IFL.L Regulatory News (IFL)

21 February 2011

International Ferro Metals Limited

("IFL" or the "Company")

Interim Financial Results for the half year to 31 December 2010

Highlights

Financial highlights

·; Sales volumes of 103,808t, up 46% on the comparative period but down 13% on the previous half

·; Higher sales volumes but lower ferrochrome prices and a stronger Rand resulted in a loss before tax of ZAR160 million, compared with a loss of ZAR145 million in the comparative period and a loss of ZAR12 million in the previous half

·; Net borrowings of ZAR216 million as at 31 December 2010, compared to a net cash balance of ZAR47 million as at 30 June 2010 principally due to capital expenditure and operating activities

·; No interim dividend declared

Operational highlights

·; Production volumes down 5% to 100,839t for the six months under review due to furnace shut downs for repair work

·; Controllable Rand production costs decreased with significant scope for further decreases once furnace feed chutes and roofs upgraded

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

·; Good performance from underground and open pit mining

·; Sky Chrome mining licence awarded

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

·; Construction by Anglo Platinum of UG2 chrome tailings re-treatment plant 6 months behind schedule

Post period highlights

·; Ferrochrome market showing strong recovery

·; Rand has depreciated since December 2010

·; Management confident that furnace problems have been accurately diagnosed by Metix and preparatory work has commenced on the furnace feed chutes and roofs redesign and rebuild

David Kovarsky, Chief Executive Officer of IFL commented:

"The global ferrochrome market is strengthening as demonstrated by demand increasing in line with higher stainless output, tightness in supply and increasing spot prices. IFL has commenced preparatory work on the furnace upgrade, the conclusion of which is expected to increase our production volumes to nameplate capacity, increase efficiencies, and decrease costs. Costs should be further reduced with the full commissioning of the co-generation plant, input of low cost UG2 ore from the beginning of 2012, and greater use of lower cost reductant. The Company should then achieve a significantly improved financial performance in a strengthening ferrochrome market."

There will be a presentation to analysts of the interim results today, Monday 21 February 2011 at 09.00am (UK time) at 16 Lincoln's Inn Fields, London WC2A 3ED. The presentation slides and a recording of the presentation will be available on the Company's website.

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

International Ferro Metals Limited

David Kovarsky, Chief Executive Officer

Mob: +27 82 650 1192

Brunswick Group

Carole Cable / Fiona Micallef-Eynaud

Tel: +44 (0) 20 7404 5959

Numis Securities Limited

John Harrison / James Black

Tel: +44 (0) 20 7260 1000

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 their 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.

Operational Review

Ferrochrome Market Review

The calendar year 2010 experienced record world stainless steel production of 31.3 million 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 experienced high utilisation levels but represents only 7% of world production. Meanwhile Europe, which represents 23% of global production, was showing sluggish growth. Over the past few weeks global ferrochrome demand has increased in line with higher stainless steel output. 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. However, the decrease in the benchmark price did not permeate into the Chinese market where prices have firmed by about 8¢/lb during the quarter. International Ferro Metals continues to have good relationships in Asia where we have focused on higher-value markets such as Korea and Taiwan.

In all markets there appears to be general tightness in ferrochrome supply which is causing spot prices to increase.

Smelting

The Company experienced a challenging first half for production due to furnace shut downs in August and November 2010 to repair heat-damaged roof panels. A subsequent root and branch review of the furnaces by Metix, a leading specialist South African furnace engineering firm, discovered that the furnace roofs have certain design deficiencies. The main deficiency being the sub-optimal positioning of the ore feed chutes into the furnaces with the resulting effect of too high gas temperatures at the top of the furnaces which in turn causes damage to the roof panels leading to water leaks. The cost of the rebuild of the furnace feed chutes and roofs is currently estimated to be ZAR40million per furnace and the rebuild will require a six week shut down per furnace. This is planned for June to August 2011 in order to coincide with the period when electricity prices are at their highest.

