Ferrexpo Share Discussion Threads

[jjhbev] 22/11/2016 14:15

Giles

My son has access to a bloomberg screen. He tells me Fe has rallied 6% today and fixed at $75. I do not have such a screen & therefore cannot provide any direct corroboration but am sure that what he says is correct.

[gilesgraves] 22/11/2016 13:05

The only iron ore price that I can find which is "live" is the one on IG.com. Am I looking at the right thing? I have looked at livecharts, fxempire, investing.com but the charts never seem to be up to date. If I am looking at the right thing, then the Iron Ore price is absolutely shooting through the roof again today....

[granto2] 22/11/2016 10:42

on rio / vale this guy has a good take on it

hxxp://www.macrobusiness.com.au/2016/11/rio-ready-resume-iron-ore-supply-growth/

DeBeers control the diamond market and release the stock very very slowly, Rio and Vale seem to be thinking the same. When I saw Rio shut the mine for Christmas and laying off 500 workers today, rolling layoffs, it tells me what they are thinking. They plan to control volumes. If the other BHP and VALE ramp up then things might change. Walking away from the 'biggest iron ore mine in the world' tells another story. one of oversupply. As for pellets, given that they will see sweet FA from Samarco I repeat it here, that I think they will drag its reopening out until they are practically beaten into it by the government . and then, it will be 'oh safety first, nice and slow small volume production, enough for salaries and dumped in China and the middle east, no way the EU rich buyers will be seeing Samarco pellets.

[ulftherock] 22/11/2016 10:10

Granto,

Great post. Why do you doubt the Rio Tinto/Vale talk? I was following that. Can you write more on that? Great point re the bond.

Also, sorry I kind of lost my temper last night. On one hand, why post if you are only supposed to post buy, buy, buy. I already did that. On the other hand, I guess my drive for more info backfired--but part of it is the Ukrainian press, I think.

Here are a couple more links--do you read Ukrainian/Russian, Granto? (back to me being neurotic, but anyone have more clarity?):

hxxp://www.ukrrudprom.com/news/Sud_arestoval_podozrevaemogo_v_mahinatsiyah_v_bankebankrote_Kons.html

hxxp://minprom.ua/news/221175.html

One says Z was charged/arrested. The other not (although it's not exactly full of good news). It seems that the first is out of sync with other news.

Anyway, it doesn't seem that this is having any effect on price... could make a case study out of this compared to last year, but anyway.

[granto2] 22/11/2016 09:54

Bonds
Ferrexpo will have no problem making its 2017 commitments,it practically has the money set aside already. the real danger is 2018 when the bonds and banks mature at the same time. It the market collapses to $45 a ton, and $20 premiums, it would leave us with an EBIDTA $180m There would be a short-fall close to $100m. 2019 would most likely look after itself. So, we really are looking at $100m minimum if the market drops as expected. With 2017 $180m plus bank X-fin cleared by Dec 2017 the appetite to fund Ferro will be there. I hope we take no more than $250m in bonds for 2021/22/23/24 giving us a free year in 2019.
Supply and Demand.
lots of talk about oncoming demand from Rio Tinto and Vale, I have my doubts about this. I suspect they will ramp up the new mines, but ease the gas on the older ones. the already pulled the christmas holiday stroke this year, expect more of these cut-backs. I think they will try to hold the price as best they can. I see $48m average. I can't see where demand will fall so I presume the same as this year. Ferrexpo is blessed in that it sells its premiums 6 and 3 months in advance. so we already know the premium price for Q1 2017, it's around $30t. a good start.
$750m. bonds.
that's the top end. unless they intent to drive production through the roof to 20m tonnes a year they won;t need this.
so
a sweet $300m or $250m bond would be just fine.

[bellbottom] 22/11/2016 09:02

Further confirmation of proposed Bonds issue - Poltava GOK

[bellbottom] 22/11/2016 08:56

This gives a good general summary of the ongoing banking crisis in Ukraine. Finance and Credit Bank gets a small mention but this is more related to how it came about and crucially that they are still in the middle of the crisis rather than it coming to an end.

