www.ferrexpo.com
Ferrexpo plc is a Swiss headquartered resource company with assets in Ukraine. We are principally involved in the production and export of iron ore pellets, which are used in the manufacture of steel. Our asset base comprises one of the largest iron ore resources in the world.
We produce around ten million tonnes of iron ore pellets per year and with several growth projects in place are aiming to double future production. We are committed to becoming a leading global supplier of iron ore pellets, providing outstanding service to our customers and strong returns to our shareholders.
We became the first Ukrainian company to be listed on the main market of the London Stock Exchange (ticker: FXPO) following a successful Initial Public Offering on 15 June 2007. We are a member of the FTSE 250 UK Index.
Ferrexpo plc is the only pure-play iron ore company currently listed on the London Stock Exchange.
Ferrexpo “on track” to meet production targets
Ukrainian iron ore producer Ferrexpo (LON:FXPO) is “on track” to meet its full-year production targets, according to broker Evolution Securities after the firm confirmed today that it improved total pellet production from its own ore during the third quarter of this year by 2.8 per cent compared to the previous quarter.
Sales volume during the four months to October 31 amounted to 3.3 million tonnes and the average realised price for Q3 2011 was in line with that achieved for Q2 2011.
Ferrexpo said that production of higher-grade 65-per cent iron ore pellets increased by 12.3 per cent compared to Q3 2010. Meanwhile, overall pellet production (including third-party concentrate) was in line with the previous quarter at 2.5 million tonnes.
In terms of recent monthly production, 774,000 tonnes of pellets were produced during October compared with 781,000 tonnes in September, which was described as “in line” by Ferrexpo.
Evolution said that it estimates full-year production of 9.7 million tonnes of pellets, compared with the 7.3 million tonnes that Ferrexpo produced during its first nine months.
Ferrexpo said that the cost environment between July 1 and October 31 reflected local inflation of 15.6 per cent during the year to date, which was principally driven by higher electricity and gas prices. The increase in cash costs for the period was partially offset by higher production and efficiency improvements, said the firm, with cost per tonne increasing 8.9 per cent to US$52.5 per tonne.
Evolution said it took as a positive signal Ferrexpo’s mitigating of inflation costs through its operation improvements, adding: “We continue to believe that Ferrexpo is a very competitive iron ore producer, and the weak Ukrainian Hryvnia continues to aid the group in this regard.”
Ferrexpo added that the group is expected to sell approximately 25 per cent of its output on spot for the full year with new long-term contracts beginning in 2012. “These new long term contracts are expected to be on an index linked price mechanism which will complement existing contracts on an index linked and quarterly negotiated basis,” said the firm.
Ferrexpo’s investment programme is progressing as planned, said the firm, with the Yeristovo deposit on schedule and budget to achieve first ore in 2013 and the Ferrexpo Poltava Mining project proceeding on schedule.
"Ferrexpo continues to benefit from its established reputation as a quality long term pellet supplier,” said Michael Abrahams, Ferrexpo’s chairman. “Should there be further deterioration in market conditions, the Group remains well positioned in the global market to maintain full production due to its low cost position on the supply curve and established infrastructure to seaborne markets, supporting the local economy and its reputation as reliable supplier to the global steel industry."
Evolution reiterated its ‘buy’ recommendation and its 504 pence per share target price. At 11:09am today the shares were trading two pennies lower at 320 pence each.
