Results from New Dredge Feasibility Study

Sierra Rutile Limited

Sierra Rutile announces impressive results from New Dredge Feasibility Study

London, UK, 3 October 2012: Sierra Rutile Limited (AIM: SRX) ("SRL") is pleased to announce the results of its feasibility study (the "Study") into a new large dredge ("New Dredge"). The full Executive Summary from the Study can be found on our website at www.sierra-rutile.com.

Highlights:

·; Exceptional feasibility study economics:

- US$472 million project pre-tax NPV110;

- US$301 million project post-tax NPV10;

- 68% pre-tax IRR2, 59% post-tax IRR; and

- 12-month project payback.

·; 81,000 tonnes per annum of rutile produced, on average, in the first 10-years of the project's life, with a further 43,000 tonnes of ilmenite and 7,000 tonnes of zircon concentrate.

·; 27-year modelled project life, with significant scope for further extensions to the project life.

·; Low cash-cost3 operation at just US$394 per tonne life-of-mine and just US$219 per tonne for the first five years.

·; Total capital cost, including contingency, of US$169 million over a 24-month project delivery timeline.

Commenting on the successful Study, John Sisay, SRL Chief Executive Officer, said, "This extensive study into the introduction of a new large dredge illustrates definitively the world-class nature of our deposit and its ability to support multiple mining units. The value of this project and its potential returns is impressive, and it further highlights the inherent value of our existing, operating assets and near-term expansions. The low-cost nature of this project provides SRL the opportunity to be an extremely profitable supplier of rutile to the market for the long-term."

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Next steps

SRL will now commence an owner-review and value-engineering review of the Study with a view to optimizing the potential of the project. This will include the following opportunities:

·; The current Study assumes the mining of the Gangama deposit followed by the Sembehun deposit. This changeover involves an 18 kilometre dredge move at a capital cost of US$30million. Several opportunities exist to optimize this process, including:

- a review of the mining sequence assumed in the Study, including the opportunity to commence mining in Sembehun and to mine Gangama by alternative means: and

- the optimization of the mining path to reduce non-productive dredge moves and associated risk and capital expenditure.

·; The method of project delivery, which currently assumes a fixed-fee, lump-sum contract for the delivery of the dredge. An EPCM-based approach could yield significant savings, as the dredge currently constitutes over 42% of the total capital expenditure.

·; Results of additional drilling and potential resource improvements.

 SRL will provide further updates as these processes are completed.

ENDS

For Further Information:

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