Ferrexpo FXPO 1

Ferrexpo (LON:FXPO), the London-listed iron ore pellet producer with a mine and plant in Ukraine, has reported a total production of 5.35 million tonnes of iron ore pellets of which 5.14 million tonnes had an average grade of 65% Fe while the remaining 215,000 tonnes reported a 62% Fe content. It’s encouraging to see the global production increase (up 5.3%) while the production of the higher value 65% pallets was increased by almost 8%.

Despite the cost escalation due to the domestic inflation in Ukraine which increases the production cost (on a C1 basis) from US$43 to US$46 per tonne, Ferrexpo should still be printing money considering the iron ore price remains firmly above $100/t. The company’s financial results should be out soon, and it will be interesting to see the company’s cash flow statements as the net debt reduction of just $62M compared to the end of last year is a bit disappointing. Perhaps some of the cash has been tied up in the working capital (inventory levels, accounts receivable while the iron ore is being shipped,…). Time will tell.

Go to Ferrexpo’s website
The author has a small long position in Ferrexpo. Please read the disclaimer

Comments are closed.