Brennen Arndt - Vice President-Investor Relations Thomas J. Casey - Chairman & Chief Executive Officer Katherine Carolyn Harper - Chief Financial Officer & Senior Vice President.

John E. Roberts - UBS Securities LLC Hassan I. Ahmed - Alembic Global Advisors LLC Des Kilalea - RBC Europe Ltd. (Broker) Edlain Rodriguez - UBS Securities LLC James P. Finnerty - Citigroup Global Markets, Inc. (Broker) Richard Hatch - Valley Mental Health, Inc..

Good day, ladies and gentlemen, and welcome to the Tronox Limited Q1 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded.

I would now like to turn the conference over to VP-Investor Relations, Mr. Brennen Arndt. Sir, you may begin..

Thank you. And welcome everyone to Tronox Limited's first quarter 2015 conference call and webcast. With me today are Tom Casey, Chairman and CEO; who will review of first quarter performance; and Kathy Harper, Senior Vice President and CFO, who will report on our financial position.

Tom will conclude our remarks with summary comments and then we'll take your questions. We will be using slides this morning as we move through the conference call.

Those of you listening by Internet broadcast through our website should already have them, and for those of you listening by telephone, if you haven't already done so, you can access them on our website at tronox.com.

Let me begin with a reminder that our discussion today will include certain statements that are forward-looking and subject to various risks and uncertainties including, but not limited to, the specific factors summarized in our 2014 Form 10-K and other SEC filings. This information represents our best judgment based on today's information.

However, actual results may vary based on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements. During the conference call, we will refer to certain non-U.S.

GAAP financial terms that we use in the management of our business, including EBITDA, adjusted EBITDA, and adjusted earnings per diluted share. EBITDA represents net income before net interest expense, income tax, and depreciation, depletion and amortization expense.

Adjusted EBITDA represents EBITDA as further adjusted for non-cash, unusual and non-recurring items. Adjusted earnings per diluted share represents EPS adjusted for unusual or non-recurring items on a fully diluted basis. A reconciliation is provided in our earnings release. It's now my pleasure to turn the call over to Tom Casey.

Tom?.

Thank you very much, Brennen and good morning, everybody. Thank you for your participation.

Despite more challenging global market conditions in the first quarter compared to those of a year ago, we delivered a significant increase in operating income, in adjusted EBITDA and in adjusted EBITDA margin in both Pigment and Mineral Sands in the first quarter.

Many of the constituent elements of our business did acceptably well, but a few negatives outweighed them. So I'm going to get into the details of these in a moment. But let me just summarize so there's a little context for all the details. In terms of Mineral Sands, volumes were strong year-on-year and sequentially.

Prices were a touch soft, but essentially almost flat, down 2% sequentially and a little more than that year-on-year. Pigment volumes also were not terrible. They were down 4% year-on-year, but they were up 2% sequentially.

But the factors that influenced the results from a negative – in a negative way this quarter were that pricing in Pigment was down 13% in dollar terms and 9% in local currency terms year-on-year, and 9% in dollar terms and 5% in local currency terms sequentially. So Pigment pricing was a big factor.

Other factors that influenced us in the quarter is that we had a net negative $6 million in the eliminations accounting category, so that costs us $6 million of EBITDA and we took an LCM, or lower cost or market charge, which was another negative $9 million in the quarter.

So on accounting charges there were $15 million and that combined with the Pigment pricing essentially determined the outcome.

So let me go into some of the details now, but we'd also say that our performance – we think our performance, we believe our performance continues to reflect the benefits of our vertical integration and our resulting ability even in these difficult market conditions, to consistently deliver a higher level of adjusted EBITDA metric per ton of Pigment sold than we believe our non-integrated peers are producing.

We've done the calculations with respect to the publicly available numbers and we think that statement is valid with respect to all of our competitors.

We also believe that when the industry recovers our vertical integration positions us to more rapidly and to disproportionately benefit from that recovery as we capture the enhanced margin at both feedstock and Pigment levels. In Pigment operating income improved year-over-year to $4 million from an operating loss of $13 million.

Adjusted EBITDA was $26 million and the adjusted EBITDA margin was 11%, a significant improvement from the $17 million and 6% respectively in the prior year quarter. In Mineral Sands, sales were 17% above the year-ago quarter, driven by a 20% sales volume increase.

