Executive Summary
Ferrexpo PLC's principal business is the mining, processing and sale of iron ore in the form of pellets for use in the production of steel. The Group's operations are vertically integrated. It processes all the iron ore it mines and produces substantially all the iron ore concentrate it processes. The Group currently has one operating open pit iron ore mine, together with a concentrator and pelletising plant, in the city of Komsomolsk, Poltava region, Ukraine. The Gorishne-Plavninskoe and Lavrikovskoe deposits, which the Group is currently mining, have more than 18 years of reserves at current levels of production, based on 491 million tonnes of proved and probable iron ore reserves. The Group has ready access to and licences in respect of additional iron ore reserves and resources in order to expand its current production of iron ore pellets. It is currently undertaking a feasibility study of the Yeristovskoe iron ore deposit adjacent to the current pit to confirm the most appropriate mining and processing methods to exploit the deposit and the expected returns. This deposit has additional probable reserves of 632 million tonnes of iron ore. Management believes there is significant potential to make fuller use of the existing ore body and production assets to increase mined output and raise pellet production levels. In 2006, the Group produced 8.6 million tonnes of iron ore pellets, compared with 7.8 million tonnes and 7.4 million tonnes in 2005 and 2004, respectively. According to AME Consulting Pty Limited (\AME\), the Group accounted for approximately 50 per cent. of total iron ore imports into Central and Eastern Europe in 2006. The Group expects to increase production to 16 million tonnes of pellets and 3.5 million tonnes of additional saleable concentrate (which the Group currently does not sell) by 2014. The Group is majority owned by The Minco Trust, one of the beneficiaries of which is Kostyantyn Zhevago, a Ukrainian national.
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