Mr. Mazen Haddad reports

ARGEX TITANIUM ANNOUNCES PRIVATE PLACEMENT OF SECURED CONVERTIBLE NOTES

Argex Titanium Inc. intends to complete a private-placement offering of secured convertible notes for minimum gross proceeds of $1.6-million and maximum gross proceeds of $2.4-million at a subscription price of $1,000 per note.

On Feb. 18, 2016, the board of directors of Argex determined that the corporation was in serious financial difficulty and that the offering and the transactions described herein were designed to improve the financial position of the corporation. The board also determined that the terms of the offering and the transactions described herein are reasonable under the circumstances of the corporation, and the current timing and resources of the corporation do not permit the corporation to seek shareholder approval. On that basis, and upon the recommendation of a committee of the board, free from any interest in the transactions and unrelated to parties involved in the transactions, the corporation has applied to the Toronto Stock Exchange for an exemption from the shareholder approval requirement of the TSX on the basis of financial hardship, pursuant to Section 604(e) of the TSX's company manual.

The TSX has also notified the corporation that it will review the corporation's eligibility for continued listing on the TSX in light of the corporation's current financial condition. The corporation believes that completion of the offering will enable the corporation to satisfy the TSX's listing requirements.

Each note will be convertible at the option of the holder into 33,333 common shares of the corporation at an issue price of three cents each and 28,333 warrants to purchase additional shares at any time at a price of five cents each over a five-year term. The notes and the warrants will contain standard anti-dilution provisions. The market price (as defined in the TSX's company manual) of the shares as at Feb. 19, 2016, was 3.19 cents, and the issue price of the shares upon conversion of the notes is at a discount of 6 per cent thereto.

Unless converted prior thereto, the notes will mature in two years from the date of issuance and bear interest at the rate of 15 per cent per year, payable annually up to their time of conversion. Holders of notes may, at their option, convert any unpaid and/or accrued interest thereon into additional shares at an issue price of three cents each.

The notes will be issued pursuant to an indenture to be entered into by and between the corporation and a reputable Canadian trust company, and the principal represented by the notes, as well as any unpaid interest thereon, will be fully secured by a first-ranking movable hypothec over the universality of the corporation's assets.

The corporation will be paying a commission on subscriptions for notes received through arm's-length third parties. The commission will be 10 per cent payable in cash and warrants to purchase a number of shares equal to 10 per cent of the shares issuable upon conversion of the notes. The cash portion of the commission may be used by certain of these arm's-length third parties to purchase notes as part of the offering. No commission would be payable on any notes so purchased.

The offering will be made only to accredited investors or other exempt purchasers as such terms are defined under applicable securities regulations. The notes and any shares and warrants issued resulting from the conversion of the notes will be subject to a four-month hold period.

In the event that the maximum offering is subscribed: (i) up to an additional 79,999,200 shares may be issued upon the conversion of the notes, (ii) up to an additional 67,999,200 shares may be issued upon the exercise of the warrants, (iii) up to an additional 7,999,920 shares may be issued upon exercise of the warrants issued as part of the commission, and (iv) up to an additional 24 million shares may be issued upon the conversion of the interest on the notes. Therefore, a total of up to an additional 179,998,320 shares may be issued resulting in a dilution of approximately 117.99 per cent of the corporation's current issued and outstanding shares.

It is anticipated that the offering will result in the creation of a new insider and control person of the corporation. Mazen Alnaimi (or a company controlled by him) is expected to participate in the offering in the amount of $1.2-million. Mr. Alnaimi currently holds no securities of the corporation. Assuming full conversion of the notes and interest into shares and full exercise of the warrants, Mr. Alnaimi would hold a total of 85,999,200 shares or approximately 25.63 per cent of the corporation's issued and outstanding shares on a postoffering basis.

It is also anticipated that Mazen Haddad, the interim president and chief executive officer of the corporation, will participate in the offering in the amount of $100,000, resulting in 7,166,600 shares being issued thereto, assuming full conversion of the notes and interest into shares and full exercise of the warrants, or approximately 4.7 per cent of the corporation's current issued and outstanding shares.

