IFL.L Regulatory News (IFL)

14 Sep 2009 07:00



14 September 2009

International Ferro Metals Limited

("IFL" or the "Company")

Annual results for the year ended 30 June 2009

International Ferro Metals Limited (LSE: IFL), the integrated ferrochrome producer, presents its full year results for the year ended 30 June 2009.

·;	Strong balance sheet with ZAR340 million (GBP26 million) of cash
·;	Ferrochrome price US$0.69/lb in Q4 of FY2009, down 64 percent from Q4 of FY2008
·;	Revenue ZAR782 million, down 59 percent
·;	EBITDA loss of ZAR396 million
·;	Net loss before tax of ZAR456 million, compared with net profit of ZAR630 million in FY2008
·;	Loss per share of ZAR0.66
·;	Excellent safety record results in the Company being certified ISO compliant during the year

 

Post period update - well placed to benefit from rising demand

·;	GBP22.2 million placing, proceeds will fund an electricity cogeneration plant expected to generate 11% of IFL’s overall electricity requirements, and reduce electricity costs
·;	ZAR500 million three year irrevocable working capital facility secured from Bank of China
·;	Second furnace restarted mid August
·;	Open pit mining ramping up and underground mine development resumed
·;	Recovery in ferrochrome price to US$0.89/lb in Q1 of FY2010

Financial highlights for FY 2009

	H1 2009	H2 2009	FY 2009	FY 2008
	Tonnes '000	Tonnes '000	Tonnes '000	Tonnes '000
FeCr production (tonnes)	90,759	19,605	110,364	205,607
	ZAR'000	ZAR'000	ZAR'000	ZAR'000
Sales Revenue	526,057	255,517	781,574	1,919,396
Cost of goods sold	(456,560)	(412,417)	(868,977)	(1,190,926)
EBITDA	(2,331)	(393,637)	(395,968)	726,727
Net profit/(loss) after tax	3,251	(341,830)	(338,579)	578,182
Net operating cash flow	(321,398)	(26,776)	(348,174)	251,257
EPS (cents per share)	1	(67)	(66)	114
DPS (pence)	-	-	-	1p

David Kovarsky, Chief Executive of IFL commented:

"The year under review was very challenging for IFL as demand and prices plummeted from the previous year. The Company responded quickly and prudently to this new environment and cut production, focused on cost cutting, cash preservation and monetising inventory. The post period successful GBP22.2 million capital raising, restart of the second furnace and resumption of mining highlights market support for these actions and the long-term ferrochrome view. We are confident that the recent resumption in demand and stronger ferrochrome prices are sustainable and IFL is back on track to take advantage of this with an improved cost base."

The full published accounts for the financial year ended 30 June 2009 will be posted to shareholders on 24 October 2009, and will be available on the Company's web site, www.ifml.com 

An analyst presentation on the full year results will start at 9.00am UK time on Monday 14 September 2009 at: 

Brunswick Group LLP

16 Lincoln's Inn Fields

London WC2A 3ED.

For further information please visit www.ifml.com or contact:

International Ferro Metals Limited

David Kovarsky, Chief Executive

Mob:

+27 82 650 1192

Brunswick Group

Patrick Handley / Carole Cable

Tel:

+44 (0) 20 7404 5959

Numis Securities Limited

John Harrison / Stuart Skinner

Tel:

+44 (0) 20 7260 1000

Notes to editors:

International Ferro Metals produces ferrochrome, the essential ingredient in stainless steel, from its integrated chromite mine and ferrochrome processing operations in South Africa, supplying 3.5 percent of the world's ferrochrome to the global stainless steel industry. 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.

Chairman's Statement

Having brought its Buffelsfontein ferrochrome facility on stream at a prosperous time in the industry's history and achieved a maiden profit after tax of ZAR578 million, the Company found itself caught up in the financial storm that buffeted economic activity throughout the world during 2008 to 2009. The ferrochrome industry did not escape. Indeed the effects of the crisis and its consequential economic downturn were arguably worse there than in many other instances.

In January 2008, Eskom, South Africa's electricity supplier, announced a cut back in electricity allocations that crystallized in a 10% reduction for the ferrochrome industry. The uncertainty surrounding the initial announcement, together with the eventual 10% cutback, propelled the stainless steel producers, who are the ferrochrome customers, to build up ferrochrome inventories to unusual levels. While this activity led to welcome ferrochrome price increases, when the downturn arrived its adverse effects were exacerbated. Orders for ferrochrome dried up overnight and the price collapsed.

The Company led the way in reacting to the emergency. It shut down both furnaces in November, 2008 and cut costs in all available areas, including labour, regrettably laying off 113 workers.

The market fell into disarray, with some customers reviewing previous commitments and calling on producers to share the burden of economic distress. The Company reacted with firmness but also a sense of pragmatism. Inevitably price reductions followed, in some cases even from previously agreed upon levels.

During April, in order to monetise raw material stocks, the costs of which were sunk, the Company restarted one furnace. This decision added to the Company's cash position. Throughout these difficult times, the Company's priority was to preserve cash.

The cut back in production caused a slump in sales from 207,862 tonnes last year to 101,835 tonnes this year, with a consequential deterioration in economies of scale. Combined with price falls in the product, it produced a loss before tax of ZAR456 million for this financial year, compared with a profit before tax of ZAR630 million in the prior year.

Towards the end of the financial year, the clouds bearing down on the industry began to lighten as the globally coordinated stimulus strategy took effect, producing a response in the stainless steel industry. Ordering recommenced and the ferrochrome price started to rise. China's strong economic performance, which outdid many of the forecasts, led the way. The Company responded to the improving conditions by deciding to continue production from its first furnace and restarting its second. Both furnaces are now in steady production, the restarts occurring without difficulty. In addition,open pit mining is ramping up and underground mine development has resumed. 

In August 2009, the Company raised GBP22.2 million from a placing of approximately 51 million new ordinary shares which were subscribed by large financial institutions, most of which were existing shareholders. 

The proceeds of the equity issue will be used largely to fund the construction of a co-generation plant that will utilize furnace off-gases to produce about 11% of the Company's electricity requirements. The plant will be registered as a Clean Development Mechanism project under the Kyoto Protocol and will significantly reduce the Company's overall Carbon Footprint. By using the subsidy available through the sale of Certified Emission Reduction certificates (Carbon Credits) it will reduce electricity costs, which are rising in South Africa. In addition, it will allow the reinstatement of the 10% production capacity lost as a result of Eskom's electricity supply constraints. Early construction of the plant, consisting mainly of engineering and ordering of long-lead items, was commenced last calendar year but delayed because of the effects of the financial crisis.

While ferrochrome industry conditions are improving, it is necessary to keep constant watch on costs, which, despite vigilance on the part of the Company, are rising in the areas of coke, mine labour, and electricity. Since year end, electricity prices have risen in excess of 40%. Because these cost pressures are common to all South African producers, who supply most of the world's ferrochrome, a case can be made for further price rises in the product.

