From a global viewpoint, 2011 was a very good year for Grupo FerroAtlántica, nonetheless, there was a significant difference between the Group's performance during the first and second halves of the year as a result of the impact of the worsening of the financial crisis, particularly during the final half of 2011, an uncertainty which has continued through the first half of 2012.

The most significant milestones achieved by the Group during 2012 were as follows:

• According to the plan laid out, the first and second furnaces at the Mangshi factory began to operate in May and June, respectively. Over the course of the year, EUR 10.5 million were invested in this factory and, although the operating margin during 2011 was negative, we expect an increase in revenues in 2012 and a reduction in production costs which will allow the Group to generate positive EBITDA at this factory.
  
  
• In 2011, an agreement was reached to acquire SamQuarzt, a company which operates a quality-quartz mine in South Africa. The buy-out has received Government approval. The competition authorities had initially failed to authorise the transaction, however, we now expect to receive approval from the said authorities by mid-2012, following the supply agreements reached with the mine's main clients.
  
  
• In October, Mr. Pedro Larrea Paguaga joined the firm as Chief Executive Officer of Grupo FerroAtlántica. Mr. Pedro Larrea Paguaga holds a degree in Mine Engineering from the ETS of Madrid and an MBA from INSEAD, his experience in industry and energy is wide-ranging. Grupo Villar Mir feels that he has the right profile to lead the international consolidation and expansion project currently being implemented by Grupo FerroAtlántica.

In 2011, Grupo FerroAtlántica's consolidated revenues totalled EUR 1,273.3 million, compared to the EUR 1,148.5 million achieved in 2010 (+10.8%) and the EUR 1,282.9 million forecast in the budget (-0.99%).

The Group's consolidated EBITDA was EUR 246.6 million, greater than the EUR 239.6 million achieved in 2010 (+2.9%) and slightly below the EUR 249.7 million forecast in the budget (-1.2%), despite the poor performance of the Energy Division due to the drought affecting the Iberian Peninsula.

As a result, Grupo FerroAtlántica managed to generate the second highest EBITDA in the Group's history, only slightly behind that achieved in 2008, and has managed to do so in a highly volatile economic climate.

Finally, the net attributable profit was EUR 109.5 million, compared to the EUR 129.4 million in 2010 (-15.4%) and the EUR 127.3 million forecast in the budget (-14.0%). This difference is a result of:

• Increased finance costs (+7.3 million euros), due both to the increase in the Group's net debt and higher spreads in the current economic setting.
  
  
• The EUR 12.4 million increase in amortisations and provisions.
   
• The increase in the applicable tax rate in 2011 imposed by: (i) the corporations tax increase from 34% to 36% in France and (ii) the requirement to set aside a provision of EUR 0.5 million for expenses in previous years, which the Spanish tax authorities have ordered be reclassified as investments and which must, therefore, be amortised in coming years.

Finally, from an operational viewpoint, in 2011 the following were worthy of note:

• Grupo FerroAtlántica's hydroelectric power plants generated a total of 534.2 GWh of electricity, significantly lower than the 809 GWh produced in 2011. This was due to the fact that 2011 was a very dry year.
  
  
• The Electrometallurgy Division's total production amounted to 1,007,225 tonnes, 11.81% more than the 900,797 tonnes produced in 2010, in particular due to the increase in silicon metal.

In terms of rainfall, 2011 was a dry year, with only 1,822 l/m2 collected in Galicia, compared to the 2,224 l/m2 usually collected in an average hydraulic year. Total contributions were 603.4 Hm3, 26.6% less than average. With these contributions, FerroAtlántica, S.L. was able to generate 314.6 GWh of electricity, a figure clearly below the 508.0 GWh achieved the previous year and the 420.2 GWh forecast in the budget.

In turn, in the Pyrenees, where the power stations of Hidro Nitro Española, S.A. are located, 153.3 GWh of electricity were generated, compared to the 169.1 GWh forecast in the budget and the 218.3 GWh achieved in 2010, due to the fact that it was much wetter in this area of Spain last year.
 
