Operator: Good morning, everyone, and welcome to our presentation for the Ferrexpo interim results covering the half year to June 2021. My name is Lucio Genovese, and I'm the Chair of Ferrexpo. I am pleased to be joined today by Jim North, Nikoley Kladiev and Brett Salt, who will be able to provide a detailed overview of our business performance so far this year. Moving to our presentation today on Slide 2, we are proud to report that we have continued the trend of strong safety performance, thereby delivering the excellent results presented here today in a safe and sustainable manner. Over the years, we have invested considerably in our assets and in our people and this has enabled us to take full advantage of the recent high demand for high-grade iron ore.

We are, however, not resting on our laurels, and we are continuing to invest in order to grow our business, not only to grow our production volumes, but also our product quality, whilst adopting modern technology for further benefits in safety. These investments and strong cash flows allows us to announce an interim dividend today, reflecting the strong performance of the Group in 2021. Finally, I’d like to welcome Ann-Christin Andersen, who joined our Board in March and he is our fourth independent Non-Executive Director. I would also like to congratulate Nikoley Kladiev, who was recently appointed as the Group's Chief Financial. Stepping into this role after 15 years with the company in Ukraine.

And with that, I hand over to Jim, who will introduce the team and take us through the Group's continued strong performance. Thank you.

Jim North: Thank you, Lucio and good morning, everyone and thanks for joining us on this morning’s call. I’d now like to take you through a few key highlights and our performance before handing over to Nikoley to take you through today’s financial results and then to Brett, who will discuss the recent strength in the iron ore market. So as you can see on this slide, there are several key things.

Our financial performance is important, but more importantly that we conduct ourselves safely. We are proud to report that our key safety methods, our lost time injury frequency rate continues to remain below that of our historic average and well below our industry peers. I’ll let Nikoley go into details on our financial performance, but this half year we are pleased to report an EBITDA result up 147% on last year. Our carbon footprint continues to see material reductions registering a 6% reduction so far this year and putting us 21% below our baseline of 2019. Through our strong financial performance and strong balance sheet, we have continued to be able to deliver solid shareholder returns and announcing a 39.6 U.S.

cent dividend per share today. We are also looking for further growth and production volumes and product quality and I shall go into this later in our session today. With that, I’ll hand over to Nikoley, who will take you through our financial results in more detail.

Nikoley Kladiev: Good morning, and thank you very much, Jim. It is a pleasure to be here this morning to present our financial results to you all.

My name is Nikoley Kladiev and given that this is my first time presenting as Group CFO, I can provide a quick overview of my background for those that do not already know me. Whilst I was recently appointed as Group CFO, I have been with Ferrexpo for over 16 years joining almost two years before our IPO. And after the successful IPO, I have been the CFO of our main operating entity, Ferrexpo Poltava Mining, as well as being a member of our executive committee. I look forward to meeting some of you during our road show over the next few days, as well as others during the conferences that we usually attend throughout the year. Hopefully, this should be a reasonable set of results to begin with.

Moving on to Slide 5, we can see our summary financial performance. Our results in the first half of 2021 reflects our position as a producer of high-grade iron ore pellets, which still make us globally showing strong demand for high-grade material. And through our investments over the years, we are well positioned to take advantage of the current trends in the markets. Brett will cover the markets in detail in the sections of the presentation today. But as you can see from the table, we have seen that iron ore prices and pellet premium have driven a 74% increase in revenues in the first half.

Looking at C1 cost, this increased to $47 per ton, with this figure in line with the historical cost level, but following a year where COVID drove commodity input costs down. Moving down the page to our underlying EBITDA. We saw EBITDA margins increase to 64%, which reflects our increasing product quality and strong market conditions. In terms of CapEx, given the strength of the markets, we have made a decision to advance our growth plans, investing $142 million during the period, an increase of 48% for this period. Within this figure, we have funded US$93 million on expansion projects including $20 million spent on our ongoing pelletiser upgrade work which will add further pelletiser capacity.

$21 million invested in our press filtration upgrades, which will further improve pellet quality and US$3 million invested in the solar power pilot project, as well as, $2 million for the mining fleet automation. Through our strong cash generation, we repaid our main debt facility on 30th of June and the cash balance shown here is following this repayment taking place with the Group maintaining its net cash position, which was originally established at the end of 2020 after a period of significantly deleveraging our balance sheet. Looking now at our EBITDA waterfall chart on Slide 6. It is always useful to understand the key drivers behind this measure. Here, we can see that the Group's investment in becoming a producer of high-grade iron ore has delivered approximately US$750 million of additional profit with smaller negative impacts from a reduction in sales volumes, which relates to a destocking process that was completed in the first half of 2020, as well as small increases to freight, C1 costs and other costs.