As we move into the post financial crisis era, and hopefully into a recovery phase, the Company is well placed to take advantage of improving conditions in the ferrochrome market. It has substantial cash resources, supplemented by a recently obtained irrevocable three year working capital facility of ZAR500 million from the Bank of China, two state of the art furnaces, experienced management, and a strong connection with the Chinese stainless steel market.

Tony Grey Chairman

 

Market Review

The first quarter of the fiscal year (Q3 2008) reflected a European benchmark ferrochrome price of US$2.05 per pound, which was the highest price ever recorded. This was against prices of US$1.01 a year before and US$1.21 at the beginning of calendar 2008. The price for Q4 2008 was set at US$1.85 in late September 2008, but the severe contraction in demand meant that there was a marked difference between agreed prices and spot and contractual prices. The contract price deteriorated rapidly to US$0.79 and then US$0.69 in Q1 and Q2 2009 respectively.

However, since May 2009, the industry has experienced a significant pick up in demand and the price firmed to US$0.89 in Q3 2009. This was driven by the disciplined reaction of ferrochrome producers that shut down production which led to global destocking and ultimately restocking. Secondly, world stainless steel production has seen a strong revival in China and, more recently, a more modest revival in Europe. The United States and Japan are lagging these economies in terms of their recoveries, but stainless steel production in these markets is picking up.

The Company's links into China have strengthened over the past nine months through a concerted marketing drive, partnered w JISCO, and IFM now sells approximately 50% of its production into the Chinese market. JISCO itself consumes 8,000 tonnes per month of ferrochrome and the Company supplies 5,000 tonnes of those requirements. JISCO's requirements are expected to double next year when it brings its new stainless steel plant into production.

The constrained supply coupled with the increase in demand particularly from China has led to an unanticipated shortage of ferrochrome and market analysts CRU International have estimated ferrochrome stocks were at 10.4 weeks of demand at June 2009, compared to 25.4 weeks in December 2008. 

Operational Review

Production 

	H1 2009	H2 2009	FY 2009	FY 2008	% Change 2008-2009
Ferrochrome production (tonnes)	90,759	19,605	110,364	205,607	-46%

 

Before the shutdown in November 2008, the plant achieved two months of record production. During the shutdown from November 2008 to April 2009 major plant upgrade and maintenance was undertaken, focussed on the furnaces and the ore beneficiation plant at a total cost of ZAR71 million. The expenditure included modifications to the pressure rings, the furnace roof and the material handling plant. Additionally the capacity of the ore beneficiation plant was increased. All of this work was conducted to enhance plant availability and flexibility. The Company is pleased to report that since the restart of the two furnaces in April and August 2009 respectively, the first furnace's output has increased to slightly above nameplate capacity while the output of the second furnace, which was more recently restarted, is in line with management's expectations.

Subsequent to the end of the financial year, a total of ZAR85 million has been committed to ensure that underground mine production achieves targeted monthly output of 90,000 tonnes. This capital programme will be completed by December 2012. The open pit will produce 35,000 tonnes per month for the next two and a half years, and this will provide the underground mine with flexibility and redundancy once the open pit is mined out. The capital expenditure includes the completion of the MG2 decline and further development of the MG1 decline. The Company has had to acquire ore as feedstock due to the earlier than anticipated furnace start up. Most of the purchases have been finalised at pre-determined prices, and purchases are less than what was earlier anticipated, due to the acceleration of the underground production schedule.

Reserves and Resources

The Mineral Reserves for Lesedi have increased marginally due to the depletion for mining during the year. For the Sky Chrome Project, the Mineral Reserves have been included in the statement as at 30 June 2009 in view of the September 2008 Feasibility Study completed during the year to 30 June 2009.

A summary is presented in the table below:

MINERAL RESERVES	Lesedi	Sky Chrome	Total		MINERAL RESOURCES	Lesedi	Sky Chrome	Total
	kt	kt	kt			kt	kt	kt
PROVED					MEASURED
MG1	3,840	64	3,904		MG1	6,130	1,022	7,152
MG2	6,808	130	6,938		MG2	7,615	1,325	8,940
					MG3	4,982	0	4,982
PROBABLE					INDICATED
MG1	826	21,074	21,900		MG1	1,938	28,535	30,473
MG2	2,129	20,488	22,617		MG2	2,060	47,719	49,779
					MG3	1,227	0	1,227
PROVED & PROBABLE RESERVES	13,603	41,756	55,359		MEASURED & INDICATED RESOURCES	23,952	78,601	102,553
					INFERRED
					MG1	2,730	6,435	9,166
					MG2	2,848	9,622	12,470
					MG3	1,894	0	1,894
					INFERRED RESOURCES	7,472	16,057	23,530

The information in this report that relates to exploration results is based on information compiled by SRK Consulting under the supervision of Mr HG Waldeck (Pr Eng), V Simposya (Pr Sci Nat) and M Wanless (Pr Sci Nat). All Competent Persons have sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration, and to the activity which has been undertaken, to qualify as a Competent Person as defined by the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. SRK consents to the report being issued in the form and context in which it appears.

Electricity Co-Generation Project Update

On 3 August 2009 it was announced that the Company would recommence construction of the Clean Development Mechanism ("CDM") compliant electricity co-generation plant at a total cost of ZAR254 million.

The Plant was conceived in January 2007 as a CDM project under the framework provided by the Kyoto Protocol. The plant has four key benefits:

·;	Firstly, it will displace c.144,000 tonnes of carbon dioxide equivalent, reducing IFL's environmental impact.
·;	Secondly, it will allow the Company to monetise the displaced carbon dioxide and earn Carbon Emission Reductions (“CER’s”) for 10 years, which are expected to generate an income of c. EUR1.4 million in the first full year of operation (based on current CER pricing) and contribute towards a reduction in IFL's electricity costs.
·;	Thirdly, by generating c.11 percent of overall electricity requirements it is expected to reduce IFL’s electricity costs by 10 percent. Eskom’s per unit electricity cost has increased by 96 percent since April 2007 and further above-inflation increases are expected.
·;	Finally, it will allow the Company to achieve 100 percent production capacity of 267,000 tpa by providing the power currently limited by Eskom’s restrictions.

 

The plant will use a proven technology manufactured by General Electric Jenbacher and is expected to be commissioned in September 2010 and ramp-up is expected to take one month. Once completed, ferrochrome production capacity will be restored from the current electricity constrained level of 240,000 tpa to full capacity of 267,000 tpa. 

Management changes

During the year there were a number of management changes. In December 2008, Tony Grey, Executive Chairman and Stephen Turner, Chief Executive Officer, moved from executive roles to non executive positions. Tony Grey is now Non Executive Chairman and Stephen Turner is Non Executive Deputy Chairman. David Kovarsky, previously Managing Director, is now Chief Executive Officer. Subsequent to year end, Jannie Muller replaced Dion Cohen as Chief Financial Officer. 

Safety, health, environment and quality 

During the year under review the Company made excellent progress in its safety and quality initiatives and its efforts resulted in it being certified by TUV Rhineland, as meeting the requirements of OHSAS 18001:2007, ISO 14001:2004 and ISO 9001:2000. 

