TIDMFXPO
RNS Number : 7173B
Ferrexpo PLC
20 April 2012
20 April 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 April 2012, total pellet production from own
ore in 1Q 2012 increased by 6.3% as compared to 1Q 2011. Premium
65% Fe pellet production from own ore increased by 1.7% in 1Q 2012
as compared to 4Q 2011. The mine continues to operate at full
capacity.
Production Q1 2012 Q4 2011 Change YTD YTD Change
in Tonnes '000
================= ==== ========== ========
% 2012 2011 %
================= === ========== ======== ======= ======== ======== =======
Production from own raw
materials
Iron Ore 7,545.6 7,941.5 (5.0) 7,545.6 7,016.2 7.5
Concentrate 2,843.4 2,962.4 (4.0) 2,843.4 2,709.3 4.9
Pellets
62% Fe 1,198.4 1,294.4 (7.4) 1,198.4 1,037.5 15.5
65% Fe 1,059.1 1,041.4 1.7 1,059.1 1,086.1 (2.5)
----------- -------- ------- -------- -------- -------
Total Pellets 2,257.5 2,335.7 (3.3) 2,257.5 2,123.6 6.3
Production/reprocessing from
purchased raw materials
Pellets
62% Fe 53.3 50.5 5.4 53.3 33.5 59.0
65% Fe 3.8 167.6 (97.7) 3.8 146.0 (97.4)
----------- -------- ------- -------- -------- -------
Total Pellets 57.1 218.2 (73.8) 57.1 179.5 (68.2)
Total Pellets
Produced 2,314.6 2,553.9 (9.4) 2,314.6 2,303.1 0.5
---------------------- ----------- -------- ------- -------- -------- -------
62% Fe 1,251.7 1,344.9 (6.9) 1,251.7 1,071.0 16.9
65% Fe 1,062.9 1,209.0 (12.1) 1,062.9 1,232.1 (13.7)
Sales
Sales volumes for the three months to 31 March 2012 were 2.2
million tonnes, in line with the same period in 2011. The average
realised price in 1Q 2012 was around 7% lower compared to the same
period in 2011 reflecting customer mix and lower market prices.
Ferrexpo continues to convert its contracts to index based
pricing.
Costs
The Group's C1 cash cost of production was $59.4, an increase of
17.2% compared to the average for 2011 full year. This has been
driven by higher oil prices and local Producer Price Inflation. The
Group continues to mitigate these increases through its business
improvement programme and by increasing production from own ore.
The Ukrainian Hryvnia, in which 70% of the Group's total operating
costs are denominated, remained stable against the US Dollar at
around 8.0 UAH to 1 US$ during the period.
Capital Investment
Ferrexpo Yeristovo Mining ("FYM")
First Ore (budgeted cost US$267 million):
The Group remains on schedule and budget to achieve first ore
from the Yeristovo deposit by early 2013. To date some 32 million
cubic metres of overburden has been removed.
Work continues with the local design institutes in relation to
the concentrator, following which, and subject to market
conditions, Board approval of the next stage of works at FYM is
expected.
Ferrexpo Poltava Mining ("FPM")
Capital investment at FPM has continued on plan to upgrade the
production facilities to lift output of 12 million tonnes of
pellets per annum from the beginning of 2014. This will be achieved
initially by utilising ore from the Yeristovo mine.
Mine Life Extension Project (budgeted cost US$168 million)
This project is proceeding on schedule to extend the life of the
FPM mine to 2038. As the project relates partly to overburden
removal, it is expected that at current rates, the higher cost of
diesel will increase the total cost of the project.
Quality Upgrade Project (budgeted cost US$212 million)
This project, to produce all 65% Fe pellets, is underway. The
first shipment of eight (out of 10) vertimills, which are used to
grind the ore finely in order to increase the iron ore content in
the output, is in transit to the mine. The project is on schedule
to be completed and fully commissioned by the end of 2014.
Funding
The Group has gross borrowing facilities of over US$1 billion
with an average tenor of four years, providing it with sufficient
financing to complete the core projects in its investment pipeline.
Net debt as of 31 March 2012 was US$180.7 million, which
predominately relates to recoverable VAT, of which approximately
half is overdue. Repayments have been received in February, March
and April and the Group continues to work constructively with local
regional and central authorities to resolve this issue.
Michael Abrahams, Ferrexpo Chairman, commented:
"Production is up for the first quarter of this year as compared
to 1Q 2011, a trend which is expected to continue as first ore from
Ferrexpo Yeristovo Mining comes on stream in 2013. While costs
remain under pressure, we continue to seek ways of mitigating these
market driven price increases. The marketing team continues to make
good progress expanding our global customer base.
"Ferrexpo continues to focus on its growth projects to increase
annual production and the quality of its pellets. All of the
projects underway are on schedule and it remains the Group's
intention to produce one million tonnes of pellets per month from
2014."
Ferrexpo:
Emma Villiers +44 207 389 8306
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 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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