JOHANNESBURG (miningweekly.com) – London-listed International Ferro Metals (IFM) on Monday reported an increased loss of 24c a share for the year ended June 2011, but newly appointed CEO Chris Jordaan remained confident that the company was “better positioned than it has been for a long time”.
The results compared with a loss of 15c a share in the 2010 financial year.
IFM widened its after-tax loss to R135-million from R86-million in the prior financial year, on the back of lower production and sales.
Ferrochrome production fell by 3% to 194 860 t, owing to furnace roof leaks and planned shut downs during furnace roof upgrade projects. However, a more upbeat production outlook was tabled for 2012, with output of between 220 000 t/y and 230 000 t/y expected.
Sales for the period were down 2% to 186 963 t, while sales revenues increased 10% to R1.58-billion for the year. This was achieved, said Jordaan, because increased ore sales of 288 000 t were realised, owing to furnace shutdowns and improved mining operations.
The chrome ore beneficiation plant achieved record production in both volume and recovery for the year.
One of the highlights of the year was the start of Sky Chrome openpit mining operations in June. The mine was currently producing 20 000 t/m, with this expected to reach 50 000 t/m by the first quarter of 2012, and finally reaching full capacity of 100 000 t/m by 2013.
The company said that it was able to lower overall production costs by 0.5% over the year, despite Eskom electricity price increases of 23% over the period. Jordaan said that this was thanks to efficiencies implemented at the Lesedi mine, as well as the substitution of anthracite with coking coal, which lowered costs. General tightening of costs controls was also implemented.
“We have identified a further 10% of controllable costs cuts, which we believe are achievable in the 2012 financial year,” said Jordaan.
One of the major contributors to this would be the ramp up to full capacity of the company’s co-generation facility, which was currently operating at 65% of its design capacity. Seven out of ten engines were currently operational.
Jordaan noted that the primary challenge in the financial year under review was the performance of its furnaces, which were experiencing leaks in the roof. He said that prompt action was taken on the issue, and furnace shutdowns took place during winter when electricity prices were at their highest.
The furnace roof rebuild was completed in the period under review, and ramp up was under way. The company was focused on achieving full production from its furnaces by mid-October, to achieve nameplate capacity of 265 000 t/y.
Jordaan said that the furnace rebuilds were done within budget and schedule, and that the results were pleasing, giving optimism to the company’s outlook.
IFM said that industry experts expected the stainless steel market to grow at an average 6.8% a year to 2015, with a positive read across to the ferrochrome market.
Thus, with the cost efficiencies implemented by the company, Jordaan was confident that IFM would be competitive and well placed to benefit from the growth in stainless steel production.
IFM’s stock gained 10% in London on Monday, trading at 18.5p a share.