The statistics below reflect this commitment: 

·;	The Company has a zero fatality rate with a total of 11 million fatality-free man hours worked since 2005 which equates to 1.4 million fatality free shifts.
·;	The frequency of total recordable injuries reduced by 76 percent compared to the previous year.
·;	The lost time injury frequency rate of 0.79 per million hours worked was a reduction of 48 percent, compared to the previous year and compares to the mining industry average of 20.1
·;	The disabling injury frequency rate of 0.17 per million hours worked was a reduction of 11 percent compared to the previous year and compares favourably to the mining industry which has an average of 4.1

 

The Company deeply regrets that one permanent employee and one contractor sustained partial amputation injuries. Both employees have been redeployed and have been given full rehabilitation support. 

The two major environmental issues facing the ferrochrome industry are general particulate emissions and hexavalent chrome generation. On both of these IFL's emissions were well within legal allowable limits. IFL's daily average particulate matter emission is 0.034mg/m3 compared with a limit of 0.075mg/m3, and sampling results for hexavalent chrome measured below detectable levels.

Black Economic Empowerment (BEE)

In April 2009 the Company lodged its intended BEE transaction with the former South African Department of Minerals and Energy ("DME"), now the Department of Mineral Resources ("DMR"), as the final element of its previously submitted application to convert its old order mining rights to new order mining rights under the South African Minerals and Petroleum Resources Development Act. The transaction envisages the sale of the business and assets of the Company's South African operating subsidiary, International Ferro Metals SA (Pty) Limited ("IFMSA"), to a new IFL subsidiary ("Newco") at fair value with consideration for the purchase to be fully funded by the issue of debentures and preference shares. The issue of these instruments results in Newco having a nominal net asset value upon implementation, enabling it to issue 26 percent of its equity to the BEE parties for a nominal amount. The BEE parties are the surrounding communities, the staff and an entrepreneur. The effective date of the transaction is shortly after the DMR converts the old order mining rights, which is expected to occur in 2010.

In anticipation of the BEE transaction, the Company bought back half of Global Eagle's (IFMSA's existing BEE shareholder) 1.25 percent shareholding for ZAR16.5 million, of which ZAR10 million was utilised to repay half of Global Eagle's ZAR20 million loan account from IFL. The buy-back transaction enabled Global Eagle to enhance its BEE composition.

Financial Review

Commentary on Financial Performance

IFL's results have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report has also been prepared on a historical cost basis, except for derivative financial instruments which have been measured at fair value. There has been no change to accounting policies over the reporting period.

Income statement

The Company reported a loss before tax of ZAR456 million for the year ended 30 June 2009, compared to a profit before tax of ZAR630 million for the prior year. The significant decline in profitability was due to the unprecedented sharp decline in global ferrochrome demand from the fourth quarter of 2008, which was triggered by dramatic production cuts by stainless steel producers as a result of the global economic crisis.

After achieving record production in the first two months of FY2009, the Company responded swiftly to deteriorating market conditions to preserve its cash position by shutting down its furnaces in November 2008 and focusing on selling down its inventory, reducing costs and deferring its major capital expenditure. 

The table below reflects the consolidated results for IFL for the year ended 30 June 2009. Both the functional currency and the presentation currency of the Company is South African Rand ("ZAR"). 

Summary of Income Statement	H1 2009	H2 2009	FY 2009	FY 2008
	ZAR'000	ZAR'000	ZAR'000	ZAR'000
Sales Revenue	526,057	255,517	781,574	1,919,396
Cost of goods sold	(456,560)	(412,417)	(868,977)	(1,190,926)
Gross profit (loss)	69,497	(156,901)	(87,403)	728,470
EBITDA	(2,331)	(393,637)	(395,968)	726,727
PBT	(26,809)	(428,969)	(455,778)	630,359
Taxation	30,060	87,139	117,199	(52,177)
Net profit (loss) after tax	3,251	(341,830)	(338,579)	578,182
Net operating cash flow	(321,398)	(26,776)	(348,174)	251,257
EPS (cents per share)	1	(67)	(66)	114
Weighted average number of shares			504,757,374	502,590,229
DPS (pence)	-	-	-	1

Sales revenue decreased by ZAR1.1 billion from ZAR1.9 billion in FY2008 to ZAR782 million in FY2009. This is attributable to a reduction in sales volumes from 207,862 tonnes in FY2008 to 101,835 tonnes in FY2009 together with significantly lower realised ferrochrome prices. 

Increases in the cost of reductants, electricity and freight contributed to increased unit production costs. Eighty two percent of the year's production occurred in the first half of the financial year where South African coke prices were on average 71 percent higher than the average for the prior financial year. Electricity prices were on average 29 percent higher in FY2009 compared with FY2008. The Rand on average depreciated by 24 percent against the US Dollar but this contribution to revenue was offset by the severity of the decrease of realised ferrochrome prices. Cost of production per chrome unit increased from US65c/lb in FY2008 to US76c/lb in FY2009, excluding head office overheads and share based payments. 

An adjustment to the share-based payment was made during the year to reflect the cancellation of all share options and phantom options and the re-issue of 9,929,568 phantom options at 16 pence per option. The effect of this was a positive revaluation of ZAR37 million.

Finance income of ZAR34 million is as a result of the large cash balances held over the financial year, and finance cost decreased by ZAR49 million between FY2008 and FY2009 due to the repayment of project debt in the previous financial year.

Headline earnings decreased significantly from a profit of ZAR578 million in 2008 (headline profit per share of ZAR1.14 per share) to a loss of ZAR339 million achieved for the year ended 30 June 2009 (headline loss of ZAR0.66 per share).

Costs

The Company took strong action to curtail costs during the year under review and during the second half of the financial year the Company undertook a cost reduction programme whereby 113 employees were retrenched, the use of contractors was cut back and senior management and board members' salaries were cut by 10 percent.

Administration and other expenses increased by ZAR257 million from ZAR135 million in FY2008 to ZAR392 million in FY2009 primarily due to:

·;	the non-absorption of fixed production costs of ZAR134 million as a result of the suspension of ferrochrome production in November 2008.
·;	the write-down of inventories of ZAR126 million to realisable value as at 30 June 2008.
·;	severance packages of ZAR37m to the previous management team and other employees.

 

Cash Flow 

	H1 2009	H2 2009	FY 2009	FY 2008
	ZAR'000	ZAR'000	ZAR'000	ZAR'000
Net cash flows from operating activities	(321,398)	( 26,776)	( 348,174)	251,257
Net cash flows from investing activities	(76,570)	( 84,525)	( 161,095)	(39,701)
Net cash flows from financing activities	97,726	(208,971)	(111,245)	607,214
Net increase / (decrease) in cash held	(300,242)	( 320,272)	( 620,514)	818,770
Cash at the beginning of the financial year	972,190	703,823	972,190	43,929
Effects of exchange rate changes on cash	31,875	( 43,462)	( 11,587)	109,491
Cash and cash equivalents at the end of the year	703,823	340,089	340,089	972,190

Operating activities utilised cash of ZAR348 million compared to ZAR251 million generated in the prior year, mainly due to the plant not recovering its fixed overheads while not in operation. 