As a result, Mineral Sands operating income improved to $9 million from an operating loss of $17 million. Mineral Sands adjusted EBITDA was $62 million, producing an adjusted EBITDA margin of 30%, a significant improvement from the $37 million and 21% respectively in the prior year quarter.

So even in a period in which feedstock prices are under pressure, we are producing 30% EBITDA margins in that sector.

Another important factor contributing to first quarter performance was our gross margin improvement to 9% from 6%, reflecting lower feedstock costs and early gains from cost control and efficiency initiatives underway across the company.

We'll continue to try to drive these initiatives to improve both our operational performance and our financial position. We took a significant step toward building a stronger, more stable and higher margin and free cash flow generating company with the closing of the Alkali acquisition on April 1st of 2015.

We now own and operate two vertically integrated inorganic minerals businesses each of which has structural cost advantages. Tronox Titanium Dioxide, which mines titanium ore and produces TiO2 pigments and Tronox Alkali, which means mines trona ore and produces natural soda ash among other products.

Beginning in the second quarter of this year, we'll report Tronox Alkali as a separate business segment, and we expect it to be accretive to earnings and free cash flow in this quarter.

And for the 12th straight quarter, our board declared a quarterly dividend of $0.25 per share payable on or before June 1st, to the shareholders of record of the company's class A and class B ordinary shares at the close of business on May 18th. This dividend level currently constitutes a yield of more than 4%.

So, turning now to the specifics of our first quarter operating results and beginning with our Pigment operations, on slide four. Pigment segment revenue of $246 million was 15% lower than $291 million in the year-ago quarter.

Sales volumes declined 4% as I said and selling prices declined 13%, 9% on a local currency basis and that was partially offset by a favorable mix. Sales volume gains were realized in North America and the Europe, Middle East and Africa sector, while sales volumes in Asia-Pacific and Latin America were lower than the prior year quarter.

Selling prices were lower in all regions compared to the year-ago quarter. Compared sequentially to the fourth quarter, sales volumes increased 2%, but selling prices were 9% lower in dollar terms, 5% on a local currency basis. Again, sales volumes were higher in EMEA.

They were level in North America and Latin America and lower in Asia-Pacific and selling prices declined in all regions. At the end of the first quarter, finished Pigment inventory was modestly above normal seasonal levels in advance of the typically stronger second quarter and third quarter performances in demand.

Our average plant utilization rate in the first quarter exceeded 90%. Pigment segment operating income of $4 million improved from an operating loss of $13 million in the year ago quarter. Pigment adjusted EBITDA of $26 million and adjusted EBITDA margin of 11% improved from $17 million and 6%, respectively, in the year-ago quarter.

As we report each quarter to give you an indication of feedstock market conditions, the average feedstock cost reflected in the Pigment segment in the first quarter was $777 per metric ton, which was down from $796 per metric ton in the fourth quarter of 2014.

During the first quarter Pigment purchased feedstock from Mineral Sands at an average cost of $730 per metric ton.

The lower feedstock selling prices we've seen over recent quarters contributed to greater margins in our Pigment business and will continue to do so as the Pigment made from that feedstock is sold, which is typically five months or six months later.

Moving to the Mineral Sands segment's performance which is shown on slide five, the segment revenue of $208 million was 17% higher than $178 million in the year-ago quarter driven by a sales volume increase of 20%, partially offset by 2% lower selling price.

External sales volumes were 11% above prior year levels on significantly higher CP titanium slag sales volumes. Selling prices for the primary titanium feedstocks declined between 5% and 10% versus the year-ago quarter. Zircon revenue declined 9% versus the prior-year quarter, as sales volumes were 11% lower but selling prices increased 2%.

Compared sequentially to the fourth quarter of 2014, revenue in the segment increased 14%, driven primarily by higher sales of titanium feedstock. Zircon revenue was 18% lower, as sales volumes declined 19%, while selling prices increased 1%.

The sequential volume decline is, we think, attributable largely to the Chinese New Year in the first quarter, as well as some softness generally in the Chinese economy which is well-known.

In the first quarter, revenue from intercompany sales was $95 million and the revenue from external sales was $113 million, including $41 million from CP titanium slag and $61 million from zircon and pig iron. The Mineral Sands segment operating income of $9 million was an improvement from an operating loss of $17 million a year ago.

