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Pala's Sees Its Offer as Attractive Considering Sierra Rutile's Financing Requirements

25 Oct 2011 07:55

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN.

FOR IMMEDIATE RELEASE

Pala's Sees Its Offer as Attractive Considering Sierra Rutile's Financing Requirements

LONDON, ENGLAND - 25 October 2011: Pala Investments Holdings Limited ("Pala") notes that, in an announcement on 24 October 2011, Sierra Rutile Limited (AIM:SRX) ("Sierra Rutile") confirmed that it was considering both debt and equity financing options to fund part of the US$55 million capital requirements for its expansion projects and associated infrastructure.

In light of continuing debt market volatility, Pala believes that it will not be possible for Sierra Rutile to obtain satisfactory third party debt financing on favourable terms to fund its capital requirements and, as a result, Sierra Rutile will be forced to raise funds through an equity financing.

Pala believes that, if its offer lapses, there is a strong possibility that Sierra Rutile's share price will fall below the offer price of 30 pence, and that any subsequent equity financing undertaken by Sierra Rutile to fund its capital requirements is likely to be at a discount to the market price at such time, as is customary for such financings.

Pala continues to believe that its offer, as well as the unconditional opportunity to sell via its broker and the private treaty option, provide a unique liquidity opportunity for Sierra Rutile shareholders prior to a likely equity financing. Sierra Rutile shareholders wishing to take advantage of this exit opportunity should take note of these options and the upcoming deadlines noted below.

Update on acceptances

As of 24 October 2011, Pala holds, or has agreed to acquire by private treaty or market purchases, 215,334,877 Sierra Rutile Shares, representing 43.11 per cent. of Sierra Rutile's issued share capital. In addition, valid acceptances of Pala's offer have been received in respect of 1,670,893 Sierra Rutile shares, representing 0.33 per cent. of Sierra Rutile's issued share capital.

In aggregate, therefore, Pala has acquired, agreed to acquire or received valid acceptances in respect of 217,005,770 shares, representing 43.44 per cent. of Sierra Rutile's issued share capital.

For Pala's offer to become unconditional by 1 p.m. (London time) on 4 November 2011, this aggregate must exceed 50%. If the offer were to lapse on 4 November 2011, Pala will not be able to acquire the shares, currently representing 0.33 per cent. of Sierra Rutile's issued share capital, from those Sierra Rutile shareholders who have accepted the offer.

Deadlines for Private Treaty and Improved Offer

Any Sierra Rutile shareholder who wishes to sell its shares to Pala regardless of the outcome of the offer should contact its own investment advisor or Pala's corporate broker, Northland Capital Partners Limited (contact details noted below), as announced by Pala on 11 October 2011. Sales through Northland Capital Partners can be effected immediately, and are not conditional on the outcome of Pala's offer and must occur by 4 November 2011. Pala would note again its statement of 11 October 2011, in which it indicated that the offer price of 30 pence was final and would not be raised again.

Further, applications from Sierra Rutile shareholders wishing to sell their shares directly to Pala by private treaty must be received by no later than 1.00 p.m. (London time) on 1 November 2011. Sierra Rutile shareholders who have already accepted Pala's offer can elect the private treaty option and ensure they receive the benefits of the price of 30 pence per Sierra Rutile share even if Pala's offer lapses.

Pala's offer will close at 1.00 pm (London time) on 4 November 2011 and will not be extended unless the Acceptance Condition is satisfied by such date, in which case the offer will remain open for acceptance for at least a further 14 days as required under Rule 31.4 of the Code.

Contact details of Northland Capital Partners

Zeg Choudry

Northland Capital Partners Limited

Telephone: +44 (0)20 7796 8863

Email: zchoudhry@northlandcp.co.uk

This announcement should be read in conjunction with the full text of the announcements of 7 September 2011 and 3 October 2011 (including their respective Appendices) and 11 October 2011. The Acceptance Condition and the terms of the Improved Offer are set out in Appendix I to Pala Mineral Limited's earlier offer announcement made on 7 September 2011 (the "Original Offer Announcement") (as modified by paragraph 4 of the announcement of the 3 October 2011 (the "Improved Offer Announcement")). Unless the context otherwise requires, definitions used in the Original Offer Announcement and Improved Offer Announcement also apply to this announcement.

For enquiries:Colin MurrayPala Investments AG+41 41 560 9070

About Pala

Pala Investments Holdings Limited is a multi-strategy investment company dedicated to investing in, and creating value across, the mining sector in both developed and emerging markets. Pala's exclusive investment advisor, Pala Investments AG, has extensive experience within the mining sector. Pala seeks to assist companies in which it has long-term shareholdings by providing strategic advice and innovative financing solutions. For more information, visit www.pala.com.

Application of the City Code on Takeovers and Mergers (the "Code")

By virtue of its status as a company incorporated in the British Virgin Islands, the Code does not apply to Sierra Rutile. Shareholders are reminded that whilst Sierra Rutile's articles of association require offers to be made on terms that would be required by the Code, save to the extent that the Board of Sierra Rutile otherwise determines, the Panel on Takeovers and Mergers does not have responsibility for ensuring compliance with the Code in respect of the Improved Offer and is not able to answer shareholders' queries in relation to Sierra Rutile, Pala or the Improved Offer.

In particular, the Board of Sierra Rutile has confirmed to Pala that it does not intend to require Opening Position Disclosures and Dealing Disclosures (as referred to in the Code) to be made by shareholders (other than PML and persons acting in concert with PML) in accordance with Rule 8 of the Code. Shareholders are reminded that public disclosures consistent with the provisions of Rule 8.3 of the Code should not be e-mailed to the Panel on Takeovers and Mergers.

Overseas jurisdictions

The Improved Offer will not be made, directly or indirectly, in or into, or by the use of the mails or any means of instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange of the United States, Canada, Australia or Japan. Accordingly, except as required by applicable law, copies of this announcement are not being, and may not be, mailed or otherwise forwarded, distributed or sent in, into or from the United States, Canada, Australia or Japan. Persons receiving this announcement (including, without limitation, nominees, trustees or custodians) must not forward, distribute or send it into the United States, Canada, Australia or Japan.

The availability of the Improved Offer to Sierra Rutile Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. In particular, as described in Appendix I of the Original Offer Announcement, the Improved Offer will not be made directly or indirectly into the United States, Canada, Australia or Japan. Sierra Rutile Shareholders who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements and read paragraph 6 of Part B, paragraph (c) of Part C and paragraph (c) of Part D of Appendix I of the Original Offer Announcement before taking any action.

Publication of this announcement

A copy of this announcement will be available at www.pala.com by no later than 12.00 p.m. (London time) on the business day after the date of this announcement. You can obtain a hard copy of this announcement or any information incorporated by reference by contacting Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH. You will not receive a hard copy of this announcement or any information incorporated by reference unless you so request. You may also inform Computershare that you wish all future documents, announcements and information in relation to the Improved Offer be sent to you in hard copy.

Copyright Business Wire 2011

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