TIDMFXPO
RNS Number : 6992Q
Ferrexpo PLC
17 October 2013
17 October 2013
Ferrexpo plc
Interim Management Statement
Ferrexpo plc ("Ferrexpo", the "Company" or the "Group") today
issues its interim management statement for the third quarter of
2013, in accordance with the UK Listing Authority's Disclosure and
Transparency Rules.
Production
For the nine months ended 30 September 2013, pellet production
from own ore was approximately 7.8 million tonnes. This represented
an increase of 12.0% compared to the same period in 2012,
reflecting the production of 1.4 million tonnes of pellets from
Ferrexpo Yeristovo Mining ("FYM") ore as the mine continues to ramp
up. Total pellet production year to date, including third party
materials, was 8.0 million, an increase of 12.5% compared to the
same period in 2012. Production of 65% Fe pellets from own ore grew
10.8% compared to 2012 to 3.5 million tonnes.
Pellet production (tonnes
'000) 3Q 2013 2Q 2013 Change 9M 9M Change
=========================== ======== ========
% 2013 2012 %
=========================== ======== ======== ======= ======== ======== =======
Pellets from FPM ore 2,135.9 2,068.5 3.3 6,362.0 6,933.9 (8.2)
62% Fe 1,089.0 1,056.4 3.1 3,309.0 3,775.4 (12.4)
65% Fe 1,046.9 1,012.1 3.4 3,053.0 3,158.5 (3.3)
--------------------------- -------- -------- ------- -------- -------- -------
Pellets from FYM ore 545.5 530.7 2.8 1,404.3 0.0 n/a
62% Fe 321.8 347.2 (7.3) 957.5 0.0 n/a
65% Fe 223.7 183.5 21.9 446.8 0.0 n/a
--------------------------- -------- -------- ------- -------- -------- -------
Pellet production from
own ore 2,681.4 2,599.2 3.2 7,766.3 6,933.9 12.0
62% Fe 1,410.8 1,403.6 0.5 4,266.5 3,775.4 13.0
65% Fe 1,270.6 1,195.6 6.3 3,499.8 3,158.5 10.8
--------------------------- -------- -------- ------- -------- -------- -------
Pellets from third party
materials 120.6 95.2 26.6 281.5 222.0 26.8
62% Fe 10.6 0.0 n/a 76.3 166.2 (54.1)
65% Fe 110.0 95.2 15.5 205.2 55.8 268.0
--------------------------- -------- -------- ------- -------- -------- -------
Total pellet production 2,802.0 2,694.4 4.0 8,047.8 7,155.9 12.5
--------------------------- -------- -------- ------- -------- -------- -------
62% Fe 1,421.4 1,403.6 1.3 4,342.8 3,941.6 10.2
65% Fe 1,380.6 1,290.8 7.0 3,705.0 3,214.3 15.3
--------------------------- -------- -------- ------- -------- -------- -------
Sales
Sales volumes of pellets for the nine months to 30 September
2013 were 7.6 million tonnes which represented an increase of 9.0%
compared to the same period in 2012. This was slightly lower than
production due to timing of shipments. The proportion of sales
volume to Traditional markets was 48% while sales to Natural and
Growth markets were 18% and 34% respectively, reflecting the
Group's focus on developing and maintaining a diversified sales
portfolio of crisis-resistant customers. Throughout the period
there was strong demand from all market segments.
The average realised price in 3Q 2013 was 4.5% lower compared to
2Q 2013 on a FOB/DAP basis due to the lagging nature of fixed price
settlements for a significant amount of volume sold to Traditional
markets. In other markets, prices followed the spot price, monthly
or 3 monthly index averages (with standard adjustments for quality
and pellet premium) as is typical for the respective markets.
During 3Q the Group also continued to reduce freight rates to
Asian markets compared to its Brazilian competitors (Yuzhny to
Qingdao vs. Tubarao to Qingdao) using predominantly capesize
vessels and the Group's wholly owned transhipment vessel. In
September 2013, the Group successfully loaded its first vessel of
over 200 thousand tonnes dead weight.
Costs
The Group's average C1 cash cost of production for the three
months to 30 September 2013 was US$58.2 per tonne compared to the
average C1 cash cost year to date of US$60.6 per tonne. The
decrease in costs reflects cost efficiencies from higher volumes.
As FYM continues to ramp up and the proportion of weathered ore
decreases, mining and processing costs are expected to reduce.
Capital Investment
Growth in Pellet Production to 12 million tonnes per annum
Ferrexpo Poltava Mining ("FPM") continues to upgrade and
modernise its facilities, and output is rising towards an
annualised rate of approximately 12 million tonnes in 2014.
Quality Upgrade Project
The quality upgrade project will improve the average iron
content of the Group's pellets to 65% Fe in 2015. The current
budget has been increased to include additional scope for tailings
facilities and total capex now stands at US$236 million, an
increase of US$24 million.
FYM Concentrator Development
The Board of Ferrexpo visited the mining operations in early
October and were pleased with the progress that had been achieved
at both FPM and FYM. At FYM the new mine is producing 0.7 million
tonnes of ore per month and ramping up on schedule.
The Board examined the case for the concentrator at FYM where
the business case is considered to be very strong even under
conditions where the iron ore price is significantly less than
today. It has approved a further US$40 million for site
infrastructure including ground works and utilities associated with
the concentrator. Further approvals concerning the scope of
construction of the concentrator are expected to follow in
2014.
VAT
As of 30 September 2013, US$302 million of gross VAT was
outstanding (30 June 2013: US$305 million; 31 December 2012: US$302
million) in Ukraine. VAT has not increased during 2013, however, no
VAT outstanding before 2013 has been recovered in the current
year.
The cabinet of ministers of Ukraine has recently confirmed the
use of treasury promissory notes instead of cash repayment to
settle outstanding VAT liabilities incurred before 2013. Final
terms and conditions of the issuance are not known at the current
time and the Company will make a decision in relation to these
notes at the appropriate time when more information is
available.
At 30 June 2013, the Group recorded a discount of US$38 million
to reflect the time value of money associated with the late
recovery of the outstanding VAT balance (31 December 2012: US$20
million).
As of 30 September 2013, prepaid corporate profit tax in Ukraine
amounted to US$86 million (30 June 2013: US$65 million). This is
expected to be recovered in future years.
The Group's closing cash balance as of 30 September 2013, was
US$339 million (30 June 2013: US$446 million) and net debt was
US$677 million (30 June 2013: US$566 million), of which, gross
outstanding Ukrainian VAT and prepaid corporate profit tax
represented US$388 million.
Ferrexpo:
Ingrid McMahon +44 207 389 8304
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 has been mining, processing and selling high quality
iron ore pellets to the global steel industry for over 35 years.
Ferrexpo's resource base is one of the largest iron ore deposits in
the world. In 2012, the subsidiary, Ferrexpo Poltava Mining
("FPM"), produced 9.3 million tonnes of iron ore pellets, while
first ore was reached at the new Ferrexpo Yeristovo Mining ("FYM")
open pit. Ferrexpo is the largest exporter of pellets in the CIS.
The Group has a diversified customer base supplying steel mills in
Austria, Slovakia, Czech Republic, Germany and other European
states, as well as in China, India, Japan, Taiwan and South Korea.
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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