Investing activities utilised ZAR161 million which represents the capital expenditure for maintenance and upgrading of the furnaces and beneficiation plant, mine development and the co-generation project.

Financing activities utilised ZAR111 million which was mainly due to the share buy-back of ZAR22 million and the payment of the dividend of ZAR76 million.

The Company's strategic focus over the financial year has been that of capital management; monetising inventory and reducing costs in a challenging environment to maximise liquidity and to take full advantage of a market recovery. Ferrochrome inventory was sold down from 42,523 tonnes in December 2008 to 9,362 tonnes by fiscal year end and certain trade debtors were discounted over the period. During April 2009 one of the furnaces was restarted to convert stockpile ore and approximately 13,000 tonnes of coke to ferrochrome which was monetised at very depressed prices. The bulk of the coke stockpile was purchased during the last two quarters of 2008 when coke prices reached historical highs. 

The Company continues to have a healthy net cash balance of ZAR340 million, after short term financing and excluding restricted cash. 

Balance Sheet

IFL has a strong balance sheet with ZAR2.3 billion in shareholders' equity (30 June 2008: ZAR2.8 billion). Key features and movements from FY2008 to FY2009 were:

 

·;	The increase in property, plant and equipment is attributable to capital work in progress for mine development, plant expansion capital and the co-generation plant.
·;	Net current assets, excluding cash and cash equivalents decreased by ZAR303 million due to a focused reduction in the working capital cycle.
·;	Net movement of ZAR118 million in deferred tax from a liability of ZAR51 million to an asset of ZAR67 million, attributable to prior year profits being offset against current year losses and unredeemed capital expenditure. The unredeemed capital expenditure balance is estimated at ZAR1.3 billion at 30 June 2009.

 

Post year-end funding

During July 2009 the Company secured a ZAR500 million three year irrevocable working capital facility with the Bank of China. On 3 August 2009 the Company raised GBP22.2 million (ZAR284 million) (before expenses) through a placing of 50.4 million ordinary shares at 44 pence per share.

This additional funding, together with the cash balance of ZAR340 million as at 30 June 2009 provides the Company with additional flexibility to manage its liquidity position and fund the higher working capital requirements arising from the increased production.

Share Buy-Back

During the year the Company repurchased and cancelled 3,919,000 ordinary shares for a total consideration of ZAR22 million at an average price of 30 pence per share.

Dividends

During the year the Company paid its maiden dividend of ZAR76 million which was declared for the 2008 financial year. The Board of Directors has resolved not to declare a dividend for this financial year.

David Kovarsky

Chief Executive

  CONSOLIDATED INCOME STATEMENTS

	Note	Consolidated		Parent
		2009	2008		2009	2008
		ZAR'000	ZAR'000		ZAR'000	ZAR'000
Sales revenue	2 (a)	781,574	1,919,396		-	-
Management fees received	2 (a)	-	-		6,217	16,960
Cost of goods sold		(868,977)	(1,190,926)		-	-
Gross (loss)/profit		(87,403)	728,470		6,217	16,960
Other (expenses)/income
Administrative and other expenses	2 (b)	(130,825)	(133,634)		(325,014)	(66,227)
Foreign exchange (losses)/gains		(11,587)	109,491		(16,037)	87,432
Write down of inventory to net realisable value		(125,775)	-		-	-
Unabsorbed fixed costs		(133,954)	-		-	-
Gains on mark-to-market of derivatives		-	5,919		-	5,919
Share based payment income/(expense)	3	35,565	(38,203)		9,673	(15,220)
Net (loss)/profit before interest and tax		(453,979)	672,043		(325,161)	28,864
Finance income	4	34,781	43,898		114,186	134,449
Finance costs	4	(36,580)	(85,582)		-	(2)
Net (loss)/profit before tax		(455,778)	630,359		(210,975)	163,311
Taxation credit/(expense)		117,199	(52,177)		-	-
Net (loss)/profit after tax		(338,579)	578,182		(210,975)	163,311
Attributable to:
Minority interest		(4,804)	5,003		-	-
Members of the parent		(333,775)	573,179		(210,975)	163,311
		(338,579)	578,182		(210,975)	163,311

Earnings per share (cents per share)
- basic (loss)/earnings per share	5	(66.13)	114.05		(41.80)	32.49
- diluted (loss)/earnings per share	5	(66.13)	114.01		(41.80)	32.48

STATEMENT OF CHANGES IN EQUITY

Consolidated	Contributed equity	Accumulated losses	Share Based payment reserve	Non-distributable reserve	Minority Interest	Total Equity
	ZAR'000	ZAR'000	ZAR'000	ZAR'000	ZAR'000	ZAR'000
At 1 July 2007	1,607,075	(651,215)	7,480	-	3,650	966,990
Profit for the period	-	573,179	-	-	5,003	578,182
Total income and expense for the period	-	573,179	-	-	5,003	578,182
Equity Transactions:
Issue of ordinary shares	1,196,208	-	-	-	-	1,196,208
Exercise of options	85,860	-	(2,492)	-	-	83,368
Share placement costs	(54,731)	-	-	-	-	(54,731)
Share based payment	-	-	1,629	-	-	1,629
At 30 June 2008	2,834,412	(78,036)	6,617	-	8,653	2,771,646
At 1 July 2008	2,834,412	(78,036)	6,617	-	8,653	2,771,646
Loss on fair value of investment	-	64	-	(7,621)	-	(7,557)
Total expense for the period recognised directly in equity	-	64	-	(7,621)	-	(7,557)
(Loss) for the period	-	(333,775)	-	-	(4,804)	(338,579)
Total income and expense for the period	-	(333,711)	-	(7,621)	(4,804)	(346,136)
Equity Transactions:
Cancellation of shares/share buy-back	(20,032)	(1,418)	-	1,577	(2,032)	(21,905)
Dividends paid	-	(76,148)	-	-	-	(76,148)
Share based payment	-	-	1,655	-	-	1,655
At 30 June 2009	2,814,380	(489,313)	8,272	(6,044)	1,817	2,329,112

STATEMENT OF CHANGES IN EQUITY

Parent	Contributed equity	Accumulated losses	Share Based payment reserve	Total Equity
	ZAR'000	ZAR'000	ZAR'000	ZAR'000
At 1 July 2007	1,607,075	(369,728)	7,189	1,244,536
Profit for the period	-	163,311	-	163,311
Total income and expense for the period	-	163,311	-	163,311
Equity Transactions:
Issue of ordinary shares	1,196,208	-	-	1,196,208
Exercise of options	85,860	-	(2,201)	83,659
Share placement costs	(54,731)	-	-	(54,731)
Share based payment	-	-	1,629	1,629
At 30 June 2008	2,834,412	(206,417)	6,617	2,634,612
At 1 July 2008	2,834,412	(206,417)	6,617	2,634,612
Loss for the period	-	(210,975)	-	(210,975)
Total income and expense for the period	-	(210,975)	-	(210,975)
Equity Transactions:
Cancellation of shares/share buy-back	(20,032)	-	-	(20,032)
Dividends paid	-	(76,148)	-	(76,148)
Share based payment	-	-	1,655	1,655
At 30 June 2009	2,814,380	(493,540)	8,272	2,329,112

