Interim Results

25 February 2013

International Ferro Metals Limited

("IFL" or the "Company")

Interim Financial Results for the half year to 31 December 2012

Highlights

Financial highlights

·; Half yearly ferrochrome sales of 105,095 tonnes ("t"), up 5% on comparative period and 56% on the previous half

·; Lower ferrochrome prices resulted in a loss before tax of ZAR121 million, compared with a loss of ZAR139 million for the comparative period and a profit of ZAR67 million in the previous half

·; Net borrowings of ZAR436 million, within the ZAR500 million working capital facility

·; No interim dividend declared

Operational highlights

·; Record half-year ferrochrome production of 110,092 tonnes, including metal recovery plant production

·; Electrode paste replacement successfully completed

·; Sky Chrome mine successfully ramped up to 70,000 tonnes per month

·; 46% of targeted cost savings achieved

·; Entrance into new, high-growth market by securing first sales in India, expanding spread of customer base

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

Post period highlights

·; Electricity buyback agreement signed to shut down one of the two furnaces commencing from 16 February to 31 March 2013 at a financially beneficial rate

·; Chrome supply from Anglo Platinum at contractual 15,000 tonnes per month plus catch-up tonnes

Chris Jordaan, Chief Executive Officer of IFL commented:

"The Company has performed well operationally over these past six months. Including metal recovery plant production, we achieved a record half year ferrochrome production, despite having an electrode paste issue which we successfully and quickly dealt with. Ferrochrome sales were 105,095 tonnes for the half and we secured sales to India for the first time, expanding our customer base to a new, high growth market.

However, the pricing environment for ferrochrome over the period under review has been challenging with three year low spot prices reached in the December quarter of 2012. This led to a financial loss despite the lower cost base. Cost savings continue to be a major focus area, and we are on track to achieve our target.

The combination of solid operating performance, active marketing to a broader range of customers and further cost savings have placed IFL in a healthy position to take advantage of improving outlook for ferrochrome and stainless steel."

There will be a presentation to analysts of the interim results today, Monday 25 February 2013 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.

Dial in details:

UK / International +44 (0) 1452 555 566

Conference ID 11133373

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

International Ferro Metals Limited Tel: +27 14 574 6302

Chris Jordaan, Chief Executive Officer

Brunswick Group Tel: +44 (0) 20 7404 5959

Carole Cable / Clemmie Raynsford

Numis Securities Limited Tel: +44 (0) 20 7260 1000

James Black / Stuart Skinner / Alastair Stratton

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 dramatic slowdown in the world economy during the second half of calendar 2012 had a significant impact on stainless steel, which was hampered with excessive stocks across most regions. This resulted in continued downward pressure on both ferrochrome and chrome ore prices. The European Benchmark price decreased from US$1.35/lb in Q2 to US$1.10/lb in Q4 2012, a decrease of 18.5% over six months. Spot prices in Asia dropped to levels below US$0.85/lb. As a result, chrome ore prices also dropped significantly during the period. This, intensified by some supply disruptions, resulted in significant destocking of both alloy and ore and which left industry stocks at vulnerable levels at the end of 2012.

Spot ferrochrome prices started to recover late in 2012 even though stainless steel production remained under pressure. The recovery in ferrochrome prices can be attributed to low stocks, which were aided by a combination of typically strong seasonal factors that increased costs in China, as well as the production cuts that were announced by most South African producers. The Benchmark Price was settled at US$1.125/lb for Q1 of 2013. Spot prices showed a stronger recovery and are now firmly above US$0.90/lb in Asia.

Sales and inventory

Sales initiatives were expanded into India as part of the Company's successful diversification strategy. A further initiative to strengthen the sales book was achieved by increasing long term contractual sales from 20% to 35% of production, with the renewal and conclusion of new agreements in Europe. Sales activities into the USA and Asia were maintained at a constant level. The increasing direct management of marketing has allowed for cost savings by reducing the use of intermediary agents.

Going forward, further cost savings and consistency are expected with the optimisation of inland logistics. IFL is investigating rail freight options in order to reduce reliance on road transportation, thereby helping to boost reliability and reduce transport costs.

Ferrochrome sales for the period were 105,095 tonnes compared with 67,326 tonnes in the previous six months. Ore sales were 78,000 tonnes.

