Mr. James Sinclair reports

PATHWAY TOWARDS COMMERCIAL GOLD PRODUCTION

Tanzanian Royalty Exploration Corp. is providing an update to its shareholders, discussing the findings of its recently completed mining feasibility study (MFS) on its joint-venture-owned Buckreef gold mine project. The study was led by an external consultant team from MaSS Resources Ltd. of Tanzania, with technical support provided by an internal team and combined previous published preliminary economic assessment study results by Venymn of South Africa, as well as other historical feasibility studies conducted over the years on this historical deposit. The Buckreef project is in the Geita district in Lake Victoria greenstone belt in central Tanzania, East Africa. The full study can be found on the company's website.

"We want to take this opportunity to inform our loyal investors of not only the next steps towards mining production but also direct their attention to the discussion of the underground potential of Buckreef," stated Jeffrey Duval, acting chief executive officer. "We have included a small portion of the underground discussion in this release and are excited with the potential that our last the deep drilling program uncovered. The results mirrored favourably with the historical records from the old Buckreef underground workings.

"As you can see in the slide, the underground mineralization extends several hundred metres below the bottom of the open-pit mine and the drill hole is open in all directions. It is this feature that has us most excited for the future.

"We are also pleased to have achieved third party validation of the tremendous economic potential for the open-pit portion of the Buckreef project.

"The company maintains a 55-per-cent economic interest in the Buckreef project, which infers a 55-per-cent interest in the 1,064,000 ounces of gold reserves at Buckreef, which has been validated by independent consultants. When one compares our current stock price levels to the company's economic interests at Buckreef, measured at gold prices levels throughout the last several years, our stock price is trading at significantly discounted levels.

"The study results reflect the continued refinement of pit optimized mining reserves, mine production schedule, process plant ore feed schedule, and financial projections and analysis based on comprehensive cost estimations for process plant (design, fabrication, construction and operation) and mining (equipment purchase and mine production) on the Buckreef project.

"The company has begun active negotiations to complete financing on a straight loan basis. This will ensure that we have the necessary capital to complete the reconditioning and construction of new modules for our modern gravity/CIL (carbon in leach) plant. We have brought in a team of experts with decades of experience in building and maintaining these types of plants. We have the utmost confidence in their ability to complete the project under budget and ahead of schedule. Importantly, this gravity/CIL plant will allow us to run pay dirt at an efficiency rate of 90 per cent or higher in the recovery of gold. We anticipate the plant being built in approximately eight months.

"The company has successfully operated in Tanzania since 1992. The significant experience of our technical team, as well as the consultants in Tanzania, contributes to the integrity of the results. The soon-to-commence grade-control drilling will be essential to further refine the minable reserves during the prestripping development plan, and in advance of our process plant construction."

Highlights:

• Conventional open-pit mining methods selected in pit designs;
• Over life of mine (LOM), a total of 17.49 million tonnes of ore with a strip ratio of 8.1:1 will be mined;
• Pre-existing stockpile ore totalling 119,726 tonnes grading 1.89 g/t (grams per tonne), to be used for process plant commissioning;
• 1,064,000 ounces of gold to be mined over the life of the project;
• Recoveries of 89 per cent for primary ore and 93 per cent for saprolite ore, utilizing a simple EDS comminution, flotation and leaching process with gravity recovery circuit for free gold component collection;
• 910,000 ounces of gold will be produced over the life of the project;
• Initial capital cost outlay estimated at $32.5-million (U.S.) with an LOM cost over the three phases of $59.6-million (U.S.) and sustaining capital, excluding closure costs;
• Cash operating costs of $696 (U.S.) per ounce produced equivalent $35.95 (U.S.) per tonne milled;
• Generation of a positive net present value (NPV) of $243-million (U.S.) at a 5-per-cent discount rate and an internal rate of return (IRR) of 53.7 per cent.

Major assumptions:

• Gold price of $1,250 (U.S.) per ounce;
• Effective tax rate of 15.25 per cent;
• Royalty rate of 4.3 per cent;
• Transport refining cost of $15 (U.S.) per ounce gold;
• Discount rate of 5 per cent.

Mineral resources and reserves

The mineral resources and reserves of the Buckreef deposits were classified using logic consistent with the CIM definitions referred to in National Instrument 43-101.

The mineral resource block model, which serves as the basis of the mineral resources and mineral reserves in the study, was developed utilizing 3-D lithology models. The attached table summarizes the mineral resources for the Buckreef project as of Feb. 14, 2014. The mineral resource is reported at a cut-off grade of 0.5 g/t gold.

