TIDMFXPO
RNS Number : 8278R
Ferrexpo PLC
10 November 2011
10 November 2011
Ferrexpo plc
("Ferrexpo", the "Group" or the "Company")
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 6 October 2011, total pellet production from own
ore in 3Q 2011 increased by 2.8% compared to 2Q 2011. Production of
higher grade 65% Fe pellets increased by 12.3% compared to 3Q 2010
and by 6.6% year to date. Production of pellets from third party
concentrate is dependent on availability in local markets. Overall,
including third party concentrate, total pellet production in 3Q
2011 was in-line with 2Q 2011 at 2.5 million tonnes.
Production in Tonnes 3Q 2Q 3Q
'000 2011 2011 Change 2010 Change YTD YTD Change
======================== ======== ======== ========
% % 2011 2010 %
======================== ======== ======== ======= ======== ======= ========= ========= =======
Production from own
raw materials
Iron Ore 7,497.3 7,182.0 4.4 7,386.4 1.5 21,695.5 21,589.1 0.5
Concentrate 2,949.8 2,865.4 2.9 2,873.3 2.7 8,524.5 8,382.9 1.7
Pellets
62% Fe 1,258.3 1,217.3 3.4 1,342.1 (6.2) 3,513.0 3,726.3 (5.7)
65% Fe 1,075.3 1,053.3 2.1 957.6 12.3 3,214.7 3,014.6 6.6
-------- -------- ------- -------- ------- --------- --------- -------
Total Pellets 2,333.6 2,270.5 2.8 2,299.7 1.5 6,727.7 6,740.9 (0.2)
Production/reprocessing from purchased
raw materials
Pellets
62% Fe 64.4 56.2 14.6 42.2 52.5 154.0 132.9 15.9
65% Fe 74.0 155.1 (52.3) 217.6 (66.0) 375.1 571.5 (34.4)
-------- -------- ------- -------- ------- --------- --------- -------
Total Pellets 138.4 211.3 (34.5) 259.8 (46.7) 529.1 704.4 (24.9)
Total Pellets Produced 2,471.9 2,481.8 (0.4) 2,559.5 (3.4) 7,256.8 7,445.3 (2.5)
------------------------ -------- -------- ------- -------- ------- --------- --------- -------
62% Fe 1,322.6 1,273.4 3.9 1,384.3 (4.5) 3,667.0 3,859.2 (5.0)
65% Fe 1,149.3 1,208.4 (4.9) 1,175.2 (2.2) 3,589.8 3,586.1 0.1
Production in October was in line with expectations and
represented 774 thousand tonnes of pellets compared to 781 thousand
tonnes of pellets in September 2011. Year to date production from
own ore is in line with 2010 at 7.5 million tonnes.
Costs
From 1 July 2011 to 31 October 2011, the cost environment
reflected local PPI inflation of 15.6% year to date driven
principally by higher electricity and gas prices. The increase in
the average C1 cash cost for the period was offset by higher
production and efficiency improvements and as a result increased by
8.9% to US$52.5 per tonne (versus 1H 2011 of US$48.2 per tonne).
The Ukrainian Hryvnia, in which 70% of the Group's operating costs
are denominated, remained stable against the US Dollar at around
7.99 UAH to 1 US$.
Sales
Sales volumes from 1 July 2011 to 31 October 2011 were 3.3
million tonnes. The average realised price in 3Q 2011 was in line
with that achieved for 2Q 2011. For the full year the Group is
expected to sell approximately 25% of its output on spot with new
long term contracts commencing 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.
Growth projects
The investment programme announced in November 2010 is
progressing as planned:
Ferrexpo Yeristovo Mining (FYM)
First ore (budgeted cost US$267 million):
The Group is progressing in line with its schedule and budget to
achieve first ore from the Yeristovo deposit in 2013. FYM took
delivery of five 220 tonne CAT trucks in October 2011 increasing
the current haul truck fleet to 21 units.
In terms of the next stage of development for FYM, design of the
concentrator is ongoing. Full board approval is expected in March
2012, subject to market conditions.
Ferrexpo Poltava Mining (FPM)
Mine Life Extension Project (budgeted cost US$168 million):
This project is proceeding on schedule and is progressing as
planned to extend the life of the FPM mine to 2038. Higher energy
costs for stripping have inevitably caused cost increases; the
Company expects this to moderate over the remaining life of the
project which runs to 2018.
Quality Upgrade Project (budgeted cost US$212 million):
The project is underway to increase the proportion of 65% Fe
pellets to 100% of production and costs are in line with the
budget. The planned works will increase FPM's capacity by upgrading
the existing ore floatation circuit and adding two additional
circuits. Orders for long lead items have been placed and detailed
design is underway. The Company forecasts that the project will be
completed and fully commissioned in 2014 and ramp up to full 65% Fe
production will occur in 2015.
In summary, the Group remains on track to increase pellet output
capacity to 12 million tonnes per annum by the end of 2013 and to
increase production of 65% Fe pellets to 100% of output by the end
of 2014. These projects are fully financed.
Funding
During the period under review, Ferrexpo secured a new credit
facility for US$420 million at 225 basis points above LIBOR. The
Group now has gross borrowing facilities of over US$1 billion with
an average tenor of 4 years. Net debt as of 31 October 2011 was
US$60.0 million. The Group believes that it has sufficient
financing to complete the core projects in its investment
pipeline.
Michael Abrahams, Ferrexpo Chairman, said:
"Ferrexpo continues to benefit from its established reputation
as a quality long term pellet supplier. 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."
Next Update
Ferrexpo will release a 4Q 2011 production report on 12 January
2012.
For further information, please contact:
Ferrexpo:
Ingrid McMahon +44 207 389 8304
Pelham Bell Pottinger
Mark Antelme +44 207 861 3894
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 2010 making
it the largest exporter of pellets in the CIS. The Company has a
diversified customer base supplying steel mills in Austria, Serbia,
Slovakia, Czech Republic, Germany and other European states, as
well as in China, India, Japan, and other Asian countries. 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
END
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