Ferrexpo PLC (LSE:FXPO) said an appeals court in Ukraine ruled its purchase of a 40.19% stake in Ferrexpo Poltava Mining (FPM), operator of the group's largest open pit operation, is 'invalid' and the stake should be returned to unnamed claimants.
Shares in the FTSE 250 group dropped 6.5% to 141.70p following the announcement, which reversed an earlier ruling in favour of the iron ore exporter
In May 2021, the court of first instance ruled in favour of Ferrexpo AG, a wholly owned subsidiary, and dismissed a claim to invalidate the agreement.
But an appeal was filed the following month. Pursuant to the 2002 share purchase agreement a 40.19% stake in FPM was sold to nominee companies that were at that time owned by the controlling shareholder of the group.
The appeal court stated the share purchase agreement is invalid and the 40.19% stake in FPM should be transferred to the claimants.
“Based on the details of the judgement provided by the appeal court, it is management's view that Ferrexpo AG has compelling arguments to defend its position,” the exporter of iron ore pellets from Ukraine said in a statement.
“Ferrexpo will proceed with protecting the interests of the company and its shareholders, and is exploring all options, including its right to appeal this decision to the Supreme Court of Ukraine,” it said.
About 17mln tonnes of high-grade ore from FPM was processed in 2021.The Poltava mine is has a JORC-compliant ore reserve in excess of 1 billion tonnes of iron ore, the equivalent of over 50 years of mine life remaining at the current rate of production.