Mr Michael Abrahams Ferrexpo’s chairman at the AGM said that the company has performed well during the period maintaining production at full capacity and growing sales whilst controlling increasing input costs due to higher commodity prices and rising local inflation.

Production
Total production to 30 April 2011 was 3.0 million tonnes in-line with the production plan. The output of higher grade 65% Fe pellets from own ore has increased 6.9% compared to the prior year period while lower processing of third party concentrate reflects reduced availability.

Costs
The cost environment has been impacted by rising commodity prices and local PPI inflation. For the period to April 30th 2011 the average C1 cash cost increased by approximately 12% compared to the month of December 2010. The Ukrainian Hryvnia, in which 70% of the Group’s operating costs are denominated, has remained broadly stable against the US Dollar at around 7.95 UAH to 1 USD.

Sales
Sales volumes to 30 April 2011 were 3.0 million tonnes. Ferrexpo continued to benefit from strong demand in a strengthening price environment. The Group achieved price increases in the first quarter which were reflective of international benchmark pricing for the majority of its contracts. Ferrexpo is moving to pricing agreements which are adjusted quarterly in arrears with a one month lag.

Growth projects and funding
In November 2010 the Board approved USD 647 million of capital expenditure to extend the mine life of Ferrexpo Poltava Mine to 2038, to upgrade the processing facilities at FPM by the end of 2014 and to achieve first ore at Ferrexpo Yeristovo Mine by the end of 2013. These projects are progressing in-line with the Group’s schedule and budget. They are fully cash funded following the placement of a debut USD 500 million Eurobond issue in April 2011. As of April 30th 2011 the Group had a net debt position of USD 53 million. Management is actively engaged in evaluating the next stages of development for FYM which includes the approval of concentrating and palletizing production facilities.

Mr Michael Abraham further comment that “I am pleased to report that Ferrexpo has made a good start to the current financial year benefiting from strong demand for its pellets. The Group has maintained its focus on cost control and enhancing operating efficiencies. This has enabled Ferrexpo to sustain its cost competitiveness even with upward pressure on costs from higher commodity input prices and local inflation. The growth projects approved in November 2010 are progressing as planned and we remain on track to increase the quantity and quality of our pellet output.”