Sierra Rutile : Provides Q2 2015 Operational Update

Sierra Rutile Limited

Sierra Rutile Limited Sierra Rutile Provides Q2 2015 Operational Update London, UK, 6 July 2015: Sierra Rutile Limited (AIM: SRX) ("Sierra Rutile") is pleased to

provide an operational update on the second quarter of 2015 ("Q2").

Highlights

 Strong Q2 performance with rutile production of 29,933 tonnes and direct operating cash cost1 of $527 / tonne.

 On-target to meet full-year rutile production guidance of 120,000 - 130,000 tonnes.

 Significant quarter-on-quarter improvement with a 28% increase in rutile production and a 16% reduction in direct operating cash cost in Q2 vs Q1.

 Commencement of construction at the Gangama Dry Mine on schedule and on budget.

 Completion of the Sembehun Dry Mine scoping study, highlighting a well-advanced, long-term dry mining project with strong economics.

 Appointment of Wayne Venter as Chief Operating Officer and Matthew Hird as Chief

Financial Officer.
Commenting on the Q2 performance, CEO John Sisay said:
"Q2 2015 has been a very active and successful quarter. Strong production and cost results have been accompanied with the commencement of the Gangama Dry Mine construction and the definition of the Sembehun Dry Mine project. We have also strengthened our management team substantially with the appointment of a new Chief Operating Officer and Chief Financial Officer. Our asset base positions us for a strong operating performance as we enter the second half of the year on-target to meet full-year guidance."

1 Direct operating cash cost (includes direct operating costs but excludes depreciation) less by-product revenue divided by tonnes of rutile produced.

Production

Sierra Rutile produced 29,933 tonnes of rutile, 4,117 tonnes of ilmenite and 333 tonnes of zircon concentrate in Q2.

Q2 2015 Q1 2015 % change Q2 2014 % change

Rutile 29,933 23,342 28% 27,842 8%

Ilmenite 4,117 12,803 (68%) 8,410 (51%) Zircon Concentrate2 333 318 5% 488 (32%)
Q2 rutile production was in-line with budget and operations continue to perform on target. Lanti Dry Mine performance benefited from the planned maintenance shutdowns in Q1 2015. In addition, a planned maintenance shutdown of Lanti Dredge Mine during Q2 was completed successfully with production achieving target levels post shutdown. This concludes Sierra Rutile's major maintenance programs on mining units for the year and positions both operations for strong operating performance in the second half of 2015.
Production over the quarter benefited from considerable improvements in the supply chain from Q1 2015. Sierra Rutile's ability to secure a reliable provision of irregular parts and materials (i.e. those materials not consumed by operations on an ongoing basis) has had a meaningful impact on operational performance, particularly with respect to the maintenance programs in the first half of the year.
Sierra Rutile remains on target to meet full-year rutile production guidance of 120,000 -
130,000 tonnes. Average monthly rutile production in May and June of this quarter of 10,500 tonnes represents 126,000 tonnes on an annualized basis, with both Lanti Dry Mine and Lanti Dredge Mine benefiting from their respective maintenance programs. In addition, Lanti Dry Mine is planned to transition to higher-grade areas which will significantly increase its rutile production relative to the first half of the year. Rutile production from contract mining of the Mogbwemo tailings is also expected to improve as ramp-up continues to target levels.
Q2 ilmenite production was targeted to be approximately 8,000 tonnes as mining moved into areas of more conventional ratios of ilmenite to rutile than experienced in Q1. Given the very high ilmenite production in Q1 2015, Sierra Rutile did not require as much ilmentite in Q2 to meet its sales plan and so has stockpiled a stream of unfinished ilmenite concentrate for processing later in the year. Sierra Rutile continues to expect full-year ilmenite production of
30,000 - 35,000 tonnes, as per previous guidance.

2 Zircon Concentrate is a semi-finished zircon product grading 40-45% ZrO2.

Operating cost

Total operating cash costs in Q2 were $636 / tonne compared to $725 / tonne in Q1 2015 and
2015 guidance of $595 - 615 / tonne.

Direct operating cash cost

Q2 2015 Actuals Q1 2015 Actuals 2015 Guidance

(US$/t) 527 630 520 - 530
Total operating cash cost

(US$/t) 3 636 725 595 - 615
All-in operating cash cost

(US$/t)4 685 766 650 - 670

Unit cash costs in Q2 benefited from strong rutile production and an increase in by-product revenue. Direct operating cash costs in Q2 were in-line with guidance. Total operating cash cost and all-in operating cash cost were slightly above guidance due to non-capitalized costs associated with the Gangama construction start-up incurred over the quarter. Sierra Rutile expects unit cash costs to further improve towards guidance levels in the second half of 2015 along-side an increase in rutile production.

3 Total operating cash cost (includes direct operating costs, general administrative costs and corporate costs but excludes depreciation) less by-product revenue divided by tonnes of rutile produced.

4 All-in cash cost (total operating cash cost plus stay-in-business capital cost, but excludes depreciation) less by- product revenue divided by tonnes of rutile produced.

Expansion projects

Gangama Dry Mine

During the quarter Sierra Rutile commenced construction of phase 1 of the Gangama Dry Mine. The project will be developed in two phases, each a separate 500 tonne per hour operation. Phase 1 will be constructed over a 12-month period, with first production targeted for late Q2 2016.
Construction is on schedule and on budget and major long-lead equipment procurement has been completed as planned.

Sembehun Dry Mine

Sierra Rutile recently completed a positive scoping study for the Sembehun Dry Mine project which has highlighted a well-advanced, long-term dry mining project with strong economics. Work has commenced on a pre-feasibility study and is expected to be completed in Q3 2015. As the Sembehun Dry Mine is a long-term project, no construction decision will be required until at least 2017.

Sales

Sierra Rutile product continues to experience strong customer demand for its high-quality, premium product, however, pigment markets remain subdued. The outlook for the titanium metal and welding markets is positive, with increased volumes expected to flow into these end markets in H2 2015.

Ebola update

To date, there have been no Ebola cases at Sierra Rutile's operations. Nationwide containment efforts are now focused on eradicating the virus in select regions and large parts of the country are now Ebola-free.
A safe work environment continues to be a first priority and all Ebola-mitigation measures remain in place at Sierra Rutile's operations.

Chief Operating Officer and Chief Financial Officer appointments

As previously announced, during the quarter Sierra Rutile appointed Wayne Venter as Chief
Operating Officer and Matthew Hird as Chief Financial Officer.

ENDS For Further Information:

Sierra Rutile Limited John Nagulendran Company Secretary	[phone]
RBC Capital Markets Nominated Adviser and Joint Corporate Broker Jonny Hardy	[phone]

Investec Bank Joint Corporate Broker Chris Sim / George Price	[phone]
Numis Securities Limited Joint Corporate Broker John Prior / James Black / Paul Gillam	[phone]
Kreab Marc Cohen / Christina Clark / Fiona Cumberland	[phone]

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 mines, located in the south west of Sierra Leone, are based on 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 895 million tonnes (as at 30 September 2014).
www.sierra-rutile.com