During the first half, we saw also our local currencies, the Ukrainian hryvnia, appreciate from UAH 28 to UAH 27 to the dollar. With the Ukrainian economy returning to growth, in 2021 and this small change can be seen in the small non-cash operating ForEx shown here on the table. Our low cash cost of production has always been one of our strongest attributes and here on Slide 7, you can see the key drivers behind our costs. C1 costs were reduced in 2020 as COVID-related measures impacted commodity input costs such as diesel, gas, electricity, which as you can see from the pie chart here, collectively represent approximately 40% of our cost base. In 2021, as expected, we have seen a rise of our cost of production as the world economy recovers and industrial output increases.

We can see this impact in the waterfall chart in the middle of the page, which with rising commodity input costs, representing approximately 90% of the cost increase seen in the first half. We also saw cost rise in relation to maintenance costs, which reflects primarily execution of delayed work on our mining fleet, as well as our crushing and beneficiation equipment, which the minor depreciation of our local currency, as mentioned earlier, in this presentation resulted in a small cost benefit. In terms of the remainder of 2021, we expect that costs to continue to track commodity prices with C1 costs also expected to include further striping and pelletiser maintenance as we position ourselves to our next phase of the growth. Moving on to our cash flow now on Slide 8. We can see the distribution of profits throughout our business in the first half.

We saw a working capital increase related to trade receivables and inflated purchase prices. The movements in interest and tax should be self-explanatory and we saw a US$29 million inflow of other costs as an accounting entry that resulted from the appreciation of our local currency. In terms of capital allocation, we have always aimed to maintain a balance of payment, with the Group able to make early repayment of its main debt facility in June. This repayment was made on the basis of the facility coming towards the end of its term. And repayment represented the most efficient use of funds given the Group's cash position.

During the period, we also distributed US$0.53 per share, in form of shareholder returns and we are also pleased to announce today an interim dividend of 39.6 U.S. cents per share reflecting the robust financial performance of the Group in the first half of 2021 and continuous balance sheet strength. The Group remains in a strong financial position with previous investments using growth today and further investment to deliver further growth in the years ahead, whilst maintaining strong balance sheet metrics. Looking now at Slide 9, disciplined capital allocation has always been a key priority for our business. Balancing levels of investments and the growth of our business with shareholder returns.

Here in the chart, we can see we have consistently invested in our assets taking full advantage at times of stronger market conditions to grow our business and it is through this growth that the business has delivered strong cash flow through being a high-grade iron ore producer and has strengthened our balance sheet. This has put us in a position to issue shareholder returns, such as the one announced today, 39.6 cents per share. And with that, this brings us to the end of the financial overview of our performance in this first half. Thank you for listening. And I’d now like to hand over to Brett, who will take us through the market movement we have seen so far this year.

Brett Salt: Thanks, Nikoley, and good morning, everyone. My name is Brett Salt, and I am the Chief Marketing Officer for Ferrexpo. It’s a privilege to speak to you today about the iron ore markets. Firstly, about our position as a high-grade producer of iron ore and then the market outlook in relation to the near-term, as well as the longer-term decarbonization of steel. Moving on to the next slide, where we take a look back at 2021.

In terms of the iron ore price, we are seeing continued strength and volatility, similar to the second half of 2020. COVID-19 has continued to impact on the steel sector. The stimulus packages introduced by governments have positively impacted our customers’ operations and downstream demand. These changes in demand has allowed us to pivot our portfolio back to European markets in 2021 giving us a self-balance in line with historical levels when compared to last year. During 2021, our location in the Ukraine continued to demonstrate its strategic importance and our proximity drive customers played a key role in the value we delivered.

We also are continuing to price our products off the 65% index, reflecting the high-grade nature of our pellets and through this, we are been able to generate strong margins. And now, focusing on the pellet premium, the elevated levels set in the first half of 2021 reflect both strong demand for iron ore, but also increasing environmental controls with pellets enabling steelmakers to lower their emissions, the factor that will grow in prominence as time goes on. The second factor is something I’ll come back to later in this section. The global economic recovery has allowed us to rebalance our portfolio and see strong profitability through being a pellet producer and the premiums that this provides. Now having taken a look backwards, here on the next slide, I'd like to take a quick look forward at the remainder of the year.

On the demand side, there are two key factors. Firstly, there is a potential for future demand disruptions driven by COVID-related recovery patterns. And secondly, we are looking to see how global demand consolidates in each China markets. As shown in the chart here on the left, we can see that demand has returned in European and Asian markets. This is a strong positive for our business as these are key markets for pellet demand.

