Ferrex lay out FY 2014 results

Our strategy has always been focussed on advancing and developing low-capex, simple open-pit, low strip ratio projects which are located near to infrastructure and can be brought into production within a short-time frame. With this objective in mind, and given the unfavourable iron ore price over the course of 2014 and depressed market outlook for the commodity, during the period we took the strategic decision to focus primarily on advancing our Nayega manganese project in Togo, West Africa. We believe this asset offers significant growth potential for investors as we advance it up the development curve through the definitive feasibility stage and into production in the near term.

In this vein, we outlined a two-phased approach to developing Nayega. Firstly the development of a low-capex, open pit, 250,000tpa manganese 38% Manganese product operation (Phase 1) and in the medium-term commissioning a smelting facility to produce a valuable 74% High Carbon Ferromanganese alloy (Phase 2). I am pleased to report that we have completed the modelling for the Definitive Feasibility Study (‘DFS’) for Phase 1 which outlines low capex costs of US$14.5 million. Additionally, recently announced high grade assay results of 41.6% and 42.1% Mn from a 3 tonne bulk sample collected by scrubbing and screening support a near-term, within six months of securing the mining licence, ‘starter’ option route at potentially lower capex costs than the US$14.5 million forecast for Phase 1. We have already received the environmental and social study sign off from the Togolese Government and are now working in conjunction with them to finalise the Mining Convention and secure the Mining Permit. We look forward to providing further updates on this in due course as we announce the next stages of development and funding for Nayega, where we are in advanced discussions with four parties, including proposals for funding of the accelerated starter option, ahead of first phase production.

With regard to our Mebaga iron ore project in Gabon, in December 2013 we entered into a proposed joint venture development and funding agreement with mining majors Anglo American and Kumba Iron Ore. Despite concluding successful legal and technical due diligence and receiving approval for the proposed transaction by both the Gabonese Ministry of Mines and Ministry of Commerce, we were disappointed to report in July 2014 that Anglo American and Kumba Iron Ore decided not to pursue the joint venture. That said, whilst due diligence was being undertaken, we continued to add value to Mebaga by completing a regional mapping and sampling programme during the year and conducted an infrastructure and logistics study which illustrated robust economics.

With the exceptional project geology and the infrastructural advantages associated with Mebaga, due to its position as the closest Direct Shipping Ore project to the port of Libreville in the Belinga Province, we believe that the project is strategically important, particularly in the right pricing environment. We are actively seeking partners to allow the continuation of low cost exploration to add value to this project.

Our third project, the Malelane iron ore project in South Africa, is at an advanced stage. We previously completed a scoping study illustrating the potential to develop a 1.8Mt per annum open pit mine producing a 57% iron ore product over a 16.6 year mine life. The project currently has an inferred resource of 137Mt at 37% Fe although it demonstrates much larger upside potential with an exploration target of 1.6 to 2.0Bt at 28-30% Fe and only 1.5km of a 14km strike length drilled to date.

We have a proven team with an excellent track record of proving up resource assets, developing mining operations and completing value accretive trade sales. We are aligned with shareholder interests through substantial investment, with our Directors having a 28% holding in the Company. As a Board we look to 2015 with vigour. With the Nayega DFS nearing completion, we have streamlined our near term development focus towards manganese production due to the near-term cash generation opportunity. We look forward to reporting on the confirmation of the Mining Licence from Nayega in due course.

With regard to funding, our cash position obviously remains tight given that we have ongoing monthly commitments and are seeking to move into production at Nayega in the course of this calendar year. Nevertheless, the Board is confident that we will be able to secure funding in the period required to not only maintain the Company’s current operations but commence developing the Nayega project this calendar year.

B Moritz

Chairman