Mr. Scott Nelson reports

TITANIUM CORPORATION REPORTS FIRST QUARTER MARCH 31, 2018 RESULTS AND PROVIDES OPERATIONAL UPDATE

Titanium Corp. Inc. has released its results for the three-month period ended March 31, 2018. The company changed its year-end to Dec. 31 from Aug. 31 on Jan. 24, 2018, and, as a result, is reporting its first quarter-end at March 31, 2018, in the new fiscal year.

The company has continued to make excellent progress on commercialization of its CVW technology with the completion of agreements with Canadian Natural Resources Ltd. and Emissions Reduction Alberta (ERA) in September and October, 2018, for front-end-engineering design (FEED) related to deployment of Titanium's CVW technology at Canadian Natural's Horizon oil sands site. The FEED project, the first step in project planning and engineering, is well under way.

Highlights for the three-month period ended March 31, 2018, and recent months include:

• The company worked closely with Canadian Natural on preliminary planning of FEED and associated studies. This work has involved identifying the site location for the CVW Horizon project facilities, assessing options for integration with the oil sands production facilities, and the requirements for utilities and other services. Requests for proposals (RFPs) for FEED were issued to qualified engineering firms in January, 2018, and the company announced the award of engineering contracts to Stantec Inc. and IHC Robbins Pty. Ltd. on April 3, 2018. Engineering has commenced and is expected to be completed by the end of 2018. The company has also retained consultants and technical firms to assist with engineering design and associated planning, including project management, regulatory approvals, minerals marketing and other areas.
• On May 15, 2018, the company announced the achievement of milestone 1 of the FEED phase of its CVW Horizon project. ERA financing is provided in stages during the project as the company meets and reports against predetermined milestones established under the ERA contribution agreement. The project has incurred costs of $1.1-million to the end of March, 2018, the milestone 1 period, and on May 18, 2018, the company received $430,150 in gross proceeds from ERA as its contribution toward the achievement of the first milestone.
• In parallel with FEED activities, the company has been meeting with Canadian investment banks regarding their potential participation in the structuring and financing of the project and their support in financial markets. The company, in consultation with outside experts, is executing an active investor outreach campaign to communicate the company's investment story to a wider investment audience.
• The company has an active program to communicate its project to and engage with government, industry, the public and the investment community:
  • In January, by invitation, the company participated in the federal government economic strategy table on "innovation and growing firms to scale" held at the MaRS Complex in Toronto, which focused on the support and financing of clean technologies.
  • In March, the company participated in the Globe 2018 Forum, which brought together business and government leaders from over 50 countries. Held every two years in Vancouver, Globe featured a leadership summit for sustainable business and an innovation expo.
  • In April, by invitation, the company attended the B7 meetings in Quebec City, where round tables included scaling up small business and climate change and resource efficiency. B7 meetings include business representatives from G7 countries and are held in advance of each annual G7 meeting, which this year will be held in Canada.
  • Also, in April, the company participated, along with ERA, in the OCE Discovery Conference in Toronto. Discovery is Canada's leading innovation-to-commercialization conference to showcase leading-edge technology and bring together key players from industry, academia, government and the investment community.
• During the first quarter, there were further stock option and warrant transactions that resulted in cash proceeds to the company of $1.15-million. On Jan. 10, 2018, management exercised 450,000 stock options set to expire in April, 2018, for proceeds to the company of $450,000. On Feb. 16, 2018, Mossco Capital Inc., an affiliated Canadian-resident corporation controlled by Moss Kadey, exercised in full its one million non-transferable common share purchase warrants at a price of 70 cents per share, which resulted in the issuance of one million common shares of Titanium for proceeds of $700,000 to the company.
• The company is continuing cash conservation programs, including those under which executive officers receive a portion of their compensation in RSUs (restricted stock units), and all directors have elected to receive their annual retainers and meeting fees in DSUs (deferred stock units), to both conserve cash and further align themselves with shareholder interests.

Next steps

Implementing Titanium's technology would see concentrator facilities built at oil sands sites, which integrate with existing oil sands operations. Separate minerals separation facilities would be constructed to process heavy mineral concentrates (HMC) into final mineral products. The facilities may be jointly owned and operated, along with oil sands operators or strategic partners. The company has advanced proposals and flexible business models, whereby customers may elect to license technology and build certain of the facilities or elect to have the company, together with partners, build and operate these facilities.

The company is acting as the lead proponent and overall project manager for the FEED project, working in close collaboration with Canadian Natural and ERA. In this role, the company is responsible for contracting with the outside engineering and other firms required for the project, managing and financing these outside contracts, project controls and reporting progress against agreed milestones, and collecting partner financing contributions upon milestone achievement from ERA and Canadian Natural.

