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Titanium Resources (SRX)

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Monday 04 September, 2006

Titanium Resources

Interim Results

Titanium Resources Group Ltd
04 September 2006

                        Titanium Resources Group Limited

                                Interim Results

3 September: Titanium Resources Group ('TRG' or 'the Group') announces interim
results for the six months ended 30 June 2006 ('the Period').


   •Sales of US$14.9 million during the Period
   •Cash on hand at the end of the Period of more than US$62 million
   •Net assets of US$176 million at the end of the Period
   •Option to purchase a third dredge for Sierra Rutile mine exercised
   •To date 35,000 tonnes of rutile and over 600,000 tonnes of bauxite
   •Acquisition of an Exclusive Prospecting Licence covering 1,742km2 and
    containing an extensive series of former beach strands

Commenting on the results, TRG Chief Executive Len Comerford said:

'We are now focusing on expanding operations and reducing costs through
production efficiencies. The outlook is extremely good, with solutions to our
current problems in hand and expansion of our operations underway.'

'A key goal for the period ahead is completing Dredge D2. This will double our
rutile production, bringing it to more than 200,000 tonnes per annum. We have
made exceptional progress in the last few months toward that goal. We have
assembled a world-class team to deliver the project with completion scheduled
for the latter half of 2007.'


Len Comerford / Walter Kansteiner
Titanium Resources Group
Telephone: +44 20 7321 0000

Michael Oke / Andy Mills
Aura Financial
Telephone: +44 20 7321 0000

Chief Executive's Review

Titanium Resources Group has had a very busy, challenging and rewarding first
half of 2006. We are now focusing on expanding operations and reducing costs
through production efficiencies. The outlook is extremely good, with solutions
to our current problems in hand and expansion of our operations underway. As we
announced in May some management positions have been changed in response to the
challenges we faced. We continue to enjoy the support of the Sierra Leone
Government and this harmonious relationship has contributed to the significant
strides made by the mines.

One of our main challenges was the industry-wide high cost of fuel which
adversely affected the Company's cash flow as was highlighted in the recent
trading and operational update. The changeover to more fuel efficient HFO power
generators has begun and the new generators will be fully in place by mid 2007.
The first delivery of HFO units is expected in the first Quarter of 2007 and the
entire changeover should be completed by mid- 2007. The new power-house is
projected to cut fuel costs in half and provide enough capacity not only to meet
our current requirements but also the additional power requirements for our
second Dredge (D2) and our third Dredge (D3).

The restart difficulties have now been overcome, and critical spares for some of
the older technology items have been procured. This is minimising any downtime
and gives us the confidence that we will meet our targets for the second half of

A key goal for the period ahead is completing Dredge D2. This will double our
rutile production, bringing it to more than 200,000 tonnes per annum. We have
made exceptional progress in the last few months toward that goal and have
assembled a world-class team to deliver the project with completion scheduled
for the latter half of 2007. We are fast-tracking the project and have already
completed all the enabling works for the deposits D2 will mine.

At this time we are delighted to announce that we have exercised our option to
purchase a third dredge (D3) from OCI Engineering of Malaysia. The Existing
Bucket line Dredge will be reconfigured to increase its nominal operating
capacity to 685 tonnes per hour. We intend to use the dredge initially to mine
our Mobgwemo tailings area. The production of this dredge will add approximately
30,000 tonnes of Rutile per annum and bring our annual production to
approximately 240,000 tonnes. We are finalising our contracts with OCI and
current indications are for a 17-month construction period. Once the tailings
have been mined, D3 will either be moved to other known deposits or to areas
currently being explored within the area of our mining lease.

To date the company has exported 35,000 tonnes of Rutile We are on schedule to
ship 50,000 tonnes of Rutile in the second half of this year as previously

Our exploration programme is expanding on our current licenses and we are
delighted to announce that we have acquired a further 1,742km2 area under a two
year, renewable Exclusive Prospecting Licence.

