International Ferro Metals Limited has announced production report for the three months to December 31st 2011.

Highlights:
Ferrochrome production of 54,142 tonnes for the quarter, up by 71% QoQ and up by 15% YoY

Sales of 58,389 tonnes achieved in the quarter, up 39% from the previous quarter and down 22% on prior year corresponding period

Furnace roof rebuild project successfully completed, on time and on budget; first full production quarter expected in Q1 of calendar 2012

Sky Chrome mining operations continued to ramp up, produced 122,000 tonnes run of mine ore for the quarter, up from 72,000 tonnes in previous quarter

Co generation plant produced 10GWh of electricity for the quarter, 4.4% of total requirement

Construction by Anglo Platinum of Chrome Tailings Re treatment plant completed, commissioning to be completed end of January with supply of UG2 chrome concentrate expected in February 2012

12% of targeted production cost savings achieved; on track to hit target in current financial year

Net borrowings increased from ZAR 367 million at September 30th 2011 to ZAR 458 million at December 31st 2011

ZAR 32 million CAPEX for the quarter

Operations expected to be cash generative in Q1 2012

Zero fatality track record maintained and further significant improvement in overall safety performance

Post period highlights:
Cogeneration plant modifications underway to increase hydrogen operating range, expected to be completed April 2012

Benchmark European FeCr price decreased by 5 cents to USD 1.15 per pound for the quarter ending March 2012

In tonnes

Mr Chris Jordaan CEO of International Ferro Metals Limited said that "The furnace roof rebuild project was successfully completed on time and on budget, with the furnaces ramping up to full load during the quarter with no water leaks, improved furnace efficiencies and reduced costs. Management is pleased with this outcome and has further strengthened its active marketing program, recording new business wins in the USA and higher volumes in existing markets to drive demand for increased production."

He added that "Cost savings continue to be a focus for the Company, with initiatives completed or underway across smelting, mining and inputs including power and chrome concentrate. The Company has already achieved 12% of targeted production cost savings and are on track to hit the target of 10.9 cents per pound on FY 2011 production costs within the current financial year. The combination of solid operations, active marketing to a broader range of customers and cost savings should place IFL in a healthy position to take full advantage of the robust long term outlook for stainless steel."

Mr Chris Jordaan said that "Our customers have noted that stainless steel mill capacity utilization remained at lower levels in Europe at 60% to 70% due to the Eurozone debt crisis, compared to the USA at 80% to 85%. In Asia, mills were at relative constant capacity utilization levels throughout the quarter. Wavering demand as spot prices edged lower towards the end of the quarter was in line with working capital and stock reduction in these markets. In Q4 of calendar 2011 the Q3 European benchmark price was rolled over at USD 1.20 per pound. During this period spot prices declined as the calendar year drew to an end. This was mainly due to European stainless steel mills reducing their working capital in response to the Eurozone debt crisis."

IFL responded successfully to this and secured term contracts. Customers reported that FeCr stock levels in relation to production capacity remained low at mills. The market remained cautious during the quarter in expectation of a lower FeCr price in Q1 of calendar 2012 and uncertainty in the European markets.

Run of mine ore production for the quarter to December 31st 2011 increased to 271,000 tonnes from 263,000 tonnes in the prior quarter. Lesedi production was down due to strike action by the mining contractor's employees over a 2 week period, while Sky Chrome production increased from 72,000 tonnes to 122,000 tonnes as ramp up continues. The ramp up of the Sky Chrome open pit mine is on track and will augment ore production as Lesedi open pit operations cease towards the end of FY 2012. While the Company expects production from Lesedi will stay at current levels over calendar H1 2012, it will begin to reduce toward the end of the financial year and be replaced by cheaper ore from Sky Chrome as its production continues to ramp up.

Chrome ore production

Recoveries for the quarter from the ore beneficiation plant averaged 58% compared to 59% in the previous quarter. As previously announced, lower recoveries are expected during the initial shallow mining phase of the Sky Chrome open pit as weathered ore is extracted. This will improve as the open pit reaches unweathered deeper levels. Blasting commenced on schedule during November 2011.

Further to this, the Company successfully commissioned an ore concentrate recovery plant in the quarter. The plant is integrated into the beneficiation plant and retreats current coarse ore and historical waste from the beneficiation plant. This will further enhance ore recovery rate contributing potentially an additional 40,000 tonnes per annum of beneficiated ore concentrate.

Management is pleased with the outcome of the furnace rebuild project. FeCr production for the quarter increased to 54,142 tonnes from 31,634 tonnes in the prior quarter. This compares favorably with past full production quarters as both furnaces were restarted in the previous quarter after the successful completion of the furnace roof rebuilds. The furnaces ramped up to full load during September and October 2011 respectively and furnace availability has improved significantly over the quarter. No downtime due to water leaks was recorded. This enabled improved furnace efficiencies and throughput resulting in reduced costs compared to periods prior to the roof refits.

During the quarter to December 31st 2011, the cogen plant generated 10.0GWh of electricity which represents 4.4% of the Company's total electricity requirement for the quarter. At full production the cogen plant should provide the Company with approximately 11% of its total energy requirements.

The furnace gas composition has stabilized at elevated hydrogen levels relative to the original engine design parameters. Engine 1 has been successfully modified to operate at these elevated hydrogen levels and modifications to the balance of the engines are underway at a cost of ZAR 11 million. The engine restart will be staggered to allow continued testing and modifications as required, and we expect the plant to reach full output during Q2 of this calendar year.