 
                                            BUCKREEF MINERAL RESOURCES
  
Prospect                        Measured                         Indicated                         Inferred      
                     Tonnes   Grade  Contained gold    Tonnes   Grade  Contained gold    Tonnes   Grade  Contained gold
                        (Mt)   (g/t)            (oz)      (Mt)   (g/t)            (oz)      (Mt)   (g/t)            (oz)

Buckreef              8.902    1.72         491,529    13.100    1.41         594,456     7.528    1.33         322,902
Eastern Porphyry      0.087    1.20           3,366     1.016    1.17          38,355     1.239    1.39          55,476
Tembo                 0.017    0.99             531     0.185    1.77          10,518     0.267    1.29          16,521
Bingwa                0.906    2.83          82,387     0.569    1.38          25,274     0.312    1.36          12,922 
Total                 9.912    1.81         577,813    14.870    1.40         668,603     9.346    1.36         407,821 

                          Measured plus indicated               Exploration target     
                      Tonnes   Grade  Contained gold       Tonnes   Grade  Contained gold    
                         (Mt)   (g/t)            (oz)         (Mt)   (g/t)            (oz) 
 
Buckreef              22.022    1.53       1,085,985        4.385    1.10         155,321 
Eastern Porphyry       1.103    1.18          41,721        1.324    1.14          48,664 
Tembo                  0.202    1.71          11,048        0.095    1.12           3,429  
Bingwa                 1.475    2.26         107,661        0.049    1.25           1,982     
Total                 24.782    1.56       1,246,415        5.853    1.11         209,396       

The pit optimization was produced using NPV Scheduler software which utilizes the industry standard Lerchs Grossman algorithm for analysis. Updated cost and recovery inputs in conjunction with new geotechnical parameters and ramp design from the preliminary economic assessment study were incorporated in the final pit design process.

The base case $1,100 (U.S.) gold shell was selected for the ultimate pit design. The final pit contains approximately 17.5 million tonnes of ore (saprolite and primary) with 142 million tonnes of waste resulting in an overall strip ratio of 8:1.

The attached table summarizes the project mineral reserves, effective as of April 27, 2017. Reserves were calculated using a gold price of $1,100 (U.S.) per ounce and the corresponding cut-off grade of 0.59 g/t for all ore categories.

                         BUCKREEF MINERAL RESERVES

Mineral reserve category             Tonnes      Grade    In situ gold
                                         (t)      (g/t)            (oz)

Measured                         12,249,856       1.78         702,169           
Indicated                         4,256,531       2.17         297,619           
Measured plus indicated          16,506,387       1.88         999,788           
Inferred                            984,710       1.99          63,064       

Mining

The deposit is projected to be mined utilizing owner-operated conventional open-pit mining methods. Mining will be completed using five-metre benches in the saprolite zone and 10-metre benches in the primary sulphide zone. Updated pit wall angle designs and Tanzanian mining regulations were incorporated into the mine plan.

The mine is estimated to produce sufficient ore to maintain an initial process plant feed scheduled at 60 tonnes per hour (years 1 to 4) with upgrades to 120 tonnes per hour (years 5 to 9) and 180 tonnes per hour (year 10 onward). Targeted ore production during commercial production is 1.5 million tonnes per year over the life of mine. Stockpiling of ore over the life of mine will result in surplus ore to be processed up to year 17.

Mineral processing

The process design for the Buckreef project is based on extensive metallurgical testwork. Results from the work have established that high gold recoveries can be achieved with a conventional process of comminution (using the latest EDS system as a replacement for the conventional ball and roller mill circuit), gravity concentrate, flotation and flotation concentrate leaching circuit.

Buckreef project ores are projected to be treated at a rate of 1.5 million tonnes per annum with process plant capacity upgrades in year 5 and year 10. Overall recoveries from the flotation and cyanide leach circuits are expected to be 89 per cent and 93 per cent for primary ore and saprolite ore, respectively. Over the life of mine an average of 53,534 ounces of gold per annum will be produced as dore.

Project economics

Cost estimates were developed to a feasibility level of accuracy. Budget quotations for mobile and plant equipment were obtained from international suppliers. Unit rates for material commodities (earthworks, concrete and steel) in Tanzania were verified from contractor and supplier quotations and based on current practice in Tanzania.

Construction and labour costs applicable for the region were built up from first principles for salaries, burdens and overhead. Contingency was applied to each item based on the source and accuracy of the estimate data, resulting in an overall initial contingency of 10 per cent. The project capital cost summary is included in the attached table.

