtpa has been estimated at A$151 million which would be incurred in year 3-4.

Infrastructure and other fixed assets – The pre-production capital cost estimate of A$162 million is based on detailed estimates for roads, power, accommodation and onsite buildings. The costs to expand to 5Mtpa have been estimated at $16.6 million.

The Company recognizes that a decision to expand to a 5Mtpa operation would be a future commercial decision based on prevailing market conditions. It is anticipated that expansion would be funded partially by cash flow from operations.

Operating Costs (OPEX):

A breakdown of total operating cost estimates is provided in Appendix 3. The total operating cost per tonne of material is estimated at $75/tonne and includes total mining, processing and transport costs .

Process costs - Processing costs are $51/tonne The TIVAN process remains approximately 40% cheaper than the standard pyrometalurgical process cost.

Transport costs - Product transportation cost estimates have decreased to $18/tonne from $27/tonne of ore based on revised cost estimates from infrastructure-providers.

The PFS has considered that final products of commercial grades would be trucked to a railhead and then railed to Darwin (approximately 1,180km) for shipping.

The proximity to key infrastructure facilities of gas power, heavy duty roads, and rail provides the Mount Peake Project with a significant advantage.

Mining Costs - Mining costs supplied by Snowden are comparable to existing operations at $5.5 per tonne.

Mine Life:

The process life of mine, including pre-production, is 20 years and will include higher throughput at the 5Mtpa production rate and mining of higher grade material in first years.

Figure 1: Mount Peake Deposit; Resource Extension (Snowden).

Appendix 2:

Mount Peake PFS; Estimate of Capital costs (CAPEX) supplied by METS include both Direct, Indirect and Infrastructure costs (+-25% accuracy)

			PFS Revised Total 2.5Mt/a	PFS Revised Total 5.0 Mt/a
Area		Plant throughout basis
100	CrushingCircuit		$28,671,591	$28,671,561
200	GrindingCircuit		$35,825,064	$35,825,064
300	Beneficiation & Leaching		$57,298,646	$79,160,587
400	Solvent Extraction		$16,754,261	$23,701,009
500	Vanadium Precipitation & Packaging		$13,190,986	$18,944,223
600	Acid Regeneration		$181,914,654	$261,256,571
700	Tailings Filtration		$24,238,940	$33,692,662
800	Reagents		$3,872,378	$5,169,422
900	Plant Utilities		$2,414,058	$3,305,699
		Direct Costs Totals	$364,180,578	$489,726,828
Field Indirects(China supply)		2.0%	$7,283,612	$9,794,567
EPCM(China supply)		4.0%	$14,567,223	$19,589,073
Vendor Reps		1.5%	$1,502,570	$1,863,847
Capital Spares		4.0%	$4,006,855	$4,970,260
CommissioningSpares		0.5%	$500,857	$621,282
First Fills			$2,200,000	$2,200,000
Insurance		3.0%	$3,005,141	$3,727,695
		Indirect Costs Total	$33,066,258	$42,766,694
	Infrastructure & Other Fixed Assets(Non-Factored Costs)
000	Road		$58,100,000	$58,100,000
000	Rail		$47,900,000	$47,900,000
000	Power Station		$22,519,750	$33,779,625
000	Water Supply		$797,805	$997,256.56
000	Buildings		$7,403,031	$7,403,031
000	Mobile Equipment		$8,898,255	$8,898,255
000	Accommodation Village		$15,587,137	$20,677,842
000	Laboratory		$1,584,767	$1,584,767
		Non-Factored Cost Total	$162,790,745	$179,340,777
		GRAND TOTALS	$560,037,580	$711,834,299

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Appendix 3:

Mount Peake PFS; Estimate of Total Operating Cost (OPEX) supplied by Snowden and METS, (+-25% accuracy)

Item	Unit	AUD
Mining
Waste	$/t	2.60
Ore	$/t	2.77
Grade ControlonOre	$/t	0.20
Administration	$/t	1.60
Total Mining Cost /t Ore	$/t	7.03
Total mining Cost / t Moved	$/t	3.61
Total Mining Cost	$M	533
Processing
Rehandle Stockpiles	$M	10.7
Labour	$/t	7.20
Power	$/t	3.18
Consumables	$/t	1.49
Maintenance	$/t	5.28
Reagents at2.5Mtpa	$/t	34.12
Reagents at 5.0 Mtpa	$/t	34.12
Administration	$/t
Average Cost / t Processed Years 1 to 3	$/t	58.77
Average Cost / t Processed Years 4 onwards	$/t	51.24
Product Transport
V2O5	$/t	168.4
TiO2	$/t	48.4
Fe2O3	$/t	48.4
Total Transport Cost / tonne Concentrate	$/t	57.6
Total Transport Cost / tonne Ore	$/t	17.77

TNG Limited | ASX Announcement