International Ferro Metals Ltd said ferrochrome demand and spot prices have "increased noticeably" over the last four weeks as a result of the Chinese economic stimulus programme and low ferrochrome inventories.
IFM expects to see firmer demand for ferrochrome, used in stainless steel to prevent corrosion, at least for the short term.
The shares were up 6.1 percent at 43.375 pence at 0735 GMT, but are a long way from last year's high of 168.75.
Production recovered from the third quarter, but slumped 67 percent from the year earlier as the company responded to lower demand from steelmakers. Fourth-quarter output increased to 18,437 tonnes from 1,168 tonnes in the third quarter.
Output and sales for the year to end-June fell to 110,364 tonnes and 101,835 tonnes, respectively, from 205,607 tonnes and 207,862 tonnes in the previous financial year.
Numis Securities said the fourth-quarter production figure was in line with its estimates and that full-year sales exceeded its forecasts by 12 percent.
The broker added that net cash, at 340 million rand, was also better than it expected.
IFM started a three-month programme in April to convert raw material inventory, comprising mainly chrome ore and coke, to finished ferrochrome product. It has reduced its inventories to 9,362 tonnes from 33,207 tonnes in the preceding quarter.
It restarted one of its two furnaces, which were suspended last November, on April 20 and expects to make a decision on the other furnace soon.
"We are currently assuming that FY2010 ferrochrome output is at 60 percent of IFM's nominal 260,000 tonne capacity - i.e. the second furnace will only be returned to production sometime in 2010," said Mike Stuart, an analyst at Numis.
Rival South African ferrochrome producer Merafe Resources Ltd said last week it had increased output at its joint venture with Xstrata to 60 percent, due to higher demand.
IFM said it continued to make costs savings in the last quarter but did not provide details.
South African miners are facing cost pressures as wages and power costs rise and as the rand remains strong.
Source: Reuters
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