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.

Production of ferrochrome from IFL’s two furnaces has been temporarily disrupted by both the operational failure of pressure rings which hold the contact points against electrodes within the furnaces and two instances of faulty wiring in the ball mill of the pelletising plant. These are expected to reduce production by up to 30,000 tonnes in the financial year ending 30 June 2008.

Electrode Pressure Rings
Following a trend of faults during the ramp-up and early operational stage, indicating similarities between a number of pressure ring failures, a Professor of Metallurgy from the University of Pretoria was appointed by IFL to review the failure events and to advise as to the most efficient remedial action.

Initial findings indicate that these failures could be due to design faults. All pressure rings in both the furnaces will need to be systematically replaced as soon as new redesigned pressure rings are available. The lead time for fabrication of replacement pressure rings prevents a complete single change over to new pressure rings. Therefore, it is planned to take a staged approach, and to the extent possible, change the pressure rings during planned maintenance cycles which will leave one furnace operating during the remediation period and minimise production disruptions. IFL is seeking to ensure all pressure rings are replaced by end of January 2008.

IFL will seek to recover the capital cost of remedying these problems from the contractor responsible for design and installation of the electrode mechanism. The contractor is committed to rectifying these problems as soon as possible.

Gear Box Faulty Wiring
IFL has also identified that incorrect wiring of control mechanisms within the ball mill gear box of the pelletising plant has caused overheating and the subsequent failure of bearings. A temporary replacement gear box has been installed allowing the plant to operate at reduced capacity resulting in a reduction of ferro chrome production.

It is expected that installation of a new gearbox and other rectification work will take up to five weeks and will be completed during October 2007. In the meantime IFL will seek to minimise disruption to production by using its lumpy ore for its furnaces.

The failure of the gear box is under investigation and the contractor responsible for construction of the pelletising plant has been notified that IFL intends to seek recovery of costs and damages from this failure.

Production Outlook
IFL expects that remedying these faults, will involve furnace down time outside that previously anticipated as routine maintenance. The consequential loss of production may be up to 30,000 tonnes through the rectification period to 31 January 2008.

Each of the other components of IFL's integrated ferro chrome facility is operating at capacity and IFL’s management has no reason to anticipate the smelter will not resume production at the rate of 2, 67,000 tpa of ferro chrome by the end of January 2008. On that basis, IFL expects production for the year ending 30 June 2008 to total about 2, 37,000 tonnes, which could reduce IFL's production and revenues for the year ending 30 June 2008 by approximately 11%.

Production in the period to 30 June 2007 totalled 49,000 tonnes, represented by sales of 36,000 tonnes and finished product committed to sales contracts but not shipped of 13,000 tonnes due to the rescheduling of shipping.

Stephen Turner, Managing Director of International Ferro Metals commented "While our management team is very disappointed at these two unforeseen plant failures we are confident that effective remedial action is being taken. It is not envisaged that this disruption to production will impact upon the timing of the proposed expansion of ferrochrome production capacity to 6, 65,000 tonnes per annum.

The stainless steel market remains strong as does that for its key ingredient ferro chrome. Prices for ferro chrome remain at a long term high with strong demand and low industry stock piles. The IFL plant is forecast to revert to producing at the rate of 2, 67,000 tpa of ferro chrome following the replacement of the pressure rings within each furnace."

ENDS

For more information contact:

International Ferro Metals Limited
Stephen Turner, Managing Director
Mob: +61 418 440 844
www.ifml.com

Brunswick Group
Carole Cable
Tel: 020 7404 5959

Numis Securities Limited
John Harrison
Tel: 020 7260 1000

Notes to editors:
International Ferro Metals is a ferrochrome producer that has recently commenced shipments from its integrated chromite mine and ferrochrome processing operations in South Africa for use in the global stainless steel industry.

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