We have signed a contract with Wallis Drilling of Australia to carry out
exploration drilling. To supplement this we have purchased a mechanical Banka
rig to carry out exploration drilling in previously un-investigated areas
covered by extensive swamps. We have an extensive infill drilling programme on
our current lease following the identification of a number of potential target

Our new prospecting licence along the southern coast of Sierra Leone is
extremely exciting to us. We have identified an extensive series of former beach
strands. The heavy mineral potential of these beach strands is indicated from
data collected by the Geological Survey of Sierra Leone ('GSSL') in the late
1980's. This data was obtained from a preliminary bore and test pit programme
undertaken on part of the licence area The GSSL has previously reported mineral
assemblages containing up to 15% heavy minerals (HM), comprising ilmenite,
zircon, rutile and monazite with above 80% potential recorded in a number of
samples. Encouraging levels of zircon were also observed with some sample
reporting a ratio of nearly 1:1 ilmenite to zircon. Given the nature of the
area, slime content (-53 microns fraction) is expected to be low, an important
consideration in any future exploitation of the area. We have not yet performed
any of our own exploration work on this prospect, and the information available
to us does not include the depths of zones tested, drilling intervals or an
average grade of mineralisation. Chris Mortimer BSc Hons, MSc DUC, SRL's Chief
Geologist and a mineral sands expert, has reviewed the GSSL's technical
mineralization, drilling and exploration data which is included within this

We have also exercised the option described in the company's Admission Document
dated 19 August 2005 to use part of the US$74 million raised on Admission to
purchase all of Nord Resources Corporation's interest to certain cash flow from
TRG's Sierra Rutile project. TRG's has also paid $0.6 million to resolve
commercial disputes and settle litigation between the parties that was delaying
the purchase. The additional cash flow and consolidation of TRG's control over
the entire corporate structure represent a significant benefit to TRG and its

Sierra Minerals Limited

The Bauxite mine continues to perform well with our operator, P W Mining
International Limited, managing to increase production.

To date the company has exported just over 600,000 tonnes of bauxite. We are on
schedule to ship the balance of the target production of 1.2m tonnes of bauxite
which is forward sold. At current levels we expect to export in the region of
1.5m tonnes in 2007, a 25% increase over original projections.


We have had no difficulty selling our production. Our current rutile production
capacity is sold through 2008. On the bauxite side, we have forward sales
contracts with Alcoa World Alumina LLC and Glencore AG for approximately 1.2m
tonnes per annum and demand for the additional tonnage we expect to produce. The
market continues to show strong demand for the Group's rutile and bauxite
products. The Company is positioning itself for solid performance by
diversifying its customer base and delivering a high-quality product. Currently
we have contracts or are in negotiations with customers from around the world.


The world markets for all TRG's products (rutile, ilmenite and bauxite) remain
strong and the Group has had no difficulty securing long-term off take
agreements for its production. At present, the Company has long-term rutile
contracts in place with Tronox, Huntsman and Kronos. The bauxite mine has
long-term sales agreements in place with Alcoa World Alumina LLC and Glencore AG
to sell the mine's total estimated annual production.

Having addressed the issues that have affected the performance of the Group so
far this year, I and the rest of the Board are confident that the Group is now
well positioned to create significant value in the years ahead.



                                        June 30, 2006     December 31, 2005
                                              -------              --------
ASSETS                                        USD'000               USD'000
Non-current assets
Property, plant and equipment                  74,494                61,279
Intangible assets                              12,962                12,985
Non-current receivables                         1,393                 1,367
Deferred tax assets                            50,304                50,304
                                             --------              --------
                                              139,153               125,935
                                             --------              --------

Current assets
Inventories                                    12,232                 7,155
Trade and other receivables                    13,523                 8,777
Cash and cash equivalents                      62,425                79,682
                                             --------              --------
                                               88,180                95,614
                                             --------              --------

Total assets                                  227,333               221,549
                                             ========              ========

Capital and reserves
Share capital                                 194,951               194,951
Revenue deficit                               (18,757)              (13,577)
                                             --------              --------
Equity holders' interest                      176,194               181,374
                                             --------              --------

Non-current liabilities
Borrowings                                     32,040                28,390
Provision for liabilities and charges           2,150                 2,150
                                             --------              --------
                                               34,190                30,540
                                             --------              --------

Current liabilities
Trade and other payables                       16,938                 9,625
Current tax liabilities                            10                    10
Borrowings                                          1                     -
                                             --------              --------
                                               16,949                 9,635
                                             --------              --------
Total liabilities                              51,139                40,175
                                             --------              --------
Total equity and liabilities                  227,333               221,549
                                             ========              ========



                                                  6 months to      May 16, 2005 
                                                     June 30,   to December 31,
                                                         2006              2005
                                                      -------          --------
Continuing operations                                 USD'000           USD'000