CONSOLIDATED BALANCE SHEETS

	Note	Consolidated		Parent
		2009	2008		2009	2008
		ZAR'000	ZAR'000		ZAR'000	ZAR'000
ASSETS
Current assets
Cash and cash equivalents	7	340,089	972,190		266,702	815,396
Receivables - inter-company	8	-	-		33,268	19,127
Trade and other receivables	8	81,059	462,919		21,863	239,559
Prepayments	9	6,263	13,382		324	686
Inventories	10	195,820	109,752		-	-
Total current assets		623,231	1,558,243		322,157	1,074,768
Non-current assets
Deferred tax asset		66,653	-		-	-
Financial assets	11	8,550	-		2,005,235	1,587,258
Property, plant & equipment	12	1,798,151	1,672,281		8,714	8,976
Intangible assets	12	10,062	-		-	-
Other non-current assets	13	18,234	25,625		707	516
Total non-current assets		1,901,650	1,697,906		2,014,656	1,596,750
Total assets		2,524,881	3,256,149		2,336,813	2,671,518
EQUITY & LIABILITIES
Current liabilities
Trade and other payables	14	105,998	213,149		3,663	6,169
Provisions	15	12,411	100,852		2,684	27,565
Total current liabilities		118,409	314,001		6,347	33,734
Non-current liabilities
Provisions	15	13,307	27,184		1,354	3,172
Interest bearing loans and borrowings	16	64,053	92,716		-	-
Deferred tax liability		-	50,602		-	-
Total non current liabilities		77,360	170,502		1,354	3,172
Total liabilities		195,769	484,503		7,701	36,906
Net assets		2,329,112	2,771,646		2,329,112	2,634,612
Shareholder's equity
Contributed equity		2,814,380	2,834,412		2,814,380	2,834,412
Share based payment reserve		8,272	6,617		8,272	6,617
Accumulated losses	17	(489,313)	(78,036)		(493,540)	(206,417)
Non-distributable reserve		(6,044)	-		-	-
Parent entity interests		2,327,295	2,762,993		2,329,112	2,634,612
Minority interests		1,817	8,653		-	-
Total shareholders equity		2,329,112	2,771,646		2,329,112	2,634,612

  STATEMENT OF CASH FLOWS

		Consolidated		Parent
		2009	2008		2009	2008
	Note	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Cash flows from operating activities
Receipts from customers		1,146,317	1,509,613		-	-
Receipts from subsidiary		-	-		-	16,960
Payments and advances to suppliers and employees (inclusive of goods and services tax)		(1,462,141)	(1,154,115)		(81,122)	(52,582)
Phantom options exercised and paid		-	(19,493)		-	(4,688)
Tax Paid		(1,982)	-		-	-
Interest Paid		(30,368)	(84,748)		-	-
Net cash flows (used in)/from operating activities		(348,174)	251,257		(81,122)	(40,310)
Cash flows from investing activities
Payments for property, plant & equipment		(183,881)	(83,599)		(114)	-
Payments for intangible assets		(10,837)	-		-	-
Investment in subsidiary		-	-		(687,000)	(500,000)
Interest received		34,781	43,898		20,601	22,112
Restricted cash deposits		(1,158)	-		-	-
Proceeds from preference dividend interest		-	-		311,158	-
Net cash flows used in investing activities		(161,095)	(39,701)		(355,355)	(477,888)
Cash flows from financing activities
Proceeds from issues of shares		-	1,196,208		-	1,196,208
Proceeds from issue of options		-	38,251		-	38,251
Payment for share buyback		(22,282)	-		(20,032)	-
Receipts from release of restricted cash		-	240,663		-	-
Proceeds from borrowings		-	800		-	800
Payment of share issue costs		-	(51,679)		-	(51,679)
Repayment of borrowings		(12,815)	(817,029)		-	-
Equity dividends paid		(76,148)	-		(76,148)	-
Net cash flows (used in)/from financing activities		(111,245)	607,214		(96,180)	1,183,580
Net increase /(decrease) in cash held		(620,514)	818,770		(532,657)	665,382
Cash at the beginning of the financial year		972,190	43,929		815,396	62,582
Effects of exchange rate changes on cash		(11,587)	109,491		(16,037)	87,432
Cash and cash equivalents at the end  of the year	14	340,089	972,190		266,702	815,396

  RECONCILIATION OF OPERATING (LOSS)/PROFIT TO CASH FLOWS FROM OPERATING ACTIVITIES

	Consolidated			Parent
	2009		2008		2009	2008
	ZAR'000		ZAR'000		ZAR'000	ZAR'000
Profit/(Loss) from ordinary activities before income tax	(455,778)		630,359		(210,975)	163,311
Adjustments to reconcile profit before tax to net cash flow:
Non Cash Items:	61,495		(61,610)		142,854	(203,188)
Amortisation of retention fee	2,249		-		-	-
Decommissioning asset expense	(7,363)		-		-	-
Depreciation	58,787		54,684		375	352
Foreign exchange loss/(gain)	11,587		(109,491)		16,037	(87,432)
Interest received/accrued	(34,781)		(43,898)		(20,601)	(22,112)
Inventory net realisable write down	125,775		-		-	-
Preference dividend accrued	-		-		(93,585)	(112,337)
Gain on mark-to-market of derivatives	-		(5,919)		-	(5,919)
Provision for diminution of investment	-		-		269,023	-
Share based payment expense	(37,393)		38,211		(11,500)	13,935
Write back of loans	(3,386)		-		(3,350)	-
(Decrease)/increase in provisions	(53,980)		4,805		(13,545)	10,325
Working Capital Adjustments:	48,091		(317,492)		(13,001)	(433)
Decrease/ (increase) in receivables	381,860		(428,274)		(10,857)	338
(Increase)/decrease in inventories	(211,843)		31,069		-	-
Decrease/(increase) in prepayments	4,870		(9,338)		362	3,358
(Decrease)/increase in payables and accruals	(126,796)		89,051		(2,506)	(4,129)
Taxation paid	(1,982)		-		-	-
Net cash flow from operating activities	(348,174)		251,257		(81,122)	(40,310)
Cash is represented by:
Cash at bank	36,186		66,434		6,794	17,465
Short term deposits	303,903		905,756		259,908	797,931
	340,089		972,190		266,702	815,396

1	TURNOVER AND SEGMENTAL ANALYSIS

The Group operates predominantly in one business segment, being the processing of chromite in South Africa and sale of ferrochrome in the international market.

2(a)	SALES REVENUE

		Consolidated		Parent
		2009	2008		2009	2008
		ZAR'000	ZAR'000		ZAR'000	ZAR'000
Sales Revenue
-	Ferrochrome sales	756,684	1,917,993		-	-
-	Other sales (a)	24,890	1,403		-	-
Intercompany Management Fees		-	-		6,217	16,960
		781,574	1,919,396		6,217	16,960

Other sales relate to chrome ore sales.

