International Ferro Metals Share Discussion Threads

[konil] 26/2/2015 19:04

no, no, i dont want any offers coming in now. imo even at significant premium to current share price it would not give 'fair' value on a long term view. i'd rather play the long game here, its one of the plays which could 10 bag and more from here in 2 to 3 years.

your purchase sub 3p gives you a head start on most, so lock 'em away and let time work its magic !

[gark] 26/2/2015 18:17

You're right as UG2 agreement worth USD 50mn approx alone. Madness, a stainless steel producer should put an offer in.

[gark] 26/2/2015 14:12

So one new furnace cost $100mn and we have 2 plus two mines but market cap and indeed enterprise value is below that.

[rettah] 25/2/2015 22:08

The market not coming into balance until 2018 is actually pretty old news and there were research reports of this in 2013. This is probably part of the reason IFL have been focused so strongly on cost reductions the last few years.

[konil] 25/2/2015 17:44

yes, quite true.

i'm hoping that particular influence will be positive in the near to medium term, based on u.s. approaching the time when interest rates will increase which should see $ gain more ground on the rand. just a hope.

[sg31] 25/2/2015 17:24

Exchange rates can have an impact.

[konil] 25/2/2015 15:29

thanks for that info wildrider, useful to know how the industry sees things.

according to jordaan fecr stockpiles have shrunk from 3 months consumption to 2 months (dont know if he meant globally or china only) .

but he did say if fecr prices rose then dormant production capacity (from producers who have shut down at current prices) would come back on stream constraining further rises therefore he does not expect any big rise - that's different to no rise though.

imo there are 5 fairly obvious factors which will determine the direction of ifl's share price in the near to medium term;

- sudden shocks in wider markets, by which i mean if a serious bear does materialise it will hamper ifl share price regardless of how well ifl themselves are doing. with markets hitting highs much bad news is being ignored, so imo the possibility of a serious pullback is still there.

- commodity pricing, which is dependent on economic factors and supply considerations. neither of these appear to be favourable currently and according to the metal pages piece wont be for fecr specifically until 2018 at least.

- ifl success in reducing costs and showing consistent quarter on quarter profits at prevailing fecr prices.

- ifl reducing debt or in other ways allaying investor fears over the debt facility especially when sailing so close to the facility limit.

- absence of adverse operational issues which ifl do seem prone to albeit some of them may be outside management's control, or at least the ability to absorb such issues financially and still show a profit.


imo the first 2 which are completely outside ifl control, could have the biggest impact on the share price

but 2018 is a long way off, so i remain hopeful of better fecr prices before then, and additionally i look forward to higher ifl capacity at lower cost from 3rd furnace in 2017, and meantime hope ifl can deliver ongoing quarterly profits.

near term a sharp pullback in markets seems likely though of course with markets hitting highs not many investors agree with that.

for the time being i retain my 2p/11p exclusion zone for adding to my ifl positions.

all imo, dyor, nai, etc. etc.

[wildrider7] 25/2/2015 14:49

24 Feb 2015
NiCoMo2015: No hikes in FeCr prices this year, overcapacity until 2018

LONDON (Metal-Pages) 24-Feb-15. No price hikes in ferro-chrome prices are expected this year and overcapacity within the industry is seen to prevail until at least 2018, said Mauri Kauppi, vice ...
hxxp://www.metal-pages.com/news/story/85725/nicomo2015-no-hikes-in-fecr-prices-this-year-overcapacity-until-2018/


I suppose it is back into the drawer ...

[rettah] 24/2/2015 21:12

The next IMS towards the end of April is going to be key. Hopefully the price of fecr will have held firm and they'll be updates on the cogen plant and other cost savings. The company does seem to be working hard on exploring various cost saving measures but always seems to get kicked in the teeth by things beyond their control.

[gark] 24/2/2015 18:02

Also if JPM have sold due to IFL falling out of index then that is a good thing and allows for consolidation and move up as selling pressure hopefully removed.

[gark] 24/2/2015 18:00

I heard off take on call and sounds like one of their customers will finance on the basis of future Fcr purchases. Also the DC furnace allows for more complex alloy production that commands a higher price.In respect of profitability if they can get cost to around 7 Rand and price stays as is we could pay down debt by ZAR 100-200mn by end of FU.

[rishika2] 24/2/2015 15:39

Thanks Konil..when i said dodgy i meant more about trust..honestly fed up with them and their cost saving iniatitives..unless it all translates into some sustainable operations / profits all this sweet talk does not matter..

but then the whole commodity space is suffering..

[konil] 24/2/2015 15:19

rishika, i think he mentioned 3 potential financing sources for the 3rd furnace. (around minute 16:30 onwards)

first a co-investor and something about 'offtakes' but i couldn't catch what he said.
secondly there was a source in the u.s.
and thirdly a source in s.a.

they would have factored in the financing costs to the bfs (they wont know them for sure but they would have made some estimates, hopefully realistic), so the figures jordaan gives about cost reduction across the total production tonnage once the new lower cost tonnes from the new furnace come through, must be net of the financing costs presumably on a 10 year dcf model or something like that.

so in theory, higher profits from higher tonnage. and by then perhaps even some increase in fecr price !

will be interesting to see if they are still targeting 2017 h1 for commissioning.

as regards trusting these guys, imo they seem a serious committed bunch who know how to run a tight ship, but of course i have no direct knowledge of any of them or the operations, only what we are fed. however, when compared to some, shall we say more adventurous companies that i've invested in, these guys are positively on the up and up !

my main immediate concern remains the cashflow position and the nearness of the drawdown to the debt facility limit.