Ferrochrome inventory at 31 December 2012 was 15,815 tonnes, up 4,966 tonnes from 30 June 2012. Inventory levels are expected to reduce to below 10,000 tonnes over the next quarter.

Although the road transport strike during September resulted in some disruptions in logistics and fluctuating transport costs, the impact on sales was mitigated by the use of rail transport and rigorous inventory management.

Smelting

Production for the period started out strong with targeted levels for Q1 being achieved. During Q2, operational challenges were experienced due to the electrode paste issue. As previously announced, this has now been successfully resolved. Operational performance improved further into Q1 2013. Ore and power efficiency improved significantly during January 2013.

Further cost reductions were achieved as anthracite use increased, in excess of 50%. Process flow optimisation initiatives were implemented during the period which increased production of lower cost recovery material and partially negated the production loss due to furnace instability in Q2.

Management is confident, given the performance prior to the electrode paste issue and subsequent performance after the electrode paste replacement, that the furnaces will operate in a stable and highly efficient manner to achieve the planned cost reduction initiatives.

Mining

During the period, Sky Chrome ramped up and reached open pit mining volumes of over 70,000 tonnes per month. A new production record of 76,894 run of mine ore tonnes was achieved in September with most being transported to the IFL beneficiation plant at Lesedi. Lower beneficiation recoveries are being experienced as a result of the levels of oxidisation of the shallower ore. The recoveries should improve as operations reach un-weathered ore.

The Lesedi underground operation run-of-mine production achieved 67,000 tonnes and the open-pit operation achieved 13,000 tonnes before it reached its end of life in July 2012 as planned.

In December, underground production was halted due to the termination of our agreement with the mining contractor. The Company is currently reviewing the Lesedi underground plan, which includes discussions as to whether or not to use a contractor in the future.

The Lesedi chrome recovery plant (CRP) has exceeded the planned production volumes of 4,000 tonnes per month. Recovery of 25,139 tonnes of chrome concentrate was achieved during the period.

Co-generation plant

The co-gen plant generated 28.4GWh of electricity for the six months to 31 December 2012 which represents 6.5% of the Company's total electricity requirement for the period. The plant generated 11.3GWh in the previous six month period (4.1% of total requirement). The output of the cogen plant was negatively affected by the quality of gas supply from the furnaces due to the instability resulting from the electrode paste issue. With improved furnace stability, output on the co-gen plant has returned to expected levels. At full production, the co-gen should generate approximately 11% of the Company's total power requirement at a significantly lower cost than grid power.

UG2 Plant

In February 2010, IFL entered into an agreement with Anglo Platinum to receive 15,000 tonnes per month of UG2 chrome concentrate until 2020 from the recovery of chrome in the UG2 tailings from Anglo Platinum's Waterval Concentrator in Rustenberg. The cost to IFL for the plant construction was ZAR161 million. This is a beneficial agreement which delivers a cost per tonne of concentrate from the Chrome Recovery Plant (CRP) which is significantly below the Company's in-house cost of concentrate production.

As previously reported, this supply was temporarily interrupted in mid-October 2012 for two months as a result of strike action at Anglo Platinum's operations. At the time, the Company was able to make up the loss in supply through its own operations and stock. With the resumption of mining activity at Anglo Platinum towards the end of last year the normal supply process has now resumed, and as part of the contract signed in 2010, Anglo Platinum is required to make up any losses in tonnage incurred at a rate of an additional 5,000 tonnes per month. The Company therefore expects the backlog to be caught up during the first quarter of calendar 2013.

The Company has successfully introduced 50% of the contractual allocation of UG2 chrome concentrate into its ore blend with the excess ore selectively sold on the export market.

Eskom electricity buy back agreement

During January 2013, an agreement was reached with Eskom to assist with the South African power utility's electricity supply requirements by participating in its electricity buy-back programme. During this programme Eskom will buy back the electricity, which would have been consumed by the furnace during the buy-back period of the shutdown, at a financially beneficial rate to the Company.

Under the terms of the agreement, the Company agreed to switch out one of its two furnaces from 1 February until 31 March 2013. However, the scheduled maintenance work on Furnace 1's taphole, took slightly longer to complete than anticipated, finishing on 15 February (instead of 1 February when the buyback was due to commence) and for this reason, the starting date of the buyback agreement was altered to commence from 16 February.

IFL's contractual commitments to customers will not be affected as these will be serviced from production from the second furnace which will continue operating at full production.

