IFL.L Regulatory News (IFL)

25 January 2011

International Ferro Metals Limited

("IFL" or the "Company")

Interim Management Statement to 25 January 2011 and

Production Report for the three months to 31 December 2010

Highlights:

·; Ferrochrome ("FeCr") production 47,054 tonnes ("t") for the quarter to 31 December 2010, down 13% on the previous quarter and down 19% on the corresponding period last year due to ongoing repairs to the roofs of both furnaces

·; Sales of 74,917t achieved in the quarter to 31 December 2010, up 159% from the previous quarter and up 117% on the corresponding period last year due to strong demand in Asia

·; FeCr inventory was reduced to a more normal level of 14,487t, down 66% from the previous quarter following strong demand

·; Net borrowings were reduced from ZAR309million as at 31 October 2010 to ZAR216million at 31 December 2010

·; Electricity co-gen plant construction complete but experiencing technical issues, commissioning continuing due to changed off-gas composition

·; Construction by Anglo Platinum of chrome tailings re-treatment plant 6 months behind schedule

·; Benchmark European FeCr price reduced by 5¢/lb to US$1.25/lb for the March 2011 quarter

Commenting on the update, Chief Executive David Kovarsky said:

"IFL achieved strong sales during the quarter due to our good relationships in Asia where we have focussed on higher-value markets. Production at our mines, underground and surface, is also approaching record levels and IFL should be self-sufficient in ore supply by January 2012. We remain focussed on maximising production from our furnaces and have identified a permanent solution to achieve nameplate ferrochrome production. Minimising costs continues to be another area of operational focus as we seek to maximise margins."

Ferrochrome Market Conditions

2010 experienced record world stainless steel production of 31.3m tonnes, an increase of 23.3% on 2009. The current status of stainless steel production varies by geographic area, with Asia continuing to show strength. The United States is showing high utilisation levels but it represents only 7% of world production. Meanwhile Europe, which represents 23% of global production, is showing sluggish growth. Chinese production, accounting for 37.5% of global production, is showing strong growth, as are Taiwan and Korea. The ferrochrome benchmark price decreased by 5¢/lb to $1.25/lb for the first calendar quarter of 2011. The decrease in the benchmark price has not permeated the Chinese spot price and in fact, prices have subsequently firmed in China by about 4¢/lb.

Mining

Mine production continues to improve and during the quarter to 31 December 2010, 204kt of chrome ore was mined. In addition the recovery of usable ore from run of mine ore has increased significantly as a result of continuing efficiencies in underground mining. Record production was achieved in the ore beneficiation plant generating 164kt of lumpy ore and chrome concentrate. This has significantly reduced our costs and has taken IFM well down the path to where it should be self-sufficient in ore supply by January 2012.

Smelting

As stated in the 30 June 2010 results, ferrochrome production was below maximum capacity in the last six months of that financial year due to continuing furnace problems. Following repair work to the roofs of both furnaces in June and August 2010, both furnaces were shut again in November for five days to finalise our replacement programme. Ferrochrome production for the period from October to December 2010 therefore continued below nameplate capacity, at 47,054 tonnes.

The Company has engaged the furnace engineering firm, Metix (Pty) Ltd of South Africa to conduct a root and branch review of the furnaces. Metix has extensive experience in furnace design and construction, and is well acquainted with the best performing units in South Africa. Based on comparison with examples of best industry practice and a thorough examination of IFM's furnaces in conjunction with key Company operating staff, certain basic deficiencies in design have been identified. While these deficiencies, which originated in the initial design and construction of the furnaces, were not discernable before the review, they have resulted in overall lower production output.

Metix has determined that the root cause of most of the problems lies in the sub-optimal positioning of the chutes that feed the ore into the furnace. The effect of this is that gas temperatures at the top of the furnaces are too high, resulting, inter alia, in the degrading of the roof panels and the creation of damaging water leaks. This issue was not identified when the Company changed out the degraded roof panels in order to stop the water leaks.

The action recommended, and what the Company has determined to do, is to reposition the current ore feed chutes and add two additional feed chutes. This will require the replacement of the roof panels. Other less important maintenance issues will also be addressed at this time. The total cost of this improvement is estimated to be ZAR40 million per furnace and will require a six week shut down per furnace to be accomplished.

Metix has commenced the engineering design work and the Company expects to commit to the refurbishment when that is completed. As there will be a 6 month lead time, the rectification work is expected to be undertaken during the winter period when electricity tariffs are at their highest. Work is therefore expected to commence during June 2011.

In the meantime, the Company expects to be able to operate at around 18,000 tonnes of ferrochrome per month, a rate which, while achievable in the interim period, without these modifications could not be expected to be sustainable in the longer term.

Metix and management are confident that these improvements will allow production to approach or exceed name plate output.

Co-generation plant

The construction of the electricity co-generation plant was completed on time and within budget. However, during the commissioning process it became apparent that hydrogen levels in the off-take gases feeding the plant were higher than had been anticipated. This is due to the conversion of sand seals to water seals in the scrubber system and different reductant being utilised in the furnaces.

The plant is currently operating but at a minimal level while various approaches to the gas composition are being examined. Once the Company knows the timescale and cost of the required improvements, a further announcement will be made.

UG2 Plant

In February 2010, IFL entered into an agreement with Rustenburg Platinum Mines Limited ("RPM") a subsidiary of Anglo Platinum Limited under which IFL would pay ZAR161 million for the construction of a Chrome Re-Treatment Plant ("CRP") to treat the tailings arising from RPM's UG2 concentrator, situated at their Waterval section. The CRP's primary objective is to extract chrome concentrate from the tailings, allowing IFL to reduce its input cost.

Construction by Anglo Platinum of the CRP at Anglo Platinum's operations is running behind schedule due to construction starting three months late and slower than anticipated progress at the site. IFL expects that the first feed of chrome concentrate will be received in January 2012.

Sales and inventory

The Company achieved sales of 74,917 tonnes of ferrochrome in the quarter to 31 December 2010 compared to 28,891 tonnes in the previous quarter and inventories reduced from 42,870 tonnes at the end of September 2010 to a more normal level of 14,487 tonnes at 31 December 2010 and inventories continue to run at these lower levels. Sales of low grade chrome ore continued and 89,187 tonnes were sold during the quarter to 31 December 2010 compared to 26,784 tonnes in the previous quarter.

Marketing initiatives in the East have been fruitful and we are now well established in the Korean and Taiwan markets where prices are generally higher than in China.

Cash

As at 31 December 2010, the Company had net borrowings of ZAR216 million, against net borrowings of ZAR309 million at 31 October 2010. The reduction in net borrowings is mainly the result of the reduction of inventory from previous levels to the current more normal levels, which IFL intends to continue to maintain in the near term.

Outlook

Costs will be continued to be reduced as a result of ongoing mine efficiencies and the Company looks forward to increased furnace production and lower costs after the planned shutdowns. The full commissioning of the co-generation plant and the receipt of UG2 chrome concentrate from Anglo Platinum will further increase cost competitiveness.

Other than as detailed above in this Interim Management Statement and the Operational Update released on 18 January 2011, there have been no material events or transactions in the period from 1 January 2011 to 25 January 2011.

- ENDS-

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

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.