TIVAN LIMITED — Interim / Quarterly Report 2012

Jul 24, 2012

QUARTERLY REPORT JUNE 2012

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HIGHLIGHTS

Mount Peake

Iron-Vanadium-Titanium Project (NT)

• Mount Peake PFS confirms a very robust mining operation capable of generating revenues of A$12 billion and operating cash flows of over A$5 billion over its initial 20-year life.

• Average annual production of 15,300tpa of vanadium pentoxide (V2O5), 375,000tpa of titanium dioxide (TiO2) concentrate and 1.13Mtpa of iron oxide (Fe2O3).

TIVAN™ Hydrometallurgical Process

• PFS confirms TIVAN™ metallurgical process will provide a commercial process for the Mount Peake operation.

• Pilot plant testwork complete, delivering outstanding analytical results including recoveries of 80% for V2O5, which was extracted to a purity of 99%.

• Final grades of the Ti02 and Fe203 are currently being assessed through additional analytical testwork.

Other Projects (NT & WA)

• Acquisition of key new tenement in the Mount Hardy region, representing the main portion of the historic Mount Hardy Copper Field.

• Heads of Agreement signed with Toro Energy to explore tenements west of Mount Peake with nickel/ copper potential.

• Major HELITEM[TM] survey commenced subsequent to the end of the Quarter to identify key initial drilling targets at both prospects.

• TNG’s Board now reviewing PFS results with a view to proceeding to a full Definitive Feasibility Study in the shortest possible timeframe.

• RC drilling confirms potential to further increase the resource inventory in the Mount Peake region.

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Corporate

• Final stage of $13.4M capital raising completed in May 2012 with a $6.8M investment in TNG by Ao-Zhong International Mineral Resources Pty Ltd. The completion of the capital raising has strengthened TNG’s cash position to over $11M and cements the foundations for the Company’s growth.

• Appointment of Mr Jianrong Xu, Deputy Director General of East China Mineral Exploration & Development Bureau (“ECMED”), as Chairman of TNG.

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Figure 1: Tenement Location Map – Northern Territory and WA Projects

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SUMMARY

The June 2012 Quarter was another active and exciting period for TNG, with the completion of the Pre-Feasibility Study (PFS) for its flagship 100%-owned Mount Peake Iron-Vanadium-Titanium Project in the Northern Territory, acquisition of the Mount Hardy Copper field, and the finalisation of a $13.4 million investment by the Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co. Ltd (“ECE”).

This investment, which has resulted in the introduction of two key strategic Chinese companies to the Company’s share register, lays the foundations for TNG’s long-term growth.

The PFS confirmed the potential to develop a very robust mining operation at Mount Peake capable of generating revenues of A$12 billion and operating cash flows of over A$5 billion over its initial 20-year life, based on average annual production of 15,300tpa of vanadium pentoxide (V2O5), 375,000tpa of titanium dioxide (TiO2) concentrate and 1.13Mtpa of iron oxide (Fe2O3).

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.

Importantly, the PFS has also confirmed that testwork on the TIVAN™ metallurgical process has progressed to a stage for assessment as economically scalable and feasible at this level of study and stage of the project. Pilot plant testwork completed during the Quarter returned outstanding analytical results, yielding recoveries of 80 per cent for V2O5, which was extracted to a very high purity of 99 per cent. Consequently, TNG and its metallurgical consultants METS are satisfied that TIVAN[TM] will provide a commercial process for the Mount Peake operation.

Based on these results, TNG’s Board is now reviewing the PFS outcomes with a view to proceeding to a full Definitive Feasibility Study in the shortest possible time frame.

Exploration at the Mount Peake Project region has also yielded further encouraging results during the Quarter, confirming the potential to further increase the resource inventory in the region.

A Reverse Circulation drilling programme at Mount Peake confirmed the presence of two large magnetite-gabbro structures – which are the hosts to the iron-vanadium-titanium mineralisation at the Mount Peake deposit. Further drilling is required, however confirmation of additional magnetite-gabbro could significantly expand the resource potential in the Mount Peake Project Area, where TNG holds over 2,000km[2] of prospective ground.

The June Quarter has also delivered a number of positive outcomes for TNG’s exploration initiatives, including the acquisition of a key new tenement covering much of the historic Mount Hardy Copper Field in the Northern Territory, and the signing of a Heads of Agreement with Australian uranium exploration and project development company, Toro Energy Limited (ASX: TOE), providing TNG with the right to explore for all minerals except uranium within Toro Energy’s EL 27115, EL 26848 and EL 27876 tenements.