[ulftherock] 21/11/2016 22:08

First, Mr. Oz, (to paraphrase the great Hotel Budapest), how is that supposed to make me feel?

For the record, I said right up front that I only just came on after lurking--and to be clear I'll say also that I'm only on one other forum on the same subject (although no one was participating at all, so I came here) I pretty much only read and don't get on forums. I've actually never gotten on any forum really but a mandolin forum, but I reckoned now is the time.

And anyway, I'm still in. And how can you say I'm the one with an agenda when we saw a massive drop only a year ago for similar issues. This isn't a push to do something, this is --it's happend before, but what does it mean this time? My question is whether or not the company is far enough away from this now (after weathering the first storm and then climbing quite nicely) or if we are in for it again. Which I think is fair. I was going to put a bullet-point history here, but now I see it will be misinterpreted.

That said, Granto2, this is one of the links that I received--I'm not going to send a bunch for the same reason as above:

hxxp://reyestr.court.gov.ua//Review/61760363

I also have seen comments about an arrest, but from what my guys sent me I don't think they are true. If somebody has more info, I would love to see it. If you think the bank issues just don't matter (or it does), I'd like ot see that too. But maybe from someone who has posted a lot who can enable a viable discussion so that we do not get accused of the GREAT AGENDA.

[mr.oz] 21/11/2016 20:52

Profile created today, two posts only. Here
No agenda at all

[granto2] 21/11/2016 18:04

post the links you want translated here.

[ulftherock] 21/11/2016 17:47

Giles, Bellbottom,

Great points. A while back Bellbottom reminded us of what happened last year when the bottom dropped out (at least for a while) over rep issues. Then it climbed and I can't say I have not done well. I also see where Giles is coming from (thanks for the calm down, atually). On the other hand, I took a hit on another stock (of which I shall not speak)--I'm not blaming myself, but Brexit, Trump anyone else, heh heh. Now though... maybe it's time to get out over this new mess. Over time/long-term, it'shard not to agree with Giles, but we've seen this before. Maybe get out and get back in later...

I think I've hung on as ferro's been good to me, but I now have a huge media summary in front of me (not particulalry in good English so I have quite a few questions), but we've seen bad news create a perfect storm in other markets before. Funny, I was so immune to such stress not so long ago, but now "surprises" only seem to bring bad news. I'm going to go through annd crystalize what I have in front of me and put this in to bullet points--if anyone is sitting in Ukraine or speaks fluent Russian and follows this to put this into perspective, I would appreciate it.

[gilesgraves] 21/11/2016 16:17

Yes - I admit though that despite the long term plan I will of course be trying to catch a few peaks and troughs along the way. Its almost impossible to do that day by day I find. But generally trends to do with big news and iron ore price trends can give a general impression of price direction. In my opinion...who knows though hey! Life is full of surprises.

[bellbottom] 21/11/2016 16:13

Hi Giles,

I think you are right with a long term plan and I agree that we are generally near the bottom in the whole mining sector. One man such as Mr Zhevago makes a big impact on share price in the short to mid term. I expect a few troughs to go with the recent mainly peaks for the reasons already noted here and elsewhere.

I'v been here since about 2009, buying and selling along the way. Not always successfully. I will keep doing so,

Best of luck

[gilesgraves] 21/11/2016 14:08

The way I see it, its dog eat dog in eastern Europe and Russia. Any successful business has to play hard ball. Accusations fly about all the time. I am enthused by the bond issue. It tells me that they have big plans for the future. At the end of the day they are supplying a Premium and specialist product that is in demand and that demand is increasing. I have a 4 to 8 year plan with my Ferrexpo investment with the overall idea that in several areas of the world infrastructure will be developed over this period. I feel like we are right at the bottom with mining shares in general and I am holding them as a long term plan. There will be lots of dips along the way Im sure. Im not really fussed about over dramatic news about any one person. Ferrexpo is a lot more than the reputation of one man.