Mineral Sands adjusted EBITDA of $62 million and adjusted EBITDA margin of 30% improved from $37 million and 21%, respectively, a year ago. Mineral Sands adjusted EBITDA is calculated again before the elimination of gross profit on sales to the Pigment segment that occurs in consolidation.

In the first quarter, $13 million of Mineral Sands gross profit and $4 million related to Mineral Sands LCM was eliminated in consolidation, and $11 million of previous eliminated gross profit was reversed for a net adjusted EBITDA decrease in consolidation of $6 million.

With respect to Fairbreeze, construction continues to progress on schedule at Fairbreeze. As you know, the mine will supply feedstock to our slag furnaces at KZN. It's expected to begin operations by the end of 2015 and be fully operational in 2016.

Total CapEx related to the Fairbreeze mine from project commencement through the end of the first phase in 2016 are estimated to be approximately $225 million. $82 million was spent through 2014, and an additional $17 million spent in the first quarter of 2015.

When the Fairbreeze mine begins operations, we'll benefit not only from a local source of high-quality ilmenite, but also from zircon and natural rutile volumes that it will produce as co-products from the mine.

We have not had these co-product volumes to sell during 2014 and 2015 as the Hillendale mine that Fairbreeze replaces ceased production in late 2013. On an annual basis Fairbreeze will produce approximately 60,000 metric tons of zircon and about 30,000 metric tons of natural rutile.

The marginal cost to produce these products is low and together with the elimination of the shipping costs we have been incurring as we move the ilmenite stockpiles from Namakwa and from Australia to KZN, their addition to 2016 performance is expected to add as much as $90 million to adjusted EBITDA on a full year business.

And although the Tronox Alkali business, which will also be contributing to our EBITDA going forward was not a part of our first quarter results, I do want to summarize the beneficial impact of that acquisition on us. But first I would like to turn the call over to Kathy Harper for a review of our financial position.

Kathy?.

Thanks, Tom. I'll begin with the review of Corporate and Other segments and then move to major line items on our financial statements. Revenue in Corporate and Other, which includes our electrolytic operations was $26 million as compared to $25 million in the year-ago quarter.

Adjusted EBITDA in the segment was negative $18 million which is principally related to corporate operations versus negative $19 million in the prior year. The Corporate and Other loss from operations was $16 million in the quarter, down from a $20 million loss from operations in the prior year quarter.

Selling, general and administrative expenses for the company in the first quarter were $44 million, down from $46 million in the first quarter 2014. The favorability is a result of a partial release of a tax reserves no longer required, offset by some M&A expenses and higher yearend audit fees.

Interest and debt expense of $34 million remained level to a year-ago quarter. We did see lower interest expense on the term loan for the 2Q repricing in 2014 offset by some interest on the new bonds in this quarter.

Beginning in the second quarter we expect our interest expense to move to approximately $40 million to $42 million per quarter as a result of the Alkali acquisition financing. On March 31, 2015 gross consolidated debt was $2.988 billion and debt net of cash was $1.849 billion.

For the quarter, capital expenditures were $32 million and depreciation, depletion and amortization was 65 million. Given the recent significant changes in foreign exchange rates, a comment on the exchange exposure, our primary exposure to currency exchange rates is in Australia, South Africa and The Netherlands.

The exposure is more prevalent in South Africa and Australia as the majority of revenues are earned in U.S. dollars, while expenses are primarily incurred in local currencies. The foreign exchange risk in Europe is partially mitigated as the majority of revenues and expenses are in the same local currency, creating a partial natural hedge.

I'll now turn the call back to Tom for his closing comments on the first quarter and our value proposition going forward.

Tom?.

Thank you, Kathy. Compared to a year ago, again, we've improved our performance as measured by operating income, by adjusted EBITDA and by adjusted EBITDA margin in both the Pigment and the Mineral Sands segments. We expected that in even what most would consider difficult or challenging market conditions we'll continue to produce solid results.

But we also believe that when an industry recovery occurs, our vertical integration positions us to more rapidly and to disproportionately benefit from that recovery because of the margin capture at both levels of the supply chain.

With respect to that question, the current market environment and when a recovery might occur, we look to demand and it's solid in North America and Latin America. It increased each month in the first quarter in Europe and it appears relatively solid in Europe.

In Asia-Pacific, the market was softer in the first quarter than prior quarters, again partially as a result of the annual Chinese New Year and partially as a result of the slowing Chinese economy. Selling prices, however, softened in all regions.