Since the Production Report issued by the Company on 25 January 2011, considerable progress has been made on the design of the new furnace roofs and gas off take systems. Design work is well advanced and construction should be complete by the end of August 2011. Ramp up should occur during September and October and the furnaces should reach name plate capacity of 265,000 tonnes per annum in October 2011.

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

Mining operations

The six month period to December 2010 experienced a continuation of the ramp-up of underground mining from 20,000 tonnes in June 2010 to 28,000 tonnes per month by the end of the calendar year. Further progress is anticipated and by June 2011 it is planned for 40,000 tonnes per month to be mined, with the target of 75,000 tonnes per month expected to be achieved by May 2014. The open pit mining operations have performed well and have averaged 49,000 tonnes per month over the six month period. Lower grade MG3 and MG4 ores not used in the Company's furnaces are being sold into the market.

Open pit operations at Lesedi will cease in July 2011 and the Sky Chrome open pit operations are planned to replace the Lesedi open pit ore production. Further information on Sky Chrome is provided later in this announcement.

The ore beneficiation plant achieved record feed volumes with 90,000 tonnes being processed in December. In addition, the recovery rates have increased from 56% to consistent recoveries in excess of 62%.

Sales and inventory

The Company achieved sales of 103,808 tonnes of ferrochrome in the six months to 31 December 2010 compared to 119,496 tonnes in the previous half year. Inventories were reduced from 17,976 tonnes at the end of June 2010 to 14,487 tonnes at 31 December 2010 and continue to run at these levels. For the first time the company has been in a position to sell relatively high volumes of surplus ore, mainly lower grade MG3 and MG4 beneficiated ore and recorded 115,971 tonnes of ore sales for the half year.

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

Financial Review

The Company reported a loss before tax of ZAR160 million for the six months ended 31 December 2010 ("the period") against a loss of ZAR12 million in the previous six months and a loss of ZAR145 million for the comparative period.

Ferrochrome production increased by 6% from the comparative period but decreased by 5% from the previous six months. Sales volumes increased by 46% to 103,808t from the comparative period but decreased by 13% from the previous six months.

The average European ferrochrome benchmark price of US$1.30/lb for the period was 34¢ higher than the average price for the comparative period and 11¢ higher than the previous six months. However, lower achieved prices combined with a significantly stronger ZAR/USD exchange rate put pressure on margins. Operating margins turned to a negative 6% compared with a 7% positive margin in the previous six months and negative 13% margin for the comparative period.

The Company has started to sell lower grade chrome ores into the market which contributed ZAR59 million to revenue for the half year. These sales will continue at a similar volume for the next half-year however ore prices have been increasing significantly in 2011.

As at 31 December 2010, the Company had net borrowings of ZAR216 million (ZAR231 million cash less ZAR447 million drawn on the working capital facility), compared with net cash of ZAR47 million at 30 June 2010. Of the ZAR263 million decrease in net cash, the operating loss utilised ZAR124 million, capital expenditure utilised ZAR115 million, UG2 payments utilised ZAR33 million and working capital released ZAR22 million.

The budgeted capital expenditure for the remainder of the financial year is ZAR247 million which includes ZAR20 million for the electricity co-generation plant, ZAR33 million for mine development, ZAR95 million for the UG2 plant and ZAR70 million for the furnace roof upgrades (the balance of ZAR10 million falling into the next financial year).

The Company is negotiating a term loan facility to fund the UG2 project and expects to conclude an agreement by the end of April 2011.

EBITDA loss for the period was ZAR99 million, reduced from a loss of ZAR102 million for the comparative period and a profit of ZAR43 million for the previous six months. The positive tax charge of ZAR53 million to the income statement is a deferred tax credit resulting from the Company's unclaimed calculated tax losses available for offset against future profits. Headline earnings per share decreased from a profit of ZAR0.04 per share for the comparative period to a loss of ZAR0.19 per share.

Costs

Ferrochrome production cost per pound for the period was US$0.91/lb at an average exchange rate of ZAR7.10/$ and consists of: ore 24.6¢ (27%); reductant 24.8¢ (27%); electricity 20.9¢ (23%); operating costs 5.9¢ (7%); fixed costs 10.4¢ (11%); and depreciation 4.8¢ (5%).

