Sierra Rutile Limited (AIM: SRX) (“SRL”) is pleased to provide an operational update on developments during the first quarter of 2013 (“Q1” or “the Period”)

.Highlights:

•Production for the quarter was in line with budget:

-Rutile production of 25,087 tonnes, a 21% increase on Q1 2012 production; and

- Ilmenite production of 5,567 tonnes, a 12% increase on Q1 2012 production.

•Lanti Dry Mining project ramping-up in line with budget.

•Gangama Dry Mining feasibility study and front-end engineering and design study continued through the quarter and remains on -track to be finalised in Q2 2013.

•Dividend policy implemented by the Board of Directors.

Production

Quarterly production was 25,087 tonnes of rutile and 5,567 tonnes of ilmenite, 21% and 12%, respectively,ahead of Q1 2012 volumes (Q1 2012: 20,693 tonnes of rutile and 4,960 tonnes of ilmenite).

The Lanti Dry Mining project was officially opened by The Sierra Leone Minister of Mines and Mineral Resources in January 2013 and continues to ramp-up production in-line with budget.

Expansion projects

The feasibility study and front-end engineering and design study for the Gangama Dry Mining project continue to progress on schedule with completion of the study expected in Q2 2013. To-date, the study has shown capital costs to be in line with pre-feasibility study (“PFS”) estimates, demonstrating the accuracy of the PFS estimates and the significant know-how gained in the successful implementation of the Lanti Dry Mining project. Furthermore, though twice the throughput of the Lanti Dry Mining project, it is anticipated that the Gangama Dry Mining project can be implemented in a similar 12-month timeframe to the Lanti Dry Mining project.The speed of construction of the Gangama Dry Mining project gives SRL significant flexibility to time or potentially stage the project to meet optimum market demand for our high-value natural rutile product. Any delay in advancing the project after the feasibility study is complete is likely to result in additional cash flows being available to pay dividends (see below).

Dividend Policy

The Board of Directors recognises that dividends form an important element of shareholder return and,accordingly, during the quarter, the Board of Directors of SRL has approved a dividend policy to distribute to shareholders at least 50% of free cash flows after capital expenditures, committed future expenditures and the repayment of any borrowings.The first dividend payment will be considered once the timing of the Gangama Dry Mining project is determined.

The declaration and payment of future dividends, and the frequency of them, will be subject to SRL＇s financial condition, future prospects, satisfaction of statutory solvency tests and other factors deemed by the Board of Directors to be relevant at the time. In accordance with SRL＇s current constitution, SRL will seek shareholder approval for the payment of dividends. There can be no guarantee as to the amount of any dividends payable by SRL.

Sales

Prices for Q1 remained at Q4 2012 levels. These prices, however, remain at very high levels when compared to historical prices for all SRL’s products. Furthermore, SRL has noted the recent news of increases to pigment prices from a number of SRL’s customers and, combined with increased inbound enquiries for its rutile product,SRL continues to believe that there will be a strengthening of the market during2013.

Commenting on the first quarter performance,CEO John Sisay said: “The quarter has demonstrated the continued stability of our operations and the sustainability of the major increases in rutile production rate that we implemented in 2012. We remain on track to deliver a year-on-year production rate increase of over 30%. Additionally,the finalisation of the Gangama Dry Mining feasibility study in the next few months will provide SRL with significant further production growth optionality beyond the current operations. Our existing operations provide SRL with strong cash flows, giving us the flexibility to develop our assets and return cash to shareholders”.