FIRST QUARTER

QUARTERLY ACTIVITIES REPORT for period ending:

31 December 2014

33 Richardson Street West Perth WA 6872
E:[email protected]W:www.toroenergy.com.au

HIGHLIGHTS

· Toro Managing Director Dr Vanessa Guthrie appointed by the Prime Minister, the Hon Tony Abbott, MP to the Australia - India CEO Forum - follows signature of Nuclear Civil Cooperation Agreement.

· Sentient agrees to invest $10M in Toro Energy Limited ('Toro' or 'the Company') under a placement at 8 cents per share and a further $10M under a project level funding arrangement.

· Toro acquires Canadian-based uranium investments from Sentient headlined by the acquisition of debt and equities in TSX-listed Strateco Resources Inc.

· Changes to the Board composition with the appointment of Mr Michel Marier, investment manager with The Sentient Group, Mr John Cahill, as an independent non-Executive Director and Audit Committee Chair (January 2015), and the retirements of both non-Executive Directors Mr Andrew Coles and Mr Peter Lester.

· Completion of a Share Purchase Plan raising $3.9M and private placement through RealFin Capital Partners raising $1M, both at 8 cents per share.

· The Environmental Scoping Document for the Wiluna Uranium Project to include mining at Millipede and Lake Maitland deposits was released for public review.

· Improvements in both spot and long term uranium prices during the quarter.

· Cash at end of the quarter was $25.2M.

1. O v e r v i e w

The December 2014 quarter was a landmark period of Toro that included successful financings, asset acquisitions, the continued development of the Wiluna Uranium Project and its environmental assessment and the first steps toward a new market for Australian uranium supplies.

Development opportunities for the Australian uranium industry have expanded appreciably following the signing in September 2014 of the Nuclear Civil Cooperation Agreement between India and Australia. The Prime Ministers of both countries have expressed a desire to expand the bilateral economic relationship, marked by the Australia-India CEO Forum to be chaired by Rio Tinto Managing Director Sam Walsh. Toro's Managing Director Dr Vanessa Guthrie has been appointed to the CEO Forum, a further tangible indication of the growing recognition of the importance of Australian uranium to Indian economic development. Vanessa is also a on the Board of the Minerals Council of Australia, providing advice on energy policy.

As a low emission fuel source, nuclear power can make a significant positive difference to people in developing economies. The Nuclear Civil Cooperation Agreement is a significant first step towards the sale of uranium concentrates from Australia to the growing nuclear power market in India. The agreement paves the way for Australian uranium to bring energy to more than 300 million Indian people who currently have no access to electricity.

India is a long standing importer of uranium for civil (ie power generation) needs. This latest agreement follows similar agreements India has with the United States, Canada, Russia and France.

The two governments are currently working upon the administrative protocols that will underpin the cooperation agreement including the significant safeguards arrangements, consistent with international standards. The US-India nuclear agreement announcement on nuclear liability issues further confirm the role of nuclear power in India's economic development.

In January 2015, Toro accompanied the Federal Minister for Trade and Investment, the Hon. Mr Andrew Robb and 450 delegates to the Australia Business Week in India. Toro heard first hand from private enterprise, government owned mining companies, power generators and regulators on the importance of energy to the growth of India and the increasing reliance on nuclear power as a clean energy source.

Prior to the Business Week, Dr Guthrie attended the Vibrant Gujarat Summit where world leaders, business and community leaders were energized by the commitment of 2015 Prime Minister Modi to improve the living standards of the 1.25 billion people in India through commerce and investment.

2. Corporate and Finance

During the quarter Toro announced and completed a Subscription and Securities Sale Agreement ("SSAA") and Unitisation Deed with independent global private equity firm The Sentient Group.

Under the terms of the SSSA dated 31 October 2014, Sentient agreed to subscribe for 125M new fully paid ordinary shares in Toro at 8 cents per share for $10M ("Share Subscription") and Toro acquired from Sentient, on the SSSA signing date, a 19.8% interest in Strateco Resources Ltd ("Strateco"), a C$3M senior secured loan receivable in Strateco, C$14.1M of junior secured Convertible Notes in Strateco and certain other interests from Sentient ("Sentient Uranium Interests"). The consideration paid for the Sentient Uranium Interests is 236.5M new fully paid ordinary shares in Toro ("Consideration Shares").

Settlement of the Share Subscription is to take place in two tranches. The Initial Subscription Shares of 93.75M new fully paid ordinary shares for $7.5M were allotted on 22 December 2014. Settlement of the Consideration Shares is also to take place in two tranches. The Initial Consideration Shares totalling 177.4M new fully paid ordinary shares were allotted on 22 December 2014.
The balance of the Consideration Shares (59.1M shares) are to be issued upon agreed conditions in relation to the Sentient Uranium Interests being met (or waived by Toro). At this point, the balance of the Share Subscription of $2.5M will be due from the Sentient Group and 31.25M new fully paid ordinary shares will be issued.

The Unitisation Agreement can be terminated by either party after three years (or earlier in certain circumstances, including a change in control of Toro). Upon termination, the unitisation fee is to be bought back by Toro at the higher of $10M less amounts paid under the Unitisation Agreement and the independently assessed fair market value of the unitization fee at or around the time of termination. Toro may elect to satisfy the consideration payable on termination in cash or Toro Shares. In addition, where a change of control event has occurred, Sentient may elect to receive shares as the consideration for the payment due on termination.