[rishika2] 24/2/2015 14:44

on the other hand i do not trust these IFL guys..they have started to look very dodgy to me now..

[rishika2] 24/2/2015 14:42

yes jordaan could not answer that well .. although the question was more like if everything starts falling what will you do.. well who can answer that ..

regarding the financing for 3rd furnace he mentioned about some US financing option..

[konil] 24/2/2015 14:32

gark, rishika, - thanks guys.

listened to it a couple of times now, still trying to figure out all the profits that will start rolling in soon! ;)


seriously though, with the cost reductions and assuming they meet intended production targets for the 2nd half, it could be good even without fecr price increases. they are anticipating 2nd half production costs of r7.14/lb, against r8.15/lb this period which led to a loss and r7.52/lb in the previous period which led to a profit.

i'm not quite so sanguine about jordaan's answers on what happens if fecr price falls and results in higher debt requirement - sounded like a stock answer even though the questioner pressed him 2 or 3 times (around 21:30 to 24:00 minutes) but to be fair probably not much else he could say.

as regards financing the 3rd furnace, its as clear as mud! though he did say 'raising' (i assume this means equity financing) didn't make sense at current share price and again in fairness its too early in the process for them to say much more. he did say, as previously, that build cost is estimated at about $100m and they expect a drop in overall production costs of $0.04 to $0.05 per lb. it would be interesting to know what financing costs they plugged into their bfs model and how conservative or optimistic the model is.

[rishika2] 24/2/2015 14:29

JPM also abandoned the ship. Surprised as to why this announcement did not come before as tey hold a lot and have been selling at least for couple of months

[rishika2] 24/2/2015 09:47

hi, please see here audio file

[gark] 24/2/2015 06:53

Konil, it is the audio file on results page.

[konil] 24/2/2015 06:26

rishika, could not find the analyst q&a file on the ifl website??

[qackers] 23/2/2015 23:05

Hopefully the worst is behind us.

[qackers] 23/2/2015 23:05

SP Angel view reported by proactive investors.
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International Ferro Metals (LON:IFL) – Weak interims highlight IFL operational and market challenges

• Ferrochrome sales totalled 101.7kt (H2/FY14: 112.7kt, H1/FY14: 109.6kt) on weaker production with European benchmark prices down at US$1.17/lb (H2/FY14: US$1.20/lb).

• Production came in at 98.0kt (H2/FY14: 111.8kt, H1/FY14: 116.5kt) affected by Section 54 related stoppage, new reductant trials, processing of lower grade material and planned maintenance works.

• The management has further tested the electrode integrity by growing power input trying to push production rates higher. Unfortunately, the process was found unstable with the decision taken to decrease the load to levels seen in FY14 in order to maintain electrodes integrity.

• Annual FeCr production target has been revised downwards to 200-205kt from previously forecast 215-222kt implying stronger output in H2/FY15 (102-107kt).

• Production costs averaged R8.15/lb (H2/FY14: R7.32/lb, H1/FY14: 6.44/lb) due weaker production and higher winter power tariffs.

• As production is set to ramp up coupled with better quality ores available sourced from Rooderand and MG1/MG2 seams operating costs are expected to come down as demonstrated by normalised costs recorded in Dec (R7.23/lb).

• Sales totalled R1,022m (H2/FY14: R1,098m, H1/FY: 1,003m), up 1.9%yoy, on the back of R66m generated in ore sales versus R14m seen last year.

• Despite a 8% depreciation in the Rand during the period, weaker FeCr prices together with wider discounts for final product, higher operating costs and a decline in production saw IFL reporting a gross loss of R52m (H2/FY14: +R110m; H1/FY14: +R121m).

• The operating margin declined to -5% (H2/FY14: +10%, H1/FY14: +12%).
• EBITDA fell to –R93m (H2/FY14: +R91m, H1/FY14: +R112m).
• Profit before tax was -R176m (H2/FY14: +R10m, H1/FY14: +R31m) with around 50% of the loss attributed to normal IFL operations (-R85m) with the balance accounting for impairments (-R26m), inventories and shipped product price adjustments (-R35m) and reductant trials costs (-R30m).
• Non-cash impairment items included: R14m covering Co-Gen plant engines, R5m furnace assets and R6m other capital work in progress.
• EPS fell to -31.55cents (H2/FY14: +2.00cents, H1/FY14: +5.91cents).
• Net debt stood R451m (Jun/14: R338m) with R49m cash in the bank. Cash balances were affected by negative operating cash flow (-R13m in H1/FY15 v +R24m in H1/FY14) and R58m spent in capex including most of the R18m budget set away for the Co-Gen chiller.

• The Board decided not to pursue the considered Pacific Carbon acquisition.

• Co-Gen plant operating on smelter’s off-gases with a planned capacity of 10% of total IFL’s total power consumed, to re-start in Q2/CY15.

• Non-executive directors, including the Chairman and Deputy Chairman, voluntarily agreed to a 20% cut in their remuneration.

[gark] 23/2/2015 21:23

Rishika please post the link to the q and a as I can't find it.