                  PROJECT CAPITAL COST SUMMARY
                       (in U.S. dollars)

Item                              Description            Initial

A                                      Mining    $    12,649,184   
B                               Process plant         35,384,625   
C                            HR and community          3,795,000    
D                                         HSE            100,000      
E                              Finance and IT          2,241,519    
Total direct costs                                    54,170,328   
Indirect costs                   
Owner's costs                    
Contingency (10 per cent)                              5,417,033    
Total installed cost                                  59,587,361  

Operating costs were also developed from first principles, inclusive of labour, consumables, fleet maintenance and repair, and general and administration costs, and data from current operations in Tanzania. The estimated operating cost is summarized in the attached table.

                     OPERATING COST SUMMARY
                        (in U.S. dollars)

Operating costs                      Units         LOM average

Mining cost (mined)              $/t mined           $    1.94             
Mining cost (ore)                  $/t ore               17.67            
Processing cost             $/t milled ore               16.89            
G&A                                $/t ore                7.89             
Direct operating cost              $/t ore               42.44            
Direct operating cost            $/t ounce                 696

The project economic analysis has been carried out for a range of gold prices with $1,250 (U.S.) per ounce selected as the base case. The analysis demonstrates that the project is expected to generate a positive NPV at a 5-per-cent discount rate of $243-million (U.S.) and a positive IRR of 53.7 per cent.

Gold price is very sensitive to project NPV. An increase in gold prices by 20 per cent will result in double the project NPV. Though a decrease in gold price has a negative impact on project NPV, the project remains viable with a 30-per-cent decrease in gold price.

Metallurgical recovery follows the same trend as gold price variations. A decrease in recovery results into low project NPV. This is an important parameter to be monitored as slight negative change in recovery has big impact on project profitability.

The project is sensitive to operating expense. A decrease in operating cost results in cash flow savings and hence increases project NPV. While the base case demonstrates a positive return at the feasibility capital and operating costs, there are opportunities to improve the economics of the project by investigating capital and operating cost savings. The company is confident that the capital and operating costs can be further optimized, improving the value of the project.

Permitting

The SML renewal permitting process for the Buckreef project continues to advance with positive support of the local communities and government authorities of Geita Municipality and Republic of Tanzania. The preparation of documents for the renewed 10-year permit was completed in October, 2016, and the offer letter confirming approval and granting renewal of the SML was received in February, 2017. The environmental management plan (EMP) was approved in October, 2016. The original environmental impact assessment (EIA) certification was granted in October, 2014, and encompassed the mining, ore processing and support infrastructure.

Underground mining potential

Mining of the Buckreef open pit will commence in year zero (prestripping). Production from the underground can commence toward the end of current LOM of the open pit via development of an access decline/ramp without leaving a crown pillar below the pit floor. An accurate cutover point between open pit and underground can be calculated by comparing the cost to mine one tonne of mineralized material considering waste movement and development costs by both methods.

Underground mineralization

The main Buckreef prospects are near-surface deposits that are amenable to be mined by open-pit methods, which in this project are assumed to extend to a depth of 150 to 200 metres below surface. This is an arbitrary cut-off point, and it is most likely that further optimization of the mineralization through grade control drilling would result in either deeper or wider pits given the grades and vein thickness. The two vein systems being considered are assumed to be robust in terms of continuity and thickness. The extents of the zone are 300 metres long and 15 metres wide at depths below 150 metres. The dip is assumed to be subvertical to vertical.

One of the veins has already been mined in the past and openings extend down to 150 metres from surface. Considerable caution would need to be exercised if mining near the old workings as voids may not have been surveyed correctly and ground conditions around old workings are often unstable.

Materials inventory

No materials inventory (reserves) has been estimated for this study. From initial orebody modelling, an assumption that the bulk of the inferred resource for the Buckreef Main deposit estimated to contain about 35.54 million tonnes grading 1.5 g/t gold will constitute the bulk of the underground resource inventory.

The geological continuity and grade distribution of the Buckreef mineralization are well constrained, and the upside potential to define additional mineral resources in extensions of the known orebody has been confirmed through drilling.

Exploration should concentrate on laterally expanding open-pit mineralization down to 100 metres and on deeper high-grade underground targets. Further detailed drilling will ensure that the project economics would improve accordingly. Accordingly, drilling should be concentrated in this target to firm up a resource estimate.

Project development

A conventional approach to mining and processing provides a solid platform on which to develop this well-defined gold deposit. Opportunities to improve the economics and value of the project have been identified in the study. These areas will continue to be investigated as development of the project continues.

The company's qualified person, Peter Zizhou, has reviewed and approved the contents of this news release. Mr. Zizhou is the chief operating officer of Tanzam2000, a subsidiary of Tanzanian Royalty Exploration. He has a master of science (exploration geology) degree from the University of Zimbabwe (2000) and is a registered scientist with the South African Council for Natural Science Professionals.

We seek Safe Harbor.