(Recasts with higher dividend, adds quotes, shares)
LONDON, March 22 Iron ore pellet producer
Ferrexpo plans to double its dividend in 2017 and raise
spending on its mines on expectation for improved prices for its
products, the company's financial officer said on Wednesday.
The Swiss-based firm resumed its dividend after a halt in
2015, paying out 6.6 cents for 2016 following a 20 percent rise
in last year's earnings, driven by a surge in commodity prices
and lower costs. It is now targeting a payout of 13.2 cents per
share in 2017 to levels last seen in 2014.
"We plan to return, if we can dependent on the market which
is looking reasonable at this point in time, to 13.2 cents per
share for this whole year," Chief Financial Officer Chris Mawe
Iron ore prices and pellet premiums jumped in the second
half of 2016 after falling to multi-year lows in the first half.
Pellet premiums, which are typically fixed at the beginning of
the year, have seen a good start to the year and therefore have
less risk for the rest of 2017, Mawe said.
"What a difference a year makes, with the surprise return to
dividends highlighting such," Investec analysts said in a note.
"Ferrexpo is a highly leveraged iron ore play and has
benefited accordingly from the higher-than-expected iron ore
price and associated premiums for high-quality product."
Shares in the world's third largest exporter of iron ore
pellets, which rose five-fold last year, slipped 0.5 percent
against a 2 percent drop in the mining sector.
After slowing down capital spending in 2016 due to low iron
ore prices, Ferrexpo expects to increase investment this year by
around $25 million on a project that will add 1.5 million tonnes
Ferrexpo said on Wednesday 2016 earnings before interest,
tax, depreciation and amortisation (EBITDA) reached $375 million
from $313 million in 2015 thanks to higher revenue and a 13
percent drop in costs.
Production of iron ore pellets in 2016 reached 10.5 million
tonnes from 10.4 million a year prior while sales inched up 3
(Reporting by Zandi Shabalala; editing by David Clarke and