IFL.L Regulatory News (IFL)

25 April 2012

International Ferro Metals Limited

("IFL" or the "Company")

Interim Management Statement to 25 April 2012 and

Production Report for the three months to 31 March 2012

Highlights:

·; Alloy sales of 52,930 tonnes achieved in the quarter, down 9% from the previous quarter but up 9% on prior year corresponding period

·; Moved back into overall profitability on a monthly basis for March, operations cash generative

·; Financially beneficial Eskom electricity buy-back agreement from 1 March to 31 May 2012

·; Eskom-related furnace shutdowns reduced ferrochrome ("FeCr") production to 48,762 tonnes for the quarter, down 10% on previous quarter and down 5% on prior year corresponding period

·; Sky Chrome mining operations produced 122,000 tonnes run-of-mine ore for the quarter, flat on previous quarter

·; Co-generation plant produced 7.6GWh of electricity for the quarter, 3.8% of total requirement ramping up to 10% in March

·; UG2 Chrome Recovery Plant ("CRP") delivered 10,000 tonnes of concentrate in March

·; 37.5% of targeted production cost savings achieved for the quarter; up from 27.5% for H1

·; Net borrowings decreased from ZAR458 million at 31 December 2011 to ZAR421 million at 31 March 2012

·; ZAR23 million capex for the quarter

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

Post period highlights:

·; Benchmark European FeCr price increased by 20¢ to US$1.35/lb for the quarter ending June 2012

·; Furnace 2 shut down on 1 April 2012 under the Eskom electricity buy-back agreement

·; UG2 CRP on track to deliver 15,000 tonnes of concentrate in April

·; Expected Eskom price increase of 25.9% under the 3 year multi-year price determination programme reduced to 16%

Commenting on the update, Chief Executive Chris Jordaan said:

"International Ferro Metals is making excellent progress in improving its competitiveness through initiatives such as an improved reductant mix, furnace roof rebuild, the UG2 plant and the co-generation plant. This has been augmented by the attractive short term benefit of our agreement with Eskom, which is value accretive to shareholders. Underlying performance is strong, and the Company's move into profitability from March demonstrates the momentum we have built up. This performance is expected to strengthen as the full benefit of the cost reduction projects, for example the CRP UG2 project amongst others, comes through. The Board believes IFL is in a stronger position than for some time, and well placed to benefit from any further improvement in the ferrochrome market."

Stainless steel and ferrochrome markets

A disconnect in ferrochrome prices developed between China and the West during the first quarter of 2012. This can mainly be attributed to a reduction in the availability of spot material outside China as a result of production cuts in South Africa, which also supported the second quarter increase in the European benchmark price from US$1.15/lb to US$1.35/lb. On the other hand, the ferrochrome market in China, which is dominated by domestic supply, softened and placed a dampener on chrome ore prices in that country.

Industry stocks of ferrochrome are expected to reduce further during the second quarter and to remain relatively low throughout the balance of the 2012 calendar year, supporting steadier prices.

Electricity buy-back agreement with Eskom

As previously announced, the Company is participating in the industry-wide Eskom electricity buy-back programme to assist with the power utility's electricity supply balance as a result of maintenance requirements.

Under the agreement, the Company switched out one furnace on 1 March and the second furnace on 1 April 2012. Eskom will buy back the electricity which would have been consumed by the furnaces, at a rate that results in a net financial benefit to the Company and which has contributed to IFL moving into profit. The scale of this net financial benefit led to the Company deciding not to exercise the option to switch back on Furnace 1 on 1 May 2012; both furnaces will therefore be restarted in June 2012 in a quick and secure way.

The National Energy Regulator of South Africa (NERSA) announced that Eskom's electricity tariffs will increase by an annual average of 16%, which will come into effect on 1 April 2012. The electricity tariff increase originally approved in February 2010 in the 3 year multi-year price determination programme was 25.9%. IFL welcomes this decision.

Health and Safety, and the Environment ("HSE")

The Company had no fatalities during the quarter and remains fatality free since inception, representing 21.2 million fatality free man hours. This equates to 2.65 million fatality free shifts as at 31 March 2012, an improvement on the last period of 20.1 million hours. The 12 month moving average lost time injury frequency improved further from 4.82 at 31 March 2011 to 2.38 at 31 March 2012 as a result of a further improvement in training. IFL is pleased with its fatality free track record and the progress made in safety performance, and is committed to maintaining these high standards in the future.

No environmental incidents were reported in the period under review.

Mining

Run-of-mine ore production for the quarter to 31 March 2012 increased to 293,000 tonnes from 271,000 tonnes in the prior quarter. The ramp up at Sky Chrome is progressing to plan and achieved 50,000 tonnes per month of run-of-mine ore in March. While production at Lesedi open pit is still expected to reduce towards the end of FY2012, the production at both Lesedi open pit and Lesedi Underground was better than expected for the quarter under review. March was a record run-of-mine production month for Sky Chrome and the Company expects the ramp up to continue to plan.

Recoveries for the quarter from the ore beneficiation plant averaged 63% compared to 58% in the previous quarter. The recoveries were positively influenced by quality production at the Lesedi open pit and improved quality of Sky Chrome. It is however expected that recovery rates should reduce when Lesedi open pit reaches its end of life, until such time as Sky Chrome has mined through the weathered material, which is expected in the next 18 months. The recoveries were further enhanced by the ore concentrate recovery plant which produced 10,500 tonnes in the quarter.

Smelting

Production for the quarter was 48,762 tonnes compared to 54,142 tonnes for the previous quarter. This was in line with management expectations and was mainly attributable to the Furnace 1 shutdown on 1 March under the terms of the Eskom electricity buy-back agreement. Both furnaces are currently not operating but will be restarted in June. The current furnace downtime is fully utilized for training staff and advanced maintenance work. Average daily furnace production was up 9.7% compared to the previous quarter.

