Ferrexpo, an iron ore company with assets in Ukraine, delivered a 9.9 per cent quarter-on-quarter (q/q) rise in sales volumes during the three months to September 30th at 2,47m tonnes.
However, as a result of the 19.5% decline in the market price in the third quarter, the average realised price during the period was below that of the previous quarter.
This was partially offset by lower cash costs, which fell from $65.1m per tonne to $58.7 q/q, although were higher than the $51.6 reported in the third quarter of 2011, hit by increased electricity and gas prices, as well as local inflation. The q/q improvement reflected efficiencies from increased production of pellets from own ore as well as a stable oil price and lower domestic inflation.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Total pellet production from own ore reached a record level of 2.4m tonnes, 1.6% higher than in the same period in 2011. Overall total pellet production edged 0.9% higher to 2,431.
Michael Abrahams, Ferrexpo Chairman, said: "The iron ore pricing environment was particularly volatile in the third quarter and Ferrexpo again demonstrated its ability to produce iron ore profitably at a low cost.
"The group's growth projects are on track and the board remains committed to invest prudently in the development of the company's iron ore reserves."
One of these projects, that of Ferrexpo Yeristovo Mining (FYM), delivered its first ore in July 2012. The ore is currently being tested in FPM's processing facilities to begin first commercial production in the first half of 2013 and will be gradually phased into production through the existing processing facilities during 2013.
The Ferrexpo board has authorised $30m for the development of the Yeristovo 10m tonnes per annum concentrator in 2013.
Ferrexpo Poltava Mining's projects remain on schedule and budget to raise output to 12m tonnes of pellets per annum from the beginning of 2014 and to increase the iron content in its pellets from an average of 63% iron to all 65% iron in 2015.
Net debt at the end of the quarter was $342m.
NR
Thousands more pay inheritance tax with figures expected to double before decade’s end
Should you invest in Microsoft?