The corporation is also proposing to amend its existing 8-per-cent convertible unsecured subordinated debentures by, inter alia, amending the conversion price thereof from $1.14 to 11 cents. There is currently a total of $7.5-million of convertible debentures outstanding. There are currently 6,578,947 shares reserved for issuance under the convertible debentures. In the event that all of the convertible debentures are converted at the amended conversion price, an additional 61,602,871 shares would be issued, representing an additional dilution of approximately 40.38 per cent of the corporation's current issued and outstanding shares.

Mr. Haddad, the corporation's interim president and chief executive officer, currently holds $25,000 of the convertible debentures. Assuming full conversion of the convertible debentures at the amended conversion price, an additional 227,272 shares, representing approximately 0.15 per cent of the corporation's current issued and outstanding shares, would be issued thereto. Luxor Capital Group LP currently exercises control and direction over 17,959,951 (or approximately 11.77 per cent of the corporation's shares) and over $2-million of the convertible debentures held by funds managed by it. Assuming full conversion of the convertible debentures at the amended conversion price, an additional 18,181,818 shares, representing approximately 11.92 per cent of the corporation's current issued and outstanding shares, would be issued to funds under its control and direction.

The attached table summarizes the maximum number of shares that would be issuable in respect of the transactions described above.

Purpose of issuance                 Number of shares issued/issuable    Dilution of current issued and outstanding
                                         Arm's-length        Current              Arm's-length             Current   
                                              parties       insiders                   parties            insiders
  
Conversion of notes                        76,665,900      3,333,300                    50.25%               2.18%
Exercise of warrants (notes)               65,165,900      2,833,300                    42.72%               1.86%
Exercise of warrants (commission)           7,999,920            Nil                     5.24%                 Nil
Conversion of interest on notes            23,000,000      1,000,000                    15.08%               0.66%
Amended conversion price of
convertible debentures                     43,193,781     18,409,090                    28.31%              12.07% 
                                          -----------     ----------                   -------              ------
Total                                     216,025,501     25,575,690                   141.60%              16.76%
                                          ===========     ==========                   =======              ======

The corporation is also proposing to amend the convertible debentures such that the corporation will have the option, in its sole discretion, to pay interest on any interest payment date in either cash or in shares at the market price (as defined by the TSX's company manual) at such payment date. The convertible debentures mature on June 30, 2019, and interest on the convertible debentures is payable quarterly. Based on the current situation, on that date, 15 interest payments of $150,000 (including the quarterly interest payments that were due on Dec. 31, 2015, and March 31, 2016) will have been due for a total amount of $2.25-million of interest payable. The attached table illustrates the number of shares that would be issuable in payment of all of the interest under various market price scenarios for the shares.

Market price     Number of shares issued/issuable    Dilution of current issued and outstanding
                Arm's-length              Current              Arm's-length             Current   
                     parties             insiders                   parties            insiders

$0.01            164,250,000           60,750,000                   107.67%              39.82%             
$0.03             54,750,000           20,250,000                    35.89%              13.27%             
$0.05             32,850,000           12,150,000                    21.53%               7.96%              
$0.10             16,425,000            6,075,000                    10.77%               3.98%              

The offering and the transactions described herein would ordinarily require shareholder approval under the requirements of the TSX as: (i) they would result in the issuance of shares in excess of 25 per cent of the number of currently issued and outstanding shares as per Section 607(g)(i) of the TSX's company manual; (ii) they would materially affect control of the corporation as per Section 604(a)(i) of the TSX's company manual; (iii) the commission payable in respect of the offering is not deemed commercially reasonable as per the provisions of Section 607 of the TSX's company manual; (iv) the price protection in respect of the shares to be issuable upon conversion of interest on the notes extends beyond 45 days as per Section 607(f) of the TSX's company manual; and (v) they may result in the issuance of more than 10 per cent of the currently issued and outstanding shares to insiders of the corporation as per Section 604(a)(ii) of the TSX's company manual.