Tanzanian Royalty Agrees to $1 Million Private Placement

Connecticut Office: Form 20-F, File No. 001-32500

93 Benton Hill Road Trade Symbol:

Sharon, CT 06069 TSX: TNX Tel: (860) 364-1830 NYSE Amex Equities: TRE Fax: (860) 364-0673 South Surrey Office:

Suite 404 – 1688 152nd Street South Surrey, BC V4A 4N2 Toll Free: 1-800-811-3855 Email: [email protected] Tel: (604) 536-7873 Website: www.TanzanianRoyaltyExploration.com Fax: (604) 536-2529

News Release –September 7, 2010

TANZANIAN ROYALTY AGREES TO $1 MILLION PRIVATE PLACEMENT

Tanzanian Royalty Exploration Corporation advises that it has reached agreement in principle for a $1,000,000 private placement with an institutional investor.

The private placement consists of a three-year note in the principal amount of $1,000,000, bearing interest at 3% and convertible into 118,182 common shares at the price of $4.518 per share, representing the five-day weighted average trading price of the common shares on the Toronto Stock Exchange for the period ended August 9, 2010, less a discount of 15%.

The funds will be utilized for the purchase of equipment and for general corporate expenses. The proposed private placement is subject to regulatory approval.

Respectfully submitted,

James E. Sinclair James E. Sinclair Chairman and Chief Executive Officer

For further information, please contact Investor Relations at 1-800-811-3855 Visit our website: www.TanzanianRoyaltyExploration.com

The Toronto Stock Exchange and NYSE Amex Equities have not reviewed and do not accept responsibility for the adequacy or accuracy of this release

Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission limits disclosure for U.S. reporting purposes to mineral deposits that a company can economically and legally extract or produce. We use certain terms on this news release, such as “reserves”, “resources”, “geologic resources”, “proven”, “probable”, "measured", "indicated", or "inferred" which may not be consistent with the reserve definitions established by the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No. 001-32500. You can review and obtain copies of these filings from the SEC's website at http://www.sec.gov/edgar.shtml.

Certain information presented in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on numerous assumptions, and involve known and unknown risks, uncertainties and other factors, including risks inherent in mineral exploration and development, which may cause the actual results, performance, or achievements of the Company to be materially different from any projected future results, performance, or achievements expressed or implied by such forward-looking statements. Investors are referred to our description of the risk factors affecting the Company, as contained in our Form 20-F, File No. 001-32500, for more information concerning these risks, uncertainties, and other factors.