These transactions have enhanced TNG’s copper exploration portfolio in the Northern Territory, and subsequent to the end of the Quarter, the Company launched a major HELITEM® survey over both project areas to identify initial drill targets.

The completion of the $13.4 million transaction with ECE outlined above has further strengthened TNG’s cash position to $10.4 million as at 30 June 2012.

The overall transaction has resulted in the introduction to the Company’s register of Ao-Zhong International Mineral Resources Pty Ltd, a subsidiary of ECE, and a privately owned Chinese industrial and high technology company, Aosu Investment and Development Co Pty Ltd – with a combined cornerstone holding of approximately 30 per cent.

Following completion of the transaction, TNG appointed Mr Jianrong Xu as Chairman of the Company. Mr Xu, who initially joined the TNG Board as a non-executive Director in May, has been Deputy Director-General of the East China Mineral Exploration and Development Bureau (ECMED) since January 2007.

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PROJECTS

IRON–VANADIUM–TITANIUM

Mount Peake Project: TNG 100%

TNG’s Mount Peake project is located in the Northern Territory close to existing key power and transport infrastructure providing direct access to Darwin Port. The project is rapidly becoming one of the largest Iron-Vanadium-Titanium projects in Australia and the area under licence covers a highly prospective, but poorly explored area of the Western Arunta geological province.

Pre-Feasibility Study

In July, TNG announced the results of the Pre-Feasibility Study for its Mount Peake Project, 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 summarised in Appendices 1-3, with key highlights including:

• Pre-tax Nett annual cash flow[1] 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

• Potential pay back in 4 years

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 ( see below ). 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 consultants 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.

1Nett Annual Cash Flow : Nett 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.

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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 Board is now reviewing the results of the PFS with a view to proceeding to a full Definitive Feasibility Study in the shortest possible time frame.

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.

Pilot Plant Test Work for TIVAN[TM] Hydrometallurgical Process

Following the completion of detailed and exhaustive bench scale and optimisation testwork, TNG commenced a programme of pilot plant test work in March 2012 to test the proprietary TIVAN™ solvent extraction (SX) process. The pilot plant was assembled at the ALS-AMMTEC laboratory in Perth using existing SX equipment, under supervision by TNG’s metallurgical consultants, METS Pty Ltd. The aim of this testwork was to provide a definitive test of the commercial potential of the TIVAN™ process to produce a high-purity aqueous vanadium solution leading to production of vanadium pentoxide of commercial grade.

The pilot plant testwork was completed in early April and returned outstanding analytical results. Importantly, recoveries of 80-90 per cent, which are higher than previous results, were achieved for vanadium pentoxide (V2O5), which was extracted to a purity of 99 per cent.

Table 1: TIVAN[TM] Pilot Plant Analytical Results (source: METS)

	TIVANTM DATA SPECIFICATION
PRODUCT	Purity %	Recovery %
Final V2O5 product	99	89-90
Final TiO2 product1	55-78	67-80
Final Fe2O3 product1	99.9	63-80

1 Subject to final verification testwork

The grade and purity of V205 have been determined by Inductively Coupled Plasma (ICP) analysis: The 99% purity has now been independently verified at the Commonwealth Scientific Industrial Research Organisation (CSIRO) in Sydney.

Final grades of the Ti02 and Fe203 will be provided once additional analytical testwork is completed.

The TiO2 leached liquor is undergoing final upgrading using existing technology at a global leader in minerals and metals processing in Perth. It is anticipated that this work will lead to a higher grade TiO2 product than has been incorporated into Preliminary Feasibility studies.

The Fe2O3 will be extracted through an acid regeneration process. This well understood existing technology is being provided by another leading technology supplier and a final Fe2O3 product of exceptional purity of 99.9% is anticipated.

The pilot plant run was the culmination of an extensive pilot plant testwork program for the TIVAN[TM] process which represented a key input for the Mount Peake Pre-Feasibility Study (PFS) detailed above.

Reverse Circulation Drilling Programme

During the Quarter, TNG announced results from a regional drilling program at Mount Peake, which have confirmed the potential to further increase the resource inventory in the region.

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The Reverse Circulation (RC) drilling programme was aimed at confirming the presence of additional magnetite-gabbro – the host to the iron-vanadium-titanium mineralisation at the Mount Peake deposit – within very large magnetic features around the existing Mount Peake deposit. Confirmation of additional magnetite-gabbro could significantly expand the resource potential in the Mount Peake Project Area (MPPA), where TNG holds over 2,000km[2] of prospective ground.