The engineering design is under way, and the third party engineering work commenced at the beginning of April, 2018, and is expected to be completed in early 2019. During the engineering design phase, the company and Canadian Natural will be undertaking a number of related commercialization activities, including: pursuing available federal and Alberta government funding programs and other sources of financing for the potential construction phase of the project; working with the Alberta government to develop a competitive fiscal structure for the project, including the new minerals products; minerals market development activities; and working with partners interested in participating in the project. Subject to the successful completion of the FEED study and evaluation of results, the company and Canadian Natural's next steps would include finalizing the business model, participants, commercial structure and financing plans and proceeding with the potential detailed engineering and construction of the facilities that would take approximately 30 months.

Financial overview

Titanium is focused on achieving long-term financial success by implementing its innovative CVW technologies for commercial operations at oil sands sites. The company is now working on engineering design for implementation of its technology at Canadian Natural's Horizon site. However, until commercial arrangements and investment decisions are made, and facilities are constructed and operating, the company expects to continue to incur losses.

Net loss: Net loss for the three-month period ended March 31, 2018, was $1.6-million, or two cents per share, compared with $900,000 or one cent per share for the three-month period ended Feb. 28, 2017 (the comparative period for the transition year). The loss was higher by $700,000 due to direct project and staffing costs for the engineering design project for Canadian Natural's Horizon site that commenced in October, 2017. The company has not recognized government or partner contributions for the engineering design project at March 31, 2018. The funding contributions from ERA and Canadian Natural will be recognized as a recovery of project costs upon achievement of the agreed milestones contained in the contribution agreement with ERA. For a development-stage company, the net loss was in line with expectations.

Research and development (R&D): For the three-month period ended March 31, 2018, R&D expenses of $1.0-million were higher by $800,000 due to the commencement of the engineering design project compared with the corresponding three-month period ended Feb. 28, 2017. While total expenses were higher due to increased staffing and the company's contribution toward engineering design for Canadian Natural's Horizon site, the company will recover an estimated $700,000 of the direct project and staffing costs incurred up until March 31, 2018, upon achievement of the first milestone, which will reduce the net overall R&D expenditures.

General and administrative (G&A): G&A expense was $600,000 for the three-month period ended March 31, 2018, as compared with $500,000 for the three-month period ended Feb. 28, 2017, a $100,000 increase. The increase is primarily related to compensation and benefits for management, where the board has reinstated cash compensation for contracted salaries and portions of incentive pay. This increase in cash compensation was offset by a decrease in deferred compensation as the amount of annual incentive estimated for settlement with RSUs is expected to be offset by an increase in cash compensation. G&A costs included $200,000 of non-cash equity-based compensation for the three-month period ended March 31, 2017, consistent with the three-month period ended Feb. 28, 2017. The company continued its equity in lieu of cash compensation plans for directors and officers during the current period.

Cash position: The company had $5.0-million in cash and short-term investments at March 31, 2018, as compared with $5.0-million at Dec. 31, 2017. While there was no overall increase in cash compared with the last quarter, the company received $700,000 from the exercise of warrants and $500,000 from the exercise of stock options during the current quarter, which was offset by higher project costs incurred. A significant portion of 2018 project costs will be recovered on successful achievement of the first milestone. In addition, on Feb. 16, 2018, Mossco exercised in full its one million non-transferable common share purchase warrants. The common share purchase warrants were exercised at a price of 70 cents per share and resulted in the issuance of one million common shares of Titanium for total proceeds of $700,000. The company believes that it has sufficient cash and financing contribution commitments from ERA and Canadian Natural to finance its expenses, including the estimated engineering design project commitment and its G&A costs, for the next year. Outstanding common share purchase warrants that are due to expire Dec. 21, 2018, may provide further cash proceeds for the company.

To view the company's management's discussion and analysis and audited financial statements for the four-month period ended Dec. 31, 2017, and year ended Aug. 31, 2017, please visit the company's website or SEDAR.

The company completed a change of financial year-end from Aug. 31 to Dec. 31 to align the company's financial reporting and enable it to streamline its annual budgeting and operations with the calendar year, which is consistent with other peer companies. For details regarding the length and ending dates of the financial reporting periods, including the comparative periods, for the interim and annual financial statements to be filed for the company's transition year and its new financial year, reference should be made to the notice of change of year-end, which is available on the company's SEDAR profile.

About Titanium Corp. Inc.

Titanium Corp.'s CVW technology provides sustainable solutions to reduce the environmental footprint of the oil sands industry. Its technology reduces the environmental impact of oil sands froth treatment tailings while economically recovering valuable products that would otherwise be lost. CVW recovers bitumen, solvents, heavy minerals and water from tailings, preventing these commodities from entering tailings ponds and the atmosphere: Volatile organic compound and greenhouse gas emissions are materially reduced; hot tailings water is improved in quality for recycling; and residual tailings can be thickened more readily. A new minerals industry will be created commencing with the production and export of zircon, an essential ingredient in ceramics.

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