Further evidence for demand can be seen in the chart on the right, strong prices for hot rolled coil. This is a good indicator of pricing for high quality steel, with these prices rising sharply in the first half of the year and all regions seeing significant increases. For us, steel prices in Europe and Asia are much relevant, seeing 100% to 200% increases year-on-year. This strong demand picture not only helps explain the price rises for iron ore that we saw in the first half, but also provides a good view of the overall strength in the steel value chain with steelmakers enjoying healthy margins. One variable to note in all this is COVID and how the future variants might impact the market.

We remain vigilant with respect to this and feel that we can comfort and the flexibility and agility that we showed during 2020 where we’re able to quickly change our sales portfolio to match market demand. Looking belong – beyond the near-term, there is an exciting opportunity unfolding for producers of high-grade iron ore pellets as shown here on the next slide. Stakeholder awareness of carbon is changing our operating environment which in turn and is increasing the value of high-grade iron ore. The European Union has set ambitious carbon reduction targets and meeting these targets will drive steelmakers towards high-grades and more direct charge material driving pellet demand is resolved and away from funds that typically reduce further. This pelletizing leads much less Co2 and – and steelmakers are enabled to use 100% scrap for flex steel products, which is typically used in the auto industry.

As a result, many of the pathways to lower CO2 emissions are based around the use of iron ore pellets. In addition, steelmaking technologies exist today with low carbon footprints such as the AF and direct reduction in rich processes, which with high-grade pellets to produce steel with 40% to 60% less CO2. And through this, we can reduce our own CO2 emissions as a result of simply producing more DR pellets. We’d state these factors to drive increased pellet consumption and therefore pellet demand. The direction in the steel industry is clear.

Our customers are already moving towards a greener future. Steelmakers are moving towards higher-grade raw materials, as well as iron ore pellets incentivized by governments and stakeholders to reduce the environmental footprints. So, when considering this, Ferrexpo is positioning itself for the green steel revolution and we are moving to support our customers initiated journey. We have been undertaking a quality upgrade of our products over many years and we are now able to reduce commercial volumes of direct reduction pellets. These are higher-grade, lower impurity pellets that are used in low carbon forms of steelmaking and we are delighted to announce our first long-term contract for this product helping to illustrate the quality of DR pellet offering.

Green Steel therefore represents a significant opportunity for Ferrexpo and we are looking forward to helping facilitate the transition to low carbon steelmaking with demand for DR pellets, expected to increase significantly in the years ahead. So, moving on to the next slide, concluding the market section of this presentation. We’ve seen strong increases in prices in the first half of the year, but we expect to surprise our response in the second half of the year to tighter prices. Furthermore, we are also expecting to see a reduction in demand from the start levels seen in the first half. Overall, iron ore prices are expected to soften, but will remain at elevated levels relative to historic norms.

Long-term results of the iron ore market will know that its message is well understood and should not come as a surprise. There are however a few key points to note. Firstly, new supplies likely come from low-grade deposits in Australia and India. This simply saves the strength in the case for high-grade premiums to stay high for longer. Secondly, environmental controls are not going away, even throughout 2020, and the financial shock of COVID-19, the governments have retained their focus on reducing emissions.

And as a result, we expect that the long-term case for pellets will only grow stronger. And with that, I hand it over to Jim to provide a broader overview on our business. Thank you.
Jim North : Thanks, Brett. In this section I will take you through the overall performance of the Group and before we wrap up, we’ll have an opportunity for people to ask questions.

And in doing so, I’d like to highlight the key focus areas for us in the near term. These are safety, production growth, technology and our responsible business activities. So, on Slide 16, our operations update. How did the operations performed in the first half of this year? As always, safety at our operations remains the first topic of conversation and as we look to embed our safety first culture throughout our business, in the first half of this year, we had an excellent result in sites which were very fair. Three of our four operating entities achieved an injury free first half year and the Group’s overall injury rate continued significantly below our historic average and well below our industry peers.

In terms of production, we achieved 5.6 million tonnes in the first half of this year, which is inline year-on-year, a good result given the amount of upgrade work that we carried out this year on our pelletisers. We’ve now completed three out of four lines in terms of upgrades and we’d expect an additional 0.5 million tonnes to 1 million tonnes of pelletization capacity to be installed at the end of this year. Perhaps however, something that’s more exciting is the next phase of our growth which is already underway. We are looking to grow our business beyond our current level of 12 million tonnes per annum, adding a further three million tonnes of output this year. We’ve already signed contract with key suppliers, via minerals and metals for our long lead time lines, crushers and grinding mills and these are critical for the next phase of our growth.

