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International Ferro Metals (LON:IFL) report: Agreement signed for recovery of platinum from tailings

Contributed by Daniel Stewart & Company

By Daniel Stewart & Co

- IFL has announced that it has signed an agreement with Phoenix Platinum, a subsidiary of AIM quoted Pan African Resources (PAF.L) to develop a Chrome Tailings Retreatment Plant (CTRP). This will treat existing tailings and new tailings at IFL’s Lesedi plant in South Africa.

- In essence, the tailings from IFL’s chrome recovery plant contain appreciable quantities of platinum group metals (PGM) though as the rights to PGM are not held by IFL it had no interest in their recovery.

- Pan African, which holds the PGM rights, will construct and operate the plant, in cooperation with IFL. IFL will be paid ZAR80m (?7.3m) in four tranches, completing when the plant is commissioned in 2012.

- Whilst this deal is not a game-changer for IFL, it serves to illustrate that the company is fully focussed on adding value where it can.

- Looking forward, the company is in the process of commissioning the CoGen plant. This will generate electricity from the waste furnace gases which will be used to increase the furnace throughput and reduce unit operating costs.

- We maintain our Buy recommendation and 84p target price.