China's development drives nine-fold rise in IFM revenue

Mining company International Ferro Metals (IFM) has announced maiden pre-tax profits of ¡ê42.5m on the back of strong demand for ferrochrome, an alloy used in the production of stainless steel.

Revenue rose nine-fold from ¡ê12.4m to ¡ê131m for the year ending July 31, as ferrochrome prices shot up 92pc to more than ¡ê1 per lb, driven by demand in China.

The company's share price rose 5? ¨C or 10.3pc ¨C to 61.50p, with investors attracted by the company's rapid growth and lack of debt.

Ferrochrome, an alloy of iron and chromium extracted from South African mines, is vital for making stainless steel that is resistant to corrosion.

IFM chief executive Stephen Turner said the company had encountered problems in South Africa with electricity supply, but production is still expected to increase by more than 10pc by next July.

"With tight cost control, increasing production and no debt, IFM is well positioned to benefit from the strong demand for ferrochrome," he said.

Mr Turner added that the board was considering buying back shares, but no decision has yet been reached. "Strong cash flows have resulted in the board's decision to evaluate the benefits of utilising part of the company's existing cash resources to acquire its shares in the market," he said.

IFM produced 205,607 tonnes of ferrochrome during the year at 77pc of its capacity ¨C a four-fold increase on last year's production of 49,370 tonnes. The company is now planning to expand its Buffelsfontein facility to triple its capacity.

IFM will pay a maiden dividend of 1p per share on November 3.

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