One of our four pelletisers lines will be upgraded for 3 million to 6 million tonnes a year and this will mark the next major phase of investment for the Group over the next three to four years. And we’ll look forward to provide the market further information on this in the second half of this year. So, moving on to Slide 17, direct reduction pellets. It’s important to note that growth for us is not limited to production volumes. We are also seeing growth in product quality without high-grade direct reduction pellets representing the future of our business and the pathway to low carbon steel production.

As mentioned by Brett in his section, direct reduction pellets at 67% FE are high-grade pellets that are utilized in low-carbon methods of steel making and we expect demand for this type of pellets to significantly increase in the years ahead. A common question we get however is, how we produce these pellets? And what level of investment would be required. The answer for us is very simple. We are already producing these pellets. We are doing so using ores from our existing mines and processing them in our existing processing facilities.

And we are able to produce direct reduction pellets today and we recently secured our first long-term contract. Currently, DR pellets are predominantly sold in the Middle East and North America, representing two new markets for us. Beyond the die however, we expect demand for DR pellets to increase significantly around the world as environmental controls push steelmakers to switch to low carbon forms of steelmaking with steelmakers in Europe in particular at the forefront of this giant which happens today our closest market. Finally, it’s worth noting the fact that by producing greater volumes with DR pellets which are used in low-carbon forms of steel making, this would drive down our Scope 3 emissions footprint. This Scope 3 currently represents approximately 90% of our overall carbon footprint and this provides us a significant opportunity for our overall business going forward.

So, moving on to technology and innovation. Looking now at our modernization strategy, this is an area we’d like to consider as fast forwards of successful innovation and mining is an industry that’s well suited for this. At Ferrexpo, we are keen to embracing the technology to further improve the safety standards, upscale our workforce and deliver greater productivity. As a result, we are adopting new technology and driving innovation throughout our business placing Ferrexpo at the forefront of the mining industry. We are doing this through investment in our people, in our assets and in the Ukraine.

Examples of this work include our ongoing fleet autonomy projects. We now have five of department staffs operating in production and this fits alongside our semi-autonomous dual rigs and drive surveys. This is an example of the modern technology that we have already deployed. Also in mining, we are looking to adopt technology to further reduce our carbon footprint with advanced discussion done the way for the full electrification of our mining fleets. This will enable our trucks to use clean energy rather than burning diesel.

In a similar way, is now our own solar power project which was built in the first half of this year and commissioned in July. This project has a capacity of five megawatts and it’s a pilot project to test the effectiveness of solar power in our location over the next couple of years. The projects I’ve mentioned here represent our near-term initiatives that are currently happening on site and there are other areas of discussion in terms of technology and innovation that exists including batter technology in our mining fleets and our locomotives. And I look forward to discussing these projects at a right time in the near future. So, moving on to responsible business, wrapping off today's presentation, we are delighted to announce the publication of our latest ESG report, which is available on our website.

Our responsible business report covers everything from workforce safety and well-being, to the environment, good corporate governance and our community support projects and I encourage you all to take a look at the good work we’ve been undertaking. To recap on some of the key achievements recently, in responsible business, in terms of our carbon footprint, in 2020, we delivered a 16% reduction in a single year and today, we’ve announced a further 6% reduction in the first half of 2021, primarily achieved through our clean energy purchasing program. We are also protecting our environment through the responsible water use program, whilst embracing new diversity and inclusion initiatives such as our community program to develop our future female leaders. So, in conclusion, the key messages here are simple. Firstly, we're achieving everything presented here today in a safe and sustainable manner.

Safety remains our number one priority and we are looking to continue to invest our culture of safety throughout our organization. Secondly, we are delivering growth throughout our business. This means growth in production volumes, growth in product quality, and growth in new markets. All of this growth has been made possible through our extensive investment in our people, investment in our operations and investments in the Ukraine. All of this investment is with a clear goal in mind of positioning Ferrexpo as a high growth, high quality company, for employees, communities, customers and investors to believe in, future proofing our business for the next 50 years of production ahead.

And with that, we come to an end of today’s presentation. I’d like to thank everybody for joining us today. I’d also like to thank everybody in the Ferrexpo team for delivering this excellent set of results. It's down to their hard work and teamwork that's helped build the company to where it is today. We now have some time for questions and answers.

So with that, I’d like to hand back to the operator to open up the lines for anybody who has a question. So, thanks again for joining us.

Operator: [Operator Instructions] And we will now take our first question. It comes from Jason Fairclough of Bank of America. Please go ahead.