2(b)	ADMINISTRATIVE AND OTHER EXPENSES

	Consolidated		Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Accounting fees	1,990	815		1,991	815
Auditors remuneration	4,064	2,501		1,904	2,459
Consulting fees	8,811	2,672		273	1,111
Depreciation not in cost of goods sold	782	358		376	352
Impairment of PPE	13,493	-		-	-
Legal fees	7,424	5,716		3,552	4,105
Remuneration of Key Management Personnel	45,567	37,210		29,634	26,107
Provision of diminution of investments	-	-		269,023
Staff costs	21,896	26,578		1,146	3,334
Other administrative expenses	26,798	57,784		17,115	27,944
	130,825	133,634		325,014	66,227

3	SHARE BASED PAYMENT INCOME/(EXPENSE)

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Equity settled option (expense)	(1,618)	(1,621)		(1,618)	(1,621)
Phantom option income/(expense)	37,183	(36,582)		11,291	(13,599)
	35,565	(38,203)		9,673	(15,220)

4	FINANCING INCOME AND COSTS

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Interest income		34,781	43,898		114,186	134,449
Interest expense		(36,580)	(85,582)		-	(2)
Finance cost		(6,212)	(9,910)		-	-
-	Amortisation of debt establishment costs	-	(6,353)		-	-
-	Early settlement fees	-	(2,723)		-	-
-	Unwinding of discount on rehabilitation provision	(6,212)	(834)		-	-
Interest charges		(30,368)	(75,672)		-	(2)
-	Interest on project debt	-	(30,879)		-	-
-	Interest on financing	(20,219)	(20,048)		-	-
-	Interest on leases	(9,888)	(23,410)		-	-
-	Interest paid - other	(261)	(1,335)		-	(2)
Net finance income/(costs)		1,799	(41,684)		114,186	134,447

5	EARNINGS PER SHARE

(a)	Earnings used in calculating earning per share

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Basic (loss)/earnings per share (cents per share)	(66.13)	114.05		(41.80)	32.49
Diluted (loss)/earnings per share (cents per share)	(66.13)	114. 01		(41.80)	32.48
Earnings used in calculating basic earnings per share (ZAR'000)	(333,775)	573,179		(210,975)	163,311
Earnings used in calculating diluted earnings per share (ZAR'000)	(333,775)	573,179		(210,975)	163,311
Weighted average number of ordinary shares on issue in calculation of basic earnings per share	504,757,375	502,590,229		504,757,375	502,590,229

(b)	Weighted average number of shares

	2009	2008
Weighted average number of ordinary shares (excluding reserved shares) for basic earnings per share	504,757,375	502,590,229
Effect of dilution:
Share options	-	144,634
Weighted average number of ordinary shares (excluding reserved shares) used in the calculation of diluted earnings per share	504,757,375	502,734,863

6	DIVIDENDS PAID AND PROPOSED

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Dividends declared and paid during the year on ordinary shares:
Final unfranked dividend for the financial year ended 30 June 2008: 1 pence, paid 3 November 2008	76,148	-		76,148	-

The Board of Directors resolved not to declare a dividend for the year ending 30 June 2009. 

7	CASH AND CASH EQUIVALENTS

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Cash at bank and on hand	36,186	66,434		6,794	17,465
Short-term deposits	303,903	905,756		259,908	797,931
	340,089	972,190		266,702	815,396

Restricted cash is disclosed as other non-current assets in note 13.

8	RECEIVABLES

(a)	Receivable - inter-company

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Loan to subsidiary	-	-		33,268	19,127

(b)	Trade and other receivables

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Trade debtors (a)	62,678	425,859		-	-
Less: Advance debtor payments	(566)	-		-	-
Less: Effect of discount	(997)	-		-	-
Outstanding tax refunds (b)	18,319	35,484		242	366
Other debtors (c)	1,625	1,576		21,621	239,193
	81,059	462,919		21,863	239,559

(a)	Trade debtors relate to the sale of ferrochrome and chrome ore. Payment terms are thirty days from date of final invoice.
(b)	Tax refunds relate to the relevant Goods and Services Tax and Value Added Tax refunds owing in Australia and South Africa.
(c)	Other debtors in the parent entity relates to accrued preference share dividends (refer note 11(b)).

The carrying value of trade and other receivables is assumed to approximate the fair value due to the short term nature of the trade and other receivables. Sales are made on a cost, insurance and freight (CIF) basis.  

9	PREPAYMENTS

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Prepaid retention fee	5,811	8,060		-	-
Prepaid shipping costs	452	4,585		-	-
Prepaid stewardship costs	-	538		324	487
Prepaid insurance	-	199		-	199
	6,263	13,382		324	686

10	INVENTORIES

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Consumable stores at net realisable value (2008: at cost)	17,019	6,895		-	-
Ore stock at net realisable value  (2008: at cost)	112,800	68,959		-	-
Raw materials at net realisable value (2008: at cost)	23,113	22,114		-	-
Finished goods at net realisable value (2008: at cost)	42,888	11,784		-	-
	195,820	109,752		-	-

11	FINANCIAL ASSETS

	Consolidated			Parent
	2009	2008			2009		2008
	ZAR'000	ZAR'000			ZAR'000	ZAR'000
Investment in subsidiaries at cost	-	-			1,578,601	891,601
Provision for diminution (a)	-	-			(269,023)	-
Net investment in subsidiaries	-	-			1,309,578	891,601
Receivable from Jefferson Investments Limited (b)	-	-			695,657	695,657
Investment in rehabilitation trust (c)	8,550	-			-	-
	8,550	-			2,005,235	1,587,258

(a)

This provision has arisen as a result of losses incurred by subsidiary companies during the current financial year.

(b)

IFML purchased a preference share in Jefferson Investments, a UK financial institution, for ZAR695 million. Simultaneously, IFMSA issued a debenture to Morgan Stanley for ZAR695 million. The debenture was secured against the preference shares. On 25 September 2008, the Board resolved to restructure IFMSA financing arrangements to extinguish IFML's exposure to Morgan Stanley counterparty risk. The restructure was executed in the following manner:

The put agreements between IFML and Jefferson Investments over the Jefferson Capital ("JC") preference shares and IFMSA debentures were cancelled;

Landsend Capital Limited ("LC") acquired the IFMSA debentures;

LC and IFML granted puts over the JC preference shares and debentures, similar to those that were in place between IFML and Morgan Stanley;

LC then pledged the IFMSA debentures to IFML as security for the above put arrangement;

11.	FINANCIAL ASSETS (continued)

The pledge was provided by LC to IFML over the listed IFMSA debentures. The pledge was registered by Standard Bank in South Africa.

In addition and prior to the above restructure, all outstanding debenture interest amounting to R267,610,434 that was owing to Morgan Stanley on 30 September 2008 was paid and a preference dividend for the same amount was received by IFML. In addition on 31 March 2009 debenture interest of R43,478,581 was paid and a preference dividend for the same amount was received by IFML.