[bellbottom] 21/11/2016 13:50

Hi Ulftherock,

I think you hit the nail on the head there. There is still some unfinished business to be cleared up in relation to certain 'goings on.' Until that is finally put to bed, then its going to be hanging over the other more positive aspects of this share.
Yes it has the potential to drop right back if things get very dirty. I'd hoped the bank thing was the low point but who knows. There is the potential for deals to be done behind the scenes but my feeling is that won't happen and a pound or so of flesh will be removed with the resultant bloody mess.
Not a very scientific assessment but I have been here for a long time with all the ups and downs along the way.

[ulftherock] 21/11/2016 13:20

Hey all, new here, but previously a lurker.

I've been riding the wave for quite some time, but now I'm starting to get worried--maybe somebody calm me down (or maybe I'm on to something?) Chiefly, I'm worried about this point:

"Answering the question of how to minimize the potential reputational risks associated with the charges of the National Bank of Ukraine addressed to the majority shareholder and CEO Ferrexpo Konstantin Zhevago in recognition of insolvent he owns the bank, "Finance and Credit" and the loss of it by about $ 175 million of deposits, McMahon said, Ferrexpo that prioritizes improved operational performance and a reduction in the debt burden."

The rep risks are what worry me. I like what I see and hear otherwise, but we've seen Finances and Credit Bank scandals before--back in 2009 (money laundering, if I remember right), then Zhevago was in trouble with the state in 2011 and now we have this ongoing issue since August basically with the same bank.

I have some guys who I pay a little to do analysis for me--I don't mean stock analysis but news analysis (I like to get the view from the ground)--and they are saying that the bank is looking at large-scale theft and that Zhevago is a suspect (or that he has to be--not sure of that yet, as their english is not that great). I'm trying to find out more, but they are telling me this is going to get very messy.

So my question to you guys is whether or not McMahon is on track or just minimizing the rep risk connected to Z and the bank. On one hand things look good, on the other--I don't know.

Any opinions?

[mustau] 20/11/2016 13:49

Hopefully should fuel some more interest.

[bellbottom] 20/11/2016 12:07

Hi Bamboo,

Thank you for the tip.

Bellbottom

[bamboo2] 20/11/2016 11:57

bell, at the beginning of the link, you need to replace the lower case h with an upper case H. This will make the link live.

[bellbottom] 20/11/2016 10:37

Strange - replace xx with tt in web address.

[bellbottom] 20/11/2016 10:35

Links didn't show up correctly on last post. Try again

[bellbottom] 20/11/2016 10:33

Some news from Friday, interesting, re.bonds issue. Not sure if anyone else has picked this up yet.



Some other news I'd missed re. Poltava GOK, from 4th November. Not sure if there are any implications here. Maybe someone more in the know than I am could explain.



All adds to the rich pot of information out there.