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

The overall IFMSA fatal-free man-hours worked record increased to 23.1 million. This equates to 2.96 million fatality free shifts. Overall, the year-to-date IFMSA LTIFR decreased to 1.84 which compares favourably to the 3.06 for FY2012. During the period under review, the re-certification audit for ISO 9001, 14001 and OSHAS 18001 was successfully completed.

No environmental incidents were reported in the period under review.

Financial Review

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.

The Company reported a loss before tax of ZAR121 million for the six months ended 31 December 2012 ("the period") against a profit of ZAR67 million in the previous six months and a loss of ZAR139 million for the comparative period. The loss resulted primarily as a result of low realised ferrochrome prices, in particular during the second quarter of the financial year.

A half-year record for ferrochrome production of 110,092 tonnes was achieved, despite electrode paste problems experienced during the second quarter, which was fully resolved during December. Ferrochrome production for the previous six months was 67,267 tonnes, mainly due to the Eskom electricity buy-back agreement during that period.

Sales volumes were in line with production at 105,095 tonnes compared with 67,326 tonnes for the previous six months. Closing stock at 31 December 2012 increased by 4,966 tonnes from 30 June 2012 to 15,815 tonnes.

The European benchmark ferrochrome price for FY2013 Q1 was settled at US$1.25/lb and for Q2 at US$1.10/lb. The average price was 7¢ below that of the previous six months. Realised prices came under further pressure during Q2. The approximate 7% weakening of the Rand against the U.S. Dollar was not enough to offset the additional drop in realised prices.

The operating margin was negative 5% compared to a positive margin of 8% in the previous six months. Monetisation of lower grade ore sales continued and a total of 78,000 tonnes were sold during the period, contributing ZAR36 million to revenue.

Net borrowings increased to ZAR436 million at 31 December 2012, from ZAR308 million at 30 June 2012, within our ZAR500 million working capital facility. The increase was due to operations (before working capital changes) utilising ZAR30 million, an increase in working capital utilising ZAR47 million, capital expenditure utilising ZAR29 million and financing activities utilising ZAR17 million. Forecast capital expenditure for the second half of the year is ZAR40 million. Net borrowings are expected to expand slightly during the current quarter before reducing over the rest of the year.

The Company maintains a conservative interest bearing debt to equity ratio of 25% and continues to operate within its banking facilities. Cash generation is also expected to improve as further targeted production cost savings are achieved.

EBITDA loss for the period was ZAR46 million against a loss of ZAR73 million for the comparative period and a profit of ZAR136 million for the previous six months. The positive tax charge of ZAR44 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 loss per share reduced from ZAR0.16 in the comparative period to ZAR0.14.

Production cost

Ferrochrome production cost for the period was ZAR6.48/lb, compared to ZAR6.13/lb for FY2012. The Company is targeting total cost reductions of ZAR0.76/lb on FY2011 production cost of ZAR6.25/lb, which strip out uncontrollable cost changes in unit electricity and reductant prices affecting all South African producers.

Adjusting for changes in electricity and reductant prices, production cost for the period was ZAR5.90/lb, ZAR0.23/lb lower than FY2011 cost of ZAR6.25/lb. This represents 46% of the targeted ZAR0.76/lb saving.

The Company is on track to achieve its targeted cost reduction when the full effects of higher production volumes and normalised electricity consumption, together with improved beneficiation recoveries and full co-generation capacity, are realised.

The table below provides the breakdown of production cost in ZAR/lb:

* Adjusted for changes in unit reductant and electricity costs from FY2011

The main drivers behind costs were:

·; Ore costs increased as a result of lower beneficiation plant recoveries during the initial shallow mining phase of the Sky Chrome open-pit as weathered ore is extracted. This will improve once the open-pit reaches unweathered deeper levels.

·; Reductant costs decreased due to increased use of anthracite which has exceeded the targeted level. Increases in anthracite prices were offset by decreases in coke prices.

·; Electricity costs increased due to Eskom electricity price increases; this was slightly offset by overall consumption efficiency improvements. During Q1, efficiencies showed marked improvement but this was impacted by the electrode paste issue experienced in Q2. Efficiencies after the electrode paste replacement in December showed marked improvement and the Company is targeting a 7% reduction in consumption efficiency.

·; Operating costs increased by below inflation due to improved cost control and general efficiencies.

