Ferrexpo has conditionally agreed an option to purchase up to 500 newly built closed rail car wagons.
The wagons are priced between $70,000 and $110,000 each, exclusive of value added tax, and the pries are adjustable according to each consignment to reflect their current market price. The maximum total expenditure under the contract will therefore be $66m, inclusive of VAT.
The supplier is an associate of the Chief Executive Officer of Ferrexpo and a related party of the firm, and as such the deal has to be approved by Ferrexpo's shareholders.
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The wagons are to be used to transport the company's iron ore pellets to the Ukrainian border for delivery.
The directors believe that the investment is required to support medium-term production growth which is expected to increase by a third to 12m tonnes of pellets per annum from the beginning of 2014.
Michael Abrahams, Chairman of Ferrexpo, said: "We are pleased that we have put in place this option to expand our own fleet of railway cars in the extremely tight CIS market. This is consistent with our growth and marketing strategy and confirms Ferrexpo's commitment to invest in logistical capabilities that support the delivery of our production growth targets."
The share price fell 0.1% to 288.40p by 14:09.
NR
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