Three large magnetic zones and one isolated magnetic anomaly were identified from geophysics and fieldwork to have the potential for new vanadium- and titanium-bearing magnetite zones.

Two of these magnetic zones were confirmed by drilling as large magnetite-rich gabbro bodies while one drill hole intersected a large granitic body in the southern anomaly. The northern anomaly drill holes intersected gneissic bodies (see Tables 2 and 3 below). Four drill holes intersected significant true widths of magnetite-rich gabbro:

Table 2: Significant Intersections in Magnetite-gabbro

From (m)	To (m)	Intersection (m)	Dip	Azimuth
2	206	204	-60°	060°
50	198	148	-60°	060°
23	198	175	-60°	060°
64	180	116	-55°	180°

Drillhole 12MPBBERC001 is of particular interest as this anomaly formed part of a relatively subdued magnetic feature. The presence of magnetite gabbro in this region significantly enhances the Company’s understanding of the geology of the area and the potential for large magnetic gabbro bodies to be present even in relatively low magnetic areas.

Assay results from these holes have produced grades consistent with those noted at the Mount Peake deposit (Table 3) and provide further encouragement that higher mineralised grades may exist within the magnetic features. Further drilling will be required to substantiate this but as mineralisation has been identified in this preliminary phase the potential is encouraging. It also provides encouragement to further assess untested magnetic features in the MPPA.

	Table 3: Significant analytical results(XRF)	Table 3: Significant analytical results(XRF)	Table 3: Significant analytical results(XRF)	Table 3: Significant analytical results(XRF)
Hole No.	From (m)	To (m)	Length (m)	Grade Fe₂O₃ (%)	Grade V₂O₅ (%)	Grade TiO₂ (%)
12MPNRC003	48	72	24	23.36	0.20	3.00
	104	108	4	23.82	0.17	3.16
12MPBBERC001	130	164	34	21.94	0.20	4.63
Incl.	145	152	7		0.25	5.36
Incl.	159	164	5		0.30	4.60

The Company concludes that these results open up the potential in the MMPA for a substantial increase to the current Mount Peake JORC Indicated and Inferred Resource 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).

The updated resource model compiled by Snowden Mining Consultants (published on 12[th] October 2011) revealed that the Mount Peake deposit itself remains open to the east (see appendix 1). This together with the latest encouraging drilling results provides further support for the Company’s Exploration Target[2] for the Mount Peake Project Area (MPPA) of 500700Mt with a grade range of 0.2-0.4% V2O5, 20-40% Fe203, 4-6% Ti02.

Further drilling to substantiate the resource potential in the MPPA leading to additional JORC estimates will be carried out during the next diamond drilling programme.

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

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COPPER

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131°30'0"E 132°0'0"E 132°30'0"E 133°0'0"E 133°30'0"E
DARWIN !(
!( Katherine
20°30'0"S 20°30'0"S
Tennant Creek
WALABANBA HILLS !(
COPPER PROJECT MOUNT PEAKE
Fe - V - Ti PROJECT
21°0'0"S 21°0'0"S
MOUNT HARDY ! ( Alice Springs
COPPER PROJECT
LOCATION MAP MOUNT PEAKE
Fe - V - Ti
Resource
21°30'0"S 21°30'0"S
`^
WALABANBA HILLS
COPPER P ROJECT
TORO ENERGY / TNG JV
22°0'0"S MOUNT HARDY 22°0'0"S
COPPER P ROJECT MOUNT PEAKE
TNG 100% Fe - V - T i P ROJECT
TNG 100%
22°30'0"S 22°30'0"S
Kilometres [´]
0 25 50
LEGEND
HELITEM Survey Areas
131°30'0"E 132°0'0"E 132°30'0"E 133°0'0"E 133°30'0"E
Tanami Road
Stuart Highway
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Figure 2: Location of the Mount Hardy and Walabanba Hills Copper Projects HELITEM Survey Areas.

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Mount Hardy Project: Copper: TNG 100%

Mount Hardy – ELA 29219, EL 27892

The Mount Hardy Copper Project is located within the historical Mount Hardy Copper Field, approximately 300km northwest of Alice Springs. The project area is situated on the Mount Doreen (SF52-12) and Mount Theo (SF52-08) 1:250,000scale sheets. Access to the Mount Hardy tenement is via the Tanami Highway.

During the Quarter, TNG signed a binding agreement to acquire a new tenement, EL 27892, in the Mount Hardy region. The acquisition agreement is with public unlisted company, Walla Mines Ltd, and the tenement covers 101.76km[2] representing the main portion of the historic Mount Hardy Copper Field, which is located adjacent and immediately south of TNG’s existing tenement ELA 29219, which covers the northern extension of the known copper field (see Figure 2).