The coupon on both the preference shares and the debenture is 12.5% compounded semi-annually in arrears. The debenture term ends on 25 January 2016.

The Group is entitled to set off the preference share and the debenture, as such, these items have been set off in the consolidated balance sheet.

(c)	The investment constitutes deposits at financial institutions in favour of a rehabilitation trust. These funds can only be applied to relevant rehabilitation expenditure.

12(a)

PROPERTY, PLANT & EQUIPMENT

	Consolidated
		Cost	Accumulated depreciation	Net book value
2009		ZAR'000	ZAR'000	ZAR'000
Mineral rights and reserves (a)		157,287	(8,166)	149,121
Land and buildings		33,198	(1,668)	31,530
Decommissioning asset		2,040	(420)	1,620
Plant & equipment		1,293,173	(96,575)	1,196,598
Leased plant & equipment		88,555	(5,555)	83,000
Mine development		163,206	(13,001)	150,205
Computer equipment		7,212	(3,053)	4,159
Leased computer equipment		1,651	(999)	652
Furniture & fittings		3,778	(2,250)	1,528
Exploration costs		15,802	-	15,802
Capital work in progress (b)		152,403	-	152,403
Vehicles		8,648	(2,551)	6,097
Leased vehicles		7,347	(1,911)	5,436
Total		1,934,300	(136,149)	1,798,151

12(a)

PROPERTY, PLANT & EQUIPMENT (continued)

	Consolidated
	Carrying value at beginning of year	Impairments (d)	Adjustments	Additions	Depreciation				Carrying value at end of year
2009	ZAR'000	ZAR'000	ZAR'000	ZAR'000	ZAR'000				ZAR'000
Mineral rights and reserves (a)	151,492	-	63	-	(2,434)				149,121
Land and buildings	28,794	-	3,490	-	(754)				31,530
Decommissioning asset	5,631	-	(3,813)	-	(198)				1,620
Plant & equipment	1,177,789	(10,182)	69,308	-	(40,317)				1,196,598
Leased plant & equipment (c)	85,256	-	67	-	(2,323)				83,000
Mine development	132,870	-	22,802	618	(6,085)				150,205
Computer equipment	2,262	-	-	3,368	(1,471)				4,159
Leased computer equipment	1,176	(23)	-	-	(501)				652
Furniture & fittings	1,643	-		856	(971)				1,528
Exploration costs	12,856	-	-	2,946	-				15,802
Capital work in progress (b)	60,522	(3,288)	(91,917)	187,086	-				152,403
Vehicles	4,638	-	511	2,500	(1,552)				6,097
Leased vehicles	7,352	-	(511)	-	(1,405)				5,436
Total	1,672,281	(13,493)	-	197,374	(58,011)				1,798,151

	Parent
	Cost	Accumulated depreciation	Carrying value
2009	ZAR'000	ZAR'000	ZAR'000
Land & buildings	3,451	(287)	3,164
Plant & equipment	4,922	(410)	4,512
Mine development	992	(83)	909
Computer equipment	223	(119)	104
Furniture & fittings	51	(26)	25
Total	9,639	(925)	8,714

12(a)

PROPERTY, PLANT & EQUIPMENT (continued)

	Parent
	Carrying value at beginning of year	Adjustments	Additions	Depreciation	Carrying value at end of year
2009	ZAR'000	ZAR'000	ZAR'000	ZAR'000	ZAR'000
Land & buildings	3,278	-	-	(114)	3,164
Plant & equipment	4,676	-	-	(164)	4,512
Mine development	942	-	-	(33)	909
Computer equipment	46	-	113	(55)	104
Furniture & fittings	34	-	-	(9)	25
Total	8,976	-	113	(375)	8,714

		Consolidated
		Cost	Accumulated depreciation	Net book value
2008		ZAR'000	ZAR'000	ZAR'000
Mineral rights and reserves (a)		157,223	(5,731)	151,492
Land and buildings		30,726	(1,932)	28,794
Decommissioning asset		5,837	(206)	5,631
Plant & equipment		1,234,006	(56,217)	1,177,789
Leased plant & equipment		88,488	(3,232)	85,256
Mine development		137,576	(4,706)	132,870
Computer equipment		3,902	(1,640)	2,262
Leased computer equipment		1,651	(475)	1,176
Furniture & fittings		2,881	(1,238)	1,643
Exploration costs		12,856	-	12,856
Capital work in progress (b)		60,522	-	60,522
Vehicles		5,636	(998)	4,638
Leased vehicles		7,858	(506)	7,352
Total		1,749,162	(76,811)	1,672,281

12(a)

PROPERTY, PLANT & EQUIPMENT (continued)

			Consolidated
		Carrying value at beginning of year	Adjustments		Additions	Depreciation			Carrying value at end of year
2008		ZAR'000	ZAR'000		ZAR'000	ZAR'000			ZAR'000
Mineral rights and reserves (a)		155,257	(28)		-	(3,737)			151,492
Land and buildings		29,353	-		42	(601)			28,794
Decommissioning asset		5,801	50		-	(220)			5,631
Plant & equipment		1,184,741	21,220		10,525	(38,697)			1,177,789
Leased plant & equipment (c)		108,350	(20,559)		-	(2,535)			85,256
Mine development		117,736	-		20,339	(5,205)			132,870
Computer equipment		2,622	-		736	(1,096)			2,262
Leased computer equipment		1,616	-		-	(440)			1,176
Furniture & fittings		2,392	-		144	(893)			1,643
Exploration costs		-	-		12,856	-			12,856
Capital work in progress (b)		22,547	(21,220)		59,195	-			60,522
Vehicles		357	(47)		5,117	(789)			4,638
Leased vehicles		1,616	47		6,160	(471)			7,352
Total		1,632,388	(20,537)		115,114	(54,684)			1,672,281

	Parent
	Cost	Accumulated depreciation	Carrying value
2008	ZAR'000	ZAR'000	ZAR'000
Land & buildings	3,450	(172)	3,278
Plant & equipment	4,922	(246)	4,676
Mine development	992	(50)	942
Computer equipment	109	(63)	46
Furniture & fittings	51	(17)	34
Total	9,524	(548)	8,976

12(a)

PROPERTY, PLANT & EQUIPMENT (continued)

	Parent
	Carrying value at beginning of year	Impairments / Adjustments	Additions	Depreciation	Carrying value at end of year
2008	ZAR'000	ZAR'000	ZAR'000	ZAR'000	ZAR'000
Land & buildings	3,394	-	-	(115)	3,279
Plant & equipment	4,840	-	-	(164)	4,676
Mine development	975	-	-	(33)	942
Computer equipment	35	-	43	(32)	46
Furniture & fittings	41	-	-	(8)	33
Total	9,285	-	43	(352)	8,976

