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Ferrexpo plc is a United Kingdom-based company that is principally involved in the production and export of iron ore pellets used in producing steel. The Company owns and operates an integrated mining and processing facility, comprising an open cut iron ore mine, concentrating facility and palletizing plant in the city of Komsomolsk. Its operations are fully integrated from the mining of ore through to the production of pellets. All production is converted into pellets through its own facilities. In addition, third-party iron ore concentrate is converted into pellets. The Company’s operating subsidiary, Ferrexpo Poltava Mining (FPM), is located on the Dnieper River in Ukraine, in close proximity to its customers in Central and Eastern Europe.

2016 Full Year Results

2016 Full Year Results: strong cash generation, strengthened balance sheet and reinstatement of dividends

Ferrexpo plc today announces its financial results for the year ended 31 December 2016.

Steve Lucas, Non-Executive Chairman, said:

“In 2016, Ferrexpo demonstrated the strength of its business model and management team. In very challenging market conditions, where the iron ore price traded at eight year lows, the Group increased its net cash flows from operations by over 1.5 times to US$332 million compared to 2015. This allowed it to significantly reduce its financial leverage and strengthen its balance sheet. Net debt to EBITDA for the last 12 months was 1.57x compared to 2.78x as of 31 December 2015. Due to the Group’s strong financial performance together with a positive outlook for 2017, I am pleased to announce a return to dividends.

The iron ore pellet industry continues to have high barriers to entry given the capital intensity of new investment while demand for high grade ore, including pellet, remains strong. Ferrexpo is one of the largest iron ore pellet exporters in the world by volume and benefits from a well-invested asset base, a competitive cost position and a diversified high quality customer portfolio.

The average 62% Fe iron ore fines price in 1Q 2017 (as of 20 March 2017) was approximately US$86 per tonne compared to the average of US$58 per tonne in 2016, while Ferrexpo’s average pellet premium for 2017 is expected to be in line with the PLATTS Atlantic long-term contract pellet premium less adjustments for quality. The pellet premium has steadily recovered from lows seen in 1Q 2016 and now reflects tight market conditions. Costs remain subject to commodity prices, the Hryvnia exchange rate and inflation levels in Ukraine. Cash generation to date in 2017, has been strong and we expect the Group’s net debt to EBITDA to improve further during the year. On the whole, these factors underpin a positive outlook for 2017.”


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