IFL.L Regulatory News (IFL)

12 Sep 2007 14:01

International Ferro Metals Limited12 September 2007 12 September 2007 International Ferro Metals Limited ("IFL" or "the Company") Operations and Production Update Production of ferrochrome from IFL's two furnaces has been temporarily disruptedby both the operational failure of pressure rings which hold the contact pointsagainst electrodes within the furnaces and two instances of faulty wiring in theball mill of the pelletising plant. These are expected to reduce production byup to 30,000 tonnes in the financial year ending 30 June 2008. Electrode Pressure Rings Following a trend of faults during the ramp-up and early operational stage,indicating similarities between a number of pressure ring failures, a Professorof Metallurgy from the University of Pretoria was appointed by IFL to review thefailure events and to advise as to the most efficient remedial action. Initial findings indicate that these failures could be due to design faults. Allpressure rings in both the furnaces will need to be systematically replaced assoon as new redesigned pressure rings are available. The lead time forfabrication of replacement pressure rings prevents a complete single change overto new pressure rings. Therefore, it is planned to take a staged approach, andto the extent possible, change the pressure rings during planned maintenancecycles which will leave one furnace operating during the remediation period andminimise production disruptions. IFL is seeking to ensure all pressure rings arereplaced by end of January 2008. IFL will seek to recover the capital cost of remedying these problems from thecontractor responsible for design and installation of the electrode mechanism.The contractor is committed to rectifying these problems as soon as possible. Gear Box Faulty Wiring IFL has also identified that incorrect wiring of control mechanisms within theball mill gear box of the pelletising plant has caused overheating and thesubsequent failure of bearings. A temporary replacement gear box has beeninstalled allowing the plant to operate at reduced capacity resulting in areduction of ferro chrome production. It is expected that installation of a new gearbox and other rectification workwill take up to five weeks and will be completed during October 2007. In themeantime IFL will seek to minimise disruption to production by using its lumpyore for its furnaces. The failure of the gear box is under investigation and the contractorresponsible for construction of the pelletising plant has been notified that IFLintends to seek recovery of costs and damages from this failure. Production Outlook IFL expects that remedying these faults, will involve furnace down time outsidethat previously anticipated as routine maintenance. The consequential loss ofproduction may be up to 30,000 tonnes through the rectification period to 31January 2008. Each of the other components of IFL's integrated ferro chrome facility isoperating at capacity and IFL's management has no reason to anticipate thesmelter will not resume production at the rate of 267,000 tpa of ferro chrome bythe end of January 2008. On that basis, IFL expects production for the yearending 30 June 2008 to total about 237,000 tonnes, which could reduce IFL'sproduction and revenues for the year ending 30 June 2008 by approximately 11%. Production in the period to 30 June 2007 totalled 49,000 tonnes, represented bysales of 36,000 tonnes and finished product committed to sales contracts but notshipped of 13,000 tonnes due to the rescheduling of shipping. Stephen Turner, Managing Director of International Ferro Metals commented "Whileour management team is very disappointed at these two unforeseen plant failureswe are confident that effective remedial action is being taken. It is notenvisaged that this disruption to production will impact upon the timing of theproposed expansion of ferrochrome production capacity to 665,000 tonnes perannum. The stainless steel market remains strong as does that for its key ingredientferro chrome. Prices for ferro chrome remain at a long term high with strongdemand and low industry stock piles. The IFL plant is forecast to revert toproducing at the rate of 267,000 tpa of ferro chrome following the replacementof the pressure rings within each furnace." ENDS For more information contact: International Ferro Metals LimitedStephen Turner, Managing DirectorMob: +61 418 440 844www.ifml.com Brunswick GroupCarole CableTel: 020 7404 5959 Numis Securities LimitedJohn HarrisonTel: 020 7260 1000 Notes to editors:International Ferro Metals is a ferrochrome producer that has recently commencedshipments from its integrated chromite mine and ferrochrome processingoperations in South Africa for use in the global stainless steel industry. This information is provided by RNS The company news service from the London Stock Exchange