Relative to the fourth quarter, selling prices declined 5% to 6% in the three major regions on a local currency basis. In the feedstock markets, demand is generally solid and selling prices in the first quarter were slightly soft, but essentially level to the prior quarter.

It is our view that an upward move in Pigment selling prices will be predicated on a reduction of supply in the pigment market relative to demand, and/or an upward move in feedstock selling prices and we expect to see both.

The seasonally stronger second quarter and third quarters will give us an indication if the market shows potential upward movement in selling prices. In zircon, sales volumes were normal in every quarter of 2014.

As we reported, they declined sequentially in the first quarter to a level that's modestly lower than the typical level, again, resulting from the slowdown around Chinese New Year and Chinese economic developments. Selling prices have been stable for five years – for five quarters.

The direction of the Chinese market, which represents approximately half of the global zircon market, should drive global zircon performance. Our focus in Tronox Titanium Dioxide continues to be on generating the highest level of profitability and adjusted EBITDA we can achieve across our fully integrated operations.

And as I said, although, Alkali, Tronox Alkali was not part of our first quarter results, I do want to briefly summarize what we consider to be the beneficial impact of that acquisition on our company.

Tronox Alkali, is the world's largest producer of natural soda ash which is used by customers in glass and detergent, in chemical manufacturing and in some other industries. Cash costs for a U.S. producer of soda ash like our business are more than 40% less than the most economic producer of soda ash that uses the synthetic process. This enables U.S.

natural soda ash producers to have a sustainable competitive advantage on a delivered basis almost everywhere in the world. But more importantly and equally importantly it also lessens the threat of imports into the United States providing natural soda ash producers with a competitive advantage.

As a result of these advantages, Tronox Alkali brings a history of consistently delivering strong operational and financial performance across economic cycles. Over the past five years it has consistently delivered EBITDA margins in excess of 20% and has converted approximately 75% of its EBITDA to free cash.

Its current annual EBITDA rate is in the $175 million to $200 million range. Another positive attribute of the Alkali business is that while the majority of its sales are to customers located in international markets, essentially all of those sales for reporting in tax purposes occur in the United States.

While the profit from these sales would otherwise be subject, therefore to U.S. taxes, we can apply our tax benefits and save that cash and reduce that liability. As a result of these attributes, we believe that Tronox itself is now a stronger company. We have greater scale. We have more stable revenue, cash flow and EBITDA.

We'll have higher net income, and we'll have higher free cash flow. We are using our tax benefits on an accelerated basis to produce higher U.S. income.

We have a more diversified end-market exposure and we have greater participation in faster-growing economies, all of which leads us to believe that our upside is enhanced relative to where we were prior to this transaction.

Let me now provide an update with respect to another value driver for Tronox, our $9.8 billion, approximately, portfolio of tax attributes.

During the first quarter, Anadarko sent approximately $5.2 billion to the Anadarko Litigation Trust, which was required of it under a settlement agreement it reached with the government and the other parties to the litigation.

Think of the Anadarko Litigation Trust as a parent trust which is tasked with making direct payments and disbursing funds to other subordinate trusts. These other subordinate trusts are broken down by state, they are broken down in some cases by the identity of the beneficiary.

And they, in turn, will be the entities that pay out money to parties carrying out the environmental cleanup efforts, those who are injured by the environmental damage and to other entitled parties.

These payments become deductions to Tronox not when the parent trust funds one of the subordinate trusts, but when the subordinate trust pays a beneficiary, whether that beneficiary is a state or federal agency, a contractor doing remediation work, individuals injured in the result of the environmental damage or others.

We received the quarterly report from the Anadarko Litigation Trust for the period ending March 31, 2015, a few days ago. That report indicates that approximately $1.8 billion was paid to federal and state agencies and other entities through March 31. This amount paid is fully deductible by Tronox now.

If unused in part or in full, the remaining value continues until it can be used as deductions against federal taxable income. The amount sent to the subordinate tort and environmental trusts will be deductible as those trusts spend the cash.

Through March 31, approximately $2.5 billion was sent to those trusts and approximately $800 million is left to be disbursed at the litigation trust level. These amounts all represent future deductions available to Tronox.

Again, just to reiterate, regarding our quarterly dividend, the board approved the dividend – a quarterly dividend of $0.25 per share payable on June 1 to the shareholders of record on May 18. So to sum, we look at our company, we see multiple sources of value creation potential.

We see the turn in the TiO2 pigment market, the turn in the TiO2 high-grade feedstock markets, our newly acquired Tronox Alkali business, our $9.8 billion of tax attributes and our dividend yielding more than 4%.

In many respects, 2015 is a transitional year for the TiO2 value chain as we see production facilities at both the pigment and the high-grade feedstock levels beginning to be shut down which should – which we believe should accelerate the turn to an improved supply/demand balance.

At the same time, Tronox Limited, the parent company, is transitioning to a stronger model with the addition of Alkali and the realization of right to tax deductions. We'll continue to actively pursue our strategy and focus of unlocking these values in both our operating businesses and across our strategic options.

With that, I thank you for your attention. And operator, we'll open the call to questions, if there are any..

Thank you. Our first question comes from John Roberts of UBS. Your line is now open..

Good morning..

Good morning..

You haven't been selling TiO2 ore to external customers for a while.

Will ore prices have to recover back to the point they were at when you stopped selling externally in order for you to resume? So I'm thinking that would say that it could be some time since ore prices have declined quite a bit in the market, or is there something else that will determine when you get back into the external ore sales?.

We are back in the external ore sales business in the first quarter. We went back in the first part of this year. And we have, in fact, had a couple of significant contracts that we signed in the first quarter at prices that obviously we found acceptable..

Okay.

So since prices are much lower now than when you stopped, how do we sort of reconcile that?.

They're not much lower, I don't think. They were somewhat lower in the first quarter than they had been in the preceding quarters, $730 against $777, for example. The contracts – some of the contracts that we signed in the first quarter were large volume and attractively priced.

So that's part of the explanation, and part of the explanation is that we simply decided that this is where the market was now and we were going to participate in it. Other slag manufacturers have closed their production facilities too, so that also had something to do with it..

Okay. Thank you. I'll get back in the queue..

Okay. Thank you..

Our next question comes from the line of Hassan Ahmed of Alembic Global. Your line is now open..

Good morning, Tom..

Hi, Hassan..

Question around pricing. You talked about it a bit in the call earlier. Obviously titanium dioxide pricing continues to come under pressure, and one of the comments you made was that obviously you are not going see any buoyancy in TiO2 till you start seeing sort of signs of stability or call it positive inflection in ore prices.

So are we there yet? Are ore prices – have they troughed out in your view?.

Well, as I said, I think the second quarter and third quarter will tell. I mean, we – there has been a fair amount of stability on ore – on high-grade feedstock prices which is a different market than ilmenite.

You have to remember that the amount of production of ilmenite and the amount of production, and particularly the rate of growth of production in high-grade feedstocks is very different.

So we've seen some closure of production facilities on the high-grade front and we have reason to think that the market there is relatively stable and we think that it might trend up. That's what we have been saying. We've also said that we'll know better in the second quarter and third quarters when the demand is higher.

So, we think – we're presuming for the balance of the year, to be honest, that the market is relatively stable, but we think that there's a possibility that it will turn up in the second half..

Fair enough. And changing gears a bit, early days as far as the Alkali business goes; you've had it now in the mix for call it a month. When you announced the acquisition, you talked about a 12-month accretion of around $0.50 a share.

Are you feeling comfortable with that number, as you look at sort of the early sort of business conditions and the like?.

Yes..

You are. Okay. Thanks so much, Tom..

Okay..

Our next question comes from the line of Des Kilalea of RBC. Your line is now open..

Thank you. Good morning, everybody. Just a question relating to that CP slag, if I may.

Have you now sold out all the CP slag that you held back when prices weren't suitable? And I wonder if you can comment on we're starting to hear talk of some consolidation in the Chinese pigment business, if you've any evidence to kind of share with us on if there is consolidation taking place, because that might perhaps help stabilize prices..

With respect to have we sold out all of the inventory that we built up on slag, no. The answer to that question is no, because we're taking one of the furnaces down this year and so one of the factors, for maintenance – for scheduled maintenance.

So, one of the factors that led to our decision last year was not only was the price unacceptable to us, but also we knew that building inventory was not going to be as difficult as it might otherwise be because we would be in a non-producing mode for 25% of our facilities this year.

So, again, we don't – we are not worried terribly much about carrying a huge excess slag inventory for a long period of time. With respect to China, I think I would say two things. One, we are involved ourselves – and I suspect this is true of others, in a variety of conversations with a variety of people.

