At Ferrexpo’s AGM, which will take place today, 24 May 2012 at 11.00am, Michael Abrahams, Chairman, will make the following comments:
The year has started well, and Ferrexpo Poltava Mining continues to operate at full capacity. In the period to 30 April, 2012, own ore pellet production was 6.2% higher as compared to the same period 2011. Sales volumes remained in line with 2011 at 3.0 million tonnes and the average selling price was 9% lower reflecting customer mix and lower market prices.
As reported at the year end, Ferrexpo continues its negotiations with the tax authorities to recover overdue VAT. The total VAT balance was US$172m at 31 December 2011, which increased to US$195m at 30 April 2012. The Group continues to address this as a matter of priority.
Ferrexpo has previously disclosed that, for over six years, it has been subject to a legal claim over a shareholding in Ferrexpo Poltava Mining. A further hearing is scheduled for 12 June 2012. The Directors expect the case to be protracted. The Board continues to receive legal advice that the case against Ferrexpo has no merit under Ukrainian law for legal, technical and practical reasons.
There has been much comment recently about Ukraine, and the Board continues to monitor developments in the country. As demonstrated by Ferrexpo’s results to date, the Group’s mining and production operations are performing well in Ukraine, where it has an experienced management team and a highly-skilled workforce.
The Group continues to experience good demand for its iron ore pellets in the year to date. It is making significant progress with its capital projects, and is on track to increase production to 12 million tonnes of pellets per annum in 2014. Its mine infrastructure works and pit development at Ferrexpo Yeristovo Mining are advancing as planned. The Board remains confident that it will deliver on its growth plans.
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