Jason Fairclough : Good morning, guys. Thanks for the presentation and great set of results. Look, just a couple quick ones from me. Firstly, on capital return. Can you just remind us, is there actually an explicit policy on capital return or would it be more fair to describe it as ad hoc? And then, secondly, maybe a little bit uncomfortable, but where are we in terms of the investigations into the related party transactions with entities controlled by your controlling shareholder? Are these behind us now?

Lucio Genovese: Good morning, Jason.

Thanks very much for the questions. I will kick off with the capital return. You have to look at the company and its capacity to spend capital. First of all, at this stage, we are – we have not developed specifically an explicit policy. And we are really embarking on capital investments, which are very accretive to the company on a piecemeal basis.

Or within the capacity of the company to deploy both from a financial perspective and from a resource perspective. And so, we need to deal with it on a piecemeal basis. These are highly accretive and highly return-based capital investments and basically are done as we move along within the restraints that we have both from a financial and from a resource base in terms of resources and technical resources and capacity to deploy these resources. So that is really how we are dealing with capital returns. As far as the investigations relating to related party transactions, those are effectively behind us as we noted in the annual results.

The investigations have been closed and appropriate arrangements have been made, which are satisfactory to the committee of the independent directors as well as the Board. Jason Fairclough : Okay. Thanks very much for that.

Operator: We’ll now take our next question. It comes from Krishan Agarwal from Citi.

Please go ahead.

Krishan Agarwal: Hi guys. Thanks a lot for taking my questions and congratulations for the great set of results. I have few questions if I may, one by one. Just to push on Jason's questions on capital allocation.

I appreciate that you are in the process of developing an explicit policy. But I were to push a little bit, I mean, what would be your preference in terms of their new policy? Is it going to be continued to base on some sort of a pay out on net incomes? Or you are looking to link the policy to free cash flows?

Lucio Genovese: So, let me hand that over to Jim please. Jim North : Yes. Sure. Thanks, Lucio.

So, Lucio gave a brief explanation about our capital management. We’ve always taken a very balanced approach to the distribution of the cash within our business. So, in the past, servicing debt or reinvesting in the business and returning cash to shareholders, we’ve heard investors. We had questions on this when we did the full year results presentation and we are investigating the opportunity to formalize a policy around potential cash management and dividend. So, we are not ready to discuss it at point in time.

But we are actually investigating what would be – what could formulate or be formulated around a dividend policy. And we’ll come back to the market at some stage in the near future later this year or next year around deliberations in that respect.

Lucio Genovese: Next question.

Krishan Agarwal: My second question is around the DR pellet. I mean, obviously, this is developing through or going to develop in few markets or few products for you guys.

So, can you discuss the longer term or medium to longer term plan in terms of how much of the volumes you are targeting, say, by 2025 or later? And then, have you had any kind of indication, earlier indication of how the pricing premium for DR pellets are going to look like versus the existing 65% pellet premium?

Lucio Genovese: Jim?
Jim North : Yes. So, look, as we talked about in our last results, so we didn’t focus particularly on the volumes of DR production today. But we indicated previously that as we grow our business, a larger proportion of the growth production that we would producing as part of our growth and expansion plan that would be allocated to DR pellets. What I’d like to do though in terms of DR pricing, I’ll hand over to Brett and Brett can talk to you specifically around what we’d expect and he mentioned in his presentation around the new markets that we are investigating. So, Brett, please?

Brett Salt: Yes.

Sure. Thanks, Jim. With respect to pricing, we follow the international benchmarks for DR pellets and we’ve been achieving those benchmarks which at this point in time basis. They are premium to a normal ferrous pellet around $10 in normal terms. And we are developing those customers through targeted technical development program looking to do trial treatments and then bringing them on as a long-term contract, which is what we talked about today.

And we continue to do that across the region we are focusing it mainly on the Middle East where the growth markets are. There are initial contractors in the U.S. And we are also looking at broader markets in Southeast Asia. But in terms of pricing, we expect to achieve international benchmarks and that benchmark is traditionally priced at a premium to lots in this market.
Jim North : Yes.

Thanks, Brett. I’ll just go a little further to add that and we touched on this in the presentation that as emissions constraints and the push to decarbonization, the move towards more DR technology or carbon free or carbon reduced steelmaking process is going on and they are going to increase. So we are seeing the demand for DR products in the future expanding, which aligns exactly with where we are taking our growth program.

Krishan Agarwal: I understand. My third question is a quick one in terms of your longer term guidance – sorry, the 2021 guidance.

So, how should we model in, in terms of your full year CapEx? And then, quick thoughts on cost as how should we expect the cost to evolve in the second half in terms of percentage increase or is there any dollar per tonne number you are targeting for this even cost for full year 2021?

