BAAR, Switzerland -- Ferrexpo Plc, an iron ore producer with Ukrainian operations, plans to fund development of its $1.3 billion Yeristovo expansion project with its own money after canceling a bond sale last month because of financing costs.
“The aim is to use our own balance sheet, which will be achieved through doing the project in a series of phases,” Chief Financial Officer Chris Mawe said in a phone interview.
Ferrexpo, which fell as much as 7.6 percent today in London trading, canceled a $500 million bond to refinance debt last month. The expansion’s first phase will cost $300 million and boost output of iron ore pellets to 12 million metric tons by the middle of 2013 from about 9 million tons.
Ferrexpo had net debt of $257 million June 30, in line with the prior six months.
The rest of the investment will be used for a concentrator and pelletizing plant over three to six years, doubling production to just less than 20 million tons, Mawe said.
“The speed at which we can increase output really depends on the amount of cash that’s generated from the business,” he said.
The company, based in Baar, Switzerland, today reported first-half net income rose almost fivefold to $138.1 million as prices increased. Rates for Ferrexpo’s iron ore pellets more than doubled in the second quarter from the 2009-10 benchmark.