Ferrexpo warns on liquidity after fatal Black Sea vessel strike

(Sharecast News) - Commodity trading and mining company Ferrexpo warned on Tuesday that recent logistics disruption and a fatal vessel incident in the Black Sea have had a material impact on its liquidity, with the group now expecting to have sufficient accessible cash only until the end of August.

Ferrexp said a ship carrying its DRgrade pellets was struck and damaged by Russian drones while sailing in Ukrainian waters, leaving the vessel afloat but with the condition of both cargo and structure unknown. The crew was rescued, though one crew member was killed.

Around 55,000 tonnes of FDP were on board, with a further 90,000 tonnes in stockpiles, and total production and delivery costs for the affected inventory estimated at $20m.

Ferrexpo said ongoing drone and missile attacks around Ukrainian ports, along with shipowners cancelling fixtures, meant it does not expect to load further vessels via this export route for the foreseeable future. Notifications have been made under its insurance policies, and salvage efforts were being explored, though it noted conditions remain highly challenging.

The disruption has forced Ferrexpo to revise its sales plans for the second half, with the Black Sea route now unavailable. As a result, the group said its liquidity position has deteriorated significantly, with its cash forecast subject to ironore prices, operating costs, insurance outcomes and other risks previously flagged, including VAT refund suspensions and legal proceedings involving Ferrexpo Poltava Mining.

Ferrexpo also said it was evaluating operational and financial options to mitigate the impact and that it was continuing to work with advisers to urgently progress an equity raise of at least $100m to support working capital.

Reporting by Iain Gilbert at Sharecast.com

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