Ferrexpo reports its production for Q1 2017

7 April 2017

In latest reporting quarter the company decreased its general production volume by 9% vs. Q1 2016 to 2.634M tons, the reason scheduled maintenance works at production facilities.

Premium 65% Fe pellets made 94% of total production volume.

General Ferrexpo production dynamics during last years looked as follows:

Ferrexpo iron ore pellets production Q1 2017

Despite output decrease we expect good financial performance of the company in reporting quarter. Average iron ore price index (for iron ore with 62% Fe content) in Q1 made USD 85/t (vs. USD 65/t in H2 2016), 65% Fe pellets premium - not less than USD 30/t. With net cost of production at USD 32-35/t (USD 31.5/t in H2 2016), estimated EBITDA of Ferrexpo for the period is not less than USD 150M.

As a result, even if iron ore prices (as predicted by a lot of industry analysts) will decline till the end of Y2017 to USD 50-55/t, annual EBITDA of Ferrexpo will be close to USD 400M. If we subtract from this amount planned investments (USD 110M), interest expenses (about USD 50M) and dividends (USD 40M), remaining free cash flow will be close to USD 200M, which will be sufficient to repay debt principal without decrease of cash balance (USD 145M as of 31.12.16, in Y2018 the group is to repay USD 320M of debt principal).

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