Finally, FerroPem's power stations generated 66.3 GWh, more than the 82.6 GWh produced in 2010 and the 72.8 GWh forecast in the budget.

Overall, the Energy Division generated 534.2 GWh of electricity, the lowest level since 2005.

During 2011 Energy trading activities continued to be carried out in Spain for a total of 327.33 GWh, representing an increase of 26.1% over the 259.5 GWh traded in 2010. The increase in trading activity has enabled the Group to obtain additional resources in a complicated year from a hydraulic viewpoint.

In 2011 the Energy Division undertook investments totalling EUR 0.5 million. In addition, it was necessary to activate EUR 1.4 million which in previous years had been recorded as maintenance costs, due to the tax authorities having ordered that said costs be recognised as an investment, to be amortised in coming years.

At year-end 2011, the total workforce of the Energy Division consisted of 54 people, compared to 52 at the end of 2010.

In 2011, the Energy Division generated EBITDA of EUR 27.5 million, compared to the EUR 44.9 million achieved the previous year (-38.8%), mainly as a result of the drop in energy production caused by the drought and the increase in other operating costs. Furthermore, it generated a net consolidated attributable profit of EUR 14.5 million, which is less than the EUR 27.0 million achieved in 2010 and the EUR 24.5 million forecast for this period.

The 2012 budget forecast for Grupo FerroAtlántica's Energy Division envisages generating revenues of EUR 70.9 million, which should lead to EBITDA of EUR 32.2 million and a net attributable profit of EUR 18.7 million.

In 2011, the total production of the Electrometallurgy Division amounted to 1,007,225 tonnes, 11.81% more than the 900,797 tonnes produced in 2010, which is the second highest production amount ever for Grupo FerroAtlántica, only behind that achieved in 2008.

During this year, the increase of 22.5% in the production of silicon metal is particularly worthy of note.

In turn, 908,273 tonnes were sold, 3.3% more than the 879,518 tonnes sold in 2010.

Broken down by product, 28.0% of the sales correspond to manganese alloys, 21.8% to silicon metal, 19.9% to standard and refined ferrosilicon, 14.7% to microsilica and, lastly, 15.6% to fine materials and others.

Broken down by factory, particularly worthy of note is the increase of 8.5% experienced in FerroPem's sales, which totalled 307,687 tonnes, making it the Group company with the highest sales volume in 2011, followed closely by FerroAtlántica S.A which, having sold 305,871 tonnes (+4.9%), comes in second place in terms of sales.



In economic terms, the Electrometallurgy Division's revenues in 2011 amounted to EUR 1,217 million, an increase of 12.2% over the EUR 1,085 million achieved in 2010, mainly as a result of the positive evolution of silicon metal, above all during the first half of the year.

Grupo FerroAtlántica's Electrometallurgy Division undertook EUR 73.2 million worth of investments in 2011. From among these investments, we should highlight the following:

• € 10.5 million to complete the restructuring and start-up of the Mangshi factory.
• € 7.1 million in the reconstruction of furnace 6 at the Château Feuillet factory.
• € EUR 7.0 million in a number of works undertaken at the Ganzi factory.
• € 4.9 million in increasing the power of furnace 1 at the Anglefort factory.
• € 4.8 million in converting a ferrosilicon furnace into a silicon metal furnace at the Witbank factory.
• € 4.6 million in the Ferrosolar project for the production of photovoltaic-quality silicon using metallurgical methods.

The average workforce of the Electrometallurgy Division during 2011 consisted of 2,818 people. Staff relations continue to develop in perfect harmony, as in previous years.

Finally, it is worth highlighting that Grupo FerroAtlántica's Electrometallurgy Division has estimated a turnover of €
1,245 million in 2012, which should lead to EBITDA of € 109.4 million and net profit of € 63.6 million.

