Ann: Quarterly Activities Report, page-41

Hey Sean,

Not much for me to add. You could always call Bruce but what is he going to say right? "talking with interested parties from the second structured sale process, confident of getting a funding deal done bla bla". I have no doubts some parties are kicking tyres and making the right noises but until or whether they actually commit to a deal not even Bruce knows.

Bruce is the seller, not quite a distressed seller but not far off after an unsuccessful 12 months of efforts to get someone on board. $18M bought some time, strategically painful but correct move to go the CR and remove the Taurus loan overhang, but having geared up for project start this year their cooking pretty hot on the cashflow front. The obvious reality is that any savvy buyer would keep deal negotiations simmering while committing to nothing while the trade war played out and the world economic slow down continued. Is their more than one serious partner? Will any deal get cheaper as SFX share price falls and time pressure grows? Will clarity improve on Zr demand/pricing while keeping SFX waiting without any risk of the deal going to someone else? Hopefully the Phase 1 trade war deal will improve global economic confidence and growth, translating into Zr-Ti demand and thus confidence for partners to pull the trigger on a funding deal.

With one week to go before Christmas it's almost certain that Bruce's last timing guidance of "Nov/Dec" has been missed, parties will not be back in the office to meaningfully move forward again for almost another month. The share price is often a good indicator of insider's confidence of a funding deal getting done, clearly the price is not expecting an imminent deal. That said buying did come in a support 29c just when it looked like a breakdown into the mid 20's was inevitable after only very modest selling volume. My TA read is that some want to back some funds out of their 39c placement but selling is not panicked or in volume. Enough buyers seem to keep stepping up into ~30c support to suggest funding deal negotiations are still 'live'.

Very tough for believers or insiders even to average down into such uncertainty after two or three bites at the averaging down cherry. Quite uncertain and binary outcome until a deal is written up and booked in for signing. Again, the market has terrible for doing a new mine development funding deal despite the obviously supportive predicted Zr and Ti deficits into the future. Even today ILU wrote down much of their Sierra Futile investment and admitted that previous mining licences etc were tainted with corruption payments and such. Added to RIO's ongoing troubles at Richards Bay, BSE troubles with Madagascar gov gouging higher royalties even before go-ahead to Tolliara mine development is given should remind the markets what the true worth of Tier 1 Oz jurisdiction min sands mines are worth.

I'm hanging tight because I think TB makes enough sense for development now, is high enough margin and of exceptional value to be the next cab off the rank. Unfortunately, even if we get a deal, share holders will probably look back with some regret that partners came in at the last minute for a steal. Long term resource project investors need to fight exploration risk, red tape, black tape, green tape, dilution, the commodity cycle, stock market corrections and finally the cruel vagaries of small funding windows for eventual success. Given me plenty of food for thought this year I can tell you.

Cheers