International Ferro Metals Limited, the integrated ferrochrome producer, announces that further to the temporary suspension of production and the court hearing held two days ago that found in favour of the Company upholding the contractual settlement agreement reached with the South African Department of Mineral Resources (“DMR”), a presentation meeting held yesterday at the DMR resulted in the successful lifting of the Section 54 notice.

 

As previously announced the furnaces remain in operation and continue to ramp up with furnace 1 expected to reach normal production by 27 November, and furnace 2 expected to achieve similar levels of production by the end of November.  An initial assessment of the impact on ferrochrome production is a loss of approximately 4,000 tonnes. As a result, production guidance for the first half of 2015 is in the range of 97,000 to 100,000 tonnes and for the full year 215,000 to 222,000 tonnes of ferrochrome. The loss in production due to the Section 54 notice will have subsequent impacts on both revenue and production costs, which are outlined in the update below.

 

Chris Jordaan, IFL’s Chief Executive Officer said, “We are pleased that the Section 54 notice has been lifted and that the furnaces are well on their way to full production, but disappointed that the impact to the business in a time of weak ferrochrome prices will result in an increased operational loss for the current half of the year.

 

The events that have pushed us into a higher loss this half than originally anticipated, in addition to a lower ferrochrome pricing environment, namely lower volumes, a one off cost for reductant trials, and a higher fines to lump ratio resulting in higher discounts – are not expected to be repeated during the second half of the year.  Moreover, with the introduction of LG6 ore in Q3 and MG1/MG2 ore in Q4 which will result in lower ore costs, we expect to see a significant improvement to profitability during these periods.”