Trading update and 4Q 2016 pellet production

RNS Number : 6300T

Ferrexpo PLC

09 January 2017

 

9 January 2017

Ferrexpo plc

("Ferrexpo", the "Group" or the "Company")

Trading update and 4Q 2016 pellet production

2016 trading summary:

·   Record sales volumes of approximately 11.7 MT compared to 11.3 MT in 2015 reflecting strong global demand for the Group's pellets.

·   Total 2016 pellet production 11.2 MT compared to 11.7 MT in 2015.

·   Lower pellet production in 2016 reflects:

-      An increase of  1.0 MT of higher performance FPP+1 pellets (2016 3.3 MT vs. 2.3 MT in 2015)

-      Refurbishment of the travelling grate in the pelletiser

-      A decrease in production from low margin third party concentrate

·   The Group's average pellet price in 2016 increased slightly compared to 2015, reflecting a recovery in the 62% Fe iron ore fines price during the year (average 2016 US$58.5 per tonne) compared to 2015 (average US$55.5 per tonne) and a steadily improving pellet premium following lows reached in 1Q 2016.

·   The full year average 2016 cash cost of production was approximately US$29 per tonne compared to US$31.9 per tonne in 2015.

·   The Group's cash balance as of 31 December 2016 was circa US$145M up US$110M compared to US$35M as of 31 December 2015.

·   US$196M of debt was retired during 2016.

Outlook:

In 2016, Ferrexpo successfully focused on reducing its debt levels, and as such enters 2017 with a much improved capital structure. In 2017 the Group expects to benefit from higher pellet premiums while production volumes will continue to reflect better-quality output with total production increasing modestly compared to 2016. Costs remain subject to commodity prices, the Hryvnia exchange rate and inflation levels in Ukraine.

4Q 2016 pellet production:

000' tonnes	Q4 2016	Q3  2016	%	2016	2015	%
			Change			Change
Pellet production from own ore	2,767.11	2,604.20	6.3	11,071.40	11,258.45	-1.7
- 62% Fe FBP	153.50	148.20	3.6	665.60	1,289.34	-48.4
- 65% Fe FPP (incl. FPP+)	2,613.61	2,456.00	6.4	10,405.80	9,969.11	4.4
Production from third party materials	105.99	0.00	-	129.20	403.16	-68.0
- 62% Fe FBP	0.00	0.00	-	0.00	5.96	-
- 65% Fe FPP (incl. FPP+)	105.99	0.00	-	129.20	397.19	-67.5
Total Pellets Produced	2,873.10	2,604.20	10.3	11,200.60	11,661.60	-4.0
- 62% Fe FBP	153.50	148.20	3.6	665.60	1,295.30	-48.6
- 65% Fe FPP (incl. FPP+)	2,719.60	2,456.00	10.7	10,535.00	10,366.30	1.6
of which % of FPP (incl. FPP+)	94.7%	94.3%	0.4	94.1%	88.9%	5.2

Note: Ferrexpo Basic Pellets (FBP), Ferrexpo Premium Pellets (FPP) and Ferrexpo Premium Pellets plus (FPP+). In 2016 the Group also produced 123kt of 67% Fe Ferrexpo Pellet Feed (FPF) compared to 40kt of 67% Fe FPF in 2015.

¹Ferrexpo premium pellets plus (FPP+) contain 65% Fe with enhanced basicity and low temperature disintegration properties compared to FPP pellets.

For further information contact:

Ferrexpo:

Investor Relations and Corporate Communications

Ingrid McMahon

[phone]

Maitland PR:

James Isola

[phone]

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. The Group is currently the 3^rd largest exporter of pellets to the global steel industry and the largest exporter of pellets from the Former Soviet Union. In 2016, it produced 11.2 million tonnes of pellets reflecting a 2% increase in production of the Group's highest quality pellets to a record 10.5 million tonnes. Ferrexpo has a diversified customer base supplying steel mills in Austria, Slovakia, the 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

 

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