Quartz Producing Subsidiaries

Cuarzos Industriales, S.A. and Rocas, Arcillas y Minerales, S.A. are the two companies in Grupo Villar Mir that produce the quartz mineral in Spain needed for manufacturing ferroalloys such as silicomanganese and ferrosilicon, as well as for silicon metal  manufacturing.

Cuarzos Industriales de Venezuela, S.A. (Cuarzoven) produces metallurgy-quality quartz in Venezuela, used mainly for consumption by Ferroven. In addition, Silicon Smelters also operates stratified quartz deposits for use of the mineral in manufacturing silicon metal in South Africa.



All of these companies are members of the Electrometallurgy Division.

Quartz production in 2011 at Grupo FerroAtlántica reached a total of 1,429,726 tonnes, representing a 5.3% increase over the amounts attained in 2010. Of this total production amount, 37.8% correspond to metallurgical quartz mineral and the rest to aggregates aimed mainly at the construction sector.

Quartz revenues in 2011 reached a total of EUR 21.3 million, a similar figure to that achieved in 2010. EBITDA was EUR 2.2 million, compared to the EUR 3.7 million achieved in 2010, and the net profit in 2011 was EUR 0.7 million. The decrease in both EBITDA and net profit is due to the depreciation of the inventories of quartz and aggregates aimed at the construction sector, as a result of the significant downturn in activity reported in this sector.

At 2011 year-end, the workforce devoted to quartz production in the Ferroalloys Division consisted of 75 people, 36 of whom were attached to RAMSA, 30 to Cuarzos Industriales and 9 to Cuarzoven.

Grupo Ferroatlántica, S.L.U., head of Grupo Ferroatlántica, is a 100% subsidiary of Grupo Villar Mir and the companies constituting Grupo Ferroatlántica are engaged in the generation of hydroelectric energy and the production of ferroalloys.

Grupo Ferroatlántica, S.L.U., in turn, has interests in the following other companies:

• Ferroatlántica, S.L.U., a company engaged in the production and sale of ferroalloys and silicon metal, with three plants in Galicia and another one in Cantabria, in addition to the production and sale of hydroelectric energy, with two regulating reservoirs and 7 power stations in the Jallas and Grande river basins (La Coruña).

• Hidro Nitro Española, S.A., is a company that is also engaged in the production of ferroalloys at its plant in Monzón (Huesca) and the generation of electric energy, with five power stations in the Cinca and Esera river basins (Huesca).

• Ferroatlántica de Venezuela (Ferroven), S.A., a company in which Ferroatlántica has an 80% holding, is the owner of a ferrosilicon, ferromanganese and silicomanganese plant in Puerto Ordaz (Venezuela) that primarily caters to the US, Canadian and Mexican markets.

• FerroPem, S.A.S. (until June 2006, its registered name was Pechiney Electrometallurgie, S.A.S.), formerly the ferroalloy and silicon metal production division of the French group, Pechiney, which was acquired by Ferroatlántica on 31 May 2005. FerroPem has 6 plants in France.

• Silicon Smelters, Pyt Ltd., in South Africa, which was acquired in May 2005 and is the owner of a silicon metal plant in Polokwane, in addition to a new ferrosilicon plant in Witbank, included in 2008.

• Mangshi Sinice Silicon Industry Company Limited., in China, a company acquired in November 2010 that owns a silicon metal plant in Mangshi.

• Cuarzos Industriales, S.A.U. and Rocas, Arcillas y Minerales, S.A. (Ramsa), owners of top quality quartz mines in Galicia and Cuarzos Industriales de Venezuela, S.A., owners of quartz concessions in Venezuela, which operate and sell this mineral, an essential raw material for the production of ferroalloys and silicon metal.

• Ferroatlántica I+D, S.L.U., a company that manages all the research and development activities for Grupo Ferroatlántica and has profitably developed and sold several patents for certain essential stages in the ferroalloy production process.

• Silicio FerroSolar, S.L.U. is a company currently engaged in the industrial testing stage of new technology for the production of photovoltaic-solar-quality silicon metal using electric arc furnaces, that is, with electrometallurgy procedures.