The acquisition was completed subsequent to the end of the Quarter on 10 July, with TNG paying $200,000 cash as consideration for the tenement.

The Mount Hardy copper mines and prospects were discovered in 1935 and are within the Lander Group geological formation, which is the dominant host rock for copper and gold mineralisation in the area. The Lander Group is interpreted to be stratigraphically equivalent to the Tanami Group, which hosts the significant gold discoveries at The Granites, Dead Bullock Soak and Coyote.

Historical rock chip sampling in the Mount Hardy area by White Industries (early 1990’s) and Tanami Gold NL (2002) returned numerous anomalous copper results, with peak grades of up to 19% copper, 18% lead, 1.52% zinc, 2.66 g/t gold, and 170 g/t silver.

TNG has established that these results may indicate additional potential for Volcanogenic Massive Sulphide mineralisation at depth.

Previous work has been focused on near surface gold exploration, with only limited drilling to shallow depths of less than 50m and no modern geophysical surveys have been completed over the area.

Subsequent to the end of the Quarter TNG announced the commencement of an extensive HELITEM® survey, flown by Fugro Airborne Surveys Pty Ltd, over the Mount Hardy Project area to identify targets for copper mineralisation.

Fugro’s HELITEM[®] system is the world’s most powerful helicopter time-domain electromagnetic system and provides multiple coil measurements, allowing for more complete identification and interpretation of conductive features which represent potential accumulations of sulphide mineralisation.

Walabanba Hills JV: Heads of Agreement completed with Toro Energy

During the quarter TNG signed a Heads of Agreement (HOA) with Australian uranium exploration and project development company, Toro Energy Limited (ASX: TOE), providing TNG with the right to explore for all minerals except uranium within Toro Energy’s EL 27115, EL 26848 and EL 27876 tenements.

The tenements lie immediately west of TNG’s flagship Mount Peake Strategic Metals Project in the Northern Territory, and are considered to be highly prospective for copper and nickel mineralisation based on previous exploration results. The HOA will be known as the Walabanba Hills Project.

Under the terms of the HOA, TNG must spend a total of A$500,000 on exploration activities within the first two years to earn a 51% interest in each of granted Exploration Licences (EL’s) 27115, 26848 and 27876, at which point a formal Joint Venture agreement between TNG and Toro will be signed, subject to meeting conditions precedent. TNG then has the right to increase its stake to 80% by spending a further A$1.5 million over the next five years. Toro can then elect to retain, assign or convert its remaining 20% interest to a 2% Net Smelter Royalty (NSR).

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The EL’s 27115, 26848 and 27876 tenements were previously held by Western Mining Corporation (WMC) in the mid-1990s and Anglo American Corporation between 2003 – 2004, who conducted aeromagnetic surveys over the region and focused on magnetic and Electro-Magnetic (EM) anomalies. These surveys identified numerous targets anomalous in nickel, copper and Platinum Group Elements (PGM), suggesting the presence of sulphide-bearing intrusive rocks.

Based on available data, six areas have been identified as highly prospective for immediate follow up using a combination of soil geochemistry, magnetic and electro-magnetic geophysics to rapidly advance targets for drilling.

Subsequent to the end of the Quarter TNG announced the commencement of an extensive HELITEM® survey, flown by Fugro Airborne Surveys Pty Ltd, over the Walabanba Hills Project area to identify targets for copper mineralisation.

McArthur River Project: Copper: TNG 100%

During the Quarter, negotiations with Traditional Owners regarding access to McArthur, Yah Yah and Black Springs exploration licences were progressed, and preparations for a detailed exploration programme are in planned.

McArthur – EL 27711

The McArthur River tenement, which is located approximately 50km south of McArthur township along the Tablelands Highway, covers part of the prospective McArthur Basin geology, 65km south-west of the McArthur Zinc mine. The licence has two major copper targets – Kilgour Crossing and Donkey Yard, both of which have been explored intermittently over the past 50 years and have recorded rock chip grades up to 2% Copper.

Mineralisation at McArthur River is hosted by the Mallapunyah Formation, in two dolomitic and variably bituminous intervals informally termed the ‘upper’ and ‘lower’ copper beds, which are 1m to 150mm thick, respectively. Chalcocite and chalcopyrite are present in the ‘lower copper bed’ along its strike length of 500m. Copper mineralisation in the lower copper bed 5km north of the Kilgour Crossing prospect comprised approximately equal quantities of chalcocite and bornite.

