Ferrexpo plc (FXPO) - Interim Management Statement
RNS Number : 9478O
18 October 2012
18 October 2012
Interim Management Statement
Ferrexpo plc ("Ferrexpo", the "Company" or the "Group") today issues its
interim management statement in accordance with the UK Listing Authority's
Disclosure and Transparency Rules.
As announced on 10 October 2012, total pellet production from own ore in 3Q
2012 reached a record level of 2.4 million tonnes in the quarter. Production
was 1.6% higher than 3Q 2011. The mine continues to operate at full capacity.
Q3 Q2 Change YTD YTD Change
Production in Tonnes '000 2012 2012 % 2012 2011 %
Production from own raw
Iron Ore 7,492.8 7,431.2 0.8 22,469.6 21,695.5 3.6
Concentrate 2,979.8 2,896.5 2.9 8,719.7 8,524.5 2.3
62% Fe 1,346.1 1,230.8 9.4 3,775.4 3,513.0 7.5
65% Fe 1,024.9 1,074.6 (4.6) 3,158.5 3,214.7 (1.7)
Total Pellets 2,371.0 2,305.4 2.8 6,933.9 6,727.7 3.1
Production/reprocessing from purchased raw
62% Fe 60.0 53.0 13.2 166.2 154.0 7.9
65% Fe 0.0 51.9 (100.0) 55.8 375.1 (85.1)
Total Pellets 60.0 104.9 (42.8) 222.0 529.1 (58.0)
Total Pellets Produced 2,431.0 2,410.3 0.9 7,155.9 7,256.8 (1.4)
62% Fe 1,406.1 1,283.8 9.5 3,941.6 3,667.0 7.5
65% Fe 1,024.9 1,126.5 (9.0) 3,214.3 3,589.8 (10.5)
Sales volumes for the three months to 30 September 2012 were 2,472 thousand
tonnes, an increase of 1.2% compared to the same period in 2011 and 9.9%
compared to 2Q 2012. The average realised price in 3Q 2012 was below 2Q 2012
reflecting the 19.5% decline in the market price during the period.
The Group's average C1 cash cost of production for the three months to 30
September 2012 was US$58.7 per tonne. This compares to US$51.6 per tonne in 3Q
2011 and US$61.5 per tonne in 2Q 2012. While the increase in the production
cost compared to 3Q 2011 reflected higher electricity and gas tariffs as well
as high levels of local inflation, the quarter on quarter decline reflected
efficiencies from increased production of pellets from own ore as well as a
stable oil price and lower domestic inflation.
The Ukrainian Hryvnia, in which 70% of the Group's total operating costs are
denominated, remained stable against the US Dollar at around 8.0 UAH to 1 US$
during the period.
Ferrexpo Yeristovo Mining ("FYM")
First ore from the new FYM pit was reached in July 2012. The ore is currently
being tested in FPM's processing facilities to begin first commercial
production in 1H 2013 and will be gradually phased into production through the
existing processing facilities during 2013.
The Ferrexpo Board has authorised US$30 million for the development of the
Yeristovo 10mtpa concentrator in 2013. This includes US$20 million for
detailed engineering design and ground works and, subject to market conditions
and further board approval, down payments for long lead items to be placed in
late 2013 which will allow for first concentrate production and ramp up in 2H
In August 2012, FYM's mining licence was renewed for a further 20 years until
Ferrexpo Poltava Mining ("FPM")
FPM's projects remain on schedule and budget to raise output to 12 million
tonnes of pellets per annum from the beginning of 2014 and to increase the
iron content in its pellets from an average of 63% Fe to all 65% Fe in 2015.
The Group did not receive any VAT refunds in Ukraine during the quarter. As of
30 September 2012, US$281 million of VAT was outstanding compared to US$231
million as of 30 June 2012. Ferrexpo continues to work constructively with
local regional and central authorities to resolve this issue and the Group
expects some progress to be made in 2013. As of 30 September 2012, the Group
had gross borrowing facilities of more than US$1 billion with an average
maturity of over three years. Net debt was US$342 million.
Michael Abrahams, Ferrexpo Chairman, commented:
"The iron ore pricing environment was particularly volatile in the third
quarter and Ferrexpo again demonstrated its ability to produce iron ore
profitably at a low cost.
The Group's growth projects are on track and the Board remains committed to
invest prudently in the development of the Company's iron ore reserves."
Ingrid McMahon +44 207 389 8304
Pelham Bell Pottinger
Charles Vivian +44 207 861 3126
Lorna Spears +44 207 861 3883
Notes to Editors:
Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine. It
is principally involved in the production and export of high quality iron ore
pellets, which are used in the manufacture of steel. Ferrexpo's resource base
is one of the largest iron ore deposits in the world. Its current producing
asset, FPM, produced approximately 10 million tonnes of iron ore pellets in
2011 making it the largest exporter of pellets in the CIS. The Company has a
diversified customer base supplying steel mills in Austria, Slovakia, Czech
Republic, Germany and other European states, as well as in China, India,
Japan, Taiwan and South Korea. Ferrexpo is listed on the main market of the
London Stock Exchange under the ticker FXPO. For further information, please
This information is provided by RNS
The company news service from the London Stock Exchange
IMSMRBFTMBIBBMT -0- Oct/18/2012 06:00 GMT
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