London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LON:FXPO) has decided not to proceed with a bond transaction at this time given its current robust liquidity position and other available sources of finance, folowing a roadshow.
Over the past two weeks Ferrexpo has been meeting with potential bond investors to gauge interest for a debut US Dollar bond. In a statement, it thanked investors for their high level of interest in the roadshow and for the productive meetings.
Ferrexpo will continue to review the international debt capital markets as a potential source of financing subject to market conditions and its financing requirements, it added.
Back in May, Edison Investment Research noted that the price for Ferrexpo’s production would likely eclipse the forecasted US$82/t (tonne) and reach as high as US$107/t, also noting that the company exceeded its production estimates.
To that point, Ferrexpo’s production of iron ore had been 17% higher than in the comparable period in FY09, while concentrate production had been 18% higher and pellet production 24% higher. Edison stated that the rate of increase would most likely not be maintained for the full year, though even a fallback to FY09 levels would suggest an overall output rise of at least 5% for pellet production.
Group revenues for the 12 month period ended 31 December 2009 fell to US$648.7 million (2008: $1.1 billion) while EBITDA (earnings before interest, tax, depreciation and amortisation) decreased to US$138 million (2008: US$503 million) and net cash flow from operations fell to US$76.9 million (2008: US$370.9 million), while pre-tax profit was lower at US$80.9 million (2008: US$375.6 million).
During 2009, Ferrexpo’s Delivered at Frontier/Free on Board ("DAF/FOB") price for its pellets averaged US$66.3 per tonne compared to US$124.6 per tonne in 2008.
Total production was maintained at full capacity, while 65% iron pellet production increased by 7.2%, in line with the company’s stated objective to increase sales of higher margin products. Sales volumes were up 3.5%.
At the start of the year the company reported that the demand for its iron ore products in January and February had been “very strong” with 63% of sales made under long-term contracts with its traditional markets. Average cash costs in the first two months of 2010 were US$38.7 per tonne, in line with guidance.
Shares in Ferrexpo have performed very well so far this year, soaring by nearly a third from 200 pence to the current 281 pence. The company reached 373 pence at one point in April before the markets were crippled by macroeconomic factors.