Source - LSE Regulatory
RNS Number : 2414S
Ferrexpo PLC
02 November 2023
 

 

 

2 November 2023

Ferrexpo plc

("Ferrexpo", the "Group" or the "Company")

 

Investigations on use of waste product update and smaller related party transaction

Ferrexpo plc (LSE: FXPO), a premium iron ore pellet supplier to the global steel industry, announces an update with regard to the previously announced investigation by Ukrainian authorities into the use of waste products from the Company's Ferrexpo Poltava Mining ("FPM") operation.

Background

As previously disclosed, in January 2023 the State Bureau of Investigations ("SBI") in Ukraine performed several searches in respect of investigations on alleged illegal extraction of minerals. The National Police of Ukraine also carried out investigations on the same matter and made searches and collected samples of the minerals in January 2023 at FPM.  FPM's position has been and remains that the minerals in question are not a separate mineral resource but are waste products ("rubble") left over from the crushing of iron ore during the technical process for the production of iron ore pellets.

The sales of the rubble were subject to inspections by the State Service for Geology and Subsoil of Ukraine for many years. The Group has not conducted any sales of the rubble since September 2021. The position of FPM is that based on the mining license held, FPM complies with the relevant legislation.

In June 2023, the SBI issued notices of suspicion to three representatives of FPM's top management and the head of one division for allegedly selling the rubble without the appropriate permit. This included Viktor Lotous, the FPM General Director and Chair of the FPM Management Board.  The FPM employees were detained by the SBI and subsequently released after FPM paid bails totalling UAH122 million (US$3.4 million) in aggregate that were approved by the court.

Update

In a further development the National Police of Ukraine issued a notice of suspicion for the illegal extraction of mineral resources to the Chair of the FPM Management Board.  On 26 September 2023, at an initial court hearing concerning the claims, the Chair of the FPM Management Board was detained with bail set at UAH999 million (approximately US$27 million).  As noted in the Group's Production Report for 3Q 2023 an appeal was lodged against this decision, and at a hearing on 30 October 2023 the bail was reduced to UAH400 million (approximately US$11 million). 

Following a detailed assessment of the position by the board of directors of the Company and taking into account the financial position of the Group, the Group has elected to pay the reduced bail so that the Chair of the FPM Management Board can be released to his family, and return to his role at FPM.  The Group continues to believe that the claims regarding the sale of waste products by FPM are without merit.

The payment of the bail amount is a smaller related party transaction for the purposes of Listing Rule 11.1.10R.  This announcement is therefore made in accordance with Listing Rule 11.1.10R(2)(c).  As per the requirements of Listing Rule 11.1.10R the Company has obtained written confirmation from an
FCA-approved sponsor firm that the terms of the transaction are fair and reasonable as far as the shareholders of the Company are concerned.

The Group notes that there remains a risk that the courts in Ukraine may seek to impose further bail payments in connection with the waste products investigation, or in connection with other existing or new legal challenges against the Group or its senior management personnel.  To the extent any further bail payments are requested, the Group would need to assess those at the time, having regard in particular to the circumstances of the case and the financial position of the Group, and there can be no guarantee that any such bail payments will be paid by the Group.

The operations of Ferrexpo are unaffected. Further updates will be made on the situation as and when appropriate.

This announcement contains inside information. The person responsible for the release of this announcement is Mark Gregory, Group Company Secretary.

 

For further information please contact:

Ferrexpo:



Nick Bias

n.bias@ferrexpo.ch

+44 (0)20 7389 8305

+44 (0)7733 177 831

Tavistock:



Jos Simson

ferrexpo@tavistock.co.uk

+44 (0)20 7920 3150

Gareth Tredway


+44 (0)7785 974 264

 

About Ferrexpo:

Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine and a premium listing on the London Stock Exchange in the FTSE 250 index (ticker FXPO). The Group produces high-grade iron ore pellets, which are a premium product for the global steel industry and enable reduced carbon emissions and increased productivity for steelmakers when the Group's iron ore pellets are converted into steel, compared to more commonly traded forms of iron ore. Ferrexpo's operations have been supplying the global steel industry for over 50 years. Before Russia's invasion of Ukraine in February 2022, the Group was the world's third largest exporter of pellets to the global steel industry. The Group has a customer base comprising of premium steel mills around the world. For further information, please visit www.ferrexpo.com.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
UPDUPGUPGUPWGAP
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Related Charts

Ferrexpo PLC (FXPO)

+1.60p (+2.16%)
delayed 18:03PM