Expansion

22 Nov 2007 07:01

Ferrexpo PLC22 November 2007 Expansion of Existing Operations beyond IPO Business Plan Ferrexpo plc ("Ferrexpo") is pleased to announce the commencement of a US$158million project to expand production at its current mining operation on theGorishne - Plavninskoye Lavrikovskoye ("GPL") deposit to approximately 32mt ofiron ore per annum by 2011 and to extend the life of the mine at theseproduction levels to at least 2035. This additional ore production will enablethe Company to take advantage of currently under-utilised processing capacity toincrease high quality pellet production by approximately 1.3mt per annum. Thisproduction expansion and extension of mine life are in addition to that detailedin the business plan associated with Ferrexpo's listing in June. As foreshadowed at the time of the listing, a GPL pit optimisation study hasbeen undertaken by Ferrexpo in conjunction with Turgis Consulting (Proprietary)Limited ("Turgis"), the Company's South Africa-based mining engineering partner,which has determined that it is possible to increase production of iron ore atthe GPL mine from current production levels of approximately 28mt per annum toat least 32mt per annum. The design of the pit expansion is such that theincremental ore mined will consist entirely of richer ore, all of which will beused to produce Ferrexpo's higher quality pellets containing 65% Fe. Thisadditional ore will be processed through the existing beneficiation andpelletising plants, which have surplus capacity, enabling capital efficientpellet production expansion to be achieved. Once full ore production is reachedin the GPL pit, it is expected that pellet production levels from produced orewill be increased by about 1.3mt per annum of 65% Fe pellets. The Board of Ferrexpo PLC has approved US$158 million in development capitalexpenditure for this project. US$68 million will be spent on capitalisedstripping works over the next 3 years, to be implemented immediately to thenorth of the of the current pit operations. Most of the remainder will be spenton additional mining equipment. The engineering design work carried out on the GPL open pit has determined thatthe mine life can be extended at the expanded production levels by at least 12years, to 2035. SRK Consulting and Turgis have been engaged to independentlyreview and verify the resource and reserve estimates and the GPL reserves willbe formally restated once this evaluation is complete. Mike Oppenheimer, Ferrexpo CEO, said: "In September we announced the initial capital commitment for the newYeristovskoye mine, the first of our major growth projects. While moving thisproject and our other longer term growth options ahead on schedule, we have alsobeen aggressively pursuing nearer term options for expanding our production tomeet strong demand from our customers and to take full advantage of ourunder-utilised processing capacity. The results of the GPL optimisation study have confirmed the huge unrealisedpotential of our resource at Poltava. Given our surplus ore processing capacity,with relatively modest capital investment in the mine we can achieve a highlycapital efficient 15% increase in pellet production from our own ore over thenext 3 years. This incremental production will all be of the higher qualityfavoured by our customers and will not require material additions to fixedcosts, thereby delivering higher margins. We will continue to pursue opportunities for extracting greater value from ourcurrent operations whilst not losing focus on our major growth projects." For further information, please contact: Ferrexpo: +44 207 389 8304Gavin Mackay Finsbury: +44 207 251 3801Robin WalkerAlex Simmons Notes to Editors: Ferrexpo is a Swiss headquartered resources company with assets in Ukraine,principally involved in the production and export of iron ore pellets, used inproducing steel. Current output is over 9 million tonnes, approximately 85% ofwhich is exported to steelmakers around the world. The Group is currentlyundertaking a significant growth programme and listed on the main market of the London Stock Exchange in June 2007 under the ticker FXPO. For further information please visit www.ferrexpo.com. This information is provided by RNS The company news service from the London Stock Exchange