(a)	Mineral rights and reserves of ZAR61million relating to the Sky Chrome deposit is held in Purity Metals Holdings Limited ("Purity"), a wholly owned subsidiary of the Group. IFM acquired the shares in Purity for US$9 million on 16 December 2005. For accounting purposes Purity is treated as a subsidiary of the Company. Purity owns 80% of the Sky Chrome project, a ferrochrome resource located adjacent to the Buffelsfontein plant. The purchase price has been allocated to the value of the Sky Chrome Mineral Resource. There has been no impact on the income statement subsequent to acquisition. The Parent investment in Purity is disclosed under "Other Financial Assets" per note 11 as "Investment in Subsidiaries at cost". On 30 April 2009, Sky Chrome submitted an application to the Department of Minerals and Energy ("DME") for a new order mining license. Sky Chrome's prospecting right expired in July 2009. The new order mining license is expected to be approved between 6 and 9 months and no mining is allowed in the meantime. Management believe that the new order mining license will be approved.
(b)	Capital work in progress relates to capital costs incurred for the expansion of the Group's associated infrastructure.
(c)	The adjustment to plant & equipment is a result of the reassessment of the minimum lease payments to be made on the finance lease of the power sub-station and feeder bays supporting the Buffelsfontein facility and mine.
(d)	Impairments relate to plant & equipment written off as part of the plant upgrade programme.

Property, mineral rights, plant and equipment of IFMSA have been pledged as security for the working capital facility provided by Bank of China. (Refer to note 16 for further details).

12 (b) INTANGIBLE ASSETS

 

 

 

 

12(b)

INTANGIBLE ASSETS (continued)

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000
Amortisation:

Amortisation - opening balance	-	-		-	-
Charge for the year	(775)	-		-	-
Amortisation - closing balance	(775)	-
Net book value	10,062	-		-	-

	Intangible assets consist of licence fees for the use of patented technology.
13	OTHER NON-CURRENT ASSETS

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Restricted cash (a)	17,100	22,942		-	-
Deposits	1,134	2,683		707	516
	18,234	25,625		707	516

(a)  Restricted cash represents cash set aside for bank guarantees provided by Standard Bank to the Department of Trade and Industry for the financial year ending 2009. Restricted cash for 2008 represents cash set aside for bank guarantees provided by Standard Bank to the Department of Trade and Industry and other contractors.

14	TRADE AND OTHER PAYABLES

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Sundry creditors and accruals	45,433	61,310		3,663	6,169
Trade creditors	35,577	131,389		-	-
Finance lease liability	24,988	9,140		-	-
Other creditors and accruals (a)	-	11,310		-	-
	105,998	213,149		3,663	6,169

Other creditors and accruals represent advance debtor payments.

Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

15	PROVISIONS

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Current provisions
Employee entitlements (a)	9,608	63,589		1,020	14,565
Share based payment liability	3,154	35,688		1,664	13,000
Taxation	(351)	1,575		-	-
	12,411	100,852		2,684	27,565
Employee entitlements
Opening balance	63,589	23,118		14,565	13,151
Provision recognised during the year	9,545	41,857		2,062	1,794
Provision utilised during the year	(63,526)	(1,386)		(15,607)	(380)
Closing balance	9,608	63,589		1,020	14,565
Phantom options
Opening balance	35,688	-		13,000	-
Transferred from non-current provision	-	18,599		-	4,089
Cash settled share based payment expense	3,154	36,582		1,664	13,599
Cancellation of phantom options	(34,662)	-		(11,974)	-
Effect of foreign exchange	(1,026)	-		(1,026)
Phantom options exercised and paid during the year	-	(19,493)		-	(4,688)
Closing balance	3,154	35,688		1,664	13,000
Taxation
Opening balance	1,575	-		-	-
Provision recognised during the year	56	1,575		-	-
Taxation paid during the year	(1,982)	-		-	-
Closing balance	(351)	1,575		-	-

15. PROVISIONS (continued)

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Non current provisions
Decommissioning and restoration (b)	10,741	18,104		-	-
Share based payment liability	2,566	9,080		1,354	3,172
	13,307	27,184		1,354	3,172
Decommissioning and restoration
Opening balance	18,104	6,292		-	-
Additional provision recognised during the year:
-Recorded in property, plant and equipment	(3,797)	-		-	-
-Unwinding of discount	6,212	834		-	-
-Adjustment in provision assumptions	(9,778)	10,978		-	-
Closing balance	10,741	18,104		-	-
Phantom options
Opening balance	9,080	27,679		3,172	7,261
Transfer to current provision	-	(18,599)		-	(4,089)
Cash settled share based payment expense	2,566	-		1,354	-
Cancellation of phantom options	(8,241)	-		(2,335)	-
Effect of foreign exchange	(839)			(837)
Closing balance	2,566	9,080		1,354	3,172

(a)

The provision for employee entitlements represents accrued annual leave liabilities and other employee provisions. It is expected that these costs will be incurred in the next financial year.

(b)

The provision for decommissioning and restoration represents management's estimate of the restoration and exit costs associated with the integrated ferrochrome mining and processing facility at Buffelsfontein and Sky Chrome. It is expected that these costs will be incurred at the end of the operations/mine life. Due to the long-term nature of the liability the greatest uncertainty in estimating the provision is the costs that will be ultimately incurred. The provision has been calculated using a pre-tax discount rate of 9%.

16	INTEREST BEARING LOANS AND BORROWINGS

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Long term portion of finance lease liability (a)	64,722	90,601		-	-
Debt Establishment costs (b)	(5,313)	-		-	-
Other loans (c)	4,644	2,115		-	-
	64,053	92,716		-	-

(a)	Finance leases The weighted average effective interest rate on finance leases is 11.93%.
(b)	Working capital facility On 29 June 2009 the company entered into a working capital facility agreement with the Bank of China for an amount of R500 million. The initial drawdown currency split will be 60% in USD and 40% in ZAR. The facility interest is charged at USD:LIBOR plus 1.5% on the USD portion of the loan while the ZAR portion of the loan is charged at the South African Prime rate plus 1.9%. The term of the facility is 36 months. The parent company, IFML, guarantees the facility on behalf of IFMSA. The entire balance sheet of IFMSA is pledged as collateral for the loan facility.
(c)	Other loans The loan constitutes the 20% tribal participation of funding provided to Sky Chrome by IFM. The loan is interest free and payable before earning distributions are made.

Undrawn loan facilities at 30 June 2009, excluding debtors discounting facilities, amounted to ZAR500 million (2008: ZAR50 million).

Fair value

The carrying values of each class of interest bearing loans and borrowings approximates their fair value.

17	ACCUMULATED LOSSES

	Consolidated			Parent
	2009	2008		2009	2008
	ZAR'000	ZAR'000		ZAR'000	ZAR'000

Opening balance at the start of the year	(78,036)	(651,215)		(206,417)	(369,728)
Dividend payments	(76,148)	-		(76,148)
Loss on fair value of investment	64	-		-	-
Cancellation of shares	(1,418)	-		-	-
After tax (loss)/profit attributable to the equity holders of the parent during the year	(333,775)	573,179		(210,975)	163,311
Closing balance at the end of the year	(489,313)	(78,036)		(493,540)	(206,417)

ENDFR CKDKKCBKDACD