NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

White Mountain Titanium Corporation, through its subsidiaries, (collectively, the “Company”) is in the business of exploring for titanium deposits or reserves on its Cerro Blanco mining concessions. The Company is an exploration stage company and its principal business is to advance exploration and development activities on the Cerro Blanco rutile (titanium dioxide) Property (“Cerro Blanco”) located in Region III of northern Chile.

The accompanying condensed consolidated interim financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2015 and for the period then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (“US”) generally accepted accounting principles (“US GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s December 31, 2014, Annual Report on Form 10-K filed with the US Securities and Exchange Commission (“SEC”) on March 30, 2015. The organization and business of the Company, accounting policies followed by the Company, other than the recently adopted accounting pronouncements discussed below and other information are contained in the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2014 filed as part of the Company’s December 31, 2014 Annual Report on Form 10-K. The results of operations for the period ended June 30, 2015 are not necessarily indicative of the operating results for the full year.

These condensed consolidated interim financial statements have been prepared by management on the basis of US GAAP applicable to a going concern, which assumes the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company has an accumulated deficit of $58,124,454 at June 30, 2015 (December 31, 2014 - $55,533,880), has not yet commenced revenue-producing operations, and has significant expenditure requirements to continue to advance its exploration and development activities on the Cerro Blanco property. Management intends to raise additional capital through stock issuance to finance operations. However, there is no assurance that management will be successful in its future financing activities.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENT

The following accounting pronouncement was adopted by the Company:

Effective January 1, 2015, the Company adopted the Financial Accounting Standards Board (“FASB”) issued update No. 2014-10 Development Stage Entities. The amendments in this update remove the definition of a development stage entity from Topic 915, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements of income, cash flows, and shareholder's equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. The amendments also remove paragraph 810-10-15-16, which states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity (VIE) if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments. As a result of the amendment, the Company no longer labels the financial statements as those of an exploration stage entity and no longer presents inception-to-date information on its statements of operations, cash flows, and shareholders’ equity.

FINANCIAL INSTRUMENTS AND RISKS

The Company has classified its financial instruments as follows:

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge its contractual obligations.

The Company mitigates credit risk by maintaining its cash with high credit quality US, Canadian, Chilean and Chinese financial institutions.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows required for operations and anticipated investing and financing activities. The Company’s cash at June 30, 2015 and December 31, 2014 totaled $1,822,572 and $949,806, respectively. At June 30, 2015 and December 31, 2014, the Company had accounts payable and accrued liabilities of $227,656, and $317,515, respectively, all of which fall due in the next fiscal quarter.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk.

FINANCIAL INSTRUMENTS AND RISKS (Continued)

Market risk (Continued)

Interest rate risk

Interest rate risk consists of two components:

To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.

To the extent that changes in prevailing market interest rates differ from the interest rate in the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.

Foreign currency risk

The Company is exposed to foreign currency risk to the extent expenditures incurred or funds received and balances maintained by the Company are denominated in currencies other than the US dollar (primarily Canadian dollars (“CAD”), Chilean pesos (“CLP”) and Chinese yuan (“RMB”)). As at June 30, 2015, the Company has net monetary assets of $30,274 (December 31, 2014 - net monetary liabilities of $19,536) denominated in CAD, net monetary liabilities of $75,233 (December 31, 2014 - $155,120) denominated in CLP, net monetary assets of $369,629 (December 31, 2014 - $44,938) denominated in Hong Kong dollars (“HKD”), and net monetary assets of $20,711 (December 31, 2014 - $122,760) denominated in RMB.

As at June 30, 2015, the Company’s sensitivity analysis suggests that a change in the absolute rate of exchange in CAD, RMB and HKD by 10% will not have a material effect on the Company’s business, financial condition and results of operations, and a change in the absolute rate of exchange in CLP by 6% will also not have a material impact.

The Company has not entered into any foreign currency contracts to mitigate this risk.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to other price risk.