And it is very clear to me from those conversations that consolidation is an important goal of the participants in the Chinese market who view themselves as long-term players in that market, so the major participants in the Chinese market.

I am told – and I, of course, haven't seen the actually legal documents, but I am told that Henan Billions and Sichuan Lomon, both of who are major participants in that market have suspended trading, that Henan Billions trades on the, I think the Shenzhen market and has suspended trading to announce a merger between the two of them.

That is clearly a major step towards consolidation in the Chinese market as I think the goal of that entity will be not only to consolidate itself, but to consolidate other smaller enterprises, and I suspect that it may lead to other cop consolidation in that market. So I think that's happening.

I think obviously Huntsman announced that after the Rockwood acquisition that it was going to reduce, I think 13% of the European production. We know that Iluka is continuing to pursue Kenmare and it looks like something may happen there. There is reduction in production at Rio.

So I think that supply is tightening around the world and we expect that the demand/supply ratio, the balance will come back into a more positive form..

Thanks very much..

Okay, Des..

Our next question comes from the line of Edlain Rodriguez of UBS. Your line is now open..

Thank you. Good morning guys..

Good morning..

Tom, first, I mean, you had stopped selling to external clients in hoping that would support prices, but that didn't seem to be the case because oil prices continue to move down somewhat. So now in TiO2 we're still seeing prices coming down and one solution for that is for capacity curtailment.

So how – and you've talked about, maybe in the second half of the year to see some price increases.

Like, how quickly will that have to happen? Because we are already in May and the seasonally strong period is essentially now, so when would you have to see prices moving up in this seasonally strong period for demand for TiO2?.

That's a good question. First, let's talk about the question of entering the slag sales market. As we reported that we purchased slag this quarter at an average – we purchased feedstocks at an average price of $730 compared to – I think, $777 was the prior quarter.

So, they did soften, but as I said in the response, I think, to John Roberts' question, that some of the contracts we signed were actually better than that number, number one.

And number two, it's always a matter of compared to what? If it's down, would have gone down further if we hadn't come out of the market, if Rio Tinto hadn't closed a couple of its furnaces, if they hadn't slowed down the UGS production facility in Canada.

So, objectively perhaps it didn't result in a skyrocketing slag price, but we think it resulted in improvement in the market.

We think that the second quarter of 2014 was the low point in high-grade feedstock prices, and in fact that prices in this quarter and in the second half of 2014 were higher than in the second quarter of 2014, on average slag prices around the world. That is in part, we believe again, because we withdrew from the market.

I think Rio responded to that by withdrawing from the market, Iluka took synthetic rutile out of the market. So this is already happening to some degree.

The question of when we'll see an increase in slag prices, I just tried to answer that by saying, we're already seeing it a little bit and we think again that the point – the low point in the market was Q2 of 2014 and when that will have an impact on pigment prices, as I said, we don't know.

We look to the performance in the second quarter and third quarter. Clearly pigment prices – pigment operators could afford to reduce their price because their cost of goods sold was declining and their margins would not be as punished by a price decline if their costs were coming down at the same time.

As prices on the pigment side stabilize, and remember there is a five-month or six-month lag from between the time you buy slag and the time you actually book it through. As prices stabilize and they start to turn, we think price on – pressure on the pigment price will be significant. So, that's all I can tell you.

I mean I can't predict with precision the week or the month or the quarter even, but we think the trend in the industry is working in that direction..

A quick follow-up. I mean, Mineral Sands results were a little better than expected and I think part of it was the volume strength we saw. But a good chunk of that went into the Pigment segment, so there was a lot of internal (36:53) transfer from Mineral Sands to Pigment.

Are you setting up for – are you seeing significant demand in Pigment – for Pigment to be buying so much from Mineral Sands right now?.

Well, we bought what we need. We don't buy ahead. So, I think if we're typical of everybody else, then you'll see the normal annual fluctuations, it goes up – we've talked about it many times.

The first quarter and the fourth quarters in the Pigment business are relatively low in terms of sales, but not low in terms of production because you're building up capacity to sell into the industry during the second quarter and third quarters which are relatively high.

So I don't see much of a difference from the annual fluctuation quarter-to-quarter that we would normally expect in terms of pattern..

Okay. Thank you very much..

Okay..