Lucio Genovese: Jim and Nikoley, please?
Jim North : Yes. Sure. So, in terms of CapEx guidance for this year, we’ve indicated previously that you could expect it to be around the $300 million mark for CapEx in net growth and sustaining. That’s historically when we’ve been investing in the business what we’ve invested in terms of our expansion, our previous expansion and that’s our intention. And Lucio indicated that when he answered around cash management.

That’s linked to our capability to execute and we think that’s the right level. And in terms of C1 costs, I’ll let, Nikoley give you an explanation and some detail around that. Thank you.
Nikoley Kladiev : Yes, Jim. Thank you, Lucio.

There will be costs - cost controls are always our key component of the cash management and we as a producer experiencing the commodity price as inflation as was reported in the presentation. We are implementing all necessary actions in our production in our mines in order to keep our C1 cost under control. They are financial measures. They are commercial measures. They are also production business improvement that are directed primarily on the control of the consumptions of our major input materials.

In respect of the remainder of the year we are following the market and expecting commodity price inflation. We are in a cycle where the commodity prices are high. We are ready to – and – to this trend of the input cost and we have included this in our financial model and costs will be always the priority for our controls and this is what have been done in the last 15 years when I was CFO of Ferrexpo Poltava mine and we will continue control our costs and manage – the cash management in a most effective way to find the balanced approach to fund our capital growth, capital projects and shareholders return.

Lucio Genovese: Thank you, Nikoley. And do you a last question?

Krishan Agarwal: No.

This is all from my side. Thank you.

Lucio Genovese: Okay. Thank you.

Operator: I will take that opportunity to move to these question submitted online.

The first question we have is from a private investor and the question is for Lucio. Why do you think Ferrexpo is trading at a discount to its competitors? And what are your plans to fill this gap?

Lucio Genovese: Thank you, Jim, would you like to take that please?
Jim North : Yes. Sure. So, yes, we are aware that Ferrexpo trades at a discount. Look, I think that historically that’s been due to Ukraine and the country risk around Ukraine.

I think we have very big review on the risk associated with Ukraine was very comfortable with investing in that environment and I think as we’ve demonstrated in the past. And our expectations around growth ramp for Ukraine in the future. It’s an emerging market. We are a single asset business and a single commodity and I think investors generally take those considerations into account when they are evaluating the company. In terms of demonstration or demonstrable values that we've done, I think we’ve improved the understanding of our business a lot over the last 18 months in terms of trying to increase investor awareness of one, the peculiarities of our business and how we differentiate us compared to other iron ore producers.

And I think that they are quite stark. We are a pellet producer and we differentiate us considerably and you think about decarbonization in the future, we have a significant advantage over other iron ore producers. And I think that initially as that understanding starts to unfold, you’ll see the valuation on the repricing of Ferrexpo focus timely.

Lucio Genovese: Thank you. Operator any question do you have?

Operator: The next question is from Tony Robson, Global Mining Research.

What is the Board’s decision on gearing going forward? Ferrexpo has had issues with that in the past. In future, will you attempt to run with a net cash position?

Lucio Genovese: I think I’ll take that. I think, clearly, we have to look at ourselves first and foremost, as Jim said, we are a one product company. And we have effectively one operation and we are in the Ukraine. So, we have volatility and cyclicality due to prices, due to the country we operate in.

And so, we have to deal with our gearing in a relatively cautious manner. We, obviously want to optimize the balance sheet and financially and at this stage considering the very high prices and high pellet premiums we’ve been able to deleverage very quickly and get to a net cash position. Going forward, I would say, that we will explore options for gearing. We have considerable capital expenditures ahead of us as we move on in these piecemeal kind of growth expansions. And so, we will utilize whatever appropriate financial options that are available and efficient and economic for the company, example financing truck feeds or something to that effect.

But effectively, we believe that we do need to have capacity in terms of both short-term and potentially longer term finance to us and we will be working towards that with the finance team.

Operator: We have a second question from Tony Robson to Jim North. You spoke of autonomous haul trucks kind of sending in autonomous drill rigs. Given the low cost of labor in the Ukraine, does this make economic sense? Can you get a return on this outlook?
Jim North : Yes. Okay.

Look, it’s an interesting question and a lot of people automatically come to the conclusion that companies like ourselves and others in the industry that are embarking on autonomous haulage and autonomous and robotics generally, it’s not a decision related to labor costs. For sure, labor cost in the Ukraine is far cheaper than some other jurisdictions where engineers are expensive such as Australia or Canada. But it’s not driven by the economics around reduction in light of where the benefits of autonomous or the deployment of autonomous solutions comes from is driven around the utilization of capital deployed. So, as you look at the possibilities for the additional operating hours for a single machine, that’s where the benefit is. Machines only do exactly as instructed.