·; Fixed costs per unit decreased significantly, mainly as a result of higher production volumes and further cost savings. Standing charges were debited directly to the income statement.

Administration and other expenses decreased from ZAR109 million in the comparative period to ZAR59 million. This was primarily due ZAR44 million of unabsorbed fixed costs charged directly to the income statement in the comparative period.

Dividends

The Board of Directors resolved not to declare an interim dividend for the six months ended 31 December 2012.

Outlook

Operationally, the Company is making good progress; the shutdown of one furnace to participate in Eskom's electricity buy-back programme will continue to the end of March and the other furnace is operating at capacity. The cost reduction initiative is expected to be fully implemented over the year and new markets have opened up for our product. The outlook for the stainless steel and ferrochrome industry is one that is characterised by supply constraints, particularly supply from South African producers as they participate in the Eskom buy-back programme. This, together with reported low inventory levels, global production cost pressures and the projected growth in stainless steel production, should provide strong support for ferrochrome prices.

1. CORPORATE INFORMATION

The financial statements of International Ferro Metals Limited (the Company) for the half year ended 31 December 2012 were authorised for issue in accordance with a resolution of the Directors on 25 February 2013.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial report is a general-purpose financial report, which has been prepared in accordance with AASB 134 "Interim Financial Reporting" and the Corporations Act 2001.  The financial report has also been prepared on an historical cost basis, except for certain financial instruments which have been measured at fair value. The principal accounting policies used by the Company comply with International Financial Reporting Standards (IFRS).

These half-year financial statements do not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report. These half-year financial statements should be read in conjunction with the Annual Report of International Ferro Metals Limited as at 30 June 2012.

It is also recommended that the half-year financial statements be considered together with any public announcements made by International Ferro Metals Limited and its controlled entities during the half-year ended 31 December 2012 and up to the issue date of this report, in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

The accounting policies and methods of computation are the same as those adopted in the most recent annual financial report except for the adoption of new and revised Accounting Standards listed under (c).

(b) Basis of accounting

For the purpose of preparing the half-year financial statements, the half-year has been treated as a discrete reporting period.

These financial statements are presented in South African Rand and all values are rounded to the nearest thousand Rand (ZAR'000) unless otherwise stated under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the class order applies.

In the application of IFRS, management is required to make judgements, estimates, and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements. Actual results may differ from estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable in the relevant notes to the financial statements.

(c) Significant accounting policies

Except as described below, the accounting policies applied by the Group in this consolidated condensed interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2012.

Changes in accounting policy and disclosures 

The Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 January 2012:

·; AASB 1054 Australian Additional Disclosures

·; AASB 2010-6 Amendments to Australian Accounting Standards - Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7]

·; AASB 2010-9 Amendments to Australian Accounting Standards - Severe Hyperinflation and Removal of Fixed Dates for First-time adopters [AASB 1]

·; AASB 2010-5 Amendments to Australian Accounting Standards - Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation [AASB 127, AASB 128 & AASB 131]

·; AASB 2010-8 Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets [AASB 112]

The adoption of these amendments did not have any impact on the financial position or the performance of the Group.

(d) Basis of consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by International Ferro Metals Limited (IFM) at the end of the reporting period. The Company and its controlled entities together are referred to as the Group. The effects of all transactions between entities in the Group are eliminated in full. Outside equity interest in the results and equity of controlled entities are shown separately in the consolidated Income Statement and Statement of Financial Position respectively.

Where control of an entity is obtained during a financial period, its results are included in the consolidated Income Statement from the date on which control commences. Where control of an entity ceases during a financial period, its results are included for that part of the period during which control existed.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

(e) Going Concern

As at 31 December 2012, the Group had net current liabilities of ZAR225 million including the Bank of China working capital facility. As at the date of this report, the Company has drawn down ZAR500 million on the Bank of China working capital facility which is due to be repaid on 25 June 2013. The Board plans to renew the Bank of China facility before it expires. In addition the Group made a loss of R77 million for the half year and a loss of R53 million for the year ended 30 June 2012, primarily due to depressed ferrochrome prices. The Board is confident that the Company has additional avenues of funding available to it which could be used with forecast operating cash flows to repay this facility should it not be renewed, on the assumption that ferrochrome prices don't deteriorate. For this reason, after making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, and hence, continues to adopt the going concern basis in preparing the accounts.

3. SEGMENT INFORMATION

Identification of reportable segments.

