Sierra Rutile : Successful placing of $20.0 million in new equity

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THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

Neither this announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe for or otherwise acquire any new ordinary shares of Sierra Rutile Limited in any jurisdiction in which any such offer or solicitation would be unlawful.

The Placing Shares have not been and will not be registered under the US Securities Act of 1933, and may not be offered or sold within the United States except in accordance with Regulation S of the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.

Sierra Rutile Limited

Successful placing of $20.0 million in new equity

London, UK, 14 April 2016: Sierra Rutile Limited (AIM: SRX) ("Sierra Rutile" or the "Company") is pleased to announce that it has successfully raised $20.0 million (£14.0 million)1 by way of a placing of 70,052,539 new Ordinary Shares with both new and existing institutional investors (the "Placing"). The Placing was oversubscribed. The net proceeds of

the Placing will be used to provide additional working capital and financial flexibility, to enable the Company to continue to implement its strategy of increasing production through expansion of its dry mining operations in a way that aligns production with anticipated customer demand.

Highlights

• Placing of 70,052,539 new Ordinary Shares (the "Placing Shares") at a price of 20.0 pence per share (the "Placing Price") raising gross proceeds of $20.0 million.

• The Placing Shares represent 11.8 per cent. of the enlarged issued share capital of the Company following admission of the Placing Shares to trading on AIM ("Admission").

• The Placing Price of 20.0 pence represents a discount of 10.1 per cent. to the closing mid-market 5 day VWAP, a discount of 6.0 per cent. to the closing mid-market 10 day VWAP and a discount of 5.4 per cent. to the closing mid-market 20 day VWAP.

• The net proceeds of the Placing will be used to provide additional working capital and financial flexibility to enable the Company to continue to implement its strategy of increasing production through expansion of its dry mining operations in a way that aligns production with anticipated customer demand.

• Pala Minerals Limited ("Pala") who currently hold 56.36% of the Company's issued share capital have committed to subscribe for 23,750,000 Placing Shares in the Placing.

• The Company has also granted an option to the Bookrunners to issue up to an additional 3,502,627 new ordinary shares at the Placing Price (being equal to up to 5% of the Placing Shares and therefore raising up to an additional $1.0 million, if exercised) on the same terms and conditions as the Placing in order to satisfy additional demand in the event that requests to participate in the Placing from institutional and certain other investors are received following this announcement (the "Bookrunner Option").

• Investec Bank plc ("Investec"), Numis Securities Limited ("Numis") and RBC Europe Limited ("RBC") are acting as Joint Bookrunners (together the "Bookrunners") in relation to the Placing and Investec is Nominated Adviser.

John Sisay, CEO of the Company, said: "We are pleased with the strong investor support for our oversubscribed share placing, which strengthens our balance sheet as we look to continue to implement our strategy of increasing our production profile through the expansion of our dry mining operations in a way that aligns production with anticipated customer demand for our product. We would like to thank our existing cornerstone shareholders for their continued support, as well as welcome new institutional shareholders onto the register at what is an exciting time for the company. We believe that we are well positioned to execute on our market led strategy and feel confident that the market dynamics for Rutile bode well for pricing towards the end of this year and beyond."

1

Exchange rate of 1.4275 USD:GBP at close 12 April 2016

For Further Information:

Sierra Rutile Limited John Sisay, Chief Executive Officer Matthew Hird, Chief Financial Officer	[phone]
Investec Bank Nominated Adviser and Joint Corporate Broker Chris Sim / George Price / Jeremy Ellis	[phone]
Numis Securities Limited Joint Corporate Broker John Prior / James Black / Paul Gillam	[phone]
RBC Capital Markets Joint Corporate Broker Jonny Hardy / Elliot Thomas	[phone]

Kreab Marc Cohen / Christina Clark

[phone]

About Sierra Rutile Limited

Sierra Rutile is a leading, multi-mine mineral sands company, operating world-class assets and developing a portfolio of growth projects in the south west of Sierra Leone, with its primary commodity mined being natural rutile, a titanium feedstock. The Company has an established operating history spanning approximately 50 years and a resource mine life of another 50 years with one of largest natural rutile deposits in the world and a JORC-Compliant Mineral Resource for measured, indicated and inferred resources for the Sierra Rutile mine of over 866 million tonnes (as at 30 September 2015). Sierra Rutile expects to be the world's largest primary producer of natural rutile in 2016.

www.sierra-rutile.com

Placing to raise $20.0 million Background to and reasons for the Placing

As highlighted in the results announcement on 31 March 2016, Sierra Rutile achieved a major milestone in 2015 achieving record annual production of 126,021 tonnes of rutile, an increase of 10% over the prior year, and increased EBITDA by 9% to $16.1m (2014: $14.8m).

The Directors believe that demand from the Company's existing customer base continues to remain firm and, as a result, the Company will focus on a market-led business model where production is aligned to customer demand. The Company expects rutile production for 2016 to be between 120,000 and 135,000 tonnes with production cash cost2 of between $540/t and

$590/t as the Gangama dry mine project ramps up following commissioning in June 2016.

The anticipated completion of the first stage of the Gangama dry mine in Q2 2016, followed by potential 250tph bolt-on expansions to Gangama and the Lanti dry mines in due course, are expected to give the Company the added flexibility to respond to increased customer demand in a capital efficient and flexible manner.

It is expected that the proceeds of the Placing of approximately $18.8 million net of expenses (assuming no exercise of the Bookrunner Option), will be used to provide additional working capital and financial flexibility to enable the Company to continue to implement its strategy of increasing production through expansion of its dry mining operations, in a way that aligns production with anticipated customer demand.

The Company has a $20 million Working Capital Facility and a $15 million Standby Facility with Nedbank Limited, both of which are for a term until 30 May 2017. The Working Capital Facility was fully drawn as at 31 December 2015, whilst the Standby Facility remained undrawn at the year end. The Company also has a drawn balance of $9 million as at 31 December 2015 under its Senior Loan Facility with Nedbank which is designated for the construction of the Gangama dry mine. In addition, the Company has a $22m million loan from the Government of Sierra Leone. The first repayment under the Senior Loan Facility and the next repayment for the loan from the Government of Sierra Leone are due in Q4 2016.

Following the Placing, the Company will explore refinancing its existing banking facilities with a view to putting in place longer term and more flexible banking arrangements which are better suited to the development profile of the Company's business. In the absence of renewing or refinancing its existing debt facilities, the Company would need to seek alternative funding arrangements in order to fund further expansion projects.

2

Production Cash Cost calculated as total direct costs of sales less depreciation, amortisation, inventory write-offs,

freight costs and change in value of finished goods inventory divided by tonnes of rutile produced.

Q1 2016 Operational Update

In conjunction with the Placing, Sierra Rutile is pleased to provide an operational update on the first quarter of 2016 ("Q1 2016").

• 26,779 tonnes of rutile produced for Q1 2016