Interim Results to 31st December 2013

24 February 2014

International Ferro Metals Limited

("IFL" or the "Company")

Interim Financial Results for the half year to 31 December 2013

Highlights

Financial highlights

· Half-year ferrochrome sales of 109,623 tonnes ("t"), up 4% on comparative period and up 38% on the previous half

· Profit before tax of ZAR31 million, compared with a loss of ZAR121 million for the comparative period and a loss of ZAR5 million in the previous half, due to lower production costs and weaker Rand

· Positive EPS of 5.9 SA cents per share ("cps"), compared to a loss of 13.6 cps in the comparative period and a loss of 9.3 cps in the previous half

· Net borrowings of ZAR372 million, up from ZAR363 million at the end of June, due to increased working capital; operating within the ZAR500 million working capital facility

Operational highlights

· Record half-year ferrochrome production of 116,469t

· Continuing discipline on production costs means IFL continues to be competitive with global ferrochrome producers

· Entrance into new, high-growth market by securing first sales in Korea, expanding our customer base, and building on sales into India

· Mining review completed, Lesedi underground mine will re-commence in Q2 of calendar 2014; ore production expected in Q3

· Sky Chrome to be ramped up to provide sufficient ore for internal consumption

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

Post period highlights

· European Benchmark Price for Q1 of calendar 2014 increased 4.9% to 118¢/lb

· South African Rand continued to depreciate against U.S. dollar

Chris Jordaan, Chief Executive Officer of IFL commented:

"International Ferro Metals has continued to improve its operational and financial performance, and is pleased to announce a pre-tax profit of ZAR31 million. This is testimony to the successful implementation of our strategy to drive down costs, actively push into new markets and continually improve our operations, and is in spite of ferrochrome prices staying flat over the six months at 112.5¢/lb. Prices were lower than the preceding six months' price of 120¢/lb and 118¢/lb in the comparative period.

The Company beat its previous production record and continued its cost reduction initiatives during the half year. Sales were up 4% as we strengthened our presence in India and entered new Asian markets. Sales were evenly distributed over our broad global customer base, which spans the US, Europe and Asia. IFL has worked hard to develop this over the last two years.

Our sharp focus on reducing costs has put us further down the cost curve and we remain competitive in the Chinese market. Cost savings continue to be a major focus area, and we are on track to achieve our target for the year.

The combination of solid operating performance, active marketing to a broader range of customers and further cost savings have resulted in IFL being profitable and cash generative, placing the business in a healthy position to take advantage of the improving outlook for ferrochrome and stainless steel."

There will be a presentation to analysts of the interim results today, Monday 24 February 2014 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 Tel: +27 14 574 6302

Chris Jordaan, Chief Executive Officer

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

Carole Cable / Fiona Micallef-Eynaud

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

James Black / Stuart Skinner / John Prior

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

US economic growth is improving, driven by consumer demand and there are positive indications that the Eurozone is turning the corner from recession to recovery. China's economy had stabilised with GDP growth at 7.7% for calendar 2013.

The stainless steel industry also showed positive signs towards the end of the year as global production increased with further build-up of inventory. Nonetheless, the industry remains sensitive to market fundamentals as it is operating below 80% of capacity utilisation.

Ferrochrome prices in China remained under pressure during the latter part of calendar 2013 as China curtailed production in the southern part of the country where most producers were exposed to both seasonal and raw material related cost pressures.

Benchmark prices remained constant at 112.5¢/lb for the half year.

Although spot prices for ferrochrome remained largely unchanged in China during Q4, other regions showed a noticeable improvement, due to tightening inventories outside China, which led to a 5.5¢/lb increase in the benchmark price for Q1CY14.

Prices for high-grade ore, such as that mined at Lesedi, saw a marked improvement during the quarter while lower grade ore prices remained subdued.

Sales and inventory

FeCr sales for the half year to 31 December 2013 were up 4.3% to 109,623t, compared with 105,095t for the comparative period in 2012 and up 38% on the preceding six months. The increase in sales was a result of higher production volumes. The distribution of sales was roughly even between customers in the East and the West. The Company also expanded sales into new markets in Asia and expects to continue to make headway in these areas.

FeCr inventory was 16,176t at 31 December 2013, up from 9,950t at 30 June 2013. This is higher than previous guidance of 10,000t, mainly due to reduced transport activity during the South African holiday season in December. Stocks are expected to reduce to approximately 10,000t towards year end at 30 June 2014.