[granto2] 17/11/2016 15:40

Ferrexpo company in 2016 plans to produce at least 11,2-11,3 million tons of iron ore pellets, which is slightly less than in 2015. The reduction is due to renovation work. The share of high quality products with 65% iron content (65% Fe) will increase from 87% to 94%, said the manager of Investor Relations and Communications, Ingrid McMahon (Ingrid McMahon).
"We hope that will be more (than 11,2-11,3 million tons). But it is important for us that 94% - it's high-quality products 65% of Fe, and what is expected of us by our customers ", - she told Interfax-Ukraine .
McMahon explained some lag on the results of last year were carried out in the third quarter of the repair work. "We will try to catch up in the fourth quarter," - she said.
Ferrexpo representative noted that the current product demand exceeds the capacity of the company. According to the presented her presentation, expected growth in demand for pellets with 408 million tons in 2015 to 493 million tons in 2020, or 3,9-4% annually.
McMahon explained that in 2018 the market situation may become more volatile due to return to his Brazilian Samarco, which produced 30 million tons of pellets per year to stop production after the incident at the tailings in November 2015.
However, she expressed confidence in Ferrexpo holding good positions in the market due to high quality products and low cost. McMahon said that due to this the company has managed in recent years to increase the proportion of the portfolio of customers first-class buyers from Europe and Japan, and to begin deliveries to South Korea. China's share in supplies was reduced from 20-25% to 13%. According to her, in the first nine months of 2016 the share of customers from Central and Eastern Europe accounted for 48% of Western Europe - 17%, North-East Asia - 16%, and Turkey, which preserved the demand for pellets 62% of Fe, - 6% .
Ferrexpo representative recalled that the company still confirms plans for 2017-2020 years increase in pellet production, first to 12 million tons. and then - up to 16 million tons, in the medium and long term, to bring them up to 16 million tons and 20 million tons. At the same time, it clarified that for increase output of over 16 million tonnes will require the construction of another pelletizing plant.
According to her, the development of a new draft Belanovsky Mining and Processing Plant (GOK) is important for the company, but its full development will be possible if the financial possibilities.
Talking about investments, McMahon said that the company intends to invest in the development of at least $ 50 million in 2017. According to her, this figure may be higher, but it will depend on the market situation, as is currently the priority for Ferrexpo is to reduce debt load.
She also said that the company is interested in dredging the port "South", announced by the Administration of seaports in the framework of the project of construction of new berths by TIS and Cargill. According to her, it would allow the terminal "TIS-Ruda", which owns 48.6% of Ferrexpo, serve capesize type vessels at berth completely without reloading on the roads.
Ferrexpo representative added that in the long term, in the case of the liberalization of markets, the company would consider buying their own locomotives to its fleet of 2252 cars and return to the use of river transport for the transport of goods along the Dnieper, not just on the Danube.
Answering the question of how to minimize the potential reputational risks associated with the charges of the National Bank of Ukraine addressed to the majority shareholder and CEO Ferrexpo Konstantin Zhevago in recognition of insolvent he owns the bank, "Finance and Credit" and the loss of it by about $ 175 million of deposits, McMahon said, Ferrexpo that prioritizes improved operational performance and a reduction in the debt burden.
Ferrexpo - iron mining company with assets in Ukraine, the largest producer and exporter of pellets in the CIS, whose shares are traded on the London Stock Exchange.
At the end of 2015 the company increased its pellet production by 5.8% - to 11.7 million tons, and the volume of export sales -. 1.5%, to 11.3 million tons.
Ferrexpo for 9 months of 2016 reduced production of pellets by 4% compared to the same period last year - to 8.33 million tons. Ferrexpo owns 97.34% shares of Poltava GOK, GOK Eristov 100% and 99.9% Belanovsky GOK.

[granto2] 17/11/2016 15:28

JJHBEV.
Like you I have had to adjust several times, upwards.
Investment, this is interesting. at a private investors meeting a few months back a company executive mentioned the possibility for adding production in 2017 but it was a wait and see scenario depending on cash and spot prices at that time. Cash preservation would be the prudent thing until the bonds are restructured but don't be surprised if they invest next summer regardless.
As for later year, once again you figures are a carbon copy image of my own, The very worst case scenario I could see is $45t and $20 premiums. That would be EBITDA of $180m per annum, with only $500m left on the debt side, and $100m plus cash reserves, all making this a cosy candidate to lend more bonds to if needed.

[jjhbev] 17/11/2016 14:00

Mr.Oz

My target based on my estimate of 2016 results outlined above is 150p. But we will not know those results until March 2017 by which time things could have changed very materially.

If iron ore were to hold at say $55+ with a decent outlook (incl the pellet situation)then I can see that target increasing towards the Deutsche Bank upgraded upgrade number of 200+p. (Iron ore has fixed again today at in excess of $72). If the iron price drops below $50 with a negative outlook the share price will take a severe kicking.

If the iron ore price does hold up and production is expanded to say 13m tons the share price can be much higher than £2 by say the mid year results in August 2017. But all of that will take time to unfold. It is hard enough to wait for year end, then the January production update, then results early March!