17th Apr 2014 07:31
LONDON (Alliance News) - Ferrexpo PLC Thursday said sales volumes increased in its first quarter following strong production from its Yeristovo mine, and it reduced its cash costs by 21% partly due to a devaluation of the Ukrainian currency.
The iron ore producer, which operates solely in Ukraine, said its sales volumes increased 10.8% to 2.8 million tonnes of pellets in the three months ended March 31, up from 2.6 million tonnes for previous year as production saw a positive increase during the period despite the ongoing crisis in the country.
The company said the market for its iron pellets remained strong in the first quarter but the average price of 62% iron fell 11% to USD120 per tonne compared with USD135 per tonne in the fourth quarter 2013.
Ferrexpo said its average cash costs of production during the period was down 21% to USD50.3 per tonne from USD63.9 per tonne due to improvements in efficiency and output as well as a devaluation of the Ukrainian hryvnia during the period in which around 50% of its production costs are denominated.
The company noted earlier in the month that a 16% devaluation of the Ukrainian hryvnia would reduce its operating costs but that this also is likely to lower the carrying value of its assets and liabilities moving forward.
Ferrexpo also said earlier in April that its total pellets produced during the period increased 10.4% to 2.8 million tonnes from 2.6 million tonnes, including a 9.2% increase in its own produced iron to 2.7 million tonnes from 2.5 million tonnes and a 55.2% increase in pellets from third party materials to 102,000 tonnes from 65,700 tonnes.
The company said all of the growth in production from its own ore came from its Yeristovo mine where pellet production more than doubled to 706,7000 from 328,100 due to the sites ongoing ramp-up of operations, offsetting a 7.0% fall in production from its Poltava mine to 2.0 million tonnes from 2.2 million tonnes.
On Thursday, Ferrexpo said it remains on track and on budget to increase production during 2014 to its target run rate of 12 million tonnes of pellets per year.
The company also said its ongoing quality upgrade project remains on track and work is underway to refurbish its floatation plant number 1 as well as construction of a third and final floatation section, with both projects due to be completed in 2014.
The miner, which operates mainly in the Poltava region on the Dnieper river in Ukraine, said in March that its operations were still operating as usual following the change of leadership in the country and crisis in the east of the country and Crimea region.
Ferrexpo shares were up 1.7% to 153.20 pence, putting it in the top five FTSE 250 risers during early trading Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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