Swiss-headquartered company Ferrexpo, whose main interests are in Ukrainian iron ore assets, has announced that it has secured a new pre-export financing facility in the amount of US$230 million, which will be available for drawdown from January 1, 2010, and will be used for financing expansion projects and general corporate purposes.
The pre-export facility was agreed with a consortium of ten financial institutions led by Deutsche Bank AG, which acted as a coordinator, arranger and bookrunner for the loan, which matures 36 months from January 1, 2010, and is to be repaid in 24 equal monthly instalments with the first instalment falling due in January 2011. The margin of the loan is 7.00 percent above US dollar LIBOR.
"Ferrexpo is pleased to have successfully renewed its debt facilities despite extremely challenging debt market conditions. The new pre-export financing facility will provide Ferrexpo with the necessary financial flexibility to invest the cash flow generated by its existing business in the development of its world class iron ore resources," Ferrexpo CFO Chris Mawe stated.
In 2007, the company produced 9.1 million mt of pellets. Ferrexpo has commenced a significant growth program which contemplates the opening of up to a further three iron ore mines along the existing deposit in the next ten years. This aggressive growth program has the potential to raise annual production to approximately 35 million mt of pellets by 2018. This is accompanied by a series of projects to raise product quality and control costs; however, these capital projects were placed on hold in October 2008, pending improvements in global market conditions.
Ferrexpo is currently carrying out iron ore mining at the Gorishne-Plavninskoye and Lavrikovskoye deposits, while Yeristovskoye is being developed and is scheduled to produce ore by 2012. "We are still looking at what the capex costs will be overall, but it looks like we will get to first ore in 2013, which is a 12-month delay on the original program," Ferrexpo's group manager of business development, Gavin Mackay, told Reuters.
"We dug about six million cubic meters at Yeristovskoye this year and we will probably dig a bit more next year. We are digging the new pit and this (refinancing) will probably help towards that," Mr. Mackay said.
As SteelOrbis previously reported, Ferrexpo plans in 2009 to invest $20 million in stripping operations at its new open pit at the Yeristovskoye iron ore field. Ferrexpo's investments in its Yeristovskoye project and in the modernization of beneficiation capacities at its Gorishne-Plavninskoye and Lavrikovskoye deposits amounted to $100 million before the investment projects were frozen due to the problems in the commodities markets.