Released: 12/11/2009
http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20091112:RnsL3816C
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RNS Number : 3816C
International Ferro Metals Limited
12 November 2009
12 November 2009
International Ferro Metals Limited
("IFL" or the "Company")
Production Report for the three months to 30 September 2009
and Interim Management Statement
Highlights:
* Ferrochrome production was 36,773 tonnes for the quarter to 30 September
2009, up sharply from the June 2009 quarter due to the start up of the second
furnace
* Ferrochrome saleswere down from 41,916 tonnes in the June 2009 quarter when
the Company was selling inventory plus production, to 36,383 tonnes in the
September quarter
* Inventory remained stable at 9,752 tonnes, compared to 9,362 tonnes at 30June
2009
* Net cash balance of ZAR433m as at 30September 2009 (30June 2009: ZAR340m)
* Ferrochrome price was US$0.89 per pound for the September 2009 quarter,
compared to US$0.69 for the June 2009 quarter
Post-period highlights
* Ferrochrome price has increased to US$1.03 per pound for the December
quarterof 2009
Three months to 30September 2009 Three months to Three months to 30September 2008
(tonnes) 30June 2009 (tonnes)
(tonnes)
Production 36,773 18,437 59,470
Ferrochrome sales 36,383 41,916 28,025
Ferrochromestock at quarter end 9,752 9,362 33,265
Commenting on the operational update, Chief Executive Officer David Kovarsky
said:
"Following increased ferrochrome demand and general shortages during the quarter
we made a decision to start up the second furnace on 17 August 2009, having
switched on the first furnace on 20 April 2009. The start up went smoothly and
production is now running at full Eskom constrained capacity. With the prospect
of continued ferrochrome price increases through 2010, IFL is well placed to
take full advantage of its strategic access to growth in stainless steel
production."
Ferrochrome market conditions
Since the beginning of 2009, global stainless steel production volumes have
steadily increased and although there has been a recent slowdown over the
quarter under review, it is expected that the upward trend will resume from the
beginning of 2010.
Production
Production for the quarter to September 2009 was 36,773 tonnes compared with
18,437 tonnes in the previous quarter when only one furnace was in operation and
59,470 tonnes for the quarter to 30 September 2008 when both furnaces were
running at full capacity after allowing for electricity constraints. Both
furnaces are now running smoothly and achieved Eskom constrained nameplate
capacity towards the end of October.
Sales
Ferrochrome sales were 36,383 tonnes for the quarter compared with 41,916 tonnes
in the previous quarter when the Company was selling stockpiled material as well
as production. These sales were executed in all of the Company's traditional
markets: China, Europe and the United States. The strength of the Rand has
adversely impacted achieved ZAR revenues and reduced margins.
Inventory and costs
Costs have been well controlled during the quarter.
Stock levels were low in the June quarter due to increased sales and are
currently low as IFL turned on its second furnace part-way through the September
quarter. The Company is now rebuilding inventory to more normal levels in
response to expected increases in electricity prices due to regulatory tariff
charges and seasonal pricing and in response to expected increases in the
ferrochrome price.
Capital expenditure
Total capital expenditure budgeted for the remainder of the financial year is
ZAR350 million which includes ZAR190 million for the electricity co-generation
project and ZAR80 million for mine development.
The mine capital programme has begun with the MG2 decline expected to be
completed by the end of November 2009. Development of the MG1 decline has
commenced.
Construction of the co-generation plant, which will allow the Company to
generate 10% of its electricity requirements at significantly lower cost, after
allowing for carbon credits, is well underway and will be commissioned in the
second half of 2010.
Cash
The Company's balance sheet remains strong with net cash of ZAR433m at the end
of September 2009 and the ZAR500 million Bank of China working capital facility
in place. The Company will continue its prudent management of cash and
resources.
Outlook
Due to a lack of transparency in demand from developing economies and the
outlook for the Rand and electricity costs, the Company remains cautious in the
near term. However, on an operational level, the Company's furnaces are
operating efficiently, mining development has commenced as planned and the
development of our co-generation project is on track. Our strategic
relationships are key in harnessing the growth in demand in China and our belief
in the outlook for stainless steel demand in the long term remains intact.
Other than as detailed above in this Interim Management Statement, there have
been no material events or transactions in the period from 1 October 2009 to 12
November 2009.
For further information please visit www.ifml.com or contact:
International Ferro Metals Limited +27 82 650 1192
David Kovarsky, Chief Executive Officer
Brunswick Group +44 (0) 20 7404 5959
Patrick Handley / Carole Cable
Numis Securities Limited +44 (0) 20 7260 1000
John Harrison / Stuart Skinner
About International Ferro Metals:
International Ferro Metals produces ferrochrome, the essential ingredient in
stainless steel, from its integrated chromite mine and ferrochrome processing
operations in South Africa. International Ferro Metals is listed on the London
Stock Exchange under the symbol IFL.
Forward Looking Statements
This announcement contains certain forward looking statements which by nature,
contain risk and uncertainty because they relate to future events and depend on
circumstances that occur in the future. There are a number of factors that could
cause actual results or developments to differ materially from those expressed
or implied by these forward looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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