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Sierra Rutile Limited

Sierra Rutile Provides Q2 2012 Operational Update

London, UK, 5 July 2012: Sierra Rutile Limited (AIM: SRX) ("SRL") is pleased to provide an operational update on developments during the second quarter of 2012 ("Q2" or "the Period").

Highlights:

·; Rutile production increased 60% to 21,917 tonnes vs. 13,693 tonnes in Q2 2011 (H1 2012: 42,610 tonnes - 57% increase vs. H1 2011: 27,149 tonnes).

·; Ilmenite production increased 58% to 5,355 tonnes vs. 3,388 tonnes in Q2 2011 (H1 2012: 10,315 - 67% increase vs. H1 2011: 6,164 tonnes).

·; Full-year 2012 rutile production guidance on track for 80,000 to 85,000 tonnes.

·; Dry mining site preparation and processing plant construction advancing on schedule and on budget. Earth moving equipment orders placed and the project remains on-track to be commissioned during late 2012.

·; Mogbwemo tailings processing plant design is complete and a contractor selected. The project remains on schedule.

·; Feasibility study into the proposed new large dredge (D3) remains on-track for completion in Q3 2012.

Production

Q2 2012 rutile production was above budget at 21,917 tonnes, 60% above the 13,693 tonnes produced in Q2 2011, continuing the positive production trend achieved in the second half of 2011 and Q1 2012. Production guidance for the full year is 80,000 to 85,000 tonnes. Q2 ilmenite production was on budget at 5,355 tonnes up 58% on the 3,388 tonnes produced in Q2 2011.

Importantly, during Q2 SRL also successfully undertook a one-week shutdown to overhaul certain critical components on the existing dredge (D1). This work both significantly de-risks the operations and will enable the dredge to dig at a 10% to 15% higher rate in the future.

Expansion projects

All expansion projects are progressing on schedule. Dry mining site preparation and plant construction are progressing well. Earth moving equipment has been ordered and will be delivered during H2 2012. Commissioning is expected during late 2012 and the project remains on budget.

The improved design of the Mogbwemo tailings (D2) plant to allow for the feed of dry mining ore has been completed and a contractor selected to provide the plant. Furthermore, the dredge type to be used for mining the tailings has been determined and an order will be placed at the appropriate time.

The feasibility study into a new large dredge (D3) continues and remains on schedule for delivery in Q3 2012.

Financing

As at 30 June 2012, SRL had $23.2 million of cash , having spent, during the H1 2012, a further $26.9 million of capital expenditure and costs associated with the new dredge (D3) study, and $17.0 million on the repayment of historic PAYE amounts and prepayment of certain future PAYE amounts to the Government of Sierra Leone (as announced on 1 May 2012). In addition, due to the timing of quarter-end shipments, SRL also had an inventory of 18k tonnes of rutile at 30 June 2012, a significant proportion of which has already been sold and all of which is expected to be shipped early in Q3.

The markets remain strong with, to date, prices fixed for Q3 in line with the average prices achieved in H1 2012.

Given the strong pricing environment coupled with the continued positive production performance, SRL does not currently anticipate the need for external sources of financing to complete the dry mining, Mogbwemo tailings (D2) or new dredge (D3) projects.

Commenting on the second quarter performance, CEO John Sisay said: "We have seen another strong quarter of rutile production and good progress on all of the expansion projects. This is now the fourth quarter in a row that we have met our production guidance, which is the result of the significant improvements we made during 2011. With the dry mining now likely to commence before the year-end and the other growth projects progressing well, I am confident that we will meet our targets both in terms of production and the delivery of our expansion projects. On time and on budget in what continues to remain a strong rutile market. "

ENDS

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Notes to Editors

About Sierra Rutile Limited

Sierra Rutile produces titanium feedstock industrial minerals (primarily rutile, with some associated ilmenite), as well as smaller quantities of zircon. Sierra Rutile's mine, located in the south west of Sierra Leone, is one of the largest natural rutile deposits in the world, with a JORC-Compliant Mineral Resource for measured, indicated and inferred resources for the Sierra Rutile mine of over 600 million tonnes (as at February 2011).

www.sierra-rutile.com