Our next question comes from the line of James Finnerty of Citi. Your line is now open..

Hi. Good morning..

Morning..

Looking forward on soda ash, I saw an article the other day stating that there was a legislator that putting forward a bill to lower royalties on soda ash produced on federal lands. I was just curious what percentage of U.S. production is on federal lands.

Is any of Tronox's assets located on federal lands?.

It varies. I have an estimate from the due-diligence process that if – let me give a little bit of background just for people who may not be as familiar as James might be. There's a federal royalty charged on extraction from federal lands in Wyoming at the trona mine. The trona mine is a checkerboard.

The way it's organized legally in ownership, it's a checkerboard of – I think it's mile – one square mile checkers, if you will, or spaces, that are owned either by the federal government, by the state government or by private parties.

And so what your liability in any given year is from the federal royalty is going to vary depending on what your mine plan is.

That is, are you mining in federal land this year or state land or private land? So our assessment during due-diligence was that the mining activity in Wyoming will sort of be less than – I don't know about less than average, but not exclusively in federal lands.

And the difference between a 6% royalty rate, which is kind of the default level, and a 4% royalty rate, which is where it is today, is somewhere between – will be somewhere between $1 million and $1.5 million a year in incremental royalty expense, again, given our mining plan for the next several years.

The legislation that was referred to is legislation that would reduce the royalty to 2%. It was introduced by a congressman from California who has trona mining activity in his district. As with all political processes, it's hard to predict precisely when it might happen or even the outcome of it.

The last time I think Congress did reduce the royalty rate from 6% to 4%; that took several years for the House and the Senate to finally work their way through. So I don't exactly know the outcome. The difference between 6% and 4% to us for the next several years is going to be maybe $1 million to $1.5 million..

Okay. Thanks for clarifying that. It was very helpful..

Yeah..

Our next question comes from the line of Richard Hatch of RBC. Your line is now open..

Thanks. Good morning, all. Just one for Kathy, I noticed in the cash flow statement you've got, working capital outflows this quarter. I just wonder whether you can just expand a bit more on that and what we can expect to see, whether that will reverse in Q2. Thanks..

Sure. We definitely had an increase in receivables and a drop in payables. The AR change is a seasonal anomaly; same thing happened in the first quarter of last year, so I absolutely expect that to improve. And AP, again, I think is just a – again is a flow of funds tied to the nature of the business we're doing.

It was a use of cash, (41:38) AP of $83 million in the quarter, which is pretty significant. And yes we expect, we expect to pull that back in line. Not sure we'll get it all worked through in the second quarter, but it will definitely come back in line..

Okay. Thank you..

Our next question comes from the line of John Roberts of UBS. Your line is now open..

Thank you. There's an expansion coming up in Mexico.

Do you think the pre-marketing of that output has contributed to the incremental weakness in pricing? And, if so, could that pricing weakness abate once that material is placed in the market?.

Yes..

Okay. And then let me ask second, a follow-up. There is a lot of U.S. TiO2 export to Europe right now, or at least there was before currency moved. Do you think the currency swing has caused some of that product to back up into the U.S.

on the margin and could that also be contributing to the weakness?.

Yes..

Care to elaborate at all?.

You asked a very good question, it was very direct, and I tried to give you a direct answer. I think that the data – the trade data shows that European, imports from Europe into United States are somewhere around 4,000 tons per month. And they have increased about 1,000 tons per month over the last – the recent month period.

Those are not phenomenal numbers. I think the U.S. market is somewhere over a million tons in production – I mean, in demand. So, I don't think it's a material contributing factor, to be perfectly honest. But I think to the extent there were exports out of the U.S. in into Europe, those are much more difficult.

Although, I would – as I said in the main statement, our sales into Europe were relatively strong and every month in the first quarter our sales in Europe were higher than they were the preceding month. Now we have Botlek, which is in the Netherlands and so most of our European sales are going to be supplied out of a European facility.

But we were surprised to be a little honest at the relative strength of the European market..

Thank you..

That concludes today's question-and-answer session. I would now like to turn the call back to Chairman and CEO, Mr. Tom Casey for any further remarks..

Thank you very much, operator, and thank all of you for your interest. We are working through this. As we said we think we have a variety of sources of value creation here. We're pursuing them. We'll continue to pursue them and we appreciate your interest and we'll talk to you next quarter. Thank you very much..

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day..

Thank you..

Thank you..