Ore sales for the quarter reduced substantially to only 30,000t from 193,000t in the previous half, due to higher internal requirements with both furnaces back in operation, as well as a response to lower chrome ore prices during the half.

Smelting

A new production record of 116,469t for the half was achieved and management is confident that the current levels of performance sets the Company up for further improvement in production levels. Stability in the operations now allows for further optimisation.

Further cost reductions were achieved as alternative reductants were introduced, resulting in a further decrease in dependency on higher cost coke. Higher alloy recovery, which is recovered at a significantly lower cost than smelting, resulted in increased ferrochrome cost dilution.

Mining

The review of the Lesedi underground mine has now been completed. The Company has decided to restart Lesedi underground mine as well as to ramp up the Sky Chrome mine to produce sufficient ore for internal consumption. Higher grade ore prices have recently started to increase and the restarting of Lesedi mine will reduce the need to buy in such ores. IFL's flexible operations mean the Company is able to respond quickly to changes in ore prices and ensure that the Company is sourcing its ore appropriately, whether internally or externally.

Lesedi underground mining development will re-commence towards the latter part of Q2 of calendar 2014 with ore production expected from Q3. The Company has decided not to use a contractor but instead to in-source the mining operations. The Company will begin to recruit and train mining personnel over the next three months. Production is planned at low levels during the first years of production as the focus remains on development. The mine will be ramped up to full output over a six year period. The restart of Lesedi Mine and the ramp-up of Sky Chrome Mine are expected to supply ore to the furnaces at a lower cost than the current and expected prices for bought-in ore.

Run-of-mine production at Sky Chrome was approximately 70,000t for the half year; this is expected to increase significantly in the next half. Production levels at Sky Chrome will be adjusted as the production of Lesedi Mine increases over the next few years. This will preserve the open cast mine reserve for potential alloy expansion in the coming years.

The improvement in the overall recovery yield was due to increased production from the Chrome Recovery Plant, improved Sky Chrome feed grades and successful modifications to the beneficiation plant's spiral circuit. Further improvements are underway to optimise recovery.

Co-generation plant

The co-gen plant generated 30.8GWh of electricity for the six months to 31 December 2013 which represents 6.0% of total electricity requirement for the half. The output was lower due to scheduled maintenance and the availability of critical spares from the Original Equipment Manufacturer (OEM). Initiatives are underway to improve performance of the plant to levels in line with expectation. The Company is in the process of changing to a new service provider for maintenance and optimisation of the generation units. IFL is at the final stages of discussions with a new service provider and expects an agreement to be in place by the end of March.

UG2 Plant

The Company has a supply agreement with Anglo Platinum to provide 15kt per month of UG2 chrome concentrate until 2020. This beneficial agreement delivers UG2 at a cost significantly below the Company's in-house cost of concentrate production.

The supply of UG2 accounted for 65kt for the half, compared with the contractual 90kt, due to strike action at Anglo Platinum as well as December shutdowns. Anglo Platinum is obliged under the agreement to make up any shortfalls from future production.

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

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

The Company had no fatalities during the half and remains fatality free since inception, representing 26,067,445 fatality free man-hours which equate to 3,258,431 fatality free shifts as at 31 December 2013. During the period, two lost time injuries occurred and the 12 month moving average lost time injury frequency improved further from 3.26 at 31 December 2012 to 1.35 at 31 December 2013. The 12 month moving average total recordable injury rate improved further from 43.47 at 31 December 2012 to 28.72 at 31 December 2013.

No significant environmental or health incidents were reported.

IFL regularly engages with the local community and the municipal government on issues which are important to the Company and the community within which it operates. The Company is aware that Community Relations is at the heart of our licence to operate and we have an active programme to ensure this engagement is relevant and focused. IFL is currently assisting the municipality with improving infrastructure service delivery.

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 profit before tax of ZAR31 million for the six months ended 31 December 2013 ("the period") against a loss of ZAR5 million in the previous six months and a loss of ZAR121 million for the comparative period. This represents an improvement of ZAR152 million on the comparative period; driven by strong cost reduction, higher production and sales volumes, and a stronger Rand pricing environment.

Half-year record ferrochrome production of 116,469t was achieved, 5.8% higher than the previous record, which was set during the comparative period. Production for the previous six months was 73,626 tonnes, mainly due to the Eskom electricity buy-back agreement during that period.

