Ferrexpo plc FXPO Interim Management Statement

  Ferrexpo plc (FXPO) - Interim Management Statement

RNS Number : 9478O
Ferrexpo PLC
18 October 2012






18 October 2012

                                 Ferrexpo plc

                         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.



Production

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
materials
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
Pellets
 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
materials
Pellets
 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

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.



Costs

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.



Capital Investment



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 
2016.



In August 2012, FYM's mining licence was renewed for a further 20 years  until 
2032.



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.



VAT

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."



Ferrexpo:
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 
visit www.ferrexpo.com



                     This information is provided by RNS
           The company news service from the London Stock Exchange

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IMSMRBFTMBIBBMT -0- Oct/18/2012 06:00 GMT