So you remove the human factor. So, what we’ve seen both in our line operation and as part of the evaluation of these projects was that, that maintenance costs reduce, equipment damage reduce, and utilization of the capital increases substantially. And that’s where the economics come in. So, over time, you need less machines to carry out the same activity.

Lucio Genovese: Rob, any other questions?

Operator: Yes.

We have a question from Thomas Streater from Streater Research. What is the latest situation with Mr. Zhevago. Ukraine’s State Bureau of Investigations said last month that he was on an international wanted list. Is Mr.

Zhevago able to perform his Director’s duties?

Lucio Genovese: Thank you, Rob. I think I’ll take that. The latest situation is, based on representations from Mr. Zhevago and also from representations from his lawyers that he is not on the list. Mr.

Zhevago has indicated both to the Board, to myself that he is looking to cooperate with the Ukrainian authorities and is – has effectively temporarily stepped down as the CEO of the company in order to get time to resolve matter. We, as a Board, are monitoring matters very closely and carefully. And at this stage, we are of the opinion that we will not make any changes, unless circumstances do change and appropriate actions need to take place. Mr. Zhevago has fulfilled his duties as a director of the company and Mr.

Zhevago clearly has a considerable expertise and interest in the company, which are effectively aligned with all shareholders. So, we continue to monitor developments and we will – the Board will deal with these matters as and when necessary.

Operator: Thank you, Lucio. The next question is from Ben Davis of Liberal. It’s two-part question.

How best do you think about wave one expansion in terms of its timing? Could this be done quicker with faster capital spend given the company’s significant free cash flow generation? And then the second part of the question is, also on the Wave 1 expansion. Will it be a step change on completion? Or will it be more staggered?

Lucio Genovese: Jim, would you like to take that please?
Jim North : Yes. Sure. Lucio. Look, Wave 1 expansion cannot be done faster.

It’s not really a question of available cash. Certainly, as we’ve indicated in the release, there is a substantial capital cost associated with that expansion. But it’s around the long lead time items and construction activities that need to happen both with the concentrator and the pelletiser. So, in terms of concentrator expansion, you would seem, we will be progressively installing equipment because it’s not one single unit that we are actually doing to upgrade that concentrator. In terms of the pelletization capacity, definitely, it will be a step change.

It requires an outage, whereby we will do a considerable amount of work leading up to that outage. But it will require an outage of around about three to four months, which we currently got factored in where we will shut down and restart at the higher rate with obviously a ramp up obviously one day and then through the work internal and begin progressive commissioning over a short period of time will be required. But in essence, in terms of production you would see a step change year-on-year.

Lucio Genovese: Thank you.

Operator: Thank you.

The next question is from Dennis Sakva of Dragon Capital. Can you please provide an update on the Galeschynske license and its recent cancellation? What happens to this license now?

Lucio Genovese: Jim, would you like to take that please?
Jim North : Sure, Lucio. So, we were advised as I am sure all investors have seen that the government had applied some sanctions and request of that Ferrexpo handover license. We don’t believe that that’s an arrangement which is covered under the rules which with they say those sanctions should be applied and we are challenging that. We currently are in discussions with government in relation to that matter and those conversations are ongoing.

And we’ve got multiple avenues which we are exploring, but in essence, that leads is around 414 million tonnes of resource requiring an underground development and while it’s in our long-term plans it wasn’t in the immediate plans for us to develop in the short-term and it’s underlined to the Belanovo deposits that we talk about in our programs.

Operator: The next question is a follow-up question from Jason Fairclough of Bank of America. He asks what is the strategy of the company to make sure that current government campaigns against your largest shareholder do not impact minority shareholders access to the value of the company’s assets.

Lucio Genovese: Thank you, Jason, for that question. A very good question.

I think, first of all, I would say that, we are maintaining good relationships with government as a company. Our business is operating normally. Yes, there are issues, but there are always issues in Ukraine from time to time, and managements are dealing with this issue whatever issues very diligently and able to resolve any minor issues. So, the – what needs to be clear is the matters relating to our major shareholder or related to our major shareholder directly and do not affect principals directly. We do have from time-to-time some grey areas in the Ukraine where they do not separate it, but we have had discussions with government to explain to them that they do need to separate it and that Ferrexpo is a separate entity and needs to be dealt with independently of any matters relating to the controlling shareholder.