The production cost for the financial year ended 30 June 2010 was US$0.83/lb at ZAR7.54/$, which equates to US$0.88/lb at this period's exchange rate of ZAR7.10/$, an increase of 3.4%. The main drivers behind costs compared to the financial year ended 30 June 2010 (adjusted for effect of exchange rate changes) and their outlook once the furnace roof upgrades have been completed are given below:

·; Ore costs decreased by 1.7¢/lb (6.6%) as a result of increased ore volumes from both the open pit and underground operations at Lesedi, as well as significantly better recoveries from the ore beneficiation plant. The UG2 supply agreement is scheduled to commence in January 2012 and is expected to further reduce ore costs by an estimated 3.0¢/lb.

·; Reductant costs increased by only 0.5¢/lb (2%) despite an average increase of 12% in coke prices. This was achieved through increased use of anthracite. The planned increase in anthracite consumption is expected to decrease reductant costs by an additional 2.0¢/lb.

·; Electricity costs increased by 4.6¢/lb (28%) mainly due to Eskom price increases and partly because of higher consumption due to the furnace roof leaks. Improved consumption after the furnace roof upgrades and the full commissioning of the co-generation plant is expected to reduce electricity costs by an additional 2.3¢/lb.

·; Operating costs remained unchanged.

·; Fixed costs increased by 1.6¢/lb (12%) mainly as a result of inflation and higher maintenance costs from furnace roof maintenance. Achieving nameplate production volume following the furnace roof upgrades from June to August is expected to decrease fixed costs by an additional 3.0¢/lb.

Administration and other expenses increased from ZAR67 million in the comparative period to ZAR82 million. This was primarily due to inventory write-downs and unabsorbed fixed costs.

Management continue to focus on minimising costs and controllable rand production costs with significant scope for further decreases once the furnace roof upgrades are completed.

Sky Chrome

Sky Chrome, an 80% subsidiary of the Company was awarded a mining licence in November 2010. The intention is to commence open pit mining by the end of April 2011. Since the conclusion of the feasibility study in 2008 the mine plans have been refined and indications are that 12 million tonnes of open pit material are available along the MG1, 2, 3 and 4 reefs. Due to the proximity of open pit operations to local communities, extensive discussions have been held with those communities to ensure that they are not adversely impacted.

The Company is in the final stage of adjudicating the tenders for appointing the mining contractor and the intention is to ramp up open pit mining to 100,000 tonnes per month by January 2012. A feasibility study will be completed within six months for the construction of an ore beneficiation plant. Approximately 35,000 tonnes per month will be treated at IFL's existing ore beneficiation plant. At full production, and until the plant commissioning, 25,000 tonnes per month will be mined in a saleable form without having to be treated. The balance will be stockpiled until the ore beneficiation plant has been commissioned. Until the commissioning, about 38,000 tonnes will be sold into the market. After commissioning and the utilisation of the stockpile in 2015, approximately 700,000 tonnes per annum will be sold into the market. The Company is in negotiations with various parties to secure an off take agreement.

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 gas composition is expected to normalise once the furnace roofs have been upgraded which will allow the plant to operate at design capacity.

The plant is currently operating but at a minimal level while various short-term approaches to the gas composition are being examined.

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 shall 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.

Dividends

The Board of Directors resolved not to declare an interim dividend for the six months ended 31 December 2010.

Outlook

The conclusion of the furnace upgrade by September is expected to increase production volumes to nameplate capacity, increase efficiencies, and decrease costs. Costs should be further reduced with the full commissioning of the co-generation plant, input of low cost UG2 ore at the beginning of 2012, and greater use of lower cost reductant. The Company should then achieve significantly improved profitability in a strengthening ferrochrome market.

The interim financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). An abridged version of the financial statements follows; the full set for the period is available on the Company web site www.ifml.com.

Abridged Financial Statements