Sales                                                  14,888               337

Cost of sales                                          (5,918)              (98)
                                                     --------          --------

Gross profit                                            8,970               239

Other income                                            1,340             1,721

Operating expense                                        (448)              (80)

Administrative and marketing expenses                 (11,101)          (14,828)

Other expenses                                         (2,737)           (4,124)
                                                     --------          --------

Operating loss                                         (3,976)          (17,072)

Finance costs                                          (1,204)             (489)
                                                     --------          --------
Loss before taxation                                   (5,180)          (17,561)

Income tax expense                                          -             3,984
                                                     --------          --------

Loss for the period from continuing operations         (5,180)          (13,577)
                                                     ========          ========

Loss attributable to equity holders of the Group       (5,180)          (13,577)
                                                   ==========         =========

Loss per share (USD)- basic                             (0.06)            (0.16)
                                                   ==========         =========



                                     Share           Revenue
                                   capital           deficit             Total
                                   -------           -------           -------
                                   USD'000           USD'000           USD'000

Balance at January 1, 2006         194,951           (13,577)          181,374
Loss for the period                      -            (5,180)           (5,180)
                                  --------          --------          --------
Balance at June 30, 2006           194,951           (18,757)          176,194
                                  ========          ========          ========

Balance at May 16, 2005                  -                 -                 -
Issue of share capital             194,951                 -           194,951
Loss for the period                      -           (13,577)          (13,577)
                                  --------          --------          --------
Balance at December 31, 2005       194,951           (13,577)          181,374
                                  ========          ========          ========


                                               6 months to     May 16, 2005 to
                                             June 30, 2006        December 31,
                                                  --------           ---------
                                                   USD'000             USD'000
Operating activities
Cash absorbed in operations                         (2,315)            (26,974)
Interest received                                    1,295               1,277
                                                  --------           ---------
Net cash used in operating activities               (1,020)            (25,697)
                                                  --------           ---------

Investing activities
Acquisition of subsidiaries net of cash acquired         -              32,553
Purchase of property, plant and equipment          (16,212)            (23,604)
Loans and advance granted                              (26)               (640)
                                                  --------           ---------
Net cash (used in)/generated from investing
activities                                         (16,238)              8,309
                                                  --------           ---------

Financing activities
Issue of ordinary shares                                 -              91,493
Proceeds from long term borrowings                       -               5,577
                                                  --------           ---------
Net cash from financing activities                       -              97,070
                                                  --------           ---------

Net increase in cash and cash
equivalents                                        (17,258)             79,682
                                                  ========           =========

Movement in cash and cash equivalents
At January 1, 2006                                  79,682                   -
Increase                                           (17,258)             79,682
                                                  --------           ---------
At June 30, 2006                                    62,424              79,682
                                                  ========           =========





Titanium Resources Group Ltd is a limited liability company incorporated and
domiciled in the British Virgin Islands. The address of its registered office is
at P.O.Box 173, Kingston Chambers, Road Town, British Virgin Islands.


The financial statements have been prepared in accordance with International
Financial Reporting Standards The financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS). The
financial statements are prepared under the historical cost convention.

The interim financial statements for the half year ended June 30, 2006 are
unaudited. The accounting policies used in the preparation of the interim
unaudited financial statements are consistent with those used in the annual
financial statements for the year ended December 31, 2005. The interim financial
statements comply with IAS 34.

                                                June, 30 2006     December 31,
                                                  -----------      -----------
                                                      USD'000          USD'000

Basic loss per share
Loss attributable to equity holders of the group
from continuing operations (thousand)                  (5,180)         (13,577)
                                                  -----------      -----------

Weighted average number of ordinary shares
in issue                                           82,397,742       82,397,742
                                                  -----------      -----------

Basic loss per share from continuing
operations                                              (0.06)           (0.16)
                                                  ===========      ===========


                                                                  June, 30   December
                                                                      2006   31, 2005
                                                                 ---------  ---------
                                                                   USD'000    USD'000
Property, plant and equipment acquisition contracted for at the
Balance sheet date but not yet incurred:                             3,900     12,739
                                                                 =========   ========

Sierra Rutile Limited, a subsidiary of Titanium Resources Group Ltd, entered
into the above capital commitments.


                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                                                                                                                                                                     

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