TNG plans to complete a thorough rock chip sampling program over the region in order to confirm the scope and tenor of mineralisation, and will potentially also conduct a VTEM survey to map the host rock.

Yah Yah – EL 28509

The Yah Yah tenement, located approximately 50km south-west of the McArthur township, contains the historical Yah Yah copper mine, which produced some 40 tonnes of hand-picked, high-grade copper (20-30% Cu) ore prior to 1912. A grab sample collected from a Yah Yah waste dump by CRA Exploration assayed 30.4% Cu. In addition, BHP completed a soil survey which returned best results of up to 562ppm Cu from a 300m wide zone over the old structure.

TNG plans to complete a thorough rock chip sampling programme over the region in order to confirm the scope and tenor of mineralisation, and will potentially also conduct a VTEM survey to map the host rock. Access to the tenement was declined by the traditional owners at this time and a second meeting is being sought.

Black Springs – EL 28503

The Black Springs tenement is located 4km south of McArthur EL 27711 covering southern extensions of the prospective McArthur stratigraphy.

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Sandover Project: Copper: TNG 100%

ELA 29252, ELA 29253 and ELA 29254

The Sandover Copper Project tenements are located approximately 100km north-east of Alice Springs just north of the Plenty Highway. The project area is situated on the Alcoota (SF53-10) 1:250,000 scale map sheet.

The area is highly prospective for volcanogenic massive sulphides, and the licences are expected to be granted during the next quarter.

The tenements are expected to be granted next month.

JOINT VENTURE PROJECTS

ZINC-LEAD-SILVER, IRON-ORE

Manbarrum Project Joint Venture: TNG 100% (Kimberley Mining Ltd (KBL) and Sorby Hills Joint Venture (SHJV) earning 51% with scope to earn up to 80%)

During the Quarter, KBL Mining Limited advised that work on the Manbarrum project under the SHJV has focused on the Sandy Creek Deposit evaluation. KBL see excellent potential for a shallow high grade Pb-Zn-Ag resource within the larger lower grade deposit.

Work has commenced on a 3D geological model in preparation for a new high grade resource model due to be completed by Hellman & Schofield in late May/early June. The new resource would be high on the agenda for processing at the nearby Sorby Hill plant.

KBL have progressed with their development plans for Sorby Hills which will have direct implications for future development of Manbarrum.

COPPER-GOLD

Western Desert Resources Ltd (WDR) Joint Venture: TNG 100%, (WDR earning 51% with scope to earn up to 80%)

The Rover Project covers three granted exploration licences in the lucrative Tennant Creek goldfields, two of which (EL24471 and EL25581) are in joint venture with TNG Ltd and one (EL28128) is 100% held by WDR.

Reinterpretation of the airborne EM data flown in 2011 has defined conductive responses situated adjacent to Rover 1 ore deposit. A total of 14 “Priority 1” conductive responses are observed. A ground IP survey has been planned to commence in July to pinpoint drilling targets based on their conductive responses and gravity signatures. Drilling of these is expected later in the year.

Approvals have been obtained to commence a four hole diamond drilling program at BIF Hill. This is a Tennant Creek-style target, which has seen minimal past exploration, but has strongly elevated gold in the near surface (including 15m@ 1.03 g/t from 3m depth). Drilling will commenced in July.

McTavish Project Joint Venure: TNG 2% Royalty, Barminco 70%

No work undertaken during the Quarter.

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Kintore East Joint Venture: TNG 20%, La Mancha 80%

TNG retains a 2% gold royalty in these prospective tenements. No work was reported by La Mancha.

NICKEL

MINING PROJECTS: Nickel Cawse Extended Joint Venture: TNG 20%, Norilsk 80%

The Cawse laterite nickel operation has been placed on indefinite care and maintenance by Norilsk Nickel Australia.

BAUXITE

Melville Island Licence

During the Quarter, TNG agreed terms for a farm-in and joint venture agreement on its 100% owned Melville Island licence ELA 28617 in the Northern Territory with Rio Tinto Exploration Pty Ltd (RTX). Under the in-principle terms, TNG will receive an initial cash payment of $50,000, and RTX will progress negotiations and grant of the licence application for bauxite exploration. Following the grant of the licence RTX must spend $5M within 4 years to earn 80% equity in the project with TNG retaining 20% equity at which point TNG may elect to contribute, sell or convert its equity to a 2% Net Smelter Royalty (NSR).

