Keras Res Regulatory News (KRS)

Ferrex plc / Index: AIM / Epic: FRX / Sector: Mining

3 June 2015

Ferrex plc ('Ferrex' or "the Company" or 'the Group')

Interim Results

Ferrex plc, the AIM quoted manganese development and iron ore exploration company focussed in Africa, is pleased to announce its interim results for the six months ended 31 March 2015.

Overview:

· Accelerated Definitive Feasibility Study ('DFS') at the Nayega Manganese ('Mn') Project in northern Togo complete

o Full DFS results to be released pending review by third party (as part of financing due diligence) and issue of Mining Permit

· Negotiation of terms in the Nayega Mining Convention finalised, clearing the way for grant of the Mining Permit

· Discussions with several parties on funding for construction of Nayega commenced and ongoing

· Strengthened cash position through £835,000 placing in February 2015

Chairman's Statement

During the six months under review Ferrex focussed on advancing its Nayega Mn Project in Togo ('Nayega'), which has the greatest potential for near-term productionamongst the Company's manganese and iron ore project portfolio in Africa. Our goal is to bring our low cost Nayega project into production as rapidly as possible, allowing Ferrex to begin generating cash flows.

The DFS exploring the viability of a 250,000 tonne per annum ("tpa") 38% manganese product operation was further advanced during the reporting period, and as announced in May 2015, has now been completed. Negotiations over the Mining Convention, which outlines the fiscal, environmental and social issues governing the Company's and Togolese Government's commitments to each other were finalised as announced in March 2015. This was a highly positive milestone as it clears the way for issue of the Mining Permit, which is expected to happen soon after the appointment of the new Prime Minister and Ministers now that the Presidential elections are complete. Discussions with several parties over funding the capital costs for construction of the Nayega mine are underway and projected to continue with due diligence evaluation and field visits in the next reporting period.

Ferrex has a proven team with an excellent track record of advancing resource assets, developing mining operations and completing value-accretive trade sales. Your board is aligned with shareholder interests through substantial investment, with our Directors holding 25% of the issued shares in the Company. We look forward to reporting good news in the next period - grant of the Nayega Mining Permit, funding secured for development and a definite timeline to construction.

Nayega Manganese, Togo - 85%

Nayega is a 92,390Ha Mn Project in northern Togo, held through local subsidiary Societe Generale de Mines. Work on the project by the Company has comprised exploration, definition of compliant resources and technical studies required to underpin a DFS into developing the deposit. Based on outcomes of the DFS, the project has the potential to provide cash flow to Ferrex in the near term via a low capex open pit operation.

The DFS to develop an open pit 250,000tpa export manganese operation has now completed. Additional testwork during the period has led to improved understanding of how the mineralised material responds to beneficiation; as a result, the Company assessed an 'accelerated startup' option which employs a modified process flow-route for Mn product. The accelerated startup option results in substantially lower capital and operating costs and has been formally adopted by the Company as the preferred development method. Full details of the DFS, including economics, will be released once a third party review has been conducted and the Mining Permit granted.

Negotiations with Togolese Government representatives over the Mining Convention have concluded. The Mining Convention is a comprehensive document outlining the Company's and Government's commitments to each other on fiscal, environmental and social issues. This is a significant step for the Company, and in conjunction with issue of the Environmental Permit last period, clears the way for the Mining Permit to be granted. We expect the Mining Permit to be issued in the next reporting period.

Additional pitting at exploration targets T27 and T48 allowed the estimation of resources for these two prospects. Inferred Resources of 220,000t @ 15.6% Mn and 2.75Mt @ 9.2% Mn were defined at T48 and T27, respectively. Both areas are within easy trucking distance (T48 is

Discussions with several parties on funding for construction of the operation are underway. Technical and legal documentation is under review, with due diligence evaluation and field visits expected to continue in the next reporting period.

Mebaga DSO Iron Ore, Gabon - 78%

Mebaga is a DSO iron ore project located in the north of Gabon within an extensive iron ore province extending from Gabon into the Republic of Congo ('ROC') and Cameroon. Major deposits in the region include Belinga in Gabon (1Bt @ 60% Fe); Mbalam in Cameroon (775Mt @ 57% Fe) and Avima in the ROC (690Mt @ 58% Fe). Mebaga has a significant advantage, being the closest DSO project in the iron ore province to the port of Libreville.

The 305 square km project, which covers prospective Banded Iron Formation ('BIF') over a strike length of 19km, hosts an Exploration Targetof 630Mt to 1,050Mt @ 25% - 65% Fe, including 90Mt to 150Mt @ 35% - 65% Fe oxide (weathered). The target has been estimated by independent experts over 11km of the 19km BIF strike length.  DSO potential was confirmed in Ferrex's 2013 drill campaign, where all nine diamond holes intersected DSO grade iron ore mineralisation; the best intercept was 28.7m at 61.4% Fe from surface in the final exploration hole of the programme, NGDH008. Given the characteristics of the ore, independent experts have confirmed that this material would trade at a premium to the 62% benchmark price. In early 2014, geological mapping successfully identified high grade iron ore mineralisation in the eastern half of the licence, 3km east of the easternmost BRGM historical pit (pit P72) and 7km east of the area drilled by Ferrex in 2013. Rock samples collected during this programme returned grades up to 63.6% Fe.