The Group has determined operating segments based on the information provided to the Board of Directors (Chief Operating Decision Maker).

The Group operates predominately in one business segment, being the mining and processing of chromite in South Africa and sale of ferrochrome. There is no material difference between the financial information presented to the Chief Operating Decision Maker and the financial information presented in this report.

Sales revenue by geographic location

Revenue obtained from external customers is attributed to individual countries based on the location of the customer.

Major customers

The Group received 56% of its external revenue from China and Europe (2011: 71%). During the half year ended 2012 the Group received 33% (2011: 48%) of its external revenue from CMC Cometals and 33% (2011: 39%) from Jiuquan Iron & Steel Group Company Ltd (JISCO).

The South African sales consisted of 16% external revenue from Glencore and 13% from Traxys.

There are no additional customers which account for more than 10% of the Group's external revenues.

4. ADMINISTRATIVE AND OTHER EXPENSES

a) Unabsorbed fixed costs for the comparative period relate to fixed costs recognised directly in the income statement during the furnace roof rebuild project during July 2011 - September 2011. The unabsorbed fixed costs in the current period relate to the Lesedi underground fixed costs that were recognised directly in the income statement during December 2012.

5. SHARE-BASED PAYMENT EXPENSE

(a) Share-based payment expense relates to the performance rights and share options issued to Mr Chris Jordaan. Please refer to the Company's Annual Report at 30 June 2012 for further details.

6. EARNINGS PER SHARE

(a) Due to the reported loss per share, the additional rights issued are anti-dilutive and hence have not been incorporated in the calculation of diluted earnings per share and the calculation of weighted average number of ordinary shares.

(a) Trade debtors increased at 31 December 2012, due to certain sales made during the period for which payment will only be received during January 2013

8. INVENTORIES

9. DEFERRED TAX ASSET

The Group has recognised a deferred tax asset as it is considered probable that it will be recovered through future taxable profits.

10. INTANGIBLE ASSETS

(a) Licence fees relate to the fees paid for the use of patented technology.

(b) The UG2 Chrome Re-Treatment Plant ("CRP") at Anglo Platinum's Waterval operations in Rustenburg delivered its full contractual volumes in July 2012 and August 2012. However, the CRP plant was shut down on 12 September 2012 due to strike action at Anglo Platinum and only 13,400 tonnes of UG2 was received for September 2012. With the resumption of mining activity at Anglo Platinum towards the end of last year the supply process resumed, and as part of the contract signed in 2010, Anglo Platinum is required to make up any losses in tonnage incurred at a rate of an additional 5,000 tonnes per month.

11. OTHER NON-CURRENT ASSETS

(a) Restricted cash represents cash set aside for bank guarantees to the Department of Mineral Resources for environmental rehabilitation. The cash backed guarantees were replaced by insurance guarantees.

12. INTEREST-BEARING LOANS AND BORROWINGS

(a) Working capital facility

International Ferro Metals SA (Pty) Limited (IFMSA) rolled forward the working capital facility agreement with Bank of China for an amount of ZAR500 million. The term of the facility is 12 months and expires on 25 June 2013. The facility interest is charged at JIBAR rate plus 3.5%. The parent company, IFML, guarantees the facility on behalf of IFMSA. The entire balance sheet of IFMSA is pledged as collateral for the loan facility. Bank of China has the option to cancel the loan facility and call upon any balance outstanding in the event of a material deterioration in the financial position of IFMSA.

(b) Other loans constitute the 20% community participation of funding provided to Sky Chrome by IFM. The loan is interest free and repayable before earning distributions are made.

(c) The weighted average effective interest rate on finance leases is 10.57%.

13. CONTRIBUTED EQUITY

14. ACCUMULATED LOSSES

15. DIVIDENDS

The Board of Directors resolved not to declare an interim dividend for the half year ended 31 December 2012.

16. CAPITAL COMMITMENTS

Capital commitments outstanding as at 31 December 2012 amounts to ZAR14 million.

17. CONTINGENT ASSETS AND LIABILITIES

There are no contingent liabilities outstanding or recorded at 31 December 2012.

18. EVENTS AFTER THE END OF REPORTING PERIOD

No other material matters or circumstances, other than those announced have arisen since 31 December 2012 that have significantly affected or may significantly affect:

- the Company's operations in future financial years; or

- the result of those operations in future financial years; or

- the Company's state of affairs in future financial years.