Sales volumes were 109,623t against 79,295t for the previous six months and 105,095t for the comparative half. Sales revenue increased to ZAR1 billion, up 22% on the comparative period's ZAR824 million. FeCr closing stock increased by 6,226t to 16,176t at 31 December 2013. The increased final product inventory should benefit the Company in the current quarter as FeCr prices increased in Q1 of calendar 2014 with more stock available for sale in the current quarter.

The European benchmark ferrochrome price for both quarters of the half was 112.5¢/lb, which was 7¢/lb below the average price for the previous six months, however, the weakening of the Rand against the U.S. Dollar resulted in a 2% higher Rand FeCr price.

Gross profit increased to ZAR121 million from ZAR53 million in the previous six months, and the operating margins improved to 12% from 7%.

Net borrowings increased by ZAR9 million to ZAR372 million at 31 December 2013, from ZAR363 million at 30 June 2013, well within our ZAR500 million working capital facility, which was fully drawn at 31 December 2013. Operations (before working capital changes) generated ZAR120 million, working capital utilised ZAR87 million, investing activities utilised ZAR23 million and financing activities utilised ZAR20 million. Forecast capital expenditure for the second half of the year is ZAR35 million, in line with previous guidance. Net borrowings are expected to reduce significantly towards the end of the financial year. Improved profitability and cash generation provides more flexibility on the timing of sales and the Company may increase inventory levels if it expects higher pricing in a following quarter. Cash generation is also expected to improve further as targeted production cost savings are achieved.

EBITDA profit increased to ZAR112 million against a loss of ZAR46 million for the comparative period and a profit of ZAR71 million for the previous six months. The tax credit of ZAR1 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. The headline profit per share for the period was ZAR0.06 compared to a headline loss per share of ZAR0.14 in the comparative period.

Production cost

Ferrochrome production cost for the period was ZAR6.44/lb, compared with ZAR6.48/lb for the comparative half. The decrease was achieved against domestic inflation of 5.8% and an average 8.5% increase in electricity prices.

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 ZAR5.80/lb, ZAR0.45/lb lower than FY2011 cost of ZAR6.25/lb. In nominal terms, this represents 59% of the targeted ZAR0.76/lb saving. In real terms, taking out the impact of domestic inflation on the other cost components, 100% of the targeted production cost savings have been achieved. Notwithstanding this major achievement, the Company continues to relentlessly drive down costs further and to increase margins. In recent announcements, while the Company has been focused on moving down the cost curve, IFL has provided a detailed breakdown of its production costs. As the targets which were set at the beginning of this programme have now been achieved, it is no longer appropriate nor commercially helpful to provide this level of detail. IFL will continue to report on its cost positioning.

The immediate areas of focus are:

· The restarting of Lesedi underground mine will reduce the buy-in of high-grade ores, which have recently become more expensive due to tightness of supply

· The introduction of alternative reductants to replace more expensive coke

· Improving the co-gen plant performance

· Continued tight control over fixed costs

Administration and other expenses increased from ZAR59 million in the comparative period to ZAR65 million. This was primarily due ZAR18 million of unabsorbed fixed costs relating to the Lesedi underground mine charged directly to the income statement during the period.

Broad-Based Black Economic Empowerment ("BBBEE")

In April 2009, the Company lodged its proposed black economic empowerment ("BEE") transaction with the Department of Mineral Resources ("DMR"), as the final element of its previously submitted application to convert its Old Order Mining Right into a New Order Mining Right under the South African Mineral and Petroleum Resources Development Act ("MPRDA").

In July 2012, the DMR granted the conversion of the Old Order Mining Right to a New Order Mining Right. However, since the submission of the proposed BEE transaction to the DMR in 2009, there have been legislative changes, and developments within IFL which have presented an opportunity for the Company to implement a more simplified BEE transaction. The Company has therefore not executed the conversion and has resubmitted its transaction in February 2014 which simplifies the funding of the transaction. The Board is confident that the DMR will receive the application favourably and convert the mining right, where after the BEE transaction will be implemented without delay.

Dividends

The Board of Directors resolved not to declare an interim dividend for the six months ended 31 December 2013.

Outlook

The global economic environment improved in the latter half of calendar 2013 which supported demand for stainless steel and its raw materials. As a result, spot prices edged upwards and the European Benchmark Price increased from 112.5¢/lb to 1.18¢/lb in Q1 of calendar 2014.

