Ferrexpo says could sell assets, LSE share price plummets
MOSCOW. April 23 (Interfax) - Ferrexpo, a mining company with core assets in Ukraine, expects production to begin to recover to pre-crisis levels in 2028, but could also sell its assets to shore up finances, Ukrainian media reported, quoting a Ferrexpo stock exchange filing.
The group retains a long-term growth optionality thanks to Ferrexpo Belanovo Mining, with iron ore reserves of 1.7 billion tonnes suitable for DR pellet production, along with upgrades to existing infrastructure and operational, production and logistics processes.
"The company could consider selling one or more of its assets to generate cash, including operating equipment and materials. However, the Group's principal operating subsidiary (Ferrexpo Poltava Mining) is in bankruptcy proceedings...," Ferexpo said.
Ferrexpo also acknowledged that the group might lose control of Poltava Mining, which could have an adverse material impact on the group.
In addition, the company believes a further sale of some or all of its assets would impact the group's future revenue and its ability to remain a viable concern.
The directors do not believe there is a realistic prospect of the company being able to raise sufficient cash proceeds from any of such alternative options prior to the group's cash shortfall, which is expected to occur at approximately the end of August 2026.
The directors believe that the intended fundraise is currently the only viable solution capable of implementation in the timeframe required to meet the group's ongoing obligations and provide sufficient working capital for the group's short-term operational requirements.
Absent successful completion of the intended fundraise, the group's operating subsidiaries would face a cash shortfall at this time and as a result the group may be unable to continue as a going concern.
The directors consider that in such circumstances, without a VAT refund, it is highly likely that the company or members of the group will have no choice but to file for insolvency in the relevant jurisdictions and shareholders may lose all or a substantial part of their investment
The directors believe that in such circumstances, absent the recovery of VAT refunds it is highly likely that the company or members of the group would have no option but to file for insolvency in the relevant jurisdictions and shareholders may lose all or a substantial portion of their investment.
As reported, Ferrexpo intends to pursue an equity raise of at least $100 million before May. Its net cash position was approximately $17 million as of April 17.
Ferrexpo shares fell 25.86% on the London Stock Exchange following this news on Wednesday, to 32 pence, Ukrainian media reported.
According to stock exchange data, Ferrexpo shares had not been as low as this since the summer of 2016. Trading on Wednesday was fairly brisk, with deals for 15.4 million shares totaling almost GBP 2 million. Ferrexpo's current share price corresponds to a market capitalization of GBP 258.16 million (approximately $348.6 million).
The company's shares peaked in the summer of 2021, when there was an ore shortage on the market, reaching 480.8 pence. However, there have been periods when shares traded below 20 pence, and at the beginning of 2016, they were less than 13.16 pence.
Ferrexpo owns 100% of iron ore miners Ferrexpo Poltava Mining and Ferrexpo Yeristovo Mining, as well as 99.9% of Ferrexpo Belanovo Mining.
