Company Information for International Ferro Metals Ltd

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LSE; IFL View full financial data

Company Statement

International Ferro Metals is an integrated ferrochrome producer listed on the London Stock Exchange (LSE: IFL). Head office is in Sydney, Australia and the production facilities are located in the North West Province of South Africa.

International Ferro Metals (IFM) aims to be one of the world’s low cost ferrochrome producers through the use of latest mining technology and integrated mine and processing plants. To fulfil this objective, the company successfully raised equity capital of £99 million and listed its shares on the AIM market in September 2005. These funds, together with Bank borrowings have been used to purchase Chrome reserves (see details of ore bodies), as well as the development of an integrated ferrochrome processing plant located 100km outside Johannesburg in the Northwest province of South Africa.

The furnaces were commissioned in January 2007. Production units are presently working 24/7 to reach IFM's goal to produce 3% of the world’s ferrochrome. Jiuquan Iron & Steel Group Company "JISCO", the largest steel manufacturer in North West China (see JISCO), who has signed a guaranteed off-take agreement to acquire approximately 40% of the company’s ferrochrome production, is giving effect to the agreement. CMC Cometals (see CMC Cometals), a metals trading company with a $1.6 billion market capitalisation, who has also entered into a off-take agreement to acquire 20% of production, is also giving effect to their agreement. The balance of production will be sold by JISCO and CMC Cometals on an agency basis. IFM's first ferrochrome shipments left the plant at the end of February.

Current Operations

The development of the Project commenced in 2002. Since then has passed a number of milestones:

• IFM has bought the mineral, mining and other required surface rights to commence operations. 
• IFM completed a Bankable Feasibility Study which was used to secure funding arrangements and terms from Senior and Junia lenders. 
• The processing plant has been designed and specified and contracts have been signed that will see the delivery of the plant on a Fixed Price Turn Key Basis. 
• Testing of the plant design has been completed and the results show that once in production, IFM should be one of the world's cheapest ferrochrome producers. This is as a result of the modern environmentally conscious technology being applied to the Project as well as the proximity of the Project to a resource of quality. 
• IFM has signed off-take arrangements with JISCO, a large Chinese steelmaker and CoMetals a US based and New York stock exchange listed commodity broker. 
• JISCO has also agreed to become a strategic equity partner in the Project. 
• All mining and processing permits have been granted. This required the completion of environmental and mine planning. 
• Debt funding arrangements have been finalised. 
• Project equity has been raised and the Company admitted to AIM. 
• Construction of the plant commenced in October 2005.
• International Ferro Metals Limited has entered into an agreement with Mittal Steel South Africa, Africa's largest steel maker, for the guaranteed supply of 100,000 tonnes of market coke at favourable pricing.
• The mine (the first phaseof the project) was succesfully commissoned during June 2006. Under the agreement, Mittal Steel South Africa, a producer of approximately 7.1 million tonnes per annum ("tps") of liquid steel will, through its Coke and Chemicals division provide IFM with 100,000 tpa of market coke for a period of three years with an option to extend the agreement. This supply will meet all of IFM's coke requirements for the operation of its two-ferrochrome furnaces which are currently under construction.
• The support of Mittal Steel removes a further risk from the operation of IFM's ferrochrome facility. The Company also has long-term agreements in place for the supply of electricity from Eskom, South Africa's primary electricity supplier and the sale of product to Jisco, a Chinese state owned steel producer situated in China's Gansu province and an major shareholder in IFM and Commercial Metals Company.
• Mittal is the only local producer of market coke in South Africa, with a current capacity of 445,000 tonnes per annum. The market for coke is growing rapidly and Mittal Steel South Africa has commissioned the construction of a ZAR455 million/450,000 tpa coke oven battery at its Newcastle mill with completion of the coke oven battery expected in August this year.
• International Ferro Metals Limited has exercised its option to acquire all of the issued share capital of Purity Metals Holdings Limited ("Purity"), the owner of an 80% interest in Sky Chrome Mining (Proprietary) Limited ("SkyChrome"), the owner of a chromite property that is situated five kilometers from the IFM site at the Buffelsfontein mine and processing facility in the North West Province of South Africa which is currently under construction and due for completion in 2006.

Highlights

• Acquisition should allow IFM to significantly extend the life of the ferrochrome facility currently under construction;
• Production capacity at the ferrochrome facility could be doubled and;
  Acquisition provides significant value to the Company.

Construction Progress

• Both furnaces were commisioned in January 2007, three months ahead of schedule;
• The beneficiation plant as well as the pelletising and sintering plant have been commissioned thereby bringing the project to a close;
• The project concluded well within its cost budget;
• Both furnaces are able to produce at full capacity of 267 000 tonnes per annum.

Mine Production ahead of schedule

• Chromite production at its Lesedi mine is developing well and its production is ahead of schedule. Ore is being stockpiled for supply to the Company's ferrochrome furnaces in January 2007;
• The Company has sufficient ore to feed the two furnaces currently under construction, along with a furnaces of the same size, for over 50 years if the Sky chrome resource are included.

Geographical Spread

South Africa

Board of Directors and Key Management

Directors
Mr Anthony (Tony) Grey	Chairman
Mr David Kovarsky	Managing Director
Mr Ian Watson	Non-executive Director
Mr Terry Willsteed	Non-executive Director
Ms Tian Xia	Non-executive Director
Mr Xiaoping Yang	Non-executive Director
Mr Stephen Oke	Non-executive Director
Management
Mr Ronald (Ronnie) Barnard	Director and Chief Executive Officer IFMSA

Company Address Level 11, 151 Macquarie Street Sydney, New South Wales, Australia 2000 Telephone: +61 2 8298 2090 Facsimile: +61 2 8298 2020 Email: info[at]ifml.com Website: http://www.ifml.com

Additional Address/Key Contact Site Office Buffelsfontein JQ465 Mooinooi Tel: +27 14 574 6300 Fax: +27 14 574 6401 Email - info@ifmsa.co.za

Nominated Brokers Numis Securities Limited Cheapside House 138 Cheapside London, EC2V 6LH United Kingdom

Nominated Advisors Grant Thornton Corporate Finance Grant Thornton House Melton Street Euston Square London, NW1 2EP United Kingdom

Broker/Analyst Reports

03/01/08 - Numis Securities
06/12/07 - Numis Securities
14/11/07 - Numis Securities
21/05/07 - Teather & Greenwood

Major Shareholders

Jiuquan Iron and Steel Group 26%

Related News

29/05/08 - Yes, We Will Get That Power, Says International Ferro Metals Chief David Kovarsky
03/04/08 - International Ferro Metals Enjoys High Ferrochrome Prices, But Power Constraints In South Africa Take Off Some Of The Shine
19/07/07 - International Ferro Metals Has Now Confounded All The Doubters

Most Recent Statement

10/07/08 - Production Report for the three months to 30 June 2008
19/05/08 - Interim Management Statement and March Quarter Production Report
06/05/08 - Notice of Interim Management Statement
03/03/08 - Reviewed Interim Results - 31 December 2007
30/01/08 - Electricity Supply Interruptions
25/01/08 - International Ferro Metals told to turn off furnaces by Eskom