As the global economy gains momentum in 2014, demand for stainless steel and ferrochrome is expected to improve. Higher ferrochrome production levels are anticipated on the back of new capacity in China and South Africa. However, there is a growing challenge in the availability of chrome ore as there are no significant planned expansions of primary chrome ore production and the supply of UG2 chrome concentrate is affected by challenges in the platinum industry.

This should support higher ferrochrome production cost in China and lead to higher ferrochrome prices globally. Given the Company's access to integrated ore and its relative cost position, it is expected that IFL will remain competitive in the Chinese market which, in recent years, has been setting the base spot price for ferrochrome.IFL's open pit mine and integrated operations mean it has the flexibility to react to market conditions - either by ramping up or scaling back.

Domestic inflation will continue to push Rand costs higher, but the continuing weakness of the Rand means that in US$ terms production costs continue to fall. Achieved selling prices in US$ remain stable whereas historically the FeCr benchmark price (denominated in US$) has been more correlated to the Rand.

The outlook for IFL is positive; the Company's smelting operations are at full load and stable, and the cost reduction programme has put the Company further down the cost curve, resulting in a business that is profitable and generates cash.

FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

1. CORPORATE INFORMATION

The financial statements of International Ferro Metals Limited (the Company) for the half year ended 31 December 2013 were authorised for issue in accordance with a resolution of the Directors on 24 February 2014.

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 2013.

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 2013 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 2013.

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 2013:

· AASB 10 Consolidated Financial Statements - New control model that applies to all entities

· AASB 13 Fair value measurement - Single source of guidance for determining the fair value of assets and liabilities

· Interpretation 20 - Stripping costs in the production phase of a surface mine

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, Statement of Comprehensive Income, Statement of Changes in Equity 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 2013, the Group had net current liabilities of ZAR152 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 September 2014. The Board plans to renew the Bank of China facility before it expires. The Board is confident that the Company can secure additional avenues of funding which could be used together with forecast operating cash flows, to repay this facility should it not be renewed. 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 73% of its external revenue from China and Europe (2012: 56%). During the half year ended 31 December 2013 the Group received 52% (2012: 33%) of its external revenue from CMC Cometals and 32% (2012: 33%) from Jiuquan Iron & Steel Group Company Ltd (JISCO).

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

4. ADMINISTRATIVE AND OTHER EXPENSES

a) The unabsorbed fixed costs relate to the Lesedi underground fixed costs that were recognised directly in the income statement during the period the mine was not operated. The current year also includes fixed costs relating to the shut-down of the pelletiser and sinter plant during the steel belt replacement.

5. SHARE-BASED PAYMENT EXPENSE

(a) Share-based payment expense relates to the performance rights and share options issued to Mr Chris Jordaan, as well as the Performance share scheme introduced and implemented to replace the existing phantom option scheme where employees are issued with fully paid-up physical shares in the Company. Please refer to the Company's Annual Report at 30 June 2013 for further details.

6. EARNINGS/(LOSS) PER SHARE

7. TRADE AND OTHER RECEIVABLES

(a) Trade debtors relate to the sale of ferrochrome and chrome ore. Payment terms are thirty days from date of final invoice.

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 Retreatment Plant (CRP) at RPM's Waterval operation in Rustenburg. The supply agreement entitles IFM to receive 15,000 tonnes per month of chrome concentrate until November 2020.

11. OTHER NON-CURRENT ASSETS

a) Restricted cash represents cash set aside for bank guarantees provided by Standard Bank to the Department of Minerals Resources for environmental rehabilitation and cash set aside for foreign exchange contracts by Bank of China.

12. INTEREST-BEARING LOANS AND BORROWINGS

(a) Working capital facility

The Company 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 September 2014. The facility interest is charged at JIBAR rate plus 3.85%. The parent company, IFML, guarantees the facility on behalf of IFM. The entire statement of financial position of IFM 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 IFM.

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

(c) The weighted average effective interest rate on finance leases is 10.5%.

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 2013.

16. CAPITAL COMMITMENTS

Capital commitments outstanding as at 31 December 2013 amounts to ZAR4.4 million.

17. CONTINGENT ASSETS AND LIABILITIES

There are no contingent liabilities outstanding or recorded at 31 December 2013.

18. EVENTS AFTER THE END OF REPORTING PERIOD

No other material matters or circumstances, other than those announced have arisen since 31 December 2013 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.