Management actively continued to pursue operational improvements, and these have had noticeable benefits over the quarter. Reductant feed ratio optimization continued through the quarter, resulting in a further increase in anthracite usage, contributing to further reduction in cost. Furnace stability also improved, resulting in improved ore and energy efficiencies and record anthracite usage. Stable gas plant performance resulted in improvements in the fuel supply to the co-generation plant and the sinter plant. These positive effects improved co-generation output and lowered sinter production cost, which further contributed to the reduced smelting cost.

The Company expects further improvement in the smelting performance. It is also expected that the stable operation prior to the shutdown of the furnace will contribute to a successful and faster restart than previous restarts.

Co-generation plant

The Cogen facility generated 10% of the Company's total electricity requirements for the month of March when only Furnace 2 was in operation. For the quarter under review, the Cogen plant generated 7.6GWh of electricity which represents 3.8% of the Company's total electricity requirement for the quarter, compared to 10.0GWh for the previous quarter. The lower power generation was due to the significant implementation of the engine modifications in the months of January and February. At full production, the Cogen plant is expected to provide the Company with approximately 11% of its total electricity requirements. The modifications to all the engines have progressed well and are expected to be completed by the end of April, at a cost of ZAR11 million.

UG2 Plant

The UG2 Chrome Re-Treatment Plant ("CRP") at Anglo Platinum's Waterval operations in Rustenburg was successfully commissioned. The first concentrate was produced in February, 10,000 tonnes was delivered in March and the Company is on track to receive the contractual 15,000tonnes of UG2 in April.

The UG2 will augment IFL's ore supply once the furnaces are restarted. No UG2 was consumed during the quarter.

The supply agreement entitles IFL to receive 15,000 tonnes per month of chrome concentrate (almost 30% of IFL's beneficiated ore requirements) until November 2020. The delivered cost per tonne of the CRP concentrate is significantly below the Company's in-house cost of concentrate production. There are no additional costs other than the cost of transporting the concentrate to IFL's facilities at Buffelsfontein, which is about 50km from the CRP, and any government royalties that may be payable.

Sales and inventory

IFL sold a total of 52,930 tonnes of ferrochrome during the quarter compared to 58,389 tonnes in the preceding quarter, with the majority of sales to the European and US markets. The 9% drop in sales can be attributed to the furnace shut-down in March. Ferrochrome inventory dropped to 6,568 tonnes at 31 March 2012 from 10,737 tonnes at 31 December 2011 due to contractual obligations during the March to May shutdown. Chrome ore sales were substantially higher at 59,226 tonnes during the quarter, a level which is expected to be maintained going forward and which management believes will be beneficial to IFL's margins.

Forecast ferrochrome sales in the second quarter will be substantially lower than in the quarter under review due to the shutdowns, but will selectively be countered by higher sales of chrome ore. IFL's contractual commitments to customers remain unaffected and will continue to be serviced.

Costs

The Company achieved a 5.3% reduction in ferrochrome production costs for the quarter compared with FY2011. Production cost for the quarter was ZAR5.92/lb (US76¢/lb at ZAR7.79/US$), compared with ZAR6.15/lb for H1 and ZAR6.25/lb for FY2011.

As shareholders will know, the key cost performance indicator for the Company is production cost after stripping out changes in unit electricity and unit reductant prices, which are outside management's control and affect all other South African producers. On this basis, production cost for the quarter was ZAR5.97/lb, a 4.6% reduction on FY2011. This represents 37.5% of the Company's ZAR76c/lb cost reduction target (US10.9¢/lb at FY2011's average exchange rate of ZAR7.00/USD).

The decreased production cost was mainly due to higher anthracite usage, lower unit fixed costs and improved electricity consumption. There are still significant cost reductions in the pipeline; these are from increased ferrochrome production volume, further improvement in electricity consumption, increased Cogen electricity generation and the consumption of low cost UG2 ore concentrate. Management is confident of achieving its cost reduction target.

Cash

The Company's net borrowings decreased by ZAR37 million, from ZAR458 million at 31 December 2011 to ZAR421 million at 31 March 2012. Cash from operations (before working capital changes) generated ZAR19 million, working capital generated ZAR60 million, capital expenditure utilised ZAR23 million, cash guarantees utilised ZAR5 million and financing and foreign exchange differences utilised ZAR14 million. Capital expenditure mainly comprised ZAR8 million for the UG2 plant, and ZAR9 million for mining. There is ZAR2 million outstanding on the UG2 project.

As announced in February 2012, the Company's major shareholder, JISCO, agreed to provide a guarantee for a short-term banking facility. Due to the reduction in net borrowings and the fact that the Company is now cash generative, the facility has been put on hold for the time being.

The Company's discussions with Bank of China are progressing well and IFL looks forward to updating the market on a revised bank facility shortly.

Outlook

IFL looks forward to enjoying the better European and US spot prices in Q2, due to the expected tightening of the European and US markets caused by the reduction in South African production. According to CRU, 24 out of the 52 furnaces in South Africa will be switched out until 31 May 2012, and we expect this to have a significant impact on the market. Seasonal shut downs in South Africa are expected to occur throughout the winter-tariff period due to the higher electricity costs over that period.

IFL notes the discussions around the South African chrome ore export duty and would welcome the introduction of this levy; the Company will monitor this situation closely for any further developments.

Analyst / investor conference call

Management will discuss these results in a conference call with the investment community on Wednesday 25 April at 09.00am (London). Dial in details are below:

Dial in: +44 (0) 1452 541 076

Pin code: 74559668

- 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.