Planning is underway for an auger exploration programme to evaluate prospective BIF ridges is in the coming dry season (mid-2015). The programme will identify targets for drill testing in the following dry season.

Alternative, innovative options for the potential funding and development of Mebaga are being evaluated. We look forward to reporting on this in due course, and work completed on the project, as information comes to hand.

Malelane Iron Ore, South Africa - 74%

Malelane is located in the mineral-rich Mpumalanga region of South Africa. Ferrex holds a 74% interest in the project, which incorporates prospecting rights over a 4,192 Hectare area. The project is located in an area that has excellent infrastructure, access to water and power and is only 6km from a rail line that runs to the Port of Maputo in Mozambique 170 km away.

Malelane hosts a JORC Code compliant Inferred Resource of 139Mt at 37% Fe, which is only defined over 1.5km of the 14km BIF strike identified within the project area. There is significant upside potential, which is clear in the compliant Exploration Target of 1.6Bt to 2.0Bt at 28% - 30% Fe. A Scoping Study completed by Ferrex in 2012 utilising the resource illustrated the robust economics of developing Malelane as an initial 1.8Mtpa open pit, low strip ratio operation with a 57% Fe product over a 16.6 year Life of Mine ("LOM"). 

Because of the iron ore pricing environment, the work programme at Malelane is currently on hold.

Leinster South Africa - 74%

The 47,004 hectare Leinster Manganese Project is located in the Northern Cape and North West Provinces of South Africa. The project area spans the entire Leinster Basin, which is an erosional outlier of the Kalahari Manganese Field - the largest manganese metallogenic province in the world.

The Leinster deposit lies at an average depth of 80m below surface and would be developed as an underground operation with ore trucked or railed to port for the export market. Anglo American held the area in the past and drilled 51 holes for manganese on the Leinster property between 1977 and 1988. Using this information, Coffey Mining calculated an exploration target of 5.5Mt to 8.7Mt at 28.6% to 31% Mn for Leinster on behalf of Ferrex. The target is open in all directions.

Ferrex flew a high-resolution airborne magnetic/radiometric survey across the project area in late 2012. As a direct result of this work, possible (previously unrecognised) occurrences of Hotazel Formation were identified and additional licence applications filed over these areas. The applications are pending; no work will be completed until the applications are processed.

Financial Review

The Group is not yet in production and so has no income other than a small amount of bank interest. Consequently the Group is not expected to report profits until it disposes of or is able to profitably develop projects.

The accounting loss before and after tax for the six months ended 31 March 2015 was £713,000.

As at 31 March 2015 the Group had cash of £452,000. During the period, Ferrex raised a total of £1,135,000, via a placing in February 2015 of £835,000 and a £300,000 loan provided by our Managing Director Mr David Reeves. The majority of cash expenditure during the six month period was expended on advancing our Nayega manganese project DFS, legal expenses associated with finalising the mining convention, listing & corporate expenses and to a lesser extent expenditure on our iron projects in Gabon and South Africa. Further information of the financial results is contained later within this announcement.

Outlook

Subsequent to the reporting period we have announced completion of the DFS and a maiden reserve at the Nayega manganese project. We remain confident and look forward to the mining permit for the project being issued in the coming months - this is the major condition to finalising funding to commence development of the project. We continue to engage to potential funders and product offtakers and would like to have this concluded shortly after the award of the mining permit.

I would like to thank investors for their support during the year and look forward to the coming six months with anticipation.

Chairman

Brian Moritz

For further information please the Company's website please visit www.ferrexplc.com or contact the following:

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 MARCH 2015

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 MARCH 2015

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 MARCH 2015

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2015 (CONTINUED)

1. Reporting entity

Ferrex plc (the "Company") is a company domiciled in England and Wales. The condensed consolidated interim financial statements of the Company as at and for the six months ended 31 March 2015 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and jointly controlled entities. The Group primarily is involved in the exploration of iron ore and manganese in Africa.

2. Basis of preparation

(a) Statement of compliance

This condensed consolidated interim financial report has been prepared in accordance with IAS 34 Interim Financial Reporting. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial performance and position of the Group since the last annual consolidated financial statements as at and for the year ended 30 September 2014. This condensed consolidated interim financial report does not include all the information required for full annual financial statements prepared in accordance with International Financial Reporting Standards.

This condensed consolidated interim financial report was approved by the Board of Directors on 2 June 2015.

(b) Judgements and estimates

Preparing the interim financial report requires Management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial report, significant judgements made by Management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 September 2014.

3. Significant accounting policies

The accounting policies applied by the Group in this condensed consolidated interim financial report are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 September 2014.

4. Financial instruments

Financial risk management

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 30 September 2014.

5. Segment information

The Group considers that it operates in two distinct business areas, being that of iron ore exploration, and that of manganese exploration. These business areas form the basis of the Group's operating segments. For each segment, the Group's Managing Director (the chief operating decision maker) reviews internal management reports on at least a quarterly basis.

Other operations relate to the group's administrative functions conducted at its head office and by its intermediate holding company together with consolidation adjustments.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the Group's Managing Director. Segment results are used to measure performance as management believes such information is the most relevant in evaluating the performance of certain segments relative to other entities that operate within these industries.

For the six months ended 31 March 2015 (unaudited)

For the six months ended 31 March 2015 (unaudited)