I think, government has understood that and we have been successful in dealing with certain matters particularly the freeze on the shifts. And so, the government has accepted that. And we will continue with the strategy, which is a strategy of dialogue, explanation, and it’s basically through effective communication with the government to explain that Ferrexpo is a publicly listed company in London and that there is a controlling shareholder, but there are also minority shareholders and there and there are minority investments, which need to be protected and presented.

Operator: Thank you, Lucio. The next question is from [Indiscernible] Can you please explain the process requirements CapEx or otherwise for – to move to direct reduction pellet production in terms of timeframe and process?

Lucio Genovese: Jim, please.

Jim North : Yes. Sure. Thanks. As we indicated in the presentation, we are actually producing direct reduction pellets now and have been doing so for almost three years albeit in small quantities. The process itself does not change and the capital required is basically zero, because we have the ability to produce it with our existing processes.

The differentiator between a direct reduction pellet and a normal pellet is only behind content and some of the physical characteristics. Those that are in content we are able to improve by slowing down the existing concentrator and pelletiser. So, recovering our higher grade iron concentrate and then converting that into a pellet. So we include some process efficiency to produce that. As part to combat that, firstly, I would say that we believe the premium that’s attached to the DR pellet that we sell compensates us for those additional losses in terms of production.

However, we are, as part of our growth program given that the majority of the amount of growth comes we would like to place into the DR market. We will be incorporating some minor changes to the process to allow us to continue to operate either at a time or an increased rate as well meeting those DR pellet specifications.

Lucio Genovese: Thank you, Jim,

Operator: Next question is from [Indiscernible] of JM Associates. Doing the Swiss Withholding tax, does the Group has any plans to move its headquarters to a country with a more favorable tax regime?

Lucio Genovese: Thank you, Rob. I would say, at the outset, we do not have any plans to move to a more favorable tax regime.

However, let’s stand back, this structure was set up at a time of the IPO with this domicile and a London listing similar to the extractors of the world of which today is also – is [Indiscernible] However, our business is changing and our business is changing in volume, it’s changing in quality and it’s changing in the universe of customers. And so, what we are – we have mandated management to is to look at our Group, look at our structure and we are in the process of doing that and this will obviously include matters like audit tax for shareholders and we will be looking at and distribute towards the end of the year and we may come back to you. At this stage, I don’t have anything else further to say.

Operator: Very good. Thank you, Lucio.

The next question is from a private investor. Have you considered a share buyback as a form of return to shareholders?

Lucio Genovese: Thank you, Rob. I will take that. We have considered it several times and in fact, in the past, we have actually done a share buyback. However, the impact was really on the short-term nature.

I think we will review that again. But as I said, we are a one operation company and a one product as a whole in the iron ore space. And so the impact of that share buyback was height limited. We believe at this stage that paying out dividends and we hope that you, as a shareholder, are happy with our dividend that we have paid out so far this year is a more effective mechanism to reward shareholders. We will nevertheless review it and continue to review it.

But our experience is being not very good.

Operator: Thank you, Lucio. The next question is from a private investor. What other efficiency programs are there in the pipeline to enhance your efforts in managing cost?

Lucio Genovese: Jim?
Jim North : Yes. Sure.

Look, in terms of our business improvement program, it’s well embedded into our culture of cost consciousness in our environment within the operating assets is very high. We have a general pipeline of purchase and you can consider that our business improvement activities are really no different than our capital programs in terms of growth. We have an ideas bank which is generated for management. But we take ideas right across our workforce, right down to monitoring and we look to have not only in terms of our safety projects and improvement in safety which I think we’ve been very successful at pushing down our recordable injury frequency rates, but also in – not only in the areas these costs, but in terms of process efficiency and how the guys just generally execute work. So, although we don’t have the detail to talk about today, because it would be an extensive conversation, we do have a very detailed business improvement program which we induct people in and do it as a mature workforce that we have and I think with our business considerable over time, that culture is well imbedded in our process.

Lucio Genovese: Thanks, Jim.

Operator: Thank you. Final question is from Alexander McFadzean from Streater Research. Could you please provide a little more color on the metrics Ferrexpo uses as a proxy of its response to move governance practices apart from the number of independent non-executive directors?

Lucio Genovese: Thank you, Rob. And I will take that question.

Effectively, we engage with the various agencies IFRS and the well-known agencies in London. We are also look at advice. We ask for advice. We clearly are in this process of trying to understand exactly all these metrics and we basically are adopting as many metrics that we can actually deliver upon. So, the company is going through the necessary changes that it has had in the past and we seek advice from these agencies and we will continue to do so.

Operator: Thank you, Lucio. That concludes all of the questions that have been submitted.