PROPERTY AND EQUIPMENT

MINERAL PROPERTIES

CAPITAL STOCK

Common stock

During the six months ended June 30, 2015, the Company closed the sale of 8,375,000 second tranche units (the “Second Tranche Units”). The sale of the units was pursuant to a Binding Memorandum of Understanding (the “MOU”) the Company entered into with Grand Agriculture Investment Limited (the “Investor”) dated December 3, 2013, amended September 11, 2014, whereby the Investor agreed to purchase a total of 20,000,000 Second Tranche Units. The sale price for the 8,375,000 Second Tranche Units was $0.40 per unit for gross proceeds of $3,350,000. Each Second Tranche Unit consists of one share of common stock and 90% of one warrant to purchase one share of common stock at $0.55 exercisable immediately upon issuance through December 31, 2017 (the “Second Tranche Warrants”). The Company is required to pay $234,500 in finder’s commissions, of which $14,000 is included in accounts payable and accrued liabilities.

In March and June 2015, the Company issued 300,000 shares of common stock to a marketing and consulting service provider as non-cash compensation in exchange for services. Those shares were measured at a fair value of $0.45 per common share.

Stock options

The Company has a stock option plan, adopted in 2005, and a stock option/stock issuance plan, adopted in 2010, which has been replaced by a stock incentive plan adopted in June 2015 (individually, the “2005 Plan” and the “2015 Plan”, respectively, and, collectively, the “Plans”). Under the Plans, the Company is authorized to grant options to executive officers and directors, employees and consultants of the Company. The 2005 Plan was originally authorized to grant 3,140,000 shares; and the 2015 Plan was originally authorized to issue 4,901,740 shares, which amount is increased at the end of each year to represent 10% of the total outstanding shares at year-end, up to a maximum of 3,800,000. The terms of any stock options granted under the 2005 Plan may not exceed five years and the exercise price of any stock option granted may not be discounted below the maximum discount permitted under the policies of the Toronto Stock Exchange. The terms of any stock options granted under the 2015 Plan may not exceed ten years and the exercise price of any stock option plan is fixed by the plan administrator.

The Company originally also adopted a management compensation pool for the benefit of officers, directors and employees of the Company. The pool will consist of 1% of the outstanding shares at the end of each year. The compensation pool program is incorporated into the 2015 Plan.

CAPITAL STOCK (Continued)

Stock options (continued)

The following table represents service-based stock option activity during the six months ended June 30, 2015 and the year ended December 31, 2014:

CAPITAL STOCK (Continued)

Stock-based compensation

In May 2015, the Company issued 859,050 shares of common stock out of the Company’s 2014 compensation pool to directors, officers, and employees based on 2014 performance. In addition, the Company issued 300,000 shares of common stock to a former executive director for the completion of an Environmental Impact Statement(“EIS”) and participation of the Company’s 2014 compensation pool. The stock-based compensation includes stock options granted in March 2015 and amortization of common stock shares issuable upon the market performance of the Company’s stock. The remaining unamortized balance of $166,929 (December 31, 2014 - $204,232) will be amortized through December 2015 and July 2019.

Warrants

During the six months ended June 30, 2015, the Company issued warrants to purchase 7,537,500 shares of common stock, as part of a private placement offering (Note 6 (a)). Each whole warrant is exercisable at $0.55 per share until December 31, 2017.

Details of stock purchase warrant activity for the period ended June 30, 2015 and the year ended December 31, 2014 are as follows:

CAPITAL STOCK (Continued)

Warrants (Continued)

As at June 30, 2015 and December 31, 2014, the following warrants were outstanding:

LOSS PER SHARE

Potentially dilutive securities not included in diluted weighted average shares outstanding include shares underlying 1,375,000 in outstanding options and 29,025,085 in outstanding warrants.