The Melville Island Exploration licence application has been a strategic licence for TNG being located in a prospective area for bauxite and other minerals. The licence area covers approximately 1400km.

The transaction is consistent with TNG’s focus on the continued evaluation and development of its flagship Mount Peake Project. It has been structured so that TNG will retain either a 20% interest or 2% NSR giving it continued exposure to the potential exploration upside of the project.

CORPORATE

Completion of final stage of capital raising

During the Quarter TNG completed the final stage of its $13.4 million transaction with two key strategic Chinese companies, further strengthening its cash position to over $11 million and cementing the foundations for its growth.

The overall transaction has resulted in the introduction to the Company’s register of Ao-Zhong International Mineral Resources Pty Ltd (“Ao-Zhong”), a subsidiary of the Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co. Ltd (“ECE”), and a privately owned Chinese industrial and hightechnology company, Aosu Investment and Development Co Pty Ltd (“Aosu”) – with a combined cornerstone holding of approximately 30 per cent.

The second and final stage of the transaction was completed on 25 May with AoZhong subscribing for 62,249,812 TNG shares at 11 cents per share – a significant premium to the share price – raising a total of $6.8 million (before costs).

The Ao-Zhong investment follows approval from Australia’s Foreign Investment Review Board (“FIRB”) for the transaction and Ao-Zhong obtaining all necessary waivers, consents and approvals from the Department of Commerce of Jiangsu Province, Jiangsu Development & Reform Commission and the State Administration of Foreign Exchange Jiangsu Branch.

The first stage of the transaction was completed on 18 January 2012, under which Aosu subscribed for 59,808,643 shares at 11 cents per share, resulting in a cash injection of $6.6 million (before costs).

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The overall $13.4 million transaction with ECE was approved by shareholders at a general meeting of the Company on 21 December 2011.

Completion of Ao-Zhong’s subscription provides continued funding to enable progression of TNG’s flagship Mount Peake Iron-Vanadium-Titanium Project and commercialisation of the TIVAN™ hydrometallurgical process; the funds will also underpin continued activity at the Company’s other projects.

Appointment of Chairman

Under the terms of the Ao-Zhong Subscription Agreement outlined above (which was varied by way of a variation deed dated 18 January 2012), TNG appointed Mr Jianrong Xu as a non-executive director, effective from completion of the investment by Ao-Zhong. Mr Xu was then appointed as the new Chairman of the Company at the TNG board meeting on 26 June.

Mr Xu is Deputy Director General of East China Mineral Exploration & Development Bureau (“ECMED”). Mr Xu obtained his BA in geophysics from Central South University in 1983 and has worked with ECMED since graduating. He had been working in Team 814 of ECMED for almost 24 years and successively held the post of head of geophysics prospecting team, project manager, deputy director and director. In January 2007, he was appointed as Deputy Director General of ECMED.

Mr Xu is also the current General Manager of ECE, Deputy Managing Director of Jiangsu Geophysical Society, the Chairman of HK ECE, Hong Kong East China Non-Ferrous International, Mineral Development Co Ltd, Namibia East China Non-ferrous Investment Pty Ltd and other ECMED wholly owned subsidiaries. Mr Xu is also a director of AIM-listed company, China Africa Resources Plc.

Davis Samuel

TNG is a party to proceedings instituted by the Commonwealth of Australia in the Supreme Court of the Australian Capital Territory. The company has made inquiries of the Court through its lawyers and indications from the Court are that the judgment may be delivered around the middle of this calendar year.

Contract Termination

The contract with Hatched Creek Pty Ltd was terminated by mutual agreement. This contract had previously been approved by shareholders at the company’s Annual General Meeting in 2006.

Cash and Investments

At Quarter end, the Company had cash and investments of $10,229,000.

TNG LIMITED Paul E Burton Managing Director 25 July 2012

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Competent Person’s Statement

The information in this report that relates to Exploration Results and Exploration Targets is based on information compiled by Paul Burton who is a Member of The Australasian Institute of Mining and Metallurgy and a Director of TNG Limited. Paul 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’. Paul Burton 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 Mineral Resources 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.

Forward-Looking Statements

This report contains ‘forward-looking information’ that is based on the Company’s expectations, estimates and projections as of the date on which the statements were made. This forward-looking information includes, among other things, statements with respect to the Company’s business strategy, plans, objectives, performance, outlook, growth, cash flow, earnings per share and shareholder value, projections, targets and expectations, mineral reserves and resources, results of exploration and related expenses, property acquisitions, mine development, mine operations, drilling activity, sampling and other data, grade and recovery levels, future production, capital costs, expenditures for environmental matters, life of mine, completion dates, and currency exchange rates. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as ‘outlook’, ‘anticipate’, ‘project’, ‘target’, ‘likely’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘would’, ‘could’, ‘should’, ‘scheduled’, ‘will’, ‘plan’, ‘forecast’ and similar expressions. Persons reading this report are cautioned that such statements are only predictions, and that the Company’s actual future results or performance may be materially different.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to the risk factors set out in the Company’s Annual Information Form.

This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. The Company disclaims any intent or obligations to update or revise any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise, unless required to do so by law.

Exploration Target

The potential quantity and grade is conceptual in nature, that 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 Resources.

Nett Annual Cash Flow

Nett 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.

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TENEMENT SCHEDULE:

Project	Tenement ID	Holder	Operator	Date Applied	Status	Area Km²
Mount Peake(NT)	EL 23271	Enigma 100%	TNG (NT)	20/07/01	Granted	95.9
Mount Peake(NT)	EL 23074	Enigma 100%	TNG (NT)	2/03/01	Granted	169.2
Mount Peake(NT)	EL 27069	Enigma 100%	TNG (NT)	1/12/08	Granted	245.9
Mount Peake(NT)	EL 27070	Enigma 100%	TNG (NT)	1/12/08	Granted	89.46
Mount Peake(NT)	EL 27706	Enigma 100%	TNG (NT)	7/10/09	Granted	579.58
Mount Peake(NT)	EL 27787	Enigma 100%	TNG (NT)	16/11/09	Granted	139.19
Mount Peake(NT)	EL 27941	Enigma 100%	TNG (NT)	15/02/10	Granted	660.82
Mount Peake(NT)	EL 28491	Enigma 100%	TNG (NT)	29/11/10	Granted	17 SBKS
Mount Peake(NT)	MLA 28341	Enigma 100%	TNG (NT)	14/10/10	Pending	358 HECT
McArthur River(NT)	EL 27711	Enigma 100%	Enigma	14/10/09	Granted	170.77
McArthur River(NT)	EL 28503	Enigma 100%	Enigma	09/12/10	Granted	229.62
McArthur River(NT)	ELA 28509	Enigma 100%	Enigma	13/12/10	Pending	29.55
Melville Island	ELA 28617	TNG 100%	TNG	14/02/11	Pending	1,387.69
East Arnhem Land(NT)	EL 28218	Enigma 100%	Enigma	16/08/10	Granted	19.94
East Arnhem Land(NT)	EL 28219	Enigma 100%	Enigma	16/08/10	Granted	29.89
Croker Island	ELA 29164	Enigma 100%	Enigma	31/10/11	Pending	140.87
Mount Hardy	ELA 29219	Enigma 100%	Enigma	18/11/11	Pending	215.98
Sandover 1	ELA 29252	Enigma 100%	Enigma	05/12/11	Pending	669.54
Sandover 2	ELA 29253	Enigma 100%	Enigma	05/12/11	Pending	733.63
Sandover 3	ELA 29254	Enigma 100%	Enigma	05/12/11	Pending	333.89
Manbarrum (NT)	A 24518	TNG 100%	KBL	15/12/04	Granted	16.85
Manbarrum(NT)	A 26581	TNG 100%	KBL	14/01/08	Granted	14.65
Manbarrum(NT)	EL 24395	TNG 100%	KBL	8/09/04	Granted	200.5
Manbarrum(NT)	EL 25470	TNG 100%	KBL	13/07/06	Granted	199.3
Manbarrum(NT)	EL 25646	TNG 100%	KBL	16/10/06	Granted	129.3
Manbarrum(NT)	ML(A)27357	TNG 100%	KBL	15/05/09	Pending	2.04
Manbarrum(WA)	EL 80/3772	TNG 100%	KBL	16/10/06	Granted	402
Manbarrum(WA)	EL 80/3816	TNG 100%	KBL	30/11/06	Granted	224

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Project	Tenement ID	Holder	Operator	Date Applied	Status	Area Km²
Warramunga(NT)	MLC 647	TNG 100%	WDR	23/03/70	Granted	0.08
Warramunga(NT)	EL 24471	TNG 100%	WDR	23/11/04	Granted	307.26
Warramunga(NT)	EL 25581	TNG 100%	WDR	6/09/06	Granted	566.63
Warramunga(NT)	ELA 25582	TNG 100%	WDR	6/09/06	Moratorium	1207
Warramunga(NT)	ELA 25587	TNG 100%	WDR	11/09/06	Pending	248.2
Tanami East(NT)	ELA 24260	TNG 100%	WDR	15/04/04	Pending	462.3
Petermans(NT)	ELA 25562	TNG 100%	WDR	23/08/06	Pending	942.15
Petermans(NT)	ELA 25564	TNG 100%	WDR	23/08/06	Pending	1546.49
Petermans(NT)	ELA 26382	TNG 100%	WDR	16/08/07	Pending	406.4
Petermans(NT)	ELA 26383	TNG 100%	WDR	16/08/07	Pending	1300
Petermans(NT)	ELA 26384	TNG 100%	WDR	16/08/07	Pending	909.51
Cawse Ext.(WA)	M 24/547	TNG 20%	Norilsk	2/02/96	Granted	8.6
Cawse Ext.(WA)	M 24/548	TNG 20%	Norilsk	2/02/96	Granted	8.6
Cawse Ext.(WA)	M 24/549	TNG 20%	Norilsk	2/02/96	Granted	8.6
Cawse Ext.(WA)	M 24/550	TNG 20%	Norilsk	2/02/96	Granted	8.6
McTavish JV(WA)	M 40/119	Enigma 2% Royalty	FMR	31/12/93	Granted	1.5
McTavish JV(WA)	M 40/157	Enigma 2% Royalty	FMR	18/01/95	Granted	0.3
McTavish JV(WA)	M 40/77	Enigma 2% Royalty	Nex Metals	13/06/88	Granted	1.2
McTavish JV(WA)	P 40/1193	Enigma 2% Royalty	FMR	2/02/07	Granted	1.71
McTavish JV(WA)	P 40/1194	Enigma 2% Royalty	FMR	2/02/07	Granted	1.82
Kintore East JV(WA)	P 16/2370	TNG 2% Royalty	LMRA	20/12/06	Granted	1.83
Kintore East JV(WA)	P 16/2371	TNG 2% Royalty	LMRA	20/12/06	Granted	1.2
Kintore East JV(WA)	P 16/2372	TNG 2% Royalty	LMRA	20/12/06	Granted	1.5
Kintore East JV(WA)	P 16/2373	TNG 2% Royalty	LMRA	20/12/06	Granted	1.21
Kintore East JV(WA)	P 16/2374	TNG 2% Royalty	LMRA	20/12/06	Granted	2
Kintore East JV(WA)	P 16/2459	TNG 2% Royalty	LMRA	20/12/06	Granted	2

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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:

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):

• Operating cash flow (life-of-mine):

• Nett cash flow (life-of-mine):

• Pre-production capital cost estimate (including all infrastructure:

• Total operating costs (including mining, processing, transport & royalties):

A$11.8 billion A$5.8 billion A$5.05 billion A$563 million A$75.5/tonne of plant feed

• Nett annual cash flow:

• IRR pre-tax:

A$294M[2] 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.

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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.

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Mount Peake Deposit; Resource Extension (Snowden).

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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 Control on Ore	$/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 at 2.5 Mtpa	$/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

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CONTACT INFORMATION

DIRECTORS

Jianrong Xu | Chairman Paul Burton | Managing Director Neil Biddle | Non-Executive Director Stuart Crow | Non-Executive Director Rex Turkington | Non-Executive Director Zhigang Wang | Non-Executive Director

COMPANY SECRETARY

Simon Robertson

SHARE REGISTRY

Computer Share Investor Services Pty Ltd

Level 2, 45 St Georges Terrace Perth WA 6000 Telephone: 08 9323 2000 Facsimile: 08 9323 2033

CONTACT

PO Box 1126 Subiaco WA 6904 Telephone: 08 9327 0900 Facsimile: 08 9327 0901 Email: corporate@tngltd.com.au Web: www.tngltd.com.au

SHAREHOLDER ENQUIRIES

Paul Burton Simon Robertson

AUSTRALIAN STOCK EXCHANGE LISTING

Shares | TNG

FRANKFURT STOCK EXCHANGE LISTING

Shares | A0B60K

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CAPITAL STRUCTURE – 30 JUNE 2012

Type of Security	Exercise Date	Class	Number	Exercise Price
Shares		fully paid ordinary	406,861,516
Options	15.12.12	(unlisted)	21,100,000	$0.15

MAJOR SHAREHOLDERS – 30 JUNE 2012

Ao-Zhong International Mineral Resources Pty Ltd	15.30%
Aosu Investment and Development Co Pty Ltd	14.70%
WWB Investments P/L & Mr & Mrs Brown	6.51%
CBH Resources Limited	3.48%

(Total Directors Holdings 16.99%)

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