COMMITMENTS

On December 4, 2013, the Company entered into a $10,000,000 financing by means of the binding MOU with the Investor. Pursuant to the MOU, the Company closed the sales of 5,714,286 First Tranche Units and 11,250,000 Second Tranche Units, for total gross proceeds of $6,500,000. During six months ended June 30, 2015, the Company closed an additional sale of 8,375,000 Second Tranche Units (Note 6(a)).

The Company expects additional sales of 375,000 Second Tranche Units, pursuant to the MOU, to complete the sale of the Second Tranche Units.

In connection with the completion of the sale of the Second Tranche Units, the Company has agreed to grant to the Investor at no additional cost warrants to purchase up to 6,000,000 shares of common stock at $0.55 per share exercisable immediately upon issuance and through December 31, 2017 (the “Bonus Warrants”). The Bonus Warrants will be in a form substantially identical to the Second Tranche Warrants.

SUBSEQUENT EVENTS

Management has evaluated subsequent events through August 10, 2015, which represents the date the condensed consolidated financial statements were issued. The following subsequent events have occurred:

On August 5, 2015, we received $150,000 from the sale of 375,000 Second Tranche Units, which, pursuant to the MOU, completed the sales of Second Tranche Units. We are obligated to pay finder’s commissions in amount of $10,500.

During 2011, we entered into our first off-take agreement with a major international pigment producer where that producer will purchase 25,000 tonnes per annum of our standard grade, natural rutile concentrate at US$1,200 per tonne FOB port. Although deliveries did not commence by September, 2014, the contract remains in place, but the buyer may terminate the agreement at any time. The term of the agreement may be extended by mutual agreement.

On September 27, 2012, we entered into a second off-take agreement with a major international pigment producer for the supply of natural rutile concentrate from the Cerro Blanco project. Under the agreement, the pigment producer has agreed to purchase 10,000 tonnes per annum of our standard grade rutile concentrate at $1,250 per tonne FOB port. The three-year term, which commences upon the production of 5,000 tons of product from the Cerro Blanco project, may be extended by mutual agreement. The buyer may terminate the agreement at any time.

The Company received environmental approval from the Chilean Environmental Authority for its Cerro Blanco project. The EIS report was filed with the Government in February 2013, and the definitive Environmental Impact Statement (the “EIS”) for the project was approved, signed and delivered to the Company on May 20, 2015. This approval marks a major milestone for the development of the project and allows the project to advance to Bankable Feasibility Study (the “BFS”) and subsequent production. The EIS approval is a necessary precursor for future permitting requirements at Cerro Blanco.

The Company closed the sale of 8,375,000 Second Tranche Units (the “Second Tranche Units”) since March 2015. The sale price for the 8,375,000 Second Tranche Units was $0.40 per unit for gross proceeds of $3,350,000. Each Second Tranche Unit consists of one share of Common Stock and 90% of one warrant to purchase one share of Common Stock at $0.55 per share exercisable immediately upon issuance through December 31, 2017 (the “Second Tranche Warrants”).

The Company entered into an agreement with a Chinese entity for financial advisory and investor relations service and paid $245,000 in upfront fees.

In June 2014, the FASB issued update No. 2014-10 Development Stage Entities. The amendments in this update remove the definition of a development stage entity from Topic 915, thereby removing the distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements of income, cash flows, and shareholder's equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. The amendments also remove paragraph 810-10-15-16, which states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity (VIE) if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments. These amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. For the current three month period ended June 30, 2015, we adopted this new standard.

Advertising and promotion expense increased from $13,484 to $245,346 as we engaged a marketing firm to increase potential investors’ awareness of the Company.

Amortization expense decreased from $185,009 to $41,398 due to the fact that we no longer amortize intangible assets after we wrote off the Chinuka Process due to an impairment loss.

Rent expense increased from $78,513 to $110,350 due to the fact that only one month rent for our China office was incurred for the same period last year as we started to use the office in June 2014.

Professional fees increased from $140,482 to $193,152 due to increase in audit and legal fees for more service activities needed for operation.

Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities

Eliminate the presumption that a general partner should consolidate a limited partnership

Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships

Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds.