IMPORTANT NOTICE - Ferrexpo...IMPORTANT NOTICE This document has been prepared solely in connection with the proposed offering (the ‘‘Offering’’) of US$185,664,000 10.375%

IMPORTANT NOTICE

This document has been prepared solely in connection with the proposed offering (the ‘‘Offering’’)of US$185,664,000 10.375% Guaranteed Amortising Notes due 2019 (the ‘‘Notes’’) of FerrexpoFinance plc (the ‘‘Issuer’’).

This Prospectus will, following publication, be available on the website of the Central Bankof Ireland at www.centralbank.ie and from the offices of the Issuer.

THE OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1) QUALIFIEDINSTITUTIONAL BUYERS (‘‘QIBs’’) IN RELIANCE ON THE EXEMPTION FROM REGISTRATIONREQUIREMENTS OF THE U.S. SECURITIES ACT OF 1933 (THE ‘‘SECURITIES ACT’’)PROVIDED BY RULE 144A OR (2) OUTSIDE OF THE UNITED STATES IN COMPLIANCE WITHREGULATION S UNDER THE SECURITIES ACT.

IMPORTANT: You must read the following before continuing. The following applies to theProspectus following this page, and you are therefore advised to read this carefully before reading,accessing or making any other use of the Prospectus. In accessing the Prospectus, you agree tobe bound by the following terms and conditions, including any modifications to them any time youreceive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIESFOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIESHAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THESECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTION AND THESECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINEDIN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTIONFROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OFTHE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THE FOLLOWING PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANYOTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANYFORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR INPART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN AVIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHERJURISDICTIONS.

Confirmation of your representation: In order to be eligible to view this Prospectus or make aninvestment decision with respect to the securities, investors must be either (1) QIBs (within themeaning of Rule 144A under the Securities Act) or (2) addressees outside the United States. ThisProspectus is being sent at your request and by accepting the e-mail and accessing thisProspectus, you shall be deemed to have represented to us that (1) you and any customers yourepresent are either (a) QIBs or (b) you and the electronic mail address that you gave us and towhich this e-mail has been delivered are not located in the United States and (2) that you consentto delivery of such Prospectus by electronic transmission.

You are reminded that this Prospectus has been delivered to you on the basis that you are aperson into whose possession this Prospectus may be lawfully delivered in accordance with thelaws of the jurisdiction in which you are located and you may not, nor are you authorised to,deliver this Prospectus to any other person.

The materials relating to the Offering do not constitute, and may not be used in connection with,an offer or solicitation in any place where offers or solicitations are not permitted by law. If ajurisdiction requires that the Offering be made by a licensed broker or dealer and the underwriteror any affiliate of the underwriter is a licensed broker or dealer in that jurisdiction, the Offering shallbe deemed to be made by the underwriter or such affiliate on behalf of the issuer in suchjurisdiction.

No person may communicate or cause to be communicated any invitation or inducement to engagein investment activity (within the meaning of Section 21 of the Financial Services and Markets Act(the ‘‘FSMA’’) received by it in connection with the issue of the Notes other than in circumstancesin which Section 21(1) of the FSMA does not apply.

This Prospectus has been sent to you in an electronic form. You are reminded that documentstransmitted via this medium may be altered or changed during the process of electronictransmission and consequently none of Deutsche Bank AG, London Branch (the ‘‘DealerManager’’) or any person who controls it, nor any director, officer, employee or agent of any ofthem or affiliate of any such person accepts any liability or responsibility whatsoever in respect ofany difference between the Prospectus distributed to you in electronic format and the hard copyversion available to you on request from the Dealer Manager.

FERREXPO FINANCE PLC(incorporated in England and Wales with limited liability)

US$185,664,000 10.375% Guaranteed Amortising Notes due 2019

guaranteed by

FERREXPO PLC(incorporated in England and Wales with limited liability)

and

FERREXPO AG(incorporated in Switzerland)

and

FERREXPO MIDDLE EAST FZE(incorporated in the Jebel Ali Free Zone)

and issued with the benefit of a surety agreement from

FERREXPO POLTAVA MINING(incorporated in Ukraine)

Issue Price 100%

The US$185,664,000 10.375% Guaranteed Amortising Notes due 2019 (the ‘‘Notes’’) will be issued byFerrexpo Finance plc (the ‘‘Issuer’’) and guaranteed by Ferrexpo plc (‘‘Ferrexpo’’ or the ‘‘Company’’),Ferrexpo Middle East FZE (‘‘Ferrexpo Middle East’’ or ‘‘FME’’) and Ferrexpo AG pursuant to and inaccordance with the guarantee set out in the trust deed (the ‘‘Trust Deed’’) to be dated on or about 6 July2015, between the Issuer, Ferrexpo, Ferrexpo AG, Ferrexpo Middle East, Ferrexpo Poltava Mining (‘‘FPM’’)and BNY Mellon Corporate Trustee Services Limited in its capacity as trustee (the ‘‘Trustee’’) (the ‘‘NoteGuarantee’’). The Notes will also benefit from a suretyship provided by FPM, (together with Ferrexpo,Ferrexpo AG and Ferrexpo Middle East, the ‘‘Guarantors’’) pursuant to and in accordance with a suretyagreement (the ‘‘Surety Agreement’’) to be dated on or about 6 July 2015 between the Issuer, FPM and theTrustee (the ‘‘Note Suretyship’’).

The Note Suretyship shall constitute a suretyship (in Ukrainian: poruka) for the purposes of Ukrainian law andshall not constitute a guarantee obligation (in Ukrainian: garantiya) as that term is interpreted under Ukrainianlaw, see ‘‘Overview of the Offering’’. FPM may be restricted from making payments under the Note Suretyshipas a result of Ukrainian currency control regulations, including the contingency measure introduced by theNational Bank of Ukraine (the ‘‘NBU’’), applicable from 23 September 2014 until 3 September 2015, prohibitingcertain cross-border payments pursuant to a suretyship. See ‘‘Risk Factors – Risks relating to ourindebtedness and the Notes – Ukrainian currency control regulations may impact FPM’s ability to makepayments under the Note Suretyship’’.

The Notes will bear interest from (and including) the Issue Date to (but excluding) 7 April 2019 (the ‘‘MaturityDate’’) at the rate of 10.375% per annum, payable semi-annually in arrear, on 7 April and 7 October in eachyear, except that the first payment of interest, to be made on 7 October 2015, will be in respect of the periodfrom (and including) the Issue Date to (but excluding) 7 October 2015. Payments on the Notes, the NoteGuarantee and the Note Suretyship will be made without withholding or deduction for or on account of taxesof the United Kingdom, Switzerland, the United Arab Emirates (the ‘‘UAE’’) and Ukraine to the extentdescribed under Condition 7 (Taxation) of the Terms and Conditions of the Notes (the ‘‘Conditions’’). Seealso ‘‘Risk Factors – Risks relating to our indebtedness and the Notes – The gross-up obligation under theSurety Agreement may not be enforceable’’.

Unless previously redeemed or purchased and cancelled, the Notes will be redeemed in two instalments ofUS$92,832,000 on 7 April 2018 and US$92,832,000 on the Maturity Date. The Notes are subject toredemption in whole, at their principal amount, together with accrued interest, at the option of the Issuer atany time in the event of certain changes affecting taxation in the United Kingdom, Switzerland, the UAE andUkraine. See Condition 5.2 (Redemption for Taxation Reasons). The Issuer will, at the option of anyNoteholder (as defined in the Conditions), redeem any Notes held by such Noteholder at any time following a

Change of Control (as defined in the Conditions), at 101% of their principal amount, together with accruedinterest. See Condition 5.3 (Redemption at the Option of the Holders Upon a Change of Control).

The Notes will be constituted by the Trust Deed and constitute direct, unsecured, unsubordinated andunconditional obligations of the Issuer. See Condition 2 (Guarantees, Suretyship and Status).

This Prospectus has been approved by the Central Bank of Ireland (the ‘‘Central Bank’’) as competentauthority under Directive 2003/71/EC, as amended, including the amendments made by Directive 2010/73/EU(the ‘‘Prospectus Directive’’). The Central Bank only approves this Prospectus as meeting the requirementsimposed under Irish and EU law pursuant to the Prospectus Directive. Application has been made to the IrishStock Exchange plc (the ‘‘Irish Stock Exchange’’) for the Notes to be admitted to its official list (the ‘‘OfficialList’’) and trading on its regulated market (the ‘‘Main Securities Market’’). The Main Securities Market is aregulated market for the purposes of Directive 2004/39/EC. Such approval relates only to Notes which are tobe admitted to trading on a regulated market for the purposes of Directive 2004/39/EC and/or which are to beoffered to the public in any Member State of the European Economic Area. Reference in this Prospectus toNotes being ‘‘listed’’ (and all related references) shall mean that such Notes have been admitted to trading onthe Main Securities Market.

The Notes are expected to be rated CCC+ by Standard & Poor’s Credit Market Services France SAS, adivision of McGraw-Hill Companies, Inc. (‘‘S&P’’), Caa3 by Moody’s Investors Services Limited (‘‘Moody’s’’)and CCC by Fitch Ratings Ltd. (‘‘Fitch’’ and, together with S&P and Moody’s, the ‘‘Rating Agencies’’). TheRating Agencies have also issued ratings on Ukraine (by Standard & Poor’s Credit Market Services EuropeLimited in the case of S&P), the Group and other debt obligations of the Issuer, as set out in this Prospectus.A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension orwithdrawal at any time by the assigning rating organisation. As of the date of this Prospectus, each of theRating Agencies is established in the European Union and is registered under Regulation (EC) No 1060/2009(the ‘‘CRA Regulation’’).

PROSPECTIVE INVESTORS SHOULD HAVE REGARD TO THE FACTORS DESCRIBED UNDER THESECTION HEADED ‘‘RISK FACTORS’’ IN THIS PROSPECTUS.

The Notes, the Note Guarantee and the Note Suretyship have not been and will not be registered under theU.S. Securities Act of 1933 (the ‘‘Securities Act’’) and, subject to certain exceptions, may not be offered orsold within the United States. The Notes are being offered and sold outside the United States in reliance onRegulation S and within the United States to ‘‘qualified institutional buyers’’ in reliance on Rule 144A underthe Securities Act (‘‘Rule 144A’’). Prospective purchasers are hereby notified that sellers of the Notes may berelying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For adescription of these and certain further restrictions on transfers of the Notes, see ‘‘Selling and TransferRestrictions’’.

The Notes will be issued in registered form in the denomination of US$120,000 each and integral multiples ofUS$1,000 in excess thereof. Delivery of the Notes will be made on or about 6 July 2015 (the ‘‘Issue Date’’).The Regulation S Notes will upon issue be represented by a single global note certificate (the ‘‘Regulation SGlobal Note Certificate’’) in registered form, which will be deposited with a common depositary for, andregistered in the name of a nominee of, Euroclear Bank SA/NV (‘‘Euroclear’’) and Clearstream Banking,societe anonyme (‘‘Clearstream, Luxembourg’’) on or about the Issue Date for the accounts of theirrespective accountholders. The Rule 144A Notes will be evidenced by a global note certificate (the ‘‘Rule144A Global Note Certificate’’ and, together with the Regulation S Global Note Certificate, the ‘‘Global NoteCertificates’’), which will be registered in the name of a nominee of, and deposited with a custodian for, TheDepository Trust Company (‘‘DTC’’). Ownership interests in the Global Note Certificates will be shown on, andtransfers thereof will be effected only through, records maintained by DTC, Euroclear and Clearstream,Luxembourg and their respective participants.

DEALER MANAGER

DEUTSCHE BANK

The date of this Prospectus is 3 July 2015

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This Prospectus comprises a prospectus for the purposes of the Prospectus Directive and for thepurpose of giving information with regard to the Issuer, the Guarantors, Ferrexpo and itssubsidiaries and affiliates taken as a whole (the ‘‘Group’’ or ‘‘Ferrexpo’’ or ‘‘our’’, ‘‘we’’, ‘‘us’’) andthe Notes which according to the particular nature of the Issuer, the Guarantors, the Group, theNotes, the Note Guarantee and the Note Suretyship is necessary to enable investors to make aninformed assessment of the assets and liabilities, financial position, profit and losses and prospectsof the Issuer, the Guarantors and the Group. The Issuer and the Guarantors accept responsibilityfor the information contained in this Prospectus. To the best of the knowledge and belief of each ofthe Issuer and the Guarantors (each of which has taken all reasonable care to ensure that such isthe case), the information contained in this Prospectus is in accordance with the facts and doesnot omit anything likely to affect the import of such information.

The Issuer and the Guarantors, having made all reasonable enquiries, confirm that: this Prospectuscontains all information with respect to the Issuer, the Guarantors, the Group, the Notes, the NoteGuarantee and the Note Suretyship which is material in the context of the issue and offering of theNotes; the statements contained in this Prospectus relating to the Issuer, the Guarantors and theGroup are true and accurate in all material respects and not misleading; the opinions, intentionsand expectations expressed in this Prospectus with regard to the Issuer, the Guarantors and theGroup are honestly held, have been reached after considering all relevant circumstances and arebased on reasonable assumptions; there are no other facts in relation to the Issuer, theGuarantors, the Group, the Notes, the Note Guarantee or the Note Suretyship, the omission ofwhich would, in the context of the issue and offering of the Notes, make any statement in thisProspectus misleading; this Prospectus does not contain any untrue statement of a material fact oromit to state a material fact necessary in order to make the statements herein, in light of thecircumstances under which they were made, not misleading; and all reasonable enquiries havebeen made by the Issuer and the Guarantors to ascertain the facts, information and statementscontained in this Prospectus.

This Prospectus may only be used for the purposes for which it has been published.

This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer, theGuarantors or the Dealer Manager (as defined in ‘‘Overview of the Offering’’ below) to subscribe orpurchase, any of the Notes. The distribution of this Prospectus and the offering of the Notes incertain jurisdictions may be restricted by law. Persons into whose possession this Prospectuscomes are required by the Issuer, the Guarantors and the Dealer Manager to inform themselvesabout and to observe any such restrictions.

No person is authorised to give any information or to make any representation not contained in thisProspectus and any information or representation not so contained must not be relied upon ashaving been authorised by or on behalf of the Issuer, the Guarantors or the Dealer Manager.Neither the delivery of this Prospectus nor any sale made in connection herewith shall, under anycircumstances, create any implication that there has been no change in the affairs of the Issuer orthe Guarantors since the date of this Prospectus or the date upon which this Prospectus has beenmost recently amended or supplemented or that there has been no adverse change in the financialposition of the Issuer or the Guarantors since the date of this Prospectus or the date upon whichthis Prospectus has been most recently amended or supplemented or that the informationcontained in it or any other information supplied in connection with the Notes is correct as of anytime subsequent to the date on which it is supplied or, if different, the date indicated in thedocument containing the same.

To the fullest extent permitted by law, the Dealer Manager accepts no responsibility whatsoever forthe contents of this Prospectus or for any other statement, made or purported to be made by theDealer Manager or on its behalf in connection with the Issuer, the Guarantors, or the issue andoffering of the Notes. The Dealer Manager accordingly disclaims all and any liability whether arisingin tort or contract or otherwise (save as referred to above) which it might otherwise have in respectof this Prospectus or any such statement.

Prospective investors should not construe anything in this Prospectus as legal, business or taxadvice. Each prospective investor should consult its own advisers as needed to make itsinvestment decision and determine whether it is legally able to purchase the Notes underapplicable laws or regulations.

No representation or warranty, express or implied, is made by the Dealer Manager or the Trusteeas to the accuracy or completeness of the information set forth in this Prospectus, and nothing

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contained in this Prospectus is, or shall be relied upon as, a promise or representation, whether asto the past or the future. Neither the Dealer Manager nor the Trustee assumes any responsibilityfor the accuracy or completeness of the information set forth in this Prospectus. Each personcontemplating making an investment in the Notes must make its own investigation and analysis ofthe creditworthiness of the Issuer, the Guarantors and the Group and its own determination of thesuitability of any such investment, with particular reference to its own investment objectives andexperience, and any other factors which may be relevant to it in connection with such investments.

None of the Issuer, the Guarantors, the Dealer Manager or any of their respective representativesis making any representation to any offeree or purchaser of the Notes regarding the legality of aninvestment by such offeree or purchaser under appropriate legal investment or similar laws. Eachinvestor should consult with its own advisers as to the legal, tax, business, financial and relatedaspects of a purchase of the Notes.

The Notes, the Note Guarantee and the Note Suretyship have not been recommended by orapproved by the U.S. Securities and Exchange Commission or any other federal or state securitiescommission or regulatory authority in the United States, nor has any such commission orregulatory authority passed upon the accuracy or adequacy of this Prospectus. Any representationto the contrary is a criminal offence in the United States.

THE STATEMENTS HEREIN ABOUT U.S. FEDERAL TAX ISSUES ARE MADE TO SUPPORTMARKETING OF THE NOTES. NO TAXPAYER CAN RELY ON THEM TO AVOID TAXPENALTIES. EACH PROSPECTIVE PURCHASER SHOULD SEEK ADVICE FROM ANINDEPENDENT TAX ADVISER ABOUT THE TAX CONSEQUENCES UNDER ITS PARTICULARCIRCUMSTANCES OF INVESTING IN NOTES UNDER THE LAWS OF THE UNITED KINGDOM,UKRAINE, THE UNITED STATES AND ITS CONSTITUENT JURISDICTIONS AND ANY OTHERJURISDICTION WHERE THE PURCHASER MAY BE SUBJECT TO TAXATION.

TO NEW HAMPSHIRE RESIDENTS: NEITHER THE FACT THAT A REGISTRATIONSTATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDERCHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEWHAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR APERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BYTHE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDERRSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NORTHE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR ATRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAYUPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVALTO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSETO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANYREPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

This Prospectus has been prepared solely for use in connection with the Offering described in thisProspectus. This Prospectus is personal to each offeree and does not constitute an offer to anyother person or to the public generally to subscribe for or otherwise acquire Notes.

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AVAILABLE INFORMATION

The Issuer and the Guarantors have agreed that, for so long as any Notes are ‘‘restrictedsecurities’’ within the meaning of Rule 144(a)(3) under the Securities Act, they will, during anyperiod in which they are neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Actof 1934, (the ‘‘Exchange Act’’) nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder,provide to any holder or beneficial owner of such restricted securities or to any prospectivepurchaser of such restricted securities designated by such holder or beneficial owner or to thePrincipal Paying Agent (as defined herein) for delivery to such holder, beneficial owner orprospective purchaser, in each case upon the request of such holder, beneficial owner, prospectivepurchaser or Principal Paying Agent, the information required to be provided by Rule 144A(d)(4)under the Securities Act.

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FORWARD-LOOKING STATEMENTS

This Prospectus contains ‘‘forward-looking statements’’ within the meaning of Section 27A of theSecurities Act and Section 21E of the Exchange Act. Examples of forward-looking statementsinclude, but are not limited to:

* Statements of the Issuer’s or the Guarantors’ projections or expectations of demand, capacityutilisation, production, revenues, costs, capital expenditures;

* Statements of plans, objectives, goals, strategies, future events, future revenues orperformance, capital expenditures, financing needs;

* Statements of plans or intentions relating to acquisitions, competitive strengths andweaknesses, plans or goals relating to financial performance and future operations anddevelopment, business strategy; and

* Statements about the trends in the industry and the political and legal environment in whichwe operate and other information that is not historical information. The words ‘‘anticipates’’,‘‘estimates’’, ‘‘expects’’, ‘‘believes’’, ‘‘intends’’, ‘‘plans’’, ‘‘may’’, ‘‘will’’, ‘‘should’’ and any similarexpressions to identify forward-looking statements may be used herein. Prospectivepurchasers of the Notes are cautioned that actual results could differ materially from thoseanticipated in forward-looking statements. The forward-looking statements contained in thisProspectus are largely based on our expectations, which reflect estimates and assumptionsmade by our management. These estimates and assumptions reflect our best judgment basedon currently known market conditions and other factors, some of which are discussed below.Although we believe such estimates and assumptions to be reasonable, they are inherentlyuncertain and involve a number of risks and uncertainties that are beyond our control. Inaddition, assumptions about future events may prove to be inaccurate. We cautionprospective purchasers of the Notes that the forward-looking statements contained in thisProspectus are not guarantees of outcomes of future performance and we cannot assure anyprospective purchasers of the Notes that such statements will be realised or the forward-looking events and circumstances will occur.

By their very nature, forward-looking statements involve inherent risks and uncertainties, bothgeneral and specific, many of which are beyond our control and risks exist that the predictions,forecasts, projections and other forward-looking statements will not be achieved. These risks,uncertainties and other factors include, among other things, those described in the section headed‘‘Risk Factors’’, as well as those included elsewhere in this Prospectus and they include:

* Civil disturbances, political instability and military action in Ukraine;

* The imposition of sanctions by the Government could adversely affect our business;

* Our business is subject to a number of risks and hazards inherent to the mining industry;

* We depend on Ukrainian power and gas distribution networks for the continuous supply ofgas and electricity;

* We depend on a limited number of customers and markets;

* Substantially all our revenues are currently derived from two iron ore mines and one pelletproduction facility in Ukraine;

* Energy costs account for a large portion of our production costs and are greater for pelletsthan for other iron ore forms, and increases in raw material and energy costs may affect ourproduction costs disproportionately;

* Increases in transportation costs and disruptions to transportation could have a materialadverse effect on our business, results of operations, financial condition and prospects;

* We are required to meet certain financial and other restrictive covenants under the terms ofour other indebtedness;

* The volume and grade of our reserves and our rate of production may not conform to currentestimates;

* Our internal compliance policies and procedures may need to be adjusted to conform to thenew Ukrainian anti-corruption legislation;

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* Our business depends on successful exploration and mining licences may be suspended,amended or terminated prior to the end of their terms or may not be renewed and may notbe transferable to third parties;

* We are exposed to certain social and political pressures associated with Ukraine;

* Ukraine’s economy is vulnerable to fluctuations in the global economy and the effects of therecent civil disturbances, political instability and ongoing military action in Ukraine;

* Inability to obtain financing from external sources could affect the Ukrainian economy;

* Our working capital may be increased and foreign exchange losses incurred by a delay ornon-repayment of VAT by the Ukrainian tax authorities;

* Our working capital may be increased by prepayments of corporate profit tax to the Ukrainetax authorities;

* Transfer pricing rules may potentially affect our results of operations;

* Our future financial and operational performance depends on our ability to upgrade existingfacilities and develop currently unexploited mining assets;

* Costs for our expansion activities may be higher than anticipated;

* Our expansion activities may require additional future funding, which we may be unable toobtain on acceptable terms, or at all;

* We operate in a highly volatile commodity market for steel and steel products, and decreasesin iron ore prices may depress our margins;

* Risks relating to the Ukrainian banking sector and our principal bank in Ukraine;

* The Ukrainian currency is subject to volatility;

* Uncertainties relating to the legal system in Ukraine;

* Risks relating to our ownership structure; and

* Risks relating to our indebtedness and the Notes.

Prospective purchasers of the Notes should be aware that a number of important factors couldcause actual results to differ materially from the plans, objectives, expectations, estimates andintentions expressed in such forward-looking statements.

Prospective purchasers of the Notes should not place undue reliance on forward-lookingstatements and should carefully consider the foregoing factors and other uncertainties and events,especially in light of the political, economic, social and legal environment in which we operate.Such forward-looking statements speak only as of the date on which they are made. Accordingly,we do not undertake any obligation to update or revise any of them, whether as a result of newinformation, future events or otherwise. We do not make any representation, warranty or predictionthat the results anticipated by such forward-looking statements will be achieved and such forward-looking statements represent, in each case, only one of many possible scenarios and should notbe viewed as the most likely or standard scenario. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

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ENFORCEABILITY OF JUDGMENTS

The Issuer and Ferrexpo are incorporated under the laws of England and Wales. FPM isincorporated under the laws of Ukraine and certain of the officers and members of FPM’s board ofdirectors and certain other persons referred to herein are residents of Ukraine. Ferrexpo AG isincorporated under the laws of Switzerland and certain of the officers and members of FerrexpoAG’s board of directors and certain other persons referred to herein are residents of Switzerland.Ferrexpo Middle East is incorporated in the Jebel Ali Free Zone and certain of the officers andmembers of Ferrexpo Middle East’s board of directors and certain other persons referred to hereinare residents of the UAE. A substantial portion of our assets and those of FPM are located outsidethe United Kingdom and the United States. As a result, it may not be possible for investors toeffect service of process upon such persons in the United Kingdom or the United States or toenforce against them or FPM, Ferrexpo AG, Ferrexpo Middle East or the Group judgmentsobtained in the courts of the United Kingdom and the United States including judgments predicatedupon the civil liability provisions of the securities laws of the United States or any State or territorywithin the United States.

The courts of Ukraine will not recognise and/or enforce any judgment obtained in a courtestablished in a country other than Ukraine unless such enforcement is envisaged by aninternational treaty to which Ukraine is a party providing for enforcement of such judgments andthen only in accordance with the terms of such treaty. There is no such treaty between Ukraineand the United Kingdom or between Ukraine and the United States providing for recognition and/orenforcement of judgments.

In the absence of an international treaty providing for recognition and/or enforcement of judgments,the courts of Ukraine may only recognise or enforce a foreign court judgment on the basis of theprinciple of reciprocity. Unless proven otherwise, reciprocity is deemed to exist in relations betweenUkraine and the country where the judgment was rendered. Ukrainian law does not provide anyclear rules on the application of the principle of reciprocity and there is no official interpretation orcourt practice in this respect. Accordingly, there can be no assurance that the courts of Ukrainewill recognise or enforce a judgment rendered by the courts of the United Kingdom or the UnitedStates on the basis of the principle of reciprocity. Furthermore, the courts of Ukraine might refuseto recognise or enforce a foreign court judgment on the basis of the principle of reciprocity on thegrounds provided in the applicable Ukrainian legislation.

A Ukrainian court may apply Ukrainian law notwithstanding the choice of foreign law by the partiesif the court determines that (a) the content of foreign law in respect of the relevant matter cannotbe established within a reasonable time, (b) the relevant matter is not of a contractual nature andfalls under the mandatory regulatory requirements of Ukraine or another relevant jurisdiction(including tax, currency exchange, banking or financial services legislation) or (c) the application ofthe relevant foreign law provisions would produce a result incompatible with the public order ofUkraine. Ukrainian legislation and court practice do not determine the precise scope or content ofthe concept of the ‘‘public order’’ of Ukraine.

Ukraine is party to the 1958 New York Convention on the Recognition and Enforcement of ForeignArbitral Awards (the ‘‘New York Convention’’). Consequently, a foreign arbitral award obtained ina state which is party to the New York Convention should be recognised and enforced by aUkrainian court (under the terms of the New York Convention), subject to compliance withapplicable procedural requirements.

Enforcement in Switzerland of judgments rendered outside Switzerland is subject to the limitationsset forth in (i) the Lugano Convention, (ii) such other international treaties under which Switzerlandis bound, and (iii) the Swiss Federal Private International Law (‘‘PILA’’). In particular, and withoutlimitation to the foregoing, a judgment rendered by a foreign court may only be enforced inSwitzerland if:

(i) (in case of (ii) and (iii) and, in certain exceptional cases, (i)) the foreign court had jurisdiction;

(ii) the judgment of such foreign court has become final and non-appealable, or, in the case of(A), has become enforceable at an earlier stage;

(iii) the court procedures leading to the judgment followed the principles of due process of law,including proper service of process; and

(iv) the judgment of the foreign court on its merits does not violate Swiss law principles of publicpolicy.

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Switzerland is party to the New York Convention. Consequently, a foreign arbitral award obtainedin a state which is party to the New York Convention should be recognised and enforced by aSwiss court (under the terms of the New York Convention).

In addition, enforceability of a judgment by a non-Swiss court in Switzerland may be limited if theSwiss company can demonstrate that it was not effectively served with process (a service ofprocess on the Swiss company will have to be made in accordance with the Hague Convention of15 November 1965 on service of judicial or extra judicial documents abroad in civil and commercialmatters).

The Notes are governed by English law and disputes in respect of them may be settled byarbitration under the Arbitration Rules of the London Court of International Arbitration (the ‘‘LCIARules’’) in London, England.

Investors may have difficulties in enforcing any arbitration awards against Ferrexpo Middle East inthe courts of the UAE. How the New York Convention provisions would be interpreted and appliedby the UAE courts in practice and whether the UAE courts will enforce a foreign arbitration awardin accordance with the New York Convention (or any other multilateral or bilateral enforcementconvention), remains largely untested. The uncertainty regarding the interpretation and applicationof the New York Convention provisions by the UAE Courts is further reinforced by the lack of asystem of binding judicial precedent in the UAE. There is therefore no certainty regarding theapproach UAE Courts will take in relation to proceedings in the future. In addition, even if Englishlaw is accepted as the governing law, this will only be applied to the extent that it is compatiblewith applicable federal law of the UAE and public policy. These factors create greater judicialuncertainty than would be expected in certain other jurisdictions. See ‘‘Risk Factors – Risks relatingto Ferrexpo Middle East – Investors may experience difficulties in enforcing foreign arbitral awardsand foreign judgments in the UAE ’’.

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PRESENTATION OF CERTAIN INFORMATION

Financial Information

Financial information in this Prospectus identified as ‘‘audited’’ herein has been derived from:

(i) the Issuer’s audited statement of comprehensive income, statement of financial position,statement of cash flows and statement of changes in equity as of and for the years ended31 December 2012, 31 December 2013 and 31 December 2014 (the ‘‘Issuer’s FinancialStatements’’); and

(ii) the Group’s audited consolidated income statement, statement of comprehensive income,statement of financial position, statement of cash flows and statement of changes in equity asof and for the years ended 31 December 2012, 31 December 2013 and 31 December 2014(the ‘‘Group’s Financial Statements’’ and, together with the Issuer’s Financial Statements,the ‘‘Financial Statements’’).

The Financial Statements have been audited by the Issuer’s and the Group’s independent auditors,Ernst & Young LLP, located at 1 More London Place, London SE1 2AF, England who have issuedunqualified opinions on such Financial Statements.

This Prospectus incorporates by references the Financial Statements and the Group’s unauditedconsolidated income statement, statement of comprehensive income, statement of financialposition, statement of cash flows and statement of changes in equity as of and for the threemonths ended 31 March 2014 and 2015 (the ‘‘Interim Financial Statements’’). See ‘‘DocumentsIncorporated by Reference’’.

Non-IFRS Measures

The financial information included in this Prospectus is not intended to comply with IFRS reportingrequirements. Compliance with such requirements would require the modification or exclusion ofcertain financial measures, including C1 cash costs, EBITDA, and their related ratios, and thepresentation of certain other information not included herein.

Our definition of ‘‘C1 cash cost’’ includes the principal production inputs related to energy (includingelectricity, natural gas and fuel), materials (including grinding media), personnel, and maintenanceservices and consumables (including repairs and spare parts). C1 cash cost excludes costs suchas depreciation, pension costs, inventory movements, costs of purchased ore and concentrate aswell as production costs of gravel and one-off items. We define our ‘‘C1 cash cost of productionper tonne’’ as the cash cost of production of own iron ore divided by the production volume of owniron ore. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results ofOperations – Cost of sales’’.

Although average cash cost per tonne is not a measure of performance recognised under IFRS,the Group’s management believes that it is useful in evaluating our performance because it is ameasure commonly used in the resources industry. Average cash cost per tonne should not beconsidered in isolation or as a substitute for measures of performance in accordance with IFRS.Moreover, because average cash cost per tonne is not calculated identically by all companies, thepresentation here may not be comparable to other similarly titled measures of other companies.

For further details on EBITDA and a reconciliation of EBITDA to the IFRS measure ‘‘profit beforetax and finance’’, see ‘‘Selected Historical Financial Information – EBITDA’’.

C1 cash costs, EBITDA, and their related ratios and certain other items included herein are non-IFRS measures and you should not consider such items as alternatives to the applicable IFRSmeasures. In particular, you should not consider C1 cash costs, EBITDA, and their related ratiosas a measurement of our financial performance or liquidity under IFRS, as an alternative to profit,operating income or any other performance measures derived in accordance with IFRS, or as analternative to cash flow from operating activities as a measure of our liquidity.

C1 cash costs and EBITDA have limitations as analytical tools, and you should not consider themin isolation from, or as substitutes for, analysis of our results of operations, including our cashflows, as reported under IFRS. Some of the limitations of C1 cash costs, EBITDA, and their relatedratios as measures are:

* they do not reflect our cash expenditure or future requirements for capital expenditure orcontractual commitments, nor do they reflect the actual cash contributions received fromcustomers;

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* they do not reflect changes in, or cash requirements for, our working capital needs;

* they do not reflect the interest expense, or the cash requirements necessary to serviceinterest or principal payments, on our debt;

* although depreciation and amortisation are non-cash charges, the assets being depreciatedand amortised will often have to be replaced in the future and such measures do not reflectany cash requirements for such replacements; and

* other companies in our industry may calculate these measures differently than we do, limitingtheir usefulness as a comparative measure.

Because of these limitations, C1 cash costs and EBITDA for the period should not be consideredas measures of discretionary cash available to us to invest in the growth of our business.Accordingly, investors should rely on our consolidated financial statements prepared in accordancewith IFRS and treat our C1 cash costs and EBITDA as supplemental information only.

Net financial indebtedness

Net financial indebtedness as defined by the Group comprises cash and cash equivalents, shortterm deposits less interest-bearing loans and borrowings.

Reserves and Resources Data

The reserves and resources data contained in this Prospectus, unless otherwise stated, is takenfrom analyses prepared by us in accordance with the methods described herein in ‘‘Reserves andResources’’. In particular, the resources we have classified under the FSU Classification standardsmay not be classified as resources under JORC or as reserves or resources under the SEC’sIndustry Guide 7 and have not been the subject of a competent person’s or independent engineer’sreport. Valid estimates may change significantly when new information becomes available.Therefore, the actual deposits and the grade of mineralisation encountered may differ materiallyfrom the estimates disclosed in this Prospectus.

Our identified resources may not continue to qualify as economically mineable deposits that can belegally and commercially exploited over the medium- to long-term. Production of mineral resourcescan be affected by factors such as permitting regulations and requirements, weather, environmentalfactors, unforeseen technical difficulties, unusual or unexpected geological formations and workinterruptions.

The reserves and resources data contained in this Prospectus comprise management estimates asof 1 January 2015. These management estimates are based on our estimates of ore mined duringperiods since the most recent engineers’ reports received by us in 2007, 2008 and 2013,subtracted from amounts shown in such reports. The 2007, 2008 and 2013 engineers’ reports havenot been subsequently updated and are not included in this Prospectus. With respect to thereserves and resources information contained in this Prospectus, for the purposes of this Offering,we have not, and do not intend to, engage independent experts to prepare a reserve report inaccordance with SEC or other industry standards in respect of any of our deposits.

Market, Economic and Industry Data

Market, economic and industry data used throughout this Prospectus has been derived fromvarious industry and other independent sources. The accuracy and completeness of suchinformation is not guaranteed.

Information contained in this Prospectus relating to the industries in which we operate in Ukraineand our competitors (which may include estimates and approximations) was derived from publiclyavailable sources, including official data published by certain government and internationalagencies, industry publications and press releases, including Metalytics, CRU, the State StatisticsService of Ukraine (the ‘‘SSSU’’), and the NBU. The Issuer and each Guarantor confirm that suchinformation has been accurately reproduced from its sources and, as far as the Issuer and eachGuarantor is aware and is able to ascertain, no facts have been omitted that would render thereproduced information inaccurate or misleading. However, the Issuer and each Guarantor jointlyand severally have relied on the accuracy of this information without carrying out an independentverification.

Certain information in this Prospectus in relation to Ukraine has been extracted from documentsand other publications released by, and is presented on the authority of, various official and other

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public and private sources, including participants in the capital markets and financial sector inUkraine and the source of such information has been identified where relevant throughout thisProspectus. There is not necessarily any uniformity of views among such sources as to theinformation provided therein. Accordingly, the Issuer and each Guarantor jointly and severally onlyaccept responsibility for accurately reproducing such extracts as they appear in this Prospectus. Itaccepts no further or other responsibility in respect of such information.

Any websites referred to herein do not form part of this Prospectus.

Currency

In this Prospectus, all references to ‘‘hryvnia’’ and ‘‘UAH’’ are to the lawful currency for the timebeing of Ukraine, all references to ‘‘Swiss francs’’ and ‘‘CHF’’ are to the lawful currency for thetime being of Switzerland, all references to ‘‘dollars’’, ‘‘US dollars’’ and ‘‘US$’’ are to the lawfulcurrency for the time being of the United States of America, all references to ‘‘pounds sterling’’ or‘‘£’’ are to the lawful currency for the time being of the United Kingdom and all references to‘‘Euro’’ or ‘‘g’’ are to the currency introduced at the start of the third stage of European economicand monetary union pursuant to the Treaty establishing the European Community, as amended.

Translations of amounts from hryvnia to dollars are solely for the convenience of the reader andare made at exchange rates based on those established by the NBU and effective as at the datesor for the periods of the respective financial information presented elsewhere in this Prospectus inrespect of both balance sheet and income statement items. No representation is made that thehryvnia or dollar amounts referred to herein could have been converted into dollars or hryvnia, asthe case may be, at any particular exchange rate or at all. See ‘‘Exchange Rates’’.

Unless otherwise specified or the context otherwise requires, all references to ‘‘US’’, ‘‘U.S.’’ and‘‘United States’’ are to the United States of America, all references to ‘‘UK’’ and ‘‘UnitedKingdom’’ are to the United Kingdom of Great Britain and Northern Ireland and all references tothe ‘‘EU’’ are to the European Union and its member states as of the date of this Prospectus.

Rounding

Some figures included in this Prospectus have been subject to rounding adjustments.

Language

The language in this Prospectus is English. Certain legislative references and technical terms havebeen cited in their original language in order that the correct technical meaning may be given tothem under applicable law.

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EXCHANGE RATES

The following table sets forth, for the periods indicated, the high, low, average and period-endofficial rates set by the NBU, in each case for the purchase of hryvnia, all expressed in hryvnia perUS dollar.

High Low Average(1) Period-End

(hryvnia per US dollar)2015(2)................................................ 30.01 15.75 21.27 21.182014 ................................................... 15.85 7.99 11.89 15.772013 ................................................... 7.99 7.99 7.99 7.992012 ................................................... 7.99 7.99 7.99 7.992011 ................................................... 7.99 7.93 7.97 7.972010 ................................................... 8.01 7.89 7.94 7.96

Notes:

(1) Calculated based on the exchange rates for each banking day of the period and the number of banking days in the period.

(2) Up to and including 25 June 2015.

Certain financial data in this Prospectus has been translated from hryvnia into US dollars at period-end rates or at average rates for the relevant period. The table above summarises the official ratereported by the NBU for the periods indicated (after rounding adjustments).

No representation is made that the hryvnia or US dollar amounts referred to herein could havebeen converted into US dollars or hryvnia, as the case may be, at any particular exchange rate orat all. The NBU’s hryvnia/US dollar exchange rate as reported on 25 June 2015 (after roundingadjustments), was UAH21.18 to US$1.00.

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TABLE OF CONTENTS

Overview ............................................................................................................................. 15

Risk Factors ........................................................................................................................ 24

Documents Incorporated by Reference .............................................................................. 78

Exchange Offer ................................................................................................................... 80

Use of Proceeds ................................................................................................................. 81

Capitalisation....................................................................................................................... 82

Selected Historical Financial Information ............................................................................ 83

Management’s Discussion and Analysis of Financial Condition and Results of Operations 86

Reserves and Resources.................................................................................................... 121

Business Description........................................................................................................... 130

Industry ............................................................................................................................... 169

Ukrainian Regulatory Framework........................................................................................ 182

Management ....................................................................................................................... 185

Shareholders and related Party Transactions..................................................................... 192

Description of Other Indebtedness ..................................................................................... 204

Terms and Conditions of the Notes .................................................................................... 210

Book-Entry, Delivery and Form........................................................................................... 249

Summary of Provisions relating to the Notes while in Global Form ................................... 254

Taxation .............................................................................................................................. 255

Certain ERISA and Other Considerations........................................................................... 269

Selling and Transfer Restrictions ........................................................................................ 271

General Information ............................................................................................................ 273

Glossary of Selected Terms ............................................................................................... 275

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OVERVIEW

This section highlights selected information about the Issuer, the Guarantors, the Group and theExchange Offer and Consent Solicitation and does not contain all of the information that may beimportant to prospective purchasers of the Notes. The entire Prospectus, including the moredetailed information regarding our business and the Financial Statements and Interim FinancialStatements incorporated by reference in this Prospectus, should be read carefully. Investing in theNotes involves risks. The information set forth in the section titled ‘‘Risk Factors’’ should becarefully considered. Certain statements in this Prospectus are forward-looking statements that alsoinvolve risks and uncertainties as described under the section titled ‘‘Forward-Looking Statements’’.

Overview of the Issuer, the Guarantors and the Group

Introduction

We are an iron ore pellet producer with assets in Ukraine and transport and sales operationsthroughout the world. We have been mining and processing high-quality iron ore pellets for theglobal steel industry for over 35 years. Since our IPO in June 2007, we have maintained apremium listing on the main market of the London Stock Exchange. According to an April 2015report by CRU, Ferrexpo Poltava Mining (‘‘FPM’’) is the largest producer and exporter of iron orepellets (by volume) in the Former Soviet Union (the ‘‘FSU’’) and fourth largest seaborne iron orepellet supplier in the world (by volume) to the global steel industry. As a result of our large iron oredeposit, significant past investment into our operations and our established logistics infrastructure,we also believe that we are an efficient and competitive producer of premium iron ore pellets on adelivered basis.

Our mining and processing operations are located on the banks of Dnieper River, next to the cityof Komsomolsk in the Poltava region of central Ukraine, more than 400 kilometres from the armedconflict in eastern Ukraine. In 2015, while we experienced no disruptions to date as a result of theongoing conflict in Ukraine, we are exposed to risks associated with the current political andeconomic conditions in Ukraine, which could reduce our output, increase our costs, hamper ourability to deliver our products and disrupt the Ukrainian financial system, on which we rely. Pleasesee ‘‘Risk Factors’’.

For further information relating to our business, strategy and capital expenditure programmes, see‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations –Liquidity and Capital Resources – Capital Expenditure’’ and ‘‘Business’’.

Rationale for Exchange Offer

In February 2015, we extended the maturity of a portion of the 2016 Notes through an exchangeoffer (the ‘‘February 2015 Exchange Offer’’), and we are seeking to extend the maturity of theremainder of the 2016 Notes.

Our revenue for the first quarter of 2015 was US$257.6 million, representing a decrease of 38%compared to revenue of US$413.5 million for the first quarter of 2014, which was due primarily toa 48% reduction in the average benchmark iron ore price from US$120 per tonne in the firstquarter of 2014 to US$62 per tonne in the first quarter of 2015. The benchmark iron ore pricereached a ten-year low of US$47.50 per tonne on 2 April 2015. Our EBITDA for the first threemonths of 2015 was US$111.6 million, representing a decrease of 41% compared to EBITDA ofUS$189.8 million for the same period of 2014, which contributed to our last 12 months (‘‘LTM’’)EBITDA to 31 March 2015 decreasing to US$418 million, compared to EBITDA for the full year2014 of US$496 million.

In March and April 2015, the consensus forecast benchmark iron ore price was lowered by marketanalysts from US$71 per tonne to US$53 per tonne for 2015 and 2016, and continued lowbenchmark iron ore prices, or any further decreases in such prices, could further affect ourfinancial performance and cash generation in subsequent periods. Other risks that may have agreater impact on our margins in a low iron ore price environment include a decrease in pelletpremiums, an increase in international freight rates, and an increase in the rate of Ukrainianinflation. Furthermore, Ukraine suffers from a large debt burden, and its ability to repay its debtsmay be hampered by low economic growth, which could lead to increases in taxes and royalties,as well as a delay in our receipt of VAT refunds.

Continued financial uncertainty surrounding the IMF bailout package and the position of privatecreditors towards Ukraine, combined with political instability and the ongoing conflict in the east of

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Ukraine, have increased overall risk and have resulted in the bank lending market being largelyunavailable for Ukrainian borrowers.

With US$700 million(1) of debt falling due for repayment over the next 24 months, Ferrexpo isseeking to adjust the maturity profile of its debt to reflect the lower forecast iron ore priceenvironment and increase operating headroom. We are looking to extend the maturity of the 2016Notes pursuant to the Exchange Offer and Consent Solicitation.

Indebtedness and Liquidity

The following table(1) sets forth our total indebtedness as of 31 March 2015.

As of31 March

2015

(US$thousand)

CurrentSyndicated bank loans – secured 207,500Other bank loans – secured 21,150Other bank loans – unsecured 1,503Obligations under finance leases 4,230Interest accrued 14,870

Total current interest bearing loans and borrowings 249,253

Non-currentEurobond issued 439,420Syndicated bank loans – secured 420,000Other bank loans – secured 60,220Other bank loans – unsecured 7,477Obligations under finance leases 12,334

Total non-current interest bearing loans and borrowings(2) 939,451

Total interest bearing loans and borrowings 1,188,704

Liquidity

As of 31 March 2015, we had cash and cash equivalents of US$494 million (of whichUS$165 million was held in Ukraine at Bank Finance and Credit. See ‘‘Related PartyTransactions’’), compared to current interest-bearing loans and liabilities of US$234 million(excluding accrued interest). In addition, as of 31 March 2015, we had non-current interest bearingloans and borrowings of approximately US$466 million that are due for repayment between 1 April2016 and 31 March 2017.

Our treasury policy is designed to ensure that our business in Ukraine will have adequate liquidityto continue to operate in times of financial or operational stress. As such, we target to hold cashequivalent to three months of operating costs and sustaining capital expenditure (approximatelyUS$180 million) inside Ukraine available on call.

On 30 April 2015, the Group announced that it had agreed to unconditionally tender for thedisposal of its entire stake in Ferrous Resources Limited (‘‘Ferrous’’) to IEP Ferrous Brazil LLC fortotal cash consideration of US$41.8 million. On 9 June 2015, the Group announced that theconditions for the disposal of its stake in Ferrous had been satisfied and that the proceeds ofUS$41.8 million had been received by the Group.

(1) Net of arrangement fees in accordance with IAS 39.

(2) Includes approximately US$466 million of obligations that fall due between 1 April 2016 and 31 March 2017.

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Summary Historical Financial Information

The summary historical financial information provided below has been derived from our auditedconsolidated financial statements as at and for the years ended 31 December 2012, 2013 and2014 prepared in accordance with IFRS as adopted by the European Union and our unauditedinterim consolidated financial statements as at and for the three months ended 31 March 2014 and2015, prepared in accordance with IAS 34 ‘‘Interim Financial Reporting’’. Our audited consolidatedfinancial statements as at and for the years ended 31 December 2012, 2013 and 2014 have beenaudited by Ernst & Young LLP.

You should read this summary historical financial information section along with ‘‘Management’sDiscussion and Analysis of Financial Condition and Results of Operations’’ and the consolidatedfinancial statements incorporated by reference in this Prospectus.

CONSOLIDATED INCOME STATEMENT DATA

Year ended 31 DecemberThree months ended

31 March

2012 2013 2014 2014 2015

(US$ thousands)REVENUE 1,424,030 1,581,385 1,388,285 413,499 257,597Cost of sales (690,729) (773,221) (647,960) (179,742) (109,946)

GROSS PROFIT 733,301 808,164 740,325 233,757 147,651

Selling and distribution expenses (311,964) (335,718) (311,514) (91,003) (57,145)General and administrativeexpenses (56,329) (54,839) (48,642) (10,951) (9,693)Net other expenses (18,814) (16,795) (47,920) (2,778) (8,693)Operating foreign exchange gain(1) 653 622 76,372 36,313 23,039

PROFIT FROM CONTINUINGOPERATIONS BEFOREADJUSTED ITEMS 346,847 401,434 408,621 165,338 95,159Adjusted non-operating items(2) (2,131) (42,216) (90,271) (2,535) (121)

PROFIT BEFORE TAX ANDFINANCE 344,716 359,218 318,350 162,803 95,038Net finance income/(expense) (85,605) (63,581) (49,222) (13,948) (18,131)Non-operating foreign exchange(loss)/gain 6,622 9,755 (14,846) (3,867) (4,776)

PROFIT BEFORE TAX 265,733 305,392 254,282 144,988 72,131Income tax expense (47,135) (41,608) (70,442) (21,741) (13,703)

PROFIT FOR THE PERIOD 218,598 263,784 183,840 123,247 58,428

(1) Including foreign exchange gains recorded during the periods ended 31 March 2015 as a result of the devaluation of thehryvnia.

(2) Including a write-down of the VAT receivable balance during the financial year ended 31 December 2013 and an impairmentloss on an investment recorded in the period ended 31 December 2014.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA

As at 31 December As at 31 March

2012 2013 2014 2014 2015

(US$ thousands)ASSETSProperty, plant and equipment 1,347,563 1,533,819 926,433 1,177,792 644,181Inventories(1) 146,473 239,166 206,709 182,047 158,035Trade and other receivables 116,553 102,498 87,226 115,006 84,137Cash and cash equivalents 596,560 390,491 626,509 366,364 493,902Other 551,309 666,395 288,018 561,813 263,008

TOTAL ASSETS 2,758,458 2,932,369 2,134,895 2,403,022 1,643,263

LIABILITIESBorrowings 1,019,985 1,029,239 1,304,627 1,045,705 1,188,704Trade and other payables 62,609 50,001 32,351 30,263 24,341Other 128,466 118,087 80,316 96,286 64,871

TOTAL LIABILITIES 1,211,060 1,197,327 1,417,294 1,172,254 1,277,916

Equity 1,547,398 1,735,042 717,601 1,230,768 365,347

TOTAL EQUITY AND LIABILITIES 2,758,458 2,932,369 2,134,895 2,403,022 1,643,263

(1) Including iron ore stockpiles amounting to US$61.6 million and US$54.2 million as at 31 March 2015 and 2014, respectively, aswell as US$82.0 million, US$58.3 million and US$12.4 million as at 31 December 2014, 2013 and 2012, respectively, whichwere classified as non-current as these stockpiles were not expected to be processed within one year.

CONSOLIDATED STATEMENT OF CASH FLOWS DATA


31 March

2012 2013 2014 2014 2015

(US$ thousands)Net cash flows from operating activities 118,578 232,926 288,448 82,239 46,121Net cash flows used in investing activities (419,337) (357,184) (224,084) (77,707) (11,547)Net cash flows from/(used in) financingactivities 7,068 (81,555) 193,022 (26,522) (151,413)

Net cash flows (293,691) (205,813) 257,386 (21,990) (116,839)

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EBITDA

EBITDA is not a uniformly or legally defined financial measure. We define EBITDA as profit fromcontinuing operations before tax and finance plus depreciation and amortisation and non-recurringexceptional items included in other income and other expenses, share based payment expensesand the net of gains and losses from disposal of investments and property, plant and equipment.This differs in certain respects from the definition of Consolidated EBITDA that is used in thecovenants contained in the Conditions. See ‘‘Terms and Conditions of the Notes – Condition 19(Definitions)’’. The following table provides a reconciliation showing how EBITDA is derived fromprofit before tax and finance for the periods shown:


31 March

2012 2013 2014 2014 2015

(US$ thousands)Profit before tax and finance 344,716 359,218 318,350 162,803 95,038Write-down of VAT receivable — 36,421 6,790 2,063 —Write-offs and impairment losses 836 854 83,534 76 3Loss on disposal of property, plant andequipment 4,067 8,492 4,825 2,109 1,054Share-based payments 1,608 1,266 530 152 98Amortisation and depreciation 54,169 99,645 82,269 22,558 15,416

EBITDA 405,396 505,896 496,298 189,761 111,609

Like many of our competitors, we present EBITDA because we believe it to be an importantsupplemental measure of our performance, and believe it is frequently used by securities analysts,investors and other interested parties in the evaluation of companies in our industry. Our EBITDAfigures are not, however, necessarily comparable to other companies’ EBITDA figures, as each iscalculated in its own way and must be read in conjunction with the explanations that accompany it.EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as asubstitute for an analysis of our results as reported under IFRS. Some of these limitations are:

* EBITDA does not reflect our cash expenditures or future requirements for capital expendituresor contractual commitments;

* EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

* EBITDA does not reflect the significant interest expense, or the cash requirements necessary,to service interest or principal payments, on our debts;

* although depreciation and amortisation are non-cash charges, the assets being depreciatedand amortised will often need to be replaced in the future and EBITDA does not reflect anycash requirements that would be required for such replacements; and

* other companies in our industry may calculate EBITDA differently than we do, which limits itsusefulness as a comparative measure.

Because of these limitations, you should not consider EBITDA to be a measure of cash availableto us to invest at our discretion in the growth of our business.

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Overview of the Offering

The capitalised terms used in this overview of the offering section but not defined herein have themeanings ascribed to them in the Conditions.

Notes US$185,664,000 10.375% Guaranteed Amortising Notes due2019.

Issuer Ferrexpo Finance plc

Guarantors and SuretyInformation

Ferrexpo plc, Ferrexpo AG, Ferrexpo Middle East FZE andFerrexpo Poltava Mining.

Dealer Manager Deutsche Bank AG, London Branch

Maturity and Redemption Unless previously redeemed or purchased and cancelled, theNotes will be redeemed in two instalments of US$92,832,000 on7 April 2018 and US$92,832,000 on the Maturity Date.

Trustee BNY Mellon Corporate Trustee Services Limited

Principal Paying Agent andTransfer Agent

The Bank of New York Mellon, London Branch

US Paying Agent and TransferAgent

The Bank of New York Mellon, New York Branch

Registrar The Bank of New York Mellon (Luxembourg) S.A.

Exchange Offer The Issuer, in an Exchange Offer and Consent SolicitationMemorandum (the ‘‘Exchange Offer and Consent SolicitationMemorandum’’) dated 28 May 2015, invited holders of itsUS$500,000,000 7.875% Notes due 2016 (the ‘‘2016 Notes’’)that are outstanding to offer such notes for exchange inconsideration for, inter alia, the issue to such holders of theNotes (the ‘‘Exchange Offer’’). Pursuant to a Dealer ManagerAgreement dated 28 May 2015 (the ‘‘Dealer ManagerAgreement’’) between the Issuer, the Guarantors and theDealer Manager, the dealer manager has agreed to act asdealer manager in relation to the Exchange Offer and solicitationagent in relation to the Consent Solicitation. In the DealerManager Agreement, the Issuer has agreed to reimburse theDealer Manager for certain of its expenses, and has agreed toindemnify it against certain liabilities, incurred in connection withthe Exchange Offer and Consent Solicitation.

Risk Factors An investment in the Notes involves significant risks. See ‘‘RiskFactors’’.

Issue Price 100% of the principal amount of the Notes.

Interest The Notes will bear interest from (and including) the Issue Date to(but excluding) the Maturity Date at the rate of 10.375% perannum, payable semi-annually in arrear, on 7 April and 7 Octoberin each year, except that the first payment of interest, to be madeon 7 October 2015, will be in respect of the period from (andincluding) the Issue Date to (but excluding) 7 October 2015.

Guarantees and Suretyship Ferrexpo, Ferrexpo AG and Ferrexpo Middle East will, pursuantto the guarantee contained in the Trust Deed and subject to thelimitations described in the section entitled ‘‘Risk Factors – Swisslaw may limit Ferrexpo AG’s liability for payments due in respectof the Notes under the Note Guarantee’’ relating to Ferrexpo AG,unconditionally and irrevocably, to the maximum extent permittedby law, guarantee the due payment of all sums expressed to bepayable by the Issuer under the Notes and the Trust Deed or byFPM under the Surety Agreement. The Note Guarantee providedpursuant to the Trust Deed will constitute a guarantee for thepurposes of English law.

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FPM will, pursuant to the suretyship contained in the SuretyAgreement, unconditionally and irrevocably, to the maximumextent permitted by law, ensure the due payment of all sumsexpressed to be payable by the Issuer, Ferrexpo, Ferrexpo AGand Ferrexpo Middle East under the Notes and the Trust Deed.The Note Suretyship will constitute a suretyship (in Ukrainian:poruka) for the purposes of Ukrainian law and shall not constitutea guarantee obligation (in Ukrainian: garantiya) as that term isinterpreted under Ukrainian law.

Payment of amounts due under the Note Suretyship will requirecompliance with certain Ukrainian currency control regulations.FPM may be restricted from making payments under the NoteSuretyship as a result of Ukrainian currency control regulationsincluding the contingency measure introduced by the NBUapplicable from 23 September 2014 until 3 September 2015,prohibiting certain cross-border payments pursuant to asuretyship by Ukrainian residents. See ‘‘Risk Factors – Risksrelating to our indebtedness and the Notes – The validity of theNote Suretyship could be challenged’’ and ‘‘Risk Factors – Risksrelating to our indebtedness and the Notes – Ukrainian currencycontrol regulations may impact FPM’s ability to make paymentsunder the Note Suretyship’’.

Ranking of the Notes, the NoteGuarantee and the NoteSuretyship

The Notes will constitute senior, unsubordinated, unconditionaland unsecured obligations of the Issuer and will rank equal in rightof payment with all existing and future senior, unsubordinated,unconditional and unsecured indebtedness of the Issuer. TheNotes shall at all times rank pari passu and without preferenceamong themselves.

The Note Guarantee and the Note Suretyship will constitutedirect, unsecured, unsubordinated and unconditional obligationsof Ferrexpo, Ferrexpo AG, Ferrexpo Middle East and FPM,respectively, and will at all times rank pari passu and without anypreference among themselves, with all outstanding, unsecuredand unsubordinated obligations of Ferrexpo, Ferrexpo AG,Ferrexpo Middle East and FPM, respectively, present andfuture, save for the obligations that are preferred solely byvirtue of mandatory provisions of applicable law.

Withholding Tax; Gross-up All payments of principal, premium and interest by or on behalf ofthe Issuer or the Guarantors in respect of the Notes or under theNote Guarantee or the Note Suretyship shall be made free andclear of, and without withholding or deduction for, any taxes,duties, assessments or governmental charges of whatever natureimposed, levied, collected, withheld or assessed by or within theUnited Kingdom, Switzerland, the UAE or Ukraine, as the casemay be, or any authority therein or thereof having power to tax,unless such withholding or deduction is required by law. In thatevent, subject to certain exceptions (including those referred to inCondition 7 (Taxation)), the Issuer or the Guarantors, as the casemay be, will pay such additional amounts as will result in receiptof the Noteholders of such amounts as would have been receivedby them had no such withholding or deduction been required asdescribed in Condition 7 (Taxation).

Redemption for TaxationReasons

The Issuer may redeem the Notes in whole, but not in part, at100% of their principal amount, plus accrued and unpaid interest,in the event of specified developments affecting taxation in theUnited Kingdom, Switzerland, the UAE or Ukraine. See Condition5.2 (Redemption for Taxation Reasons).

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Change of Control Following a Change of Control, a Noteholder will have the right torequire the Issuer to repurchase all of the Notes held by suchNoteholder at 101% of their principal amount, plus accrued andunpaid interest. See Condition 5.3 (Redemption at the Option ofthe Holders Upon a Change of Control).

Covenants The Issuer will issue the Notes under the Trust Deed. The TrustDeed will limit, among other things, the ability of Ferrexpo andcertain of its subsidiaries to:

* create or permit to exist certain liens;

* incur or guarantee additional indebtedness;

* enter into certain transactions with affiliates;

* transfer, lease or sell certain assets including subsidiarystock;

* merge or consolidate with other entities;

* change the ranking of claims in respect of the Notes, theNote Guarantee or the Note Suretyship;

* impose restrictions on the ability to pay dividends or makeother payments;

* issue and transfer capital stock;

* enter into sale and leaseback transactions; and

* change the nature of their core or related businesses.

Each of these covenants is subject to significant exceptions andqualifications. See Condition 3 (Covenants).

Form and Denomination The Notes will be issued in registered form in the denomination ofUS$120,000 each and integral multiples of US$1,000 in excessthereof. The Regulation S Notes and the Rule 144A Notes will berepresented by a Regulation S Global Note Certificate and a Rule144A Global Note Certificate, respectively. The Regulation SGlobal Note Certificate and the Rule 144A Global Note Certificatewill be exchangeable for Definitive Certificates in the limitedcircumstances specified in the Regulation S Global NoteCertificate and the Rule 144A Global Note Certificate,respectively.

Initial Delivery of Notes On or before the Issue Date, the Rule 144A Global NoteCertificate will be deposited with a custodian for DTC and theRegulation S Global Note Certificate will be deposited with acommon depositary for Euroclear and Clearstream, Luxembourg.The Rule 144A Notes will be registered in the name of a nomineeof DTC and the Regulation S Notes will be registered in the nameof a common nominee for Euroclear and Clearstream,Luxembourg.

Listing and admission totrading

Application has been made to the Irish Stock Exchange for theNotes to be admitted to the Official List and trading on the MainSecurities Market. The Main Securities Market is a regulatedmarket for the purposes of Directive 2004/39/EC.

ERISA Considerations The Notes should not be acquired by an ‘‘employee benefit plan’’(as defined in Section 3(3) of the U.S. Employee RetirementIncome Security Act of 1974, as amended (‘‘ERISA’’)) that issubject to Title I of ERISA, a ‘‘plan’’ subject to Section 4975 of theU.S. Internal Revenue Code of 1986, as amended, (the Code) orany entity whose assets are treated as assets of any such planunless such purchase and holding of the Notes will not result in anon-exempt prohibited transaction under ERISA or the Code.Each purchaser and/or holder of Notes and each transferee

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thereof will be deemed to have made certain representations asto its status under ERISA and the Code. Potential purchasersshould read the sections entitled ‘‘Certain ERISA and OtherConsiderations’’ and ‘‘Selling and Transfer Restrictions’’.

Governing Law The Trust Deed, the Notes, the Note Guarantee and the NoteSuretyship will be governed by English law.

Security Codes Regulation S ISIN: XS1252372401Regulation S Common Code: 125237240Rule 144A ISIN: US31529TAD54Rule 144A CUSIP: 31529TAD5Rule 144A Common Code: 125335144

Guarantors

Certain of our subsidiaries, together with Ferrexpo, will be Initial Guarantors under the terms of theNotes. See ‘‘Terms and Conditions of the Notes’’ for further information. As at 31 March 2015, theconsolidated net assets of the Initial Guarantors, when aggregated, represented approximately 96%of the consolidated net assets of the Group (compared to approximately 91% as at 31 December2014 and approximately 86% as at 31 December 2013). As at 31 March 2015, the net assets ofthe subsidiaries of Ferrexpo which are not guarantors of the Notes (together, the ‘‘Non-GuarantorSubsidiaries’’), when aggregated, represented approximately 4% of the consolidated net assets ofthe Group (compared to approximately 9% as at 31 December 2014 and approximately 14% as at31 December 2014). For the three months ended 31 March 2015, the total EBITDA of the InitialGuarantors, when aggregated, represented approximately 89% of the total EBITDA of the Group(compared to approximately 93% for the year ended 31 December 2014 and approximately 95%for the year ended 31 December 2013). For the three months ended 31 March 2015, the totalEBITDA of the Non-Guarantor Subsidiaries, when aggregated, represented approximately 11% ofthe total EBITDA of the Group (compared to approximately 7% for the year ended 31 December2014 and approximately 5% for the year ended 31 December 2013).

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RISK FACTORS

An investment in the Notes to be issued in this Offering involves significant risks. In addition to theother information contained in this Prospectus, you should carefully consider the following riskfactors before purchasing the Notes. The following risk factors apply to the Issuer, the Guarantorsand the Group as a whole. The Issuer and the Guarantors believe that the risks described belowrepresent the principal risks in investing in the Notes, however the risks and uncertainties wedescribe below are not the only ones we face. Additional risks and uncertainties of which we arenot aware or that we currently believe are immaterial may also have an adverse effect on ourbusiness, results of operations, financial condition and prospects. If any of the risks describedbelow materialises or if any of the events described below occurs, our business, results ofoperations, financial condition and prospects could be adversely affected or materially adverselyaffected. If that happens, we may not be able to pay interest on and principal of the Notes whendue, or at all, and you could lose all or part of your investment.

This Prospectus also contains forward-looking statements that involve risks and uncertainties. Ouractual results may differ materially from those anticipated in these forward-looking statements as aresult of various factors, including the risks described below and elsewhere in this Prospectus.

Risks relating to our operations

Civil disturbances, political instability and military action in Ukraine may impact and affect ourbusiness, results of operations, financial condition and prospects

The recent significant civil disturbances and political instability in Ukraine and the ongoing militaryaction in some parts of the Donetsk and Luhansk regions of Ukraine have negatively impactedUkraine’s economy and the relations between the Russian Federation (‘‘Russia’’) and Ukraine.

Following the decision of the President of Ukraine and the Government to defer the signing of theAssociation Agreement between Ukraine and the EU (the ‘‘Association Agreement’’) on21 November 2013, mass rallies took place in Kyiv and other cities of Ukraine. Civil disturbancesin Ukraine continued to escalate and, in February 2014, the Ukrainian parliament (the‘‘Parliament’’) adopted a resolution stating that President Yanukovych had vacated his office in amanner not permitted under the Ukrainian Constitution and called for new presidential elections. On18 March 2014, an agreement was signed between Russia and the Autonomous Republic ofCrimea (‘‘Crimea’’) on the acceptance of Crimea into Russia. This agreement provides for theformation of Crimea and the city of Sevastopol as two separate administrative units. NeitherUkraine nor the EU has recognised the agreement or the alteration of the status of Crimea and thecity of Sevastopol.

As a result of these events, geopolitical tensions between Russia and Ukraine have continued toescalate. These and other actions have created pressure on the Ukrainian authorities and led todisturbances in eastern Ukraine. Since April 2014, pro-Russian rebels have gained control ofcertain parts of the Donetsk and Luhansk regions, and the Ukrainian authorities have responded bylaunching anti-terrorist operations in the region. On 5 September 2014, representatives of Ukraine,Russia and the Organisation for Security and Co-operation in Europe signed a ceasefire agreement(the ‘‘Ceasefire Agreement’’), pursuant to which on 16 September 2014 the Parliament adopted alaw providing, among other things, for a special local governance regime for three years in certainparts of the Donetsk and Luhansk regions, as well as a limited amnesty for individuals involved inconflict in these regions (the ‘‘Regional Governance Law’’). Notwithstanding the CeasefireAgreement, fighting has continued in certain parts of eastern Ukraine, and the conflict escalated inJanuary 2015, as fighting intensified over the control of the Donetsk International Airport.

On 12 February 2015, representatives of Ukraine, Russia, France and Germany further negotiatedand signed a new ceasefire agreement providing for, among other things, an immediate and fullbilateral ceasefire as of midnight on 15 February 2015 and withdrawal of all heavy weapons byboth sides. It is reported, however, that the ceasefire has not effectively been complied with, andfighting has continued. On 17 March 2015, the Parliament adopted amendments to the RegionalGovernance Law providing a special local governance regime for certain parts of the Donetsk andLuhansk regions for three years if they hold local elections in accordance with Ukrainian law andunder international observation. On the same day, the Parliament also adopted a resolutionrecognising certain districts, towns and villages of the Donetsk and Luhansk regions as temporarilyoccupied territory.

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The armed conflict in the region in recent months is continuing to destabilise Ukraine and has putfurther pressure on relations between Russia and Ukraine. Escalating geopolitical tensions havehad an adverse effect on the Ukrainian financial markets, and there have been reports ofincreased capital outflows from Ukraine. The ability of Ukrainian companies and financialinstitutions to obtain funding from the international capital markets has also been hampered as aresult of decreased demand for Ukrainian credit exposure. Any continuing or escalating militaryaction in eastern Ukraine could have a further material adverse effect on the Ukrainian economyand consequently could affect (i) our ability to obtain financing or re-financing; (ii) our ability to useour cash held in Ukraine; (iii) the Government’s ability to meet its payment obligations on amountsdue to Ferrexpo, such as VAT refunds; (iv) the Government’s ability to maintain critical transportinfrastructure, such as rail networks; and (v) Ukrainian taxation rates applicable to us, all or any ofwhich could have a material adverse effect on our business, results of operations, financialcondition and prospects.

The imposition of sanctions by the Government could adversely affect our business

On 14 August 2014, the Parliament adopted the Law of Ukraine On Sanctions, which provides forspecial economic and other restrictive sanctions against foreign states, foreign legal entities andindividuals involved in activities threatening the national security, sovereignty and territorial integrityof Ukraine and the rights and freedoms of its citizens. In accordance with this legislation, theGovernment has submitted proposals on personal economic and other restrictive measures againstmore than 200 legal entities and more than 1,000 individuals to the National Security and DefenceCouncil for approval. Should Ukraine introduce sanctions against Russia, Russian businesses and/or individuals due to current political tensions, there is a risk that Russia may adopt sanctionsagainst Ukraine, Ukrainian businesses and/or individuals in response. Such sanctions could have anegative effect on the Ukraine economy, and as a result, a material adverse effect on ourbusiness, results of operations and financial condition.

Our business is subject to a number of risks and hazards inherent to the mining industry

Our operations are subject to significant risks and hazards inherent in the mining industry that evena combination of careful evaluation, experience and knowledge cannot eliminate. Our explorationand extraction activities may be hampered by industrial accidents, equipment failure, unusual orunexpected geological conditions, environmental hazards, labour disputes, changes in theregulatory environment, extreme weather conditions (especially in winter) and other naturalphenomena. Our production activities may be hampered by accidents associated with the operatingof our crushing, concentrating and pelletising plant and equipment which could result in prolongedshort-term downtime or longer-term shutdowns of our production facilities. These hazards couldresult in material damage to mineral properties, human exposure to pollution, personal injury ordeath, environmental and natural resource damage, delays in shipment, monetary losses andpossible legal liability if we are unable to satisfy our contractual obligations under various supplycontracts.

We currently mine our iron ore from two open-cut mines, the Gorishne-Plavninskoye andLavrikovskoye (‘‘GPL’’) deposits pit and the Yeristovskoye deposit pit. The Belanovskoye deposit isbeing prepared for mining work. Hazards associated with open-pit mining include accidentsinvolving the operation of open-pit mining and rock transportation equipment, the preparation andignition of large scale open-pit blasting operations, collapses of the open pit wall and flooding ofthe open pit. Additionally, our operations require the removal of groundwater during mining,particularly pre-stripping works at FYM and the Ferrexpo Belanovo Mining (‘‘FBM’’) mine. Futureefforts to remove groundwater may not be adequate and may not meet future operational demandsor expectations.

In 2012, 2013 and 2014, FPM, our principal operating subsidiary and a provider of a suretyship ofthe Notes, recorded 11, 10 and 10 accidents, respectively, which we define as work-related injuriesthat prevent the affected employee from working for at least one day. For the three months ended31 March 2015, there have been 4 work related accidents at FPM. During the same period noaccidents occurred at our other subsidiaries. In 2014, there were two fatalities at FPM and onefatality at FBM. In 2013, FPM recorded one fatality and there were no fatalities at any of theGroup’s facilities in 2012. See ‘‘Business Description – Operational hazards and insurance’’.

The occurrence of these hazards and/or any prolonged short-term downtime or longer-termshutdown at any of our mining, production or transportation facilities could materially adversely

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affect our ability to produce and ship iron ore pellets, consequently impairing our ability to satisfyour contractual obligations under various supply contracts.

Failure to resolve any unexpected problems as described above at a commercially reasonable costcould have a material adverse effect on our business, results of operations, financial condition andprospects.

We depend on Ukrainian power and gas distribution networks for the continuous supply of gasand electricity

Ferrexpo is a major consumer of electricity in the Poltava region and in central Ukraine. Based on2014 production levels, the power demand for the existing FPM mining facility (without auxiliaryconsumption) averages 220 megawatt hour (‘‘MWh’’) at nominal capacity, at 100% utilisation ofequipment under normal working conditions, with a peak loading of 256 MWh. As such, we arereliant on the existing power distribution network, including the regional electricity distributioncompany OJSC Poltavaoblenergo and State Company ‘‘Energorynok’’, a wholesale distributor ofelectricity in Ukraine.

Due to recent events in the Donetsk and Luhansk regions, several thermal power generationstations and/or surrounding infrastructure in the conflict zone have been subject to damage due tomilitary action and/or are unable to continue operations. See also ‘‘– Risks relating to ouroperations – Civil disturbances, political instability and military action in Ukraine may impact andaffect our business, results of operations, financial condition and prospects’’. As a result, theUkrainian power generation system has increased its reliance on nuclear power generation andthermal power generation capacities located in other regions. According to the SSSU, the share oftotal Ukrainian power generation sourced from nuclear power generation increased to 49.7% as ofDecember 2014 compared to 43.9% as of December 2013. As of March 2015 the share of totalUkrainian power generation sourced from nuclear power generation further increased to 51.2%.The reduction in the availability of thermal power generation has limited the ability of the country’spower generation system to increase power supply during peak hours. As a result, reliance onnuclear power generation has increased and if nuclear capacity is disrupted for any reason, wemay experience a loss of production volumes of iron ore concentrate and pellets which could havea material adverse effect on our business, results of operations, financial condition and prospects.

Ukrainian mines producing thermal coal used by thermal power generation stations are mostlylocated in the Donetsk and Luhansk regions. As a result of the recent events in the conflict zone inthese two regions, the output of thermal coal previously sourced from these regions has reducedsignificantly. According to the SSSU, Ukraine total coal production fell 69.5% in 2014 compared to2013. While alternative sources of coal are available, Ukrainian thermal power generationcompanies may fail to procure the required volumes of thermal coal to continue power generationdue to factors such as a lack of supply or logistics constraints, which would adversely affect powergeneration in the country. Reflecting these risks, the Government declared a state of emergency inthe Ukrainian power sector in July 2014. In August 2014, the Ministry of Energy and Coal Industryof Ukraine introduced schedules limiting electric power consumption, allowing OJSCPoltavaoblenergo to limit electric power distribution to us. During December 2014, FPMexperienced reductions in the supply of electricity during certain times of the day, which resulted inthe loss of 144,000 tonnes of pellet production. There have not been any further power disruptionsin the first quarter of 2015. Any continued or future interruptions of power generation in Ukrainecould have a material adverse effect on our business, results of operations, financial condition andprospects.

FPM relies on the Ukrainian gas transit network as well as National joint-stock company ‘‘Naftogazof Ukraine’’ (‘‘Naftogaz’’) and other market operators for natural gas supplies required in thepelletising process. Historically, Ukraine met its natural gas requirements not covered by domesticproduction with gas imports from the Russian state-owned gas company OJSC Gazprom(‘‘Gazprom’’). There have been pricing and payment disputes between Naftogaz and Gazprom,with Naftogaz claiming unfair pricing for gas delivered by Gazprom and, for delivered gas,Gazprom claiming non-payment by Naftogaz. These disputes led to Gazprom, on 16 June 2014,suspending gas supplies to Naftogaz and introducing an advance payment system. On 30 October2014, Ukraine, the European Commission and Russia reached a temporary agreement on gassupply and transit conditions effective until March 2015. On 1 April 2015, Ukraine and Russiareached a temporary agreement on gas supply for the second quarter of 2015 pursuant to whichthe price of natural gas supplied by Gazprom will be approximately US$248 per 1000 cubic metres,

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with other terms of the October 2014 agreement being extended until the end of June 2015. (see‘‘– Risks relating to operating in Ukraine – Any further unfavourable changes in Ukraine’s regionalrelationship, especially Russia, may adversely affect the Ukrainian economy’’). There is a risk thatthe temporary agreement may be disputed or terminated or that the parties do not agree newterms when the temporary agreement expires. As a result, Gazprom may suspend the supply ofgas in the future and, consequently, Naftogaz may not be able to procure sufficient volumes ofnatural gas to meet all Ukrainian consumer requirements, including those of FPM. As a result,restrictions may be imposed on gas consumption, which may result in a loss of production of FPMpellets which could have a material adverse effect on our business, results of operations, financialcondition and prospects.

We depend on a limited number of customers and markets

Our two largest customers, located in our Traditional markets in central Europe and our Growthmarkets in Asia, together accounted for approximately 35.0% of our net sales revenue of iron orepellets for the year ended 31 December 2014, 37.9% for the year ended 31 December 2013 and36% for the year ended 31 December 2012. Our agreements with these customers, and/or anyframework agreements entered into with customers from our other markets, could be terminatedbefore expiry of their scheduled terms. Whether or not we are able to expand our customer base,the loss of either or both of these principal customers could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

Substantially all our revenues are currently derived from two iron ore mines and one pelletproduction facility in Ukraine

Substantially all our revenues currently are derived from sales of iron ore pellets produced at ouriron ore mines and associated concentrating and pelletising facility in Komsomolsk, Ukraine. Ifmining or processing operations at this site were to be materially reduced, interrupted or curtailed,or if our mining licences and the other permits and approvals we require to carry out miningoperations were to be revoked or not renewed upon their expiry (see ‘‘– Risks relating to ouroperations – Our business depends on successful exploration and mining licences may besuspended, amended or terminated prior to the end of their terms or may not be renewed and maynot be transferable to third parties’’), our ability to continue to produce pellets and meet customerdemand would be at risk and could have a material adverse effect on our business, results ofoperations, financial condition and prospects.

We may also experience events such as explosions, fires or natural disasters that could cause acatastrophic loss to our mine or production facility. The destruction of our Komsomolsk facilitythrough a single catastrophic event could have a material adverse effect on our business, resultsof operations, financial condition and prospects.

We are not insured against catastrophic loss and other liabilities

We do not currently carry insurance against catastrophic loss. As Ukrainian law currently prohibitsforeign insurance companies from operating directly in Ukraine, the underdeveloped insurancemarket in Ukraine offers only limited opportunities for insuring risks associated with our business,and reinsurance with an international insurance house would come at a substantial cost. Moreover,insurance against risks such as environmental pollution or other hazards as a result of explorationand production is not generally available on acceptable terms to companies in the mining industry,including us.

We maintain limited insurance to protect against certain risks in such amounts as we considerreasonable in light of the circumstances surrounding such risks. However, our insurance does notcover all potential risks associated with our operations. We do not have full coverage against lossof, or damage to, all of our plant and equipment, losses arising from interruption of business orthird party liability in respect of accidents occurring on our premises or as a result of ouroperations, including environmental damage. Should one or more events for which we are notinsured occur, we could experience substantial property loss and significant disruptions in ourproduction capacity, for which we would not be compensated. Depending on the severity of theproperty damage, we may not be able to rebuild our facilities or damaged property in a timelymanner or at all. In addition, insurance coverage may not continue to be available on reasonablyacceptable terms or may not be adequate to cover any resulting liability. Losses from these eventsmay cause us to incur significant costs that could have a material adverse effect on our business,results of operations, financial condition and prospects. We will need to fund any losses we incur

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that are not covered by insurance policies from our own funds. This may reduce the fundsotherwise available to fund our current operations and expansion activities and could result in ourinability to pay interest on and principal of the Notes when due, or at all.

We hold insurance policies for the risk of loss of or damage to our pellets at Komsomolsk andtrans-shipment from Komsomolsk. However, we may not be able to obtain insurance for these riskswith acceptable insurance companies or at suitable premium levels in the future. In the future, wemay be required to insure our goods under delivery terms with our customers which could result insubstantially increased cost. If we are unable to obtain insurance against the loss or damage toour pellets, we may be exposed to an additional reduction in funds available to sustain our currentoperations and for our expansion activities which could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

Energy costs account for a large portion of our production costs and are greater for pellets thanfor other iron ore forms, and increases in raw material and energy costs may affect ourproduction costs disproportionately

Energy costs accounted for 53.1% of our C1 cash cost of production for the year ended31 December 2014 compared to 49.9% for the year ended 31 December 2013 and 48.6% for theyear ended 31 December 2012, respectively. Compared to producers of products from highergrade deposits, producers of products from lower grade deposits, including our pellets, requiregreater energy inputs during the beneficiation process to produce high grade products for sale, andany increase in the price of gas or electricity in Ukraine may affect us disproportionately. Forexample, in the year ended 31 December 2012, our average C1 cash cost of production per tonneincreased by 17.6% to US$59.6 per tonne (as compared to US$50.7 per tonne in 2011), reflectinghigher electricity tariffs (an 18.7% increase from 2011) and higher gas prices (a 24.1% increasefrom 2011). Despite actively managing our electricity providers and monitoring our electricity usage,increases in energy prices may significantly reduce our margins and may result in a reduction inour planned development capital expenditure. See ‘‘Business Description – Existing Operations –Raw materials and energy – Natural gas’’.

Compared to iron ore lumps and fines, producing pellets incurs greater input costs. These includeraw materials (including grinding bodies), energy and fuel costs, labour and overhead expenses.Increases in the cost of our mining and processing operations could occur as a result ofunforeseen events such as interruptions in deliveries by suppliers, price fluctuations affecting oil,electricity, raw material expenses, regional events or conflicts, or new regulations affecting energyand fuel costs (see ‘‘– Risks relating to operating in Ukraine – Any further unfavourable changes inUkraine’s regional relationships, especially with Russia, may adversely affect the Ukrainianeconomy’’). Increases in our production expenses could decrease our profitability, reduce thefeasibility and increase the cost of mining existing reserves or implementing our growth plans.Consequential changes in our production could have a material adverse effect on our business,results of operations, financial condition and prospects.

The iron ore industry is intensely competitive, and we may have difficulty effectively competingwith other iron ore mining companies

The iron ore industry is characterised by intense global competition. As a producer which exportsthe substantial majority of our products, we compete with a number of large mining companies,including international mining companies, some of which have total assets and financial resourcessubstantially greater than ours. Some of our competitors may, in the future, enter into purchaseagreements with our customers, which may result in a loss of our market share. These competitorsmay also acquire additional exploration rights over iron ore deposits, further develop iron ore pelletproduction facilities near our facilities, increase proprietary mining activities or engage in pricing orother financial or operational practices that will increase competitive pressure on us. Steel plantsare increasingly demanding higher grade iron ore to increase the efficiencies of their blastfurnaces. The increased cost of producing higher quality pellets in response to customer demandmay reduce our current margins and place us at a competitive disadvantage to competitors withricher ore deposits. Additionally, some of these competitors possess lower cash costs of productionthan we do, and there is a risk in down cycles when sales prices are low that we may not be ableto profitably compete in all export markets.

On the other hand, some of our competitors produce pellets with an iron ore content higher than65%, for which there may be greater customer demand. Accordingly, competition from foreign ironore pellet producers or foreign direct investment in our domestic competitors may also result in

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losses of our market share and could have a material adverse effect on our business, results ofoperations, financial condition and prospects.

We are required to meet certain financial and other restrictive covenants under the terms of ourother indebtedness

Our total indebtedness increased from US$1,029.2 million as at 31 December 2013 toUS$1,304.6 million as at 31 December 2014 and decreased to US$1,188.7 million as of 31 March2015. As of 31 March 2015, we had long-term borrowings of US$939.4 million (79.0% of our totalindebtedness, calculated as total loans and borrowings) and short-term borrowings ofUS$249.3 million (21.0% of our total indebtedness, calculated as total loans and borrowings). Weare exposed to the risk that we may not be able to refinance such borrowings. If we are unable todo so, our liquidity could be adversely affected.

Our core source of financing as of 31 December 2014 was a US$500 million Eurobond,US$214.3 million of which was retired pursuant to the February 2015 Exchange Offer, a syndicatedUS$420 million pre-export finance facility, and a syndicated US$350 million pre-export financefacility with principal balances outstanding as of 31 December 2014 of US$500 million,US$333 million and US$350 million, respectively. The US$420 million and US$350 million revolvingpre-export finance facilities include a commitment amortisation over the final 24 months and thematurities are 31 July 2016 and 8 August 2018, respectively. Subject to additional bankcommitments, the US$350 million facility can be further increased up to an amount of US$500million within one year of the effective date, which was 8 August 2014. The unsecured US$500million Eurobond, US$214.3 million of which was retired pursuant to the February 2015 ExchangeOffer, was issued on 7 April 2011 and matures on 7 April 2016.

Neither the Company nor any of its subsidiaries is subject to externally imposed capitalrequirements other than a bank covenant requirement to maintain consolidated equity in respect ofthe Group of US$500 million including minority interests and excluding any foreign currencytranslation adjustments. We are also subject to a covenant requiring us to maintain net debt below3.0 times EBITDA on a rolling annual basis, tested semi-annually. Compliance is ensured bybalancing dividend payments and discretionary capital expenditure against our earnings.

Certain Group entities are subject to financial and other restrictive covenants under the terms oftheir indebtedness that limit their ability to, among other things:

* borrow money;

* create liens;

* give guarantees;

* sell or otherwise dispose of assets;

* engage in mergers, acquisitions or consolidations; and

* pay dividends.

Ensuring compliance with these covenants could have a material adverse effect on our ability tofinance our future operations or capital needs or to engage in other business activities that may bein our best interest. In addition, a breach of the terms of our indebtedness could cause a defaultunder the terms of the indebtedness, causing some or all of such indebtedness to become dueand payable prior to its stated maturity. We may not be able to generate the funds necessary torepay our indebtedness in the event of its acceleration. Any such default could result in ourcreditors proceeding against the collateral securing our indebtedness. Any such acceleration oraction could have a material adverse effect on our business, results of operations, financialcondition and prospects.

Increases in transportation costs and disruptions to transportation could have a materialadverse effect on our business, results of operations, financial condition and prospects

We currently rely substantially on the rail freight network operated by Ukrzaliznytsya, the Ukrainianstate-owned railway authority, for transportation of our raw materials and finished products. Railwaytariffs for freight increase periodically. For example, railway tariffs increased by approximately12.2% in the year ended 31 December 2012, approximately 4.6% in the year ended 31 December2013 and approximately 6.2% in the year ended 31 December 2014. In addition, certain of ourcustomers depend on the rail networks of countries that neighbour Ukraine and as a result thecompetitiveness of our products can be impacted by the rail tariffs in those countries. Significant

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increases in rail freight or other transportation costs may occur in the near to medium-term.Additionally, the Ukrainian rail fleet is aging and suffers from generally insufficient capitalreinvestment. The failure of Ukrainian railways to upgrade their rolling stock within the next fewyears could result in a shortage of available working rolling stock, disruptions or delays intransportation of our products, loss or damage of our product due to poor condition of rail cars andincreased costs of rail or other substituted transport. We own a fleet of 2,225 rail cars.Nonetheless, any or all of these events could have a material adverse effect on our business,results of operations, financial condition and prospects.

In addition to rail transport, approximately one million tonnes per annum (‘‘Mtpa’’) of our pellets aredelivered on a Free on Board (‘‘FOB’’) basis to central Europe by barge. Risks which can disruptpellet dispatches by barge include:

* low water in peak summer and winter months resulting in slowed or suspended barge trafficfor short periods of time;

* freezing of the Danube River in extreme weather conditions;

* lack of available third party barges; and

* large increases in barge carriage costs which can impact the amount of tonnage that thecustomer is willing to barge.

In addition, any limitations on shipping capacity or lack of storage and berthing facilities at any ofour principal ports could impede our ability to deliver our products on time and expose us to risksof demurrage and increased handling costs, which could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

Tariffs at all water ports, including private berths, are regulated by the Government. The averageannual FOB fees for Yuzhny for the year ended 31 December 2014 were US$4.1 per tonne, whilefor the years ended 31 December 2012 and 2013 they were US$4.5 per tonne and US$4.2 pertonne, respectively. Further changes could potentially reduce the competitiveness of our productsfor export.

In addition to transportation costs to the Ukrainian border, a growing portion of our sales in Chinaand other markets are transacted on the basis of delivery including cost and freight (‘‘CFR’’). As aconsequence, we are exposed to movements in international freight rates, which could have amaterial adverse effect on our business, results of operation, financial condition and prospects.

The volume and grade of our reserves and our rate of production may not conform to currentestimates

Our mineral reserves and resources, as described in this Prospectus, are estimates and theestimated quantities or grades of minerals may not be available to extract and the particular levelof recovery of minerals may not be realised. Reserves estimates are imprecise and depend onassumptions about operating costs, commodity prices and geological analyses based partly onstatistical inferences drawn from drilling and sample analyses, any of which may prove unreliable.The reserves and resources data contained in this Prospectus, unless otherwise stated, is takenfrom analyses prepared in accordance with the methods described herein in ‘‘Reserves andResources’’. In particular, the resources we have classified under the FSU Classification standardsmay not be classified as resources under JORC or as reserves or resources under the SEC’sIndustry Guide 7 and have not been the subject of a competent person’s or independent engineer’sreport. Valid estimates may change significantly when new information becomes available.Therefore, the actual deposits and the grade of mineralisation encountered may differ materiallyfrom the estimates disclosed in this Prospectus.

Our identified resources may not continue to qualify as commercially potential mineable depositsthat can be legally and economically exploited over the medium to long term. Production of mineralresources can be affected by such factors as permitting regulations and requirements, weather,environmental factors, unforeseen technical difficulties, unusual or unexpected geological formationsand work interruptions. The estimated resources described in this Prospectus should not beinterpreted as an assurance of the commercial viability, profitability or potential of any futureoperations. The calculated reserves may be significantly depleted as a result of a dramatic changein external economic factors like changes in iron ore and fuel prices. Moreover, our productionlevels at any of our mines might not ever reach previous historical production levels.

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The reserves and resources data contained in this Prospectus comprise management estimates asof 1 January 2015. These management estimates are based on our estimates of ore mined duringperiods since the most recent engineers’ reports received by us in 2007, 2008 and 2013,subtracted from amounts shown in such reports. The 2007, 2008 and 2013 engineers’ reports havenot been subsequently updated and are not included in this Prospectus. With respect to thereserves and resources information contained in this Prospectus, for the purposes of this Offering,we have not, and do not intend to, engage independent experts to prepare a reserve report inaccordance with SEC or other industry standards in respect of any of our deposits. If such anindependent report were to be prepared, it could potentially estimate our reserves and resources tobe materially different than the estimates set forth in this Prospectus. If the information on whichour resources and reserves estimates rely is incorrect, or if, due to the inherent uncertaintyregarding resources and reserves, these estimates are found to be materially different to thecurrent estimates, we may experience delays and/or increased operating costs, and the economicviability of our projects may be adversely affected which could have a material adverse effect onour business, results of operations, financial condition and prospects.

We may not be able to attract or retain qualified key managerial and technical personnel

Our ability to maintain our competitive position and to implement our business strategy isdependent, to a large degree, on the services of our senior management team. Competition inUkraine for senior management and technical personnel with relevant expertise and exposure tointernational best practices is intense due to the small number of qualified individuals, which mayaffect our ability to retain our existing senior management and technical personnel and to attractadditional qualified personnel. This includes Kostyantin Zhevago, our chief executive officer(‘‘CEO’’) and a beneficiary of the ultimate beneficial owner of our majority shareholder, who is alsoa member of Parliament (an ‘‘MP’’). Mr. Zhevago’s parliamentary duties could take up adisproportionately large amount of his time, preventing him from effectively managing the Group.Additionally, if Mr. Zhevago were to cease acting as an MP, it could limit his ability to lobbyeffectively on behalf of the Group. The loss of any of our key personnel or an inability to attractand retain additional senior management or technical personnel could have a material adverseeffect on our business, results of operations, financial condition and prospects.

Our internal compliance policies and procedures may need to be adjusted to conform to the newUkrainian anti-corruption legislation

On 14 October 2014, the Parliament adopted the Law of Ukraine ‘‘On Prevention of Corruption’’which came fully into force on 26 April 2015 (the ‘‘New Anti-Corruption Law’’). The purpose ofthe New Anti-Corruption Law is to eliminate corrupt practices in Ukraine, as well as to prevent andmanage conflicts of interest of state or local authorities, including members of the UkrainianParliament (‘‘MPs’’). Under the New Anti-Corruption Law, MPs may not (i) occupy paid positions orengage in entrepreneurial activity generally, and (ii) be a member of a management board or asupervisory board of a for-profit company or organisation (the ‘‘incompatibility restriction’’). TheNew Anti-Corruption Law leaves room for interpretation and, in particular, it is uncertain if theincompatibility restriction applies only to Ukrainian companies and organisations or extends toforeign companies and organisations as well. The New Anti-Corruption Law remains largelyuntested and there is no official interpretation by courts or the National Agency for Prevention ofCorruption (the ‘‘Anti-Corruption Agency’’), which was established on 3 April 2015 in accordancewith the New Anti-Corruption Law and which will be responsible for the formation, implementation,and enforcement of Ukrainian anti-corruption policies, including the New Anti-Corruption Law. Ourmajority shareholder, Mr. Zhevago, is the CEO of Ferrexpo and a member of FPM’s SupervisoryBoard. On 26 October 2014, Mr. Zhevago was re-elected as an MP. There is a risk that theUkrainian courts or the Anti-Corruption Agency, may be of the view that the New Anti-CorruptionLaw (and in particular the incompatibility restriction) applies to foreign companies andorganisations, and therefore that Mr. Zhevago’s dual position as CEO of Ferrexpo and an MPcontravenes the New Anti-Corruption Law. Before adoption of the New Anti-Corruption Law, theprincipal enforcement mechanism in respect of the incompatibility restriction was removal of theincompliant MP from the office in accordance with the special procedure. The New Anti-CorruptionLaw introduced additional remedies, which are novel to Ukrainian anti-corruption law (e.g.,administrative liability, restriction of MP’s voting power, etc.). However, these remedies have notbeen applied in practice yet. We may need to review and, if necessary, adjust our internalcompliance policies and procedures and undertake other steps to ensure that we have appropriatesafeguards in place to manage potential conflicts of interest and to ensure that we fully comply

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with all the requirements of applicable Ukrainian anti-corruption legislation. If we fail to do so, thiscould have a material adverse effect on our business, results of operations, financial condition andprospects.

Our business depends on successful exploration and mining licences may be suspended,amended or terminated prior to the end of their terms or may not be renewed and may not betransferable to third parties

In Ukraine, all subsoil resources are the exclusive property of the Ukrainian people and may onlybe granted for the use of legal entities and individuals. The licencing regime in Ukraine for theexploration, development and production of mineral resources is governed primarily by the SubsoilCode of Ukraine dated 27 July 1994 (the ‘‘Subsoil Law’’), and regulations issued under theSubsoil Law. We currently conduct our operations under numerous exploration and mining licences.Our mining or exploration licences for certain deposits (including exploration licences for theNorthern Deposits (as defined below)) were issued in late 2004 without a tender process (the‘‘2004 Licences’’). Although the licencing authority cancelled its internal decision on the issuanceof the 2004 Licences to us, it subsequently confirmed on 17 March 2006 and 15 May 2007 that allsuch licences were still valid and that it had not revoked any or all of the licences issued at thattime. Generally, our licences provide that they may be terminated prior to the expiry of their statedterm if the licence holder fails to comply with licence terms, does not make timely payments oflevies and taxes for the use of the subsoil, systematically fails to provide information, files forbankruptcy or fails to fulfil any capital expenditure and/or production obligations. The Governmentperiodically reviews compliance of Ukrainian companies with the terms of their licences. IfGovernment regulators decide that we have failed to fulfil the specific terms of a licence, or haveoperated in the licensed area in a manner that violates Ukrainian law, they may impose fines orsuspend, amend or immediately terminate the licence, which may have a material adverse effecton our business, results of operations, financial condition and prospects.

In addition, exploration and mining licences are not granted in perpetuity, and any renewal must beobtained before expiration of the relevant licence. In order for our exploration and mining licencesto be renewed, we must be deemed by the relevant Ukrainian authorities to comply with thelicence terms and observe the Subsoil Law. Moreover, should the decision to limit subsoilresources use be adopted by Ukrainian authorities, our exploration and mining licences may not berenewed. We will seek to renew such licences prior to their expiry, however, we may not be ableto obtain renewed licences on similar or more favourable terms, or on a commercially reasonablebasis, without significant delay, or at all. See ‘‘Business Description – Regulatory and health andsafety matters – Mining Licenses’’.

Title to our mineral properties or production facilities, or to any privatised company we haveacquired, may be challenged

Some of the properties and facilities that we have acquired or may acquire from time to time maybe subject to prior claims or unregistered agreements, and title may be affected by undetecteddefects. In addition, competitors may from time to time also seek to deny our rights to developcertain natural resource deposits by challenging our compliance with tender rules and proceduresor licence terms.

We acquired FPM from intermediaries following its privatisation. Privatisations in some of theformer Soviet republics (including Ukraine) have been subject to political controversy and legalchallenge or reversal, including the re-privatisation (by way of re-nationalisation and re-sale bytender) of OJSC Kryvorizhstal, Ukraine’s largest steel mill, in 2005. No action has been takentowards the invalidation of FPM’s status as a privately-owned company and, currently, we are notaware of any challenges pending to the privatisation of any of our subsidiaries.

In the event that any title to, or ownership stakes in, any privatised company we have acquired issubject to challenge on the grounds of defects in the privatisation process or otherwise and we areunable to defeat such claim, we risk losing our ownership interest in such company or its assets,which could have a material adverse effect on our business, results of operations, financialcondition and prospects.

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If the Ukrainian Anti-monopoly Committee were to conclude that we acquired a new company orincreased the level of control we exert over certain of our subsidiaries in contravention of anti-monopoly legislation, we could face administrative sanctions or be required to divest certainassets

Our business was substantially formed through the acquisition and establishment of companiesincorporated and operating in Ukraine. Certain of these acquisitions or establishments ofcompanies required the prior approval of, or notification to, the Ukrainian Anti-monopoly Committee(the ‘‘AMC’’). The failure to obtain necessary approvals for such transactions could subjectFerrexpo, the Group and/or Kostyantin Zhevago to fines of up to 5% of our consolidated revenuefor the financial year immediately preceding the year in which the fine is imposed, or result in theinvalidation of such transactions if they are found to have led to the creation of a monopoly orsubstantially reduced competition in the relevant market or part thereof. The same is applicable forcross occupation of managerial positions by individuals in two or more undertakings. Althoughmembers of the Group received AMC approvals for certain transactions pertaining to ourestablishment, they may have failed to disclose all of the necessary information in theirsubmissions to the AMC. There is a risk that the AMC could conclude through the applicable anti-monopoly legislation that competition in Ukraine has been reduced as a result of these transactionsand impose fines or require the divestment of the newly acquired asset. Any such finding couldresult in the imposition of administrative sanctions or fines, cancellation of FPM’s registrationdocuments via court proceedings initiated by the AMC, or obligations to restore the undertaking’soriginal state or require the divestiture of such newly acquired asset, which could have a materialadverse effect on our business, results of operations, financial condition and prospects.

We are in disputes with the Ukrainian tax authorities

We are disputing several tax claims by Ukrainian tax authorities following inspections and audits inrespect of taxes imposed from prior years, such as corporate profit tax and environmental taxesand continue to dispute these claims in the Ukrainian court system. Ukrainian legislation andregulations regarding taxation and customs continue to evolve, are not always clearly written andare subject to varying interpretations and inconsistent enforcement by local, regional and nationalauthorities, and other governmental bodies.

The current tax claims against us relate primarily to the deductibility of expenses for tax purposesand adjustments in respect of payments of additional environmental and other taxes and duties. Asof 31 March 2015, the aggregate amount claimed by the Ukrainian tax authorities relating to thesematters, together with applicable fines and penalties, was approximately US$0.7 million. As webelieve the tax authorities claims are unlikely to be enforced, no provision has been made forthese claims, although there is no guarantee the tax authorities’ challenges will not succeed. Wehave experienced in the past claims from the Ukrainian tax authorities relating to export pricing forwhich the tax claims involved were significantly higher. As of the date of this Prospectus, no suchclaims exist. However, there is a risk that such claims might be raised again in future periods,which could have a material adverse effect on our business, results of operations, financialcondition and prospects.

We are also in the process of recovering VAT, which has been incurred in the course of ourbusiness between 2010 and 2013, through the issuance of bonds by the Ministry of Finance ofUkraine (the ‘‘Ministry of Finance’’).

The tax authorities have also made certain deductions from the VAT claims we have filed. Wehave challenged these deductions in the local regional and central administrative courts, as well aswith the tax administration. The total amount of the VAT balance challenged by us in the courtsystem in Ukraine as at 31 March 2015 amounted to US$2.4 million and US$3.5 million alreadyrefunded by the tax authorities during the 2014 financial year is in the process of being consideredby the Ukrainian court system. (For further information on VAT risks, see ‘‘– Risks relating tooperating in Ukraine – Our working capital may be increased and foreign exchange losses incurredby a delay or non-repayment of VAT by the Ukrainian tax authorities’’).

The total amount of our VAT balances under review in the court system in Ukraine decreasedsignificantly from 1 January 2014 as most of the claims were decided in favour of the Group.However, there is a risk that repayment of VAT will be delayed again through claims made by thetax authorities, which could have a material adverse effect on our business, results of operations,financial condition and prospects. See ‘‘Business Description – Litigation’’ for further details.

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The ownership of FPM is being challenged

In November 2005, a former shareholder in FPM brought proceedings against certain nomineecompanies that were previously ultimately controlled by Kostyantin Zhevago (among other parties)seeking to invalidate a share sale and purchase agreement (the ‘‘SPA’’), pursuant to which a40.19% stake in FPM was sold to such nominee companies on 18 November 2002.

Between 2005 and April 2010, the case was heard in the Ukrainian courts on several occasions.On 21 April 2010, the High Commercial Court of Ukraine ruled that the SPA was invalid (the ‘‘SPAJudgment’’).

On 2 December 2014, the Supreme Court reversed the SPA judgment and remitted the case forlegal review by the High Commercial Court of Ukraine. On 16 February 2015, the High CommercialCourt of Ukraine dismissed the claims of the former shareholders of FPM in relation to theinvalidation of the SPA and upheld the first and second instance decisions of the CommercialCourts. As a result, the SPA remains valid.

Based on the SPA Judgment, in October 2011, a second claim was filed by the formershareholders requesting that the court invalidate all results of FPM’s General Shareholders’Meetings dating back to 20 November 2002, and to thus restore the claimant’s shareholding inFPM. On 20 October 2014, the Kyiv City Commercial Court dismissed this request in full. Itconcluded that the restitution of the former shareholder’s position in FPM was not possible underUkrainian law. This judgment was confirmed by the Kyiv Appeal Commercial Court and the HighCommercial Court of Ukraine on 28 January 2015 and 14 April 2015, respectively.

In both proceedings the claimants have the right of appeal with the Supreme Court of Ukraine.Risks associated with the independence and the operation of the Ukrainian court system remain,and the claimants may ultimately succeed in their claim to shares of FPM, which could have amaterial adverse effect on our business, results of operations, financial condition and prospects.

Our business may be affected by labour disruptions, or we may be unable to manage our labourcosts

As of 31 December 2014, more than 90% of FPM’s personnel were members of a labour union(‘‘FPM’s Trade Union’’). In August 2010, we experienced a limited work slowdown that had noeffect on production. A work slowdown, stoppage or strike may result in unknown effects to ourproduction levels. Work slowdowns, stoppages or other labour-related developments could have amaterial adverse effect on our business, results of operations, financial condition and prospects.

For the year ended 31 December 2014, the Group’s labour production costs amounted toapproximately 9.7% of our total production costs. Although our average labour costs are low, withthe majority of FPM’s employees receiving approximately US$496 (UAH5,900) per month andFYM’s employees receiving approximately US$538 (UAH6,408) per month for the year ended31 December 2014 (in each case, calculated using the average exchange rate for the year), ourheadcount is relatively high and productivity per worker is relatively low compared to producers ofiron ore in other parts of the world. We face certain statutory, political and social constraints inseeking to reduce headcount that prohibit us from optimising our labour costs through outsourcingof support functions. See ‘‘Business Description – Employees and employee relations’’. As a result,restrictions on our ability to optimise our labour costs may impair our competitiveness comparedwith iron ore producers with lower production costs per tonne of iron ore produced and could havea material adverse effect on our business, results of operations, financial condition and prospects.

We are exposed to certain social and political pressures

Our predecessors established or maintained most of the social and physical infrastructure in thetown of Komsomolsk, and we remain by far the largest local employer. We contribute to a numberof voluntary social projects and municipal charitable funds for the benefit of our employees, theirfamilies and the community. As a result, we may face political and social requirements to increaseour expenditure on community commitments and we may not be able to reduce our support for thelocal town and community, which may have a material impact on our ability to manage our costs.In addition, given the current political and economic situation in Ukraine, we may face increasedpolitical and social requirements that may lead to increased expenditure in respect of socialprojects and municipal charitable funds in future periods.

Our development of future mining deposits may require the relocation of local communities. As aresult, we may face negative reactions from local communities which could have a material

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adverse effect on the development of our future projects, our business, results of operations,financial condition and prospects.

We are dependent on our relations with third party contractors and consultants

We are dependent on the provision of certain services (such as project management, engineering,construction, process design and planning) by third party contractors and consultants in order tocarry out our operations and implement strategic developments. Our operations and developmentsmay be interrupted or otherwise adversely affected by failure to supply, or delays in the supply of,services by third party providers, by any adverse change to the terms on which these services aremade available by third-party providers, and by the failure of third party providers to provideservices that meet our quality requirements. If we found it necessary to change a provider of suchservices, this could result in us experiencing additional costs, interruptions to continuity of supply orservice, or some other adverse effect on our business. Additionally, we may not be able to findadequate replacement services in a timely manner or at all. Any disruption or deterioration, orincrease in cost with respect to our third party arrangements could have a material adverse effecton our business, results of operations, financial condition and prospects.

Our compliance with labour, health and safety laws may require increased capital expenditures,and non-compliance may subject us to penalties

Compliance with labour, health and safety requirements and standards we believe to be prudentrequires material ongoing capital expenditures and other expenses. Such standards are subject tochange which could require additional expenditures in the future. Although we seek to meet suchrequirements, a violation of labour, health and safety laws relating to a mine, or at a concentrating,pelletising or other plant, or a failure to comply with the instructions of the relevant labour, healthand safety authorities, could lead to, among other things:

* a temporary shut down of all or a portion of the mine, concentrator, pelletiser or other plant;

* a loss of the right to mine or operate a concentrator, pelletiser or other plant; or

* the imposition of costly compliance procedures.

Employees experience accidents at our facilities and in 2014, FPM, FYM and FBM had 10, 10 and7 accidents, respectively. For the three months ended 31 March 2015, there have been 4 workrelated accidents at FPM. During the same period no accidents occurred at our other subsidiaries.In 2014 FPM recorded two fatalities and one in 2013 while FBM recorded a fatality in 2014. Therewere no fatalities at the Group’s operations for the year ended 2012. There have been no fatalaccidents since 31 December 2014. In the ordinary course of business, we are subject to variousstate inspections. In accordance with current Ukrainian law on labour safety, the statutory minimumlevel of expense for labour safety is defined as 0.5% of the company’s salary fund for the previousyear. If labour, health and safety authorities require us to shut down all or a portion of a mine,concentrator, pelletiser or other plant or to implement costly compliance measures, such measurescould have a material adverse effect on our business, results of operations, financial condition andprospects.

Transfer pricing rules may potentially affect our results of operations

Ukrainian transfer pricing rules apply to a wide range of cross-border and certain domestictransactions, most typically regulating pricing for goods and services sold or purchased to or fromrelated parties and, in certain cases, unrelated parties.

With effect from 1 September 2013, the Tax Code of Ukraine (the ‘‘Tax Code’’) was amended tointroduce new transfer pricing rules that require liabilities to tax on certain transactions (including, inparticular, liabilities to corporate income tax (‘‘CIT’’) and VAT) to be calculated on the basis ofprices set on an arm’s length (market) basis. Further, effective as of 1 January 2015, the transferpricing rules envisaged by the Tax Code were amended, in particular with regard to the list oftransactions which are subject to transfer pricing regulation (the ‘‘New TP Rules’’). The transferpricing rules apply to: (a) cross-border transactions with related foreign entities; (b) cross-bordertransactions on sale of goods via non-resident agents; (c) cross-border transactions with foreignentities registered in a tax jurisdiction where the standard CIT rate is at least 5% lower than thestandard CIT rate in Ukraine or if such jurisdiction does not disclose information on ownershipstructures of legal entities or does not have a treaty on exchange of information with Ukraine (thelist of such jurisdictions must be approved by the Government); and (d) transactions betweenrelated parties involving any unrelated party with only an intermediary role within such transaction

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where such unrelated party does not perform any important function, is not exposed to commercialrisks of such transaction and does not use any substantial assets (each such transaction, a‘‘Controlled Transaction’’). Controlled Transactions are subject to transfer pricing regulationsprovided that the following criteria are met: (1) the total income (which is subject to CIT) of therespective Ukrainian taxpayer and/or its related parties exceeds UAH20 million in the relevantcalendar year; and (2) the volume of such transactions with any particular counterparty exceedsUAH1 million (exclusive of VAT) or 3% of total income for the relevant calendar year. Ukrainiantaxpayers are required to report Controlled Transactions to the tax authorities on an annual basis.Based on such reporting, as well as their own monitoring and tax audits, the Ukrainian taxauthorities can make transfer pricing adjustments and impose additional tax liabilities in respect ofControlled Transactions if the transaction price differs from arm’s length (market) prices.

Our historical and current trading relationships, including sales between FPM and Ferrexpo AG andbetween FPM and Ferrexpo Middle East, fall within the scope of these transfer pricing rules. Also,Ferrexpo foreign counterparties that do not have a permanent establishment in Ukraine may payCIT at a rate which is lower than the standard CIT rate in Ukraine by 5% or more and theUkrainian tax authorities may apply the new transfer pricing rules to transactions between those ofFerrexpo’s companies that are tax resident in Ukraine and their foreign counterparties, regardlessof whether they are related parties.

The Tax Code offers a number of methods to establish the arm’s length (market) price in respectof a Controlled Transaction. According to the most commonly used comparable uncontrolled pricemethod, the arm’s length (market) price is determined by reference to the sales price of identical(or similar) goods, works, or services between unrelated parties taking into account, in particular,the commercial value of such agreements including the amount, volume of goods, contractualobligations, payment terms and other relevant terms. Other methods are largely based onaccounting standards and include the resale price method, the cost plus method, the net profitmethod and the profit distribution method.

Under the New TP Rules, companies trading in commodities are obliged to determine the prices ofgoods sold based on the quotation of such commodity on a recognised stock exchange (includedin a special list approved by the Government). Certain adjustments to the quoted price are allowedwith respect to the supply basis and related costs. However, adjustments related to the quality ofgoods are not allowed (with the expection of a 5% safe harbour for deviations in the chemicalcomposition of the relevant commodity). The quotation price should be determined as an averageprice for the decade prior to the date of the transaction (which is the date when title passes to thebuyer).

The New TP Rules provide that transfer pricing reports and documentation for 2014 must besubmitted in accordance with the rules applicable as at 31 December 2014. Therefore, the New TPRules should not affect transactions carried out before 31 December 2014. However, the taxauthorities may require the transfer price to be determined based on the quotation from arecognised stock exchange, as required by the New TP Rules.

If a taxpayer decides to apply general transfer pricing rules to prove the arm’s length nature of theprice of commodities (instead of applying the quotation price), such taxpayer must disclose the fullsupply chain up to the unrelated purchaser and provide information on profitability margins for eachcompany in the supply chain.

There can be no guarantee that the transfer pricing method and underlying data used by the taxauthorities to determine the arm’s length (market) price would correspond to the method and dataused by the Group. Accordingly, any discrepancies between such tax assessments could lead tothe imposition of transfer pricing adjustments by the Ukrainian tax authorities, which may imposefines and penalties in addition to requiring the payment of additional amounts to cover underpaidtax liabilities. Furthermore, there is no guarantee foreign companies of the Group will be able tomake an offsetting adjustment which could further increase overall tax burden of the Group onrespective transactions and could result in double taxation of trading profits of the Group. Theimposition of any such fines, penalties and/or additional payment obligations, or any disputebetween the tax authorities and the Group in relation thereto, could have an adverse effect on ourbusiness, results of operations, financial condition and prospects.

The Group has developed and follows a transfer pricing policy that we believe is defendable andconsistent with the arm’s length principle as established in the Tax Code. However, the relevantlaws, rules and standards used for the purpose of determining arm’s length (market) prices in

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Ukraine are vaguely drafted, often lack consistent practice and leave wide scope for interpretationby the Ukrainian tax authorities and administrative courts. The tax authorities in Ukraine maychallenge Ferrexpo’s prices and propose adjustments for calculation of CIT and VAT. If the taxauthorities implement substantial transfer pricing adjustments to sales and purchase transactionssettled in prior periods and such adjustments were determined and ultimately upheld by therelevant Ukrainian authorities and enforced, we could face significant losses associated with theassessed amount of prior tax underpaid and related interest and penalties, which could have amaterial adverse effect on our business, results of operations, financial condition and prospects.

Our financial condition may be adversely affected by changes in applicable taxation regimes orin our taxation residence

Ferrexpo, a Guarantor of the Notes, is incorporated in England and Wales. The Directors currentlyconduct our affairs in a manner such that Ferrexpo is regarded as resident in Switzerland forSwiss and UK tax purposes and for the purposes of the Switzerland/UK Double Taxationconvention. As a result, the profits, income and gains will be subject to the Swiss tax regime andnot, save in the case of UK source income, to the UK tax regime. See ‘‘Taxation – UnitedKingdom’’ for further details of the applicable UK tax regime.

A change of law or the practice of any relevant tax authority or the renegotiation of theSwitzerland/UK Double Taxation convention, or any change in the management or the conductingof our affairs, could mean Ferrexpo becomes, or is regarded as having been, resident in the UK,therefore becoming subject to the UK tax regime, which would substantially increase our aggregatetax rate. This could have a material adverse effect on our business, results of operations, financialcondition and prospects.

Risks relating to our expansion plans

Our future financial and operational performance depends on our ability to upgrade existingfacilities and develop currently unexploited mining assets

Our business is currently determined by our ability to extract our reserves and resources from ourtwo separately managed mines and by the capacity of our processing operations. To maintain andincrease our profit margin and production volume, our strategy for future iron ore production andprocessing involves improving efficiencies to contain operating costs as part of our businessimprovement programme (‘‘BIP’’), upgrading our current plant and processes such as ourconcentrating and pelletising facilities, and further developing our mining resources such as theYeristovskoye deposit and, in the longer term, the Belanovskoye and Galeschinskoye deposits. Ouraim is to double iron ore pellet production from 2013 levels in the medium- to long-term. Theprojects to achieve this are to be phased, and the timing of commitment to these projects willlargely depend on the future free cash flows generated by the Group.

The first phase of projects that were approved by our Board of Directors was to increase pelletproduction by a third to 12 Mtpa by the end of 2014 (or 1Mt of pellet production per month), andto increase the proportion of our 65% iron ore pellet output to predominantly all of total productionin 2016. As a result, we expect that by the end of 2015 our annualised production rate will be12 Mt of pellets and following the commissioning of our new floatation units in 1Q 2015, productionof 65% Fe pellets has increased significantly. In April 2015 we produced 1.04 Mt of pellets ofwhich 88% were 65% Fe pellets.

The next phase of investment concerns the construction of a 10 Mtpa concentrator at FYM toprocess the remaining 22 Mtpa of crude ore that can be mined annually at the FYM pit. As of31 December 2014, the Board of Directors had approved US$94.8 million to begin thisdevelopment of which US$8.0 million has been spent to date. In the current low priced iron oremarket environment new growth capital expenditure has been reduced and we will instead focus onsmall scale, high return projects that will incrementally increase our production capacity. In thiscontext, the construction of a 10 million tonne per annum concentrator at FYM or significantinvestment at FBM to reach first ore has been put on hold, while low level capital expenditures willbe made to maintain the integrity of the projects.

Our medium-term goals, subject to market conditions, remain to produce approximately 12 Mtpa ofpellets with 65% iron content and 10 Mtpa of concentrate with up to 67% iron content, doublingour output from 2013 production levels. See ‘‘Management’s Discussion and Analysis of FinancialCondition and Results of Operations – Liquidity and capital resources – Capital expenditure’’.Accordingly, failure to further develop and expand on concentrating and pelletising capacity may

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have a material adverse effect on our business prospects even if we are successful in developingour reserves.

The current plant operated by FPM is over 30 years old and consists of an integrated beneficiationand pelletising facility. Minimum levels of annual sustaining capital expenditure are expected to berequired in order to maintain production levels of 12 Mtpa. Capital programmes associated with themaintenance, renewal and upgrade of the old plant and equipment carry increased risks includingcomplex implementation, difficulty in cost estimation and unpredictable results. The level ofsustaining capital expenditure required to maintain production levels of 12 Mtpa at the FPM minecould be materially higher than forecast, may require the use or implementation of newtechnologies or take longer than anticipated, or when implemented may give unsatisfactory results.

Our capital expenditure programme is subject to a variety of potential problems and uncertainties,including changes in economic conditions, fluctuations in the Ukrainian or global iron ore markets,regulatory developments, the unavailability of external financing sources on satisfactory terms,changes in the terms of existing financing arrangements, the pursuit of new business opportunitiesand defects in design or construction. Furthermore, certain actions of the Government mayinfluence the implementation of our capital expenditure programme. Accordingly, we may not beable to complete the modernisation of, and improvement to, our facilities as originally planned oron schedule and the expected benefits of the programme may not be fully realised, including theremoval of current constraints on our production relating to mining and enrichment.

Our operational, administrative and financial resources may be inadequate to allow us to achievethe growth we desire. If we are unable to manage our growth and expansion effectively, the qualityof our products, services and customer support could deteriorate. Additionally, any failure toimplement our expansion plans, or any other proposed developments or changes to our business,in accordance with our plans or to budget or on time could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects. In particular, if we do not developand extend our concentrating and pelletising capacity, then we will be unable to process theincreased volumes of ore we expect to extract from our mines, which could have a materialadverse effect on our business, results of operations, financial condition and prospects.

Costs for our expansion activities may be higher than anticipated

Our expansion activities represent a significant addition to our existing operations and requiresupply contracts, a substantial work force, equipment and supplies, and possibly future funding.

The success of our expansion activities depends in part on our ability to complete construction andproduction in accordance with cost estimates. These cost estimates are based on design andengineering studies undertaken before Board approval of the relevant project. Accordingly, our costcontrol estimates are susceptible to increases due to unforeseen conditions or developments,including delays, which may arise and cause the actual cost to vary significantly from the costcontrol estimates. Any cost overruns could have a material adverse effect on our business, resultsof operations, financial condition and prospects.

In the event of delays or other factors that cause cost overruns, depending on our cash flow fromoperations, we may be required to secure additional financing, which we may be unable to obtainon commercially acceptable terms, or at all.

Expansion activities may be subject to delays

Key work contracts will need to be negotiated to implement each of the stages of our capitalexpenditure plans. If we do not successfully complete negotiations on terms satisfactory to us withnecessary contractors and commit these contractors to the expansion activities on anticipatedschedules, development of expansion activities may be significantly delayed.

Additional external factors may delay any of the expansion activities including:

* the inability of contractors to complete projects in a timely manner;

* unavailability or delays in the delivery of parts, machinery or operators, particularly in periodsof high demand for those parts, machinery or operators;

* inability to obtain any necessary permits, licences or approvals from government authorities orthird parties;

* requested changes to the technical specifications of the plans;

* failure to enter into additional agreements with contractors or suppliers in a timely manner;

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* shortage of capital or labour stoppages; and

* other operational risks applicable to our business that are identified in ‘‘– Risks relating to ouroperations’’.

Any delay could negatively impact our cash flow, financial performance and ability to meetcontractual supply obligations which could have a material adverse effect on our business, resultsof operations, financial condition and prospects.

We may need additional approvals for our expansion activities, or our existing licences may besuspended or revoked or a requested extension may be refused

We may require consents, approvals and licences from relevant government authorities toundertake our long-term expansion activities. We intend to apply for the approvals as and whenthey are required.

The process of seeking and obtaining approvals requires us to work closely with the relevantgovernment authorities to ensure that they are obtained in a timely manner. We expect that we willbe able to obtain all consents and approvals required to undertake our expansion activities inaccordance with our proposed timetable. However, significant delays or the inability to obtain anyconsents, approvals or licences would delay the commencement of construction and, ultimately, thecommissioning of any expansion. Such delays may have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

Additionally, we must comply in all respects with local environmental regulations. Exploration andmining licences may be suspended or revoked, or an extension may be refused, if we do notsatisfy the conditions of our licences, including the payment of exploration and mining fees, thecommencement of work within the period stipulated in the licence, and compliance with mining,environmental, labour, health and safety regulations.

If there are delays in obtaining necessary approvals or they are obtained on terms and conditionsnot considered favourable to the expansion activities, this may adversely affect the timing or costof, or our ability to complete, the expansion activities. Additionally, failure to obtain the necessaryapprovals or failure to comply with environmental regulations could result in a delay of expansionactivities, regulatory fines or legal consequences which could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

Our expansion activities may require additional future funding, which we may be unable toobtain on acceptable terms, or at all

We expect to fund our capital expenditures from existing cash, cash flow from operating activitiesand, if those cash sources are insufficient, available borrowings. Reductions in our operating cashflow will have negative consequences for the amount of capital we are able to invest and thereforeon the level of expenditure targeted for 2015 and following years. While we expect these sourcesof funds, once obtained, will be sufficient to fund the anticipated expenditure, we may be requiredto secure additional financing if actual cash flows from operations are insufficient to meet theactual capital cost requirements of the expansion activities for any reason, including:

* prices for our iron ore products being lower than expected;

* a delay or increased cost of the expansion;

* inability to meet our production schedule at existing operations as a result of disruptions fromthe expansion activities;

* an unanticipated increase in the operating costs of our existing operations as a result ofhigher gas or electricity or oil prices, higher labour costs, currency movements or for anyother reason; or

* increased capital expenditures required for our existing operations that exceed the currentbudget.

If we decide to approve further capital expenditures to substantially expand our concentration andpelletising capacity, then we also anticipate funding these expenditures from cash flow fromoperations and available borrowings. If we cannot fund either the currently approved capitalexpenditure programme or any future expenditures from these sources, then we may be requiredto secure additional funding, which we may be unable to obtain on favourable terms, or at all.Inability to obtain additional funding or curtailment of our expansion plans could have a materialadverse effect on our business, results of operations, financial condition and prospects.

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There may be increased production costs associated with our capital expenditure programmethat may be unmanageable

Steel plants are designed to use iron ore feedstock having a specific percentage of iron contentand other constituents, such as silica, in their blast furnaces. The iron content of iron ore depositsvaries widely from Direct Shipping Ore, which has iron content of over 50% and requires nobeneficiation apart from crushing to size, to ‘‘lean’’ ore, which has iron content of approximately10% to 50% and must be enriched prior to steel making. The enrichment of iron content is anenergy-intensive process and our use of lean ore means that energy costs form a larger proportionof our production costs as compared to producers mining richer ore deposits. We currently producetwo grades of iron ore pellets with an enriched iron content of 62% and 65%. Our currentlyapproved expansion plan, if successful, will increase the proportion of our 65% iron ore pellets topredominantly all of our total production in 2016. Raising the iron content of our pellets requiresadditional stages of processing which will incur additional energy. Any increase in the price of gasor electricity in Ukraine may affect us disproportionately. These additional expenditures may reduceour margins and place us at a competitive disadvantage, in particular in relation to competitors thatstrip and mine richer iron ore deposits. See ‘‘– Risks relating to our operations – Energy costsaccount for a large portion of our production costs and are greater for pellets than for other ironore forms, and increases in raw material and energy costs may affect our production costsdisproportionately’’.

Our customers are also increasingly demanding pellets that are of higher quality in terms of othercharacteristics such as hardness (cold compression strength) and silica content. While the oremined from GPL deposits is strong enough to satisfy the required level of pellet hardness withoutincreasing production costs, demands for lower silica content require additional electricity andgrinding bodies for fine grinding, which would increase our production costs. If we are unable tomeet our customers’ demands for higher quality pellets or increase the overall quality of our pelletsto meet other expectations due to higher production costs, we may not be able to complete themodernisation of and improvement to our facilities as originally planned or on schedule, and theexpected benefits of the programme may not be fully realised. While we are taking steps toincrease our energy efficiency and reduce consumption to help minimise the impact of recent gasand other energy price increases on our production costs, if we are unable to do so, or if pricesincrease significantly, this could have a material adverse effect on our business, results ofoperations, financial condition and prospects.

We may make acquisitions, which may not be integrated or managed successfully

We may undertake acquisitions in the future in order to take advantage of opportunities to furthergrow our business. Acquired businesses may not achieve the levels of revenue, profit orproductivity we anticipate or otherwise perform as we expect. Acquisitions involve special risks,including the potential assumption of unanticipated liabilities and contingencies and difficulties inintegrating acquired businesses. Our past or future acquisitions may not be accretive to earnings orotherwise meet our operational or strategic expectations. If we are not able to successfullyintegrate and/or manage any acquired business, the transaction may fail to achieve the desiredbenefits. We may be unable to manage these risks, and management’s attention may be divertedaway from other ongoing business concerns. Further acquisitions could increase the overallcomplexity of our business and may require significant cash expenditures to integrate suchacquisitions and the addition of qualified management and other key personnel. Any inability tosuccessfully integrate and/or manage acquisitions may have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

We may make investments in other companies, which may not deliver returns as envisaged ormay require further significant investment and management attention

The Group owned a 14.9% stake in Ferrous Resources Limited (‘‘Ferrous’’), a producing iron orecompany operating in the iron ore quadrangle of the Minas Gerais region of Brazil. The Groupacquired the stake during 2013, for total consideration of approximately US$82.4 million. Due to thedecline in the benchmark iron ore price during the third quarter of 2014, and the subsequentfurther decline in the benchmark iron ore price to US$72 per tonne as of 31 December 2014,Ferrexpo fully impaired its investment in Ferrous as of 31 December 2014. This reflected ongoinguncertainties regarding Ferrous’ current operations as well as uncertainties regarding the futurefinancing and development of its capital projects. On 30 April 2015, the Group announced that ithad agreed to unconditionally tender for the disposal of its entire stake in Ferrous to IEP Ferrous

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Brazil LLC for total cash consideration of US$41.8 million. On 9 June 2015, the Group announcedthat the conditions for the disposal of its interest in Ferrous had been satisfied and that theUS$41.8 million in proceeds for the disposal had been received by the Group. A revaluation gainof US$41.8 million was recognised in the statement of other comprehensive income as of 31 March2015 and the amount of the fair value adjustment (US$41.8 million) will be reclassified andrecognised in the income statement.

We may have to write down all or part of the value of any future investments or may be unable tomanage the risks associated with such investments, and management’s attention may be divertedaway from other ongoing business concerns. Further investments could increase the overall risk toour business and may require significant cash expenditures. Any inability to successfully managethese investments may have a material adverse effect on our business, results of operations,financial condition and prospects.

We may have only limited financial and other information about potential targets and theirfinancial performance may differ from ours

Target companies may not prepare financial statements in accordance with IFRS, US GAAP or anyother set of internationally recognised accounting standards and may prepare accounts based onlocal GAAP, which may not always reflect all material transactions. Therefore, we may not be ableto rely on a target’s financial information as indicative of its past financial performance. Becausewe may not have the benefit of reliable financial statements, we may discover areas of financialconcern after making an acquisition that we did not foresee prior to the acquisition. In someinstances we may have limited time or restricted access to the target and its records and may notalways be able to conduct full diligence prior to completing our acquisition, which may prevent usfrom realising the value or achieving the strategic objective we anticipated from our investment andcould lead to adverse consequences, including the need to make provisions or to write downacquired assets and may place additional demands upon our senior management in order tointegrate the business. This could have a material adverse effect on our business, results ofoperations, financial condition and prospects.

Risks relating to the industry

We operate in a highly volatile commodity market for steel and steel products, and decreases iniron ore prices may depress our margins

We operate in a highly volatile commodity market. Our average pellet price can vary significantlyfrom period to period as it is dependent on global prices (over which we have little or no control asprice takers). As such, our business is highly dependent on the market price of iron ore, and pricesfor 62% Fe iron ore fines CFR China declined significantly in 2014 and have continued to declinein 2015. Sales prices and demand in the worldwide iron ore market are cyclical. The prevailinglevel of worldwide demand for steel products determines demand for iron ore and the parametersfor the contract price which we are able to obtain for our iron ore. At present, the global market ishighly dependent on the Chinese steel sector which comprises about half of global iron oredemand. Factors that have and may continue to put downward pressure on the prices for ourproducts include:

* deterioration in economic conditions and a reduction in iron ore consumption by ourcustomers;

* a sustained weakening of Asia’s economy, and China’s in particular; and

* a significant increase in the production of iron ore or decrease in market demand for globalsupplies of iron ore.

Due to the significant growth in the iron ore market in recent years, the iron ore pricing mechanismhas substantially developed in line with pricing mechanisms of other globally traded commodities.Prices for 62% Fe iron ore fines CFR China are now published on a daily basis with contracts withsteel mills often priced on monthly or quarterly averages. There remains, however, a lack of pricingtransparency in the market for pellet premiums and price adjustments for chemical properties and,as such, a lack of standardisation for pricing of these elements could result in our achieving lowerpricing compared to other pellet producers.

There is a risk that if iron ore prices are towards the high end of the cost curve and there is asudden decrease in demand or sustained period of supply in excess of demand, prices may

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decline sharply and depress our margins and could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

Historically, changes in worldwide demand for steel have had a greater impact on demand forpellets than other iron ore products. During depressions in the market when demand for iron ore islow, there is a risk that steel producers will engage in cost utilisation and switch to lower value ironore products. Since iron ore pellets are a higher value product and cost more to produce, iron oreprice volatility may impact us disproportionately. Prolonged reductions or declines in world contractprices or sales volumes for iron ore could have a material adverse effect on our business, resultsof operations, financial condition and prospects.

Our mining operations create difficult and costly environmental challenges

Mining operations on the scale of our operations involve significant environmental risks andchallenges. Our primary challenge is to dispose of the large amount of crushed and ground rockmaterial, called tailings, which results from the process by which we physically separate the ironore-bearing materials from the ore that is mined. Another environmental challenge is managingoverburden, which is the rock that must be moved aside in the mining process in order to reachthe ore. We also use hazardous materials such as explosives in our mining operations and ourpelletising plant produces harmful atmospheric emissions and waste water. These activities aresubject to a number of laws and regulations relating to environmental protection in Ukraine.

Under the current system, the Ukrainian authorities review our operations and determine theamount of environmental discharge into the atmosphere or water, and waste, which includestailings and overburden, which is permissible for us to produce in a given time period based on ourexpected production output. We are required to pay quarterly environmental charges to the statebased on these quotas (calculated separately for each pollutant) and, to the extent that we exceedthe quotas, we will have to pay a penalty calculated pursuant to formulas set forth by Ukrainianregulations. Although we are voluntarily implementing new pollution reduction equipment at theFPM mining facility, there have been instances where we have exceeded our permitted quotas inthe past, and we may exceed our permitted quotas or be subject to substantially higherenvironmental charges and penalties in the future. In particular, our plans to increase our miningoperations and expand production, will require application to the Ukrainian authorities for newemissions quotas. Total emission levels are set for Ukraine as a whole and each region isallocated a portion of these overall limits. The regions then allocate quotas among the businesseswithin their region. As a result, we may not be able to obtain permission for higher emission levelsto facilitate our planned production increase if the pre-existing emissions quotas issued within thePoltava region are close to its regional allocation. Any failure to obtain higher quotas could hinderour ability to increase production or require us to make additional capital expenditure for equipmentto reduce emissions in connection with any production increase. Such an event could have amaterial adverse effect on our business, results of operations, financial condition and prospects.

In addition, enforcement of existing legislation, regulations and licences may become morestringent, and more comprehensive legislation could be adopted in Ukraine. Future changes inenvironmental laws or in the enforcement of such laws may require us to make significant capitalexpenditure or otherwise alter aspects of our operations, and such changes could have a materialadverse effect on our business, results of operations, financial condition and prospects.

Risks relating to operating in Ukraine

Political and social conflicts or instability could create an uncertain operating environment

Since obtaining independence in 1991, Ukraine has undergone substantial political transformationfrom a constituent republic of the former Union of Soviet Socialist Republics to an independentsovereign state. In parallel with this transformation, Ukraine is transitioning from a centrally plannedeconomy to a market economy. However, this process of economic transition is not complete.Historically, a lack of political consensus in the Verkhovna Rada, or Parliament of Ukraine, hasmade it difficult for the Government to sustain a stable coalition of parliamentarians to secure thenecessary support to implement a variety of policies intended to foster economic reform andfinancial stability.

Following the October 2012 Parliamentary elections, the majority of Parliament and theGovernment, headed by Prime Minister Mykola Azarov, were closely aligned with PresidentYanukovych.

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In November 2013, the Government deferred the signing of the Association Agreement with theEU. Soon thereafter, mass rallies took place in Kyiv and other cities of Ukraine expressing supportfor the political association and economic integration of Ukraine with the EU.

In December 2013, the presidents of Russia and Ukraine announced a package of economicsupport for Ukraine by Russia, and the announcement was seen by protesters as a shift awayfrom the movement towards closer relations with the EU and the west.

As a result of mounting political pressure, Prime Minister Mykola Azarov resigned on 28 January2014 and on 5 February 2014 President Yanukovych signed a decree instructing First DeputyPrime Minister of Ukraine, Serhiy Arbuzov, to fulfil the Prime Minister’s duties. Following theescalation of civil unrest in Kyiv and elsewhere and the deaths of numerous protestors, Parliamentadopted a resolution stating that President Yanukovych had vacated his office in a manner notpermitted under the Ukrainian Constitution and called for new presidential elections to be held on25 May 2014. At the end of February 2014, President Yanukovych fled from Ukraine to Russia. On27 February 2014, a new parliament coalition ‘‘European Choice’’ was formed with 250 deputiesand Arseniy Yatseniuk was appointed as acting Prime Minister of Ukraine, announcing theresuming of Association Agreement negotiations.

On 16 March 2014, a disputed referendum was held in Crimea. It was reported that a majority ofthose who voted were in favour of secession from Ukraine and joining Russia as a federal subject.This referendum violated the requirements of the Ukrainian Constitution concerning changes in thelegal status of the territories of Ukraine. On 17 March 2014, the parliament of Crimea declaredindependence from Ukraine and applied to the Russian authorities with a request to join Russia,which on 18 March 2014 was followed by the signing of an agreement between Russia andCrimea. These events in Crimea and the resulting change in Crimea’s legal status have prompteda negative reaction from the international community, with the EU, the United States and Ukraine,amongst others, refusing to recognise the referendum in Crimea as legal.

On 25 May 2014, Mr. Poroshenko was elected as the President of Ukraine. On 24 July 2014,‘‘European Choice’’ was dissolved and on 27 August 2014, the President dissolved Parliament andcalled for the new elections to be held on 26 October 2014. However, elections could not be heldin Crimea and in some parts of the Donetsk and Luhansk regions of Ukraine. According to officialelection results, pro-European political parties, namely Petro Poroshenko Bloc, Narodny Front,Samopomich, Radical Party of Oleh Lyashko and Batkivshchyna, won the majority of seats inParliament.

If political instability occurs and continues, it may have negative effects on the Ukrainian economyand, consequently, could have a material adverse effect on our business, results of operations,financial condition and prospects.

Ukraine’s economy is vulnerable to fluctuations in the global economy and the effects of therecent civil disturbances, political instability and ongoing military action in Ukraine

Ukraine’s economy is vulnerable to market downturns and economic slowdowns elsewhere in theworld. Because Ukraine is a major producer and exporter of metal and agricultural products, theUkrainian economy is especially vulnerable to world commodity prices and the imposition of importtariffs by the United States, the EU, Russia or by other major export markets. In particular, adeterioration in global economic and financial conditions as well as a decrease in domestic demandresulting from civil disturbances and political uncertainty in Ukraine has affected industrial output,which declined by 4.3% in 2013, according to the SSSU. In 2014, industrial output further declinedby 10.7% as compared to 2013. The industrial output in January to March 2015 declined by21.4%, as compared to the corresponding period in 2014. In addition, recent significant civildisturbances and political instability in Ukraine and the ongoing military action in some parts of theDonetsk and Luhansk regions of Ukraine have negatively impacted Ukraine’s economy and therelations between Russia and Ukraine. Any continuation of the civil disturbances and/or militaryaction to other regions of Ukraine may further negatively impact Ukraine’s economy. For the yearended 31 December 2014, exports of Ukrainian goods to Russia decreased by 33.7% and the totalvalue of goods exported from Ukraine decreased by 13.5%, as compared to 2013. In January-April2015, exports of Ukrainian goods to Russia decreased by 60.6%, as compared to thecorresponding period in 2014. Any such developments may have negative effects on the economyof Ukraine, which in turn may have a material adverse effect on our business, results ofoperations, financial condition and prospects.

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In addition, Ukraine’s economy is also subject to the risk of economic slowdown in Russia(Russia’s GDP growth at the end of 2013 was 1.3% and 0.6% in 2014, according to the RussianFederal State Statistics Service); and to a further potential deterioration of Ukraine’s relationshipwith Russia. Ukraine’s real GDP in 2013 remained on the same level as in 2012 and decreased by6.8% in 2014, according to the SSSU, and the International Monetary Fund (‘‘IMF’’) expectsUkraine’s real GDP to contract by 9% in 2015 mostly due to a fall in the value of investmentscaused primarily by reduced trade with Russia and the unresolved conflict in eastern Ukraine.According to the SSSU, Ukraine’s real GDP in the first quarter of 2015 contracted by 17.6% ascompared to the corresponding period in 2014. See ‘‘– Risk Factors Relating to Ukraine – Anyfurther unfavourable changes in Ukraine’s regional relationships, especially with Russia, mayadversely affect the Ukrainian economy’’.

The Ukrainian economy has been characterised by the following features, which may have asignificant adverse effect on the investment climate in Ukraine and, in turn, may be a significantdetriment to our business, results of operations, financial condition and prospects:

* high interest rates;

* price declines in the natural resource sector;

* high levels of budget deficit;

* relatively weak banking system providing limited liquidity to Ukrainian enterprises;

* the continued operation of loss-making enterprises due to the lack of effective bankruptcyproceedings;

* tax evasion;

* large share of black and grey-market economy;

* significant capital flight;

* high unemployment and underemployment; and

* the impoverishment of a large portion of the Ukrainian population.

In addition, the recent significant civil disturbances and political instability in Ukraine and theongoing military action in some parts of the Donetsk and Luhansk regions of Ukraine havematerially and adversely affected and may continue to affect Ukraine’s economy. The worsening ofthe trade balance is mostly related to the pressure that Russia has enforced on Ukraine while theGovernment was negotiating the signing of an Association Agreement with the EU.

Although the Government has generally been committed to economic reform, the implementation ofreform has been impeded by a lack of political consensus, controversies over privatisation(including privatisation of land in the agricultural sector and privatisation of large industrialenterprises), restructuring of the energy sector, and the removal of exemptions and privileges forcertain state owned enterprises or for certain industry sectors.

Failure to achieve the political consensus necessary to support and implement such reforms andany resulting instability could adversely affect the country’s macroeconomic indices and economicgrowth. Furthermore, future political instability in the executive or legislative branches could hamperefforts to implement necessary reforms. There can be no assurance that the political initiativesnecessary to achieve these or any other reforms described elsewhere in this Prospectus willcontinue, will not be reversed or will achieve their intended aims. Rejection or reversal of reformpolicies favouring privatisation, industrial restructuring and administrative reform may have anegative effect on the Ukrainian economy, which could in turn have a material adverse effect onour business, results of operations, financial condition and prospects.

Further, during times of financial crisis companies operating in emerging markets can faceparticularly severe liquidity constraints as foreign funding sources are withdrawn. Prior to the globalfinancial crisis, relatively easy access to liquidity, both from within Ukraine and internationally, wasa significant factor facilitating growth in Ukraine’s GDP. If the global macroeconomic situation failsto improve or if conditions in Ukraine do not improve, this could lead to prolonged unavailability ofexternal funding or could impact commodity prices and global trade flows. Ukraine’s overalleconomic and financial position in the short and medium term could also be negatively affected,which could in turn have a material adverse effect on our business, results of operations, financialcondition and prospects.

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Any further unfavourable changes in Ukraine’s regional relationships, especially with Russia,may adversely affect the Ukrainian economy

Ukraine’s economy relies heavily on its trade flows with Russia and other FSU countries, largelybecause Ukraine imports a large proportion of its energy requirements, especially from Russia (orfrom countries that transport energy-related exports through Russia). In addition, a large share ofUkraine’s services receipts comprises transit charges for oil, gas and ammonia from Russia, whichare delivered to the EU via Ukraine. In the year ended 31 December 2014, approximately 18.2% ofall Ukrainian exports of goods went to Russia.

As a result, Ukraine considers its relations with Russia to be of strategic importance. However,relations between Ukraine and Russia are strained due to:

* recent political events including the annexation of the Crimean peninsula by Russia;

* ongoing disagreements over the prices and methods of payment for gas delivered by theRussian gas monopolist Gazprom to, or for transportation through, Ukraine;

* issues relating to the delineation of the Russia-Ukraine maritime border; and

* Russian bans on imports of food products from Ukraine and anti-dumping investigationsconducted by Russian authorities in relation to certain Ukrainian goods.

When Mr. Yanukovych declared his intention to sign the Association Agreement in 2013, pressurewas placed on Russia-Ukraine bilateral relations, which included the threat of restrictive trademeasures by Russia. As a result, the Association Agreement was not signed and exports ofUkrainian goods to Russia decreased by 14.6% in 2013 as compared to 2012. In December 2013,the presidents of Russia and Ukraine agreed on a package of economic support for Ukraine to beprovided by Russia for the amount of US$15 billion. On 24 December 2013, Russia made its firstpayment of US$3 billion for Ukraine’s newly issued sovereign Eurobonds. However, following anescalation of civil disturbances in Ukraine, the second issue of Eurobonds planned for 18 February2014 was cancelled. Russian President Vladimir Putin stated that Russia did not recognise the newGovernment (appointed on 27 February 2014) and did not have any obligation to make furtherdisbursements under the support package. Following the signing of political provisions of theAssociation Agreement on 21 March 2014, the economic part of the treaty was signed on 27 June2014, which will come into force after Ukraine and each of the 28 member countries of the EUratifies it. On 16 September 2014, both the Ukrainian and the European Parliaments voted to ratifythe Association Agreement.

By the end of February 2014, protests had erupted in Crimea and eastern regions of Ukraineputting further strain on Russia-Ukraine bilateral relations. For the year ended 31 December 2014,exports of Ukrainian goods to Russia decreased by 33.7%, as compared to the correspondingperiod in 2013. The foregoing events may have a longstanding impact on trade and other aspectsof Ukraine’s bilateral relations with Russia and could lead to the imposition of trade and otherpunitive measures by Russia. These factors, in turn, could have a material adverse effect on theUkrainian economy.

Russia has in the past threatened to cut off the supply of oil and gas to Ukraine in order to applypressure on Ukraine to settle outstanding gas debts and maintain low transit fees for Russian oiland gas through Ukrainian pipelines to European consumers. The average weighted annual pricefor natural gas supplied to Ukraine for domestic consumption by Russia was US$309.0, US$424.5and US$412.5 per 1,000 cubic metres in 2011, 2012 and 2013, respectively. For the six monthsended 30 June 2014, the actual average price for imported natural gas from Russia was US$272.4per 1,000 cubic metres. In 2013, the price of gas to be purchased from Gazprom by Naftogaz wasreduced to US$268.5 per 1,000 cubic metres in the first quarter of 2014. As of early April 2014,Ukraine had failed to repay gas debts for 2013, but had paid in full for January and February2014. Following the recent tension between Ukraine and Russia over the Crimean peninsula,Gazprom decided not to continue to implement the agreed discount on gas prices for Ukraine.Gazprom set the price of gas at US$385.50 per 1,000 cubic meters from 1 April 2014. On 2 April2014, the Russian government unilaterally annulled an agreement signed in 2010 on the temporarystationing of the Russian Black Sea Fleet in the territory of Ukraine, thus cancelling the discountfor gas export duties. Ukraine started importing gas from Germany through Poland in November2012 and from Hungary in April 2013. In 2013, Ukraine imported 2,132 billion cubic meters of gasfrom Europe. In January 2014, supplies from Europe were suspended due to an agreementbetween Naftogaz and Gazprom to set the price of gas at $268.50 per 1,000 cubic meters, but inApril 2014, this agreement was not extended. From 2 April 2014, the price of Russian gas for

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Ukraine has been set at US$485.5 per 1,000 cubic meters. Gas supplies resumed on 15 April2014 from Poland to Ukraine, and on 1 May 2014 from Hungary to Ukraine. On 28 April 2014, thegas transport operators of Ukraine and Slovakia (Ukrtransgaz and Eustream) signed amemorandum on reverse gas supplies, and on 2 September 2014, Slovakia commenced its gassupplies to Ukraine. On 16 June 2014, Gazprom suspended gas supplies to Ukraine andintroduced an advance payment system. Naftogaz submitted a claim to the Arbitration Institute ofthe Stockholm Chamber of Commerce for the establishment of a fair price for gas supplied toUkraine by Gazprom, while Gazprom filed a claim for $4.5 billion concerning non-payment for gasby Naftogaz. On 26 September 2014, a Hungarian gas network operator suspended supplies toUkraine due to the Russian-Ukrainian conflict. On 9 October 2014, Ukraine, the EuropeanCommission and Russia agreed to hold a new round of talks on 21 October 2014 to resolve thegas crisis. On 30 October 2014, Ukraine, the European Commission and Russia reached anagreement on gas supply and transit conditions until March 2015 and signed respectivedocuments. On 1 April 2015, Ukraine and Russia reached a temporary agreement on gas supplyfor the second quarter of 2015, pursuant to which it was agreed that the price of natural gassupplied by Gazprom will be approximately US$248 per 1,000 cubic metres, with other terms ofthe temporary agreement of October 2014 being extended until the end of June 2015. It has beenreported in Ukraine that Naftogaz will cease to buy natural gas from Gazprom starting from 1 July2015, since no agreement has been reached between Naftogaz and Gazprom regarding furthersupplies of natural gas.

In addition, in May 2011, it was reported that Russia plans to divert approximately 20 billion cubicmetres of gas per annum from Ukraine’s gas transit system to the Nord Stream and South Streampipelines bypassing Ukraine. The Nord Stream pipeline commenced commercial operations inNovember 2011. In 2012, transit of natural gas through Ukraine decreased to 84.3 billion cubicmetres from 104.2 billion cubic metres in 2011, and in 2013 increased to 86.126 billion cubicmetres. For the year ended 31 December 2014, transit of natural gas through Ukraine amounted to62.2 billion cubic meters, a decrease of 27.8% compared to the same period in 2013. Ukraine isseeking to minimise any potential adverse effect of Nord Stream to Naftogaz and the Ukrainianeconomy in general, including through assurances on transport volumes. Such efforts may not besuccessful and any decreases in the volumes of gas transportation (due to the operation of NordStream, or the launch of South Stream and other pipelines bypassing Ukraine), further increases inthe prices of natural gas supplied to Ukraine by Russia or other developments could adverselyaffect Naftogaz’s future results of operations, reducing the revenue that the state budget receivesfrom Naftogaz or increasing Naftogaz’s need for support.

These and any further changes in Ukraine’s relations with Russia, in particular any changesadversely affecting supplies of energy resources from Russia to Ukraine or Ukraine’s revenuesderived from transit charges for Russian oil and gas, may have negative effects on certain sectorsof the Ukrainian economy, which could in turn have a material adverse effect on our business,results of operations, financial condition and prospects.

A deterioration in Ukraine’s relationship with the EU might have negative effects on theUkrainian economy and, consequently, the Group

Ukraine’s relationship with governments in the EU and with multinational institutions is of greatimportance to Ukraine. Their perception of the commitment to and nature of legislative andregulatory reform programmes in Ukraine, the improvement and continued independence of thejudicial system and political developments in Ukraine could significantly impact those relations.

Ukraine aims to achieve a closer relationship with the EU and, with effect from 30 December 2005,Ukraine was given market economy status by the EU. The EU accounted for 26.3%, 25.4% and27% of all exports in 2011, 2012 and 2013, respectively, according to the SSSU, making it thethird largest external trade partner of Ukraine after Russia and Asian countries. For the year ended31 December 2014, the EU became Ukraine’s largest external trade partner, accounting for 31.5%of all Ukrainian exports, according to the SSSU. For the four months ended 30 April 2015, the EUaccounted for 34.1% of all exports of goods, according to the SSSU. Following extensivenegotiations on the free trade area held between Ukraine and the EU from 2008, the partiesachieved progress in the harmonisation of, among others, the following areas: trade in goods(including in relation to instruments of trade protection, tariffs, technical barriers in trade, sanitaryand customs issues), intellectual property, rules relating to the origin of goods, sustainabledevelopment and trade, trade in services, and public procurement.

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The political part of the Association Agreement was signed on 21 March 2014, while the economicsection, including the Deep and Comprehensive Free Trade Agreement (the ‘‘DCFTA’’), was signedon 27 June 2014. On 16 September 2014, both the Ukrainian and the European Parliaments votedto ratify the Association Agreement. Implementation of the Association Agreement started shortlyafter its ratification by the Parliament and will involve, among other things, the incrementalapproximation of Ukrainian legislation to EU regulatory norms in areas including transport, energy,environment, and health and safety. The Association Agreement sets out detailed approximationschedules for the approximation of Ukrainian legislation to EU regulatory norms, includingtimetables for implementation. The DCFTA is intended to substantially integrate the EU andUkraine markets, by dismantling import duties and banning other trade restrictions, albeit withspecific limitations and transitional periods in ‘‘sensitive’’ areas, such as trade in agriculturalproducts. It will also partially integrate public procurement markets. On 29 September 2014,following tri-lateral consultations between Ukraine, the European Union and Russia, the EuropeanUnion set 1 January 2016 as the date for the provisional application of the DCFTA to take effectwhile continuing autonomous trade measures of the European Union to the benefit of Ukraineduring this period, as part of a comprehensive peace process in Ukraine. On 26 October 2014,extraordinary parliamentary elections took place in Ukraine, which led to the formation of a newcoalition ‘‘European Ukraine’’ on 27 November 2014 and subsequent formation of a new pro-European government on 2 December 2014.

Should Ukraine fail to develop its relations with the EU, or should the development of suchrelationship be protracted or regress, this may have a negative effect on the Ukrainian economy,which could in turn have a material adverse effect on our business, results of operations, financialcondition and prospects.

Risks relating to the Ukrainian banking sector and our principal bank in Ukraine could impair ourbusiness, restrict our ability to use cash held in Ukrainian banks or lead to a total loss of fundsheld in Ukraine

The Ukrainian banking sector is deemed weak as compared to more developed economies andhas weakened in recent periods. The banking sector is heavily exposed to devaluation of Ukrainiancurrency as well as to other external and internal factors. Further, Ukrainian banks are heavilyreliant on support from the NBU and dependant on banking and currency control requirementsenacted or amended from time to time by the NBU affecting the bank’s ability to manage theirliquidity and foreign currency.

Pursuant to recent figures published by the NBU, regulatory capital of Ukrainian banks decreasedby UAH109.0 billion (US$4.9 billion at exchange rates as at 25 June 2015 of UAH21.178 to US$1)from UAH205.0 billion as of 1 January 2014 to UAH96.0 billion as of 1 June 2015. The NBU hasannounced plans to support the banking sector which include recapitalisation of certain banks. Asof 26 June 2015, 54 banks have been taken over by the Deposits Guarantee Fund and 44 banksare in the process of liquidation. Ukraine itself is financially weak and unstable and reserves of thecountry have dwindled to historic lows. As a result, the Ukrainian banking sector may experiencefurther downturn in whole or in part and/or further banks may be placed under administration of theDeposits Guarantee Fund with further potential liquidation of such banks.

On 28 December 2014, the Parliament adopted the Law of Ukraine ‘‘On Measures forCapitalisation and Restructuring of Banks’’ (the ‘‘Bank Capitalisation Law’’), which becameeffective on 30 December 2014. Under the Bank Capitalisation Law, banks must take steps toensure adequate capitalisation to be compliant with Tier 1 capital targets of at least 7% under thebaseline scenario and 4.5% under the adverse scenario within an overall capital adequacyrequirement of at least 10%, through 2016. Banks with capital shortfalls must submitrecapitalisation or restructuring plans to the NBU for approval. Banks which are not recapitalised bytheir shareholders and which do not provide the NBU with the satisfactory recapitalisation orrestructuring plans may be (i) recapitalised or restructured using public funds provided they satisfythe strict criteria provided for by the Bank Capitalisation Law or (ii) declared insolvent by the NBU.

Doubtful and bad loans (which since the end of 2012 are referred to as ‘‘weak’’ and‘‘unsatisfactory’’, respectively) are another factor affecting the asset quality of Ukrainian banks. Theproportion of loans represented by doubtful and bad loans was 9.6%, 8.9%, 7.7% and 13.5% as at1 January 2012, 1 January 2013, 1 January 2014 and 1 January 2015, respectively. As at 1 June2015, the proportion of loans represented by doubtful and bad loans was 18.0%. Also, in 2014 anumber of Ukrainian banks, including Bank Finance and Credit, Nadra Bank, VAB Bank and First

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Ukrainian International Bank, carried out refinancings of their outstanding eurobonds. On 27 April2015 The State Export-Import Bank of Ukraine (Ukreximbank) obtained consent from the holders ofits US$750 million eurobonds to extend the maturity of such eurobonds to 27 July 2015.Temporary administration was introduced at VAB Bank on 21 November 2014 followed by adecision to liquidate on 19 March 2015, and at Nadra Bank on 6 February 2015 followed by adecision to liquidate on 5 June 2015. Furthermore, on 2 March 2015 Delta Bank, a bank ofsystemic importance to the Ukrainian financial system, was declared insolvent. According to theNBU, Delta Bank was the fourth biggest bank in Ukraine based on the value of assets. In 2013,hryvnia remained stable against the US dollar and depreciated against the euro by 4.8%. In theperiod from 1 January 2014 to 31 December 2014, the hryvnia depreciated against the US dollarby 97.3% and by a further 33.5% from 1 January 2015 to 30 April 2015. As at 1 January 2013,following a change in the methodology used to account for nonperforming loans, the NBUcalculated loans in the ‘‘high risk’’ and ‘‘default’’ categories as a percentage of the aggregate loanportfolio of Ukrainian banks. According to the NBU, the proportion of loans represented bynonperforming loans was 14.73% and 16.54% as at 31 December 2011 and 31 December 2012,respectively, and 12.89%, 14.61% and 18.98% as at 31 December 2013, 30 June 2014 and31 December 2014, respectively. According to the NBU, as at 31 March 2015, the proportion ofloans represented by nonperforming loans was 24.7%. The future increase in the share of non-performing loans in banks’ loan portfolios, or a failure to decrease this share, could place additionalstrain on the banking system. The fragile condition of the Ukrainian banking system has also beenthe main factor in restricting the availability of domestic credit required by domestic businesses tocontinue to grow their operations. Troubled domestic banks are in many cases unwilling or unableto lend to domestic businesses in need of renewed or increased funding. A continuing stagnationof credit conditions within Ukraine, resulting from bank profitability remaining low and theanticipated recovery being slow to materialise, is likely to continue to have a negative effect onUkraine’s GDP growth. Furthermore, increased domestic borrowing by the Government is likely toreduce the availability of domestic credit for Ukrainian businesses, exacerbating the effect on GDPlevels. In addition, depreciation of the hryvnia may have a negative effect on bank balance sheets.

In response to a significant depreciation of the hryvnia and rapidly accelerating inflation, the NBUhas introduced the following measures: (i) increased its discount rate from 14% to 19.5% (witheffect from 6 February 2015) which was further raised to 30% (with effect from 4 March 2015) and(ii) suspended daily foreign currency auctions, effectively allowing Ukrainian banks to determinatethe hryvnia foreign currency exchange rates on the basis of market supply and demand. Anabnormally high discount rate of the NBU may lead to lower liquidity and instability of the moneymarkets, volatility in the local financial system, an increase in borrowing costs, deterioration incorporate creditworthiness and consumer confidence, as well as other negative impacts on theeconomic environment, any of which could have a material adverse effect on our business, resultsof operations, financial condition and prospects.

Ferrexpo’s principal bank in Ukraine, Bank Finance and Credit, is owned by Kostyantin Zhevago,the Chief Executive Officer of Ferrexpo and a beneficiary of the ultimate beneficial owner of ourmajority shareholder. Bank Finance and Credit carries out the majority of financial and bankingservices for the Group in Ukraine. Following the business plan submitted by Bank Finance andCredit to the NBU in 2014, Kostyantin Zhevago injected UAH760 million of new equity into BankFinance and Credit in 2014. In the first quarter of 2015, Bank Finance and Credit increased itsshare capital by 22% or UAH616.4 million. It also incurred financial loss in the amount ofUAH715.7 million as compared to UAH54.7 million in the corresponding period in 2014. As a resultof military action and worsening of the economic situation in Ukraine, corporate and private clientsof Bank Finance and Credit experienced difficulties in servicing their obligations leading to anincrease in the costs for forming reserves under all active operations from UAH211.9 million in thefirst quarter of 2014 to UAH688.4 million in the corresponding period of 2015. According to recentNBU stress tests, Bank Finance and Credit is undercapitalised. As reported, its capital adequacyratio was 7.39% in the first quarter of 2015, while the minimum capital adequacy requirement setby the NBU is 10%. In February 2015, the NBU decided to provide Bank Finance and Credit withstabilisation loans in a total amount of UAH700 million. According to the NBU, in the period fromFebruary 2015 to April 2015, Bank Finance and Credit has received stabilisation loans in anaggregate amount of UAH700 million. On 12 June 2015 the NBU provided a stabilisation loan inthe amount of UAH750 million to Bank Finance and Credit.

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Failure or deterioration in the condition of Bank Finance and Credit and/or the banking sector inUkraine would have material adverse consequences for the Group and its ability to processfinancial transactions in country, including payments to suppliers and employees, and could alsoresult in the temporary freezing of funds in Ukraine or the total loss of funds in Ukraine. Currently,Ferrexpo holds significant cash in Ukraine, amounting to approximately two months operating costsand capital expenditures. In particular, FPM and FYM jointly have approximately US$160 million inbank accounts with Bank Finance and Credit, and the total exposure of FPM and FYM to BankFinance and Credit, depending on commodity prices and the timing of cash payments and taxrefunds, could be as high as US$200 million. Any failure or deterioration in the condition of BankFinance and Credit or significant impairment of the Group’s ability to execute financial transactionsin Ukraine may have a material adverse effect on our business, results of operations, financialcondition and prospects.

While Russian banks retain a strong presence in Ukraine, several European banks have reducedtheir exposure in Ukraine in recent years including Commerzbank, Austria’s Erste Group Bank,Swedish bank Swedbank, Italy’s Intesa Sanpaolo, the Bank of Cyprus and Greek Eurobank Group.This is largely due to the high risk of doing business in Ukraine, high credit risk, a high ratio ofnon-performing loans and exchange rate risk. The recent political changes may affect the presenceof Russian banks in Ukraine.

The worsening of the financial position of Ukrainian banks, including increased constraint onliquidity and growth of weak and unsatisfactory loans or the failure by the Government to adoptand implement a system of banking regulation that achieves an increased degree of soundnessand stability of the Ukrainian banks could affect the Ukrainian economy and restrict our ability touse cash held in Ukrainian banks, which could have a material adverse effect on our business,results of operations, financial condition and prospects.

Our working capital may be increased and foreign exchange losses incurred by a delay or non-repayment of VAT by the Ukrainian tax authorities

As an exporter in Ukraine who does not charge VAT on sales which can be offset against thepurchase of goods and services, including the import of capital goods as part of our capitalinvestment programme, we rely on the timely repayment by the Government of VAT incurred inorder to ensure smooth cash flows and our continued ability to invest in our business.

We have experienced significant delays in the repayment of VAT which has led to, and may leadagain to, further increases in working capital and result in material financial losses, includingforeign exchange losses. Administrative procedures and resulting disputes have required us to usethe court system to enforce repayment. This has significantly delayed recovery beyond the normal90-day period.

Our gross Ukrainian VAT receivable balance as at 31 December 2014 was US$73 million (2013:US$318 million). The hryvnia devalued compared to the US dollar from 7.993 as at 31 December2013 to 15.769 as at 31 December 2014 resulting in a translation loss of US$126.4 million on theVAT balances expressed in US dollars during this period.

During the year ended 31 December 2014, most of the court claims with tax authorities wereresolved in favour of the Group. During July and August 2014, the Ministry of Finance issuedbonds with a face value of UAH1,607.1 million (US$135.6 million at the exchange rate at the dateof issuance) to settle accumulated VAT liabilities that had been judicially resolved in our favour.

As of 31 December 2014, the Group had sold all of the bonds received during July and August2014, resulting in proceeds of UAH1,256.8 million at an average discount of 21.8%. The discountrepresented a loss of US$29.3 million on the sale of these bonds. In addition to the discount, werecognised a translation loss of US$8.9 million as a result of the further devaluation of theUkrainian hryvnia from the date of issuance of the bonds to the date of sale.

As at 31 March 2015, US$46.1 million of gross VAT receivables were outstanding relating to theGroup’s Ukrainian operations (31 December 2014: US$72.8 million). The Group’s managementexpects the remaining amounts which are the subject of challenges in the Ukrainian court systemof UAH56 million (US$2.4 million) to be recovered within one year either in cash refunds orthrough a further issuance of bonds which are expected to trade at a similar discount to face valueas those we recently received. A provision of US$1.7 million has been recorded to reflect thediscount on those VAT balances expected to be recovered through VAT bonds.

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There is a risk that VAT owed to us will not be paid promptly, which will lead to increases inworking capital. There is also a risk that the Government’s financial position will preclude the timelyrepayment of VAT, leading to a financial loss depending on the terms of repayment imposed and,as we report our financial results and position in US dollars, the prevailing exchange rate whenactual repayments are made. We have and may continue to incur exchange rate losses asexpressed in US dollars from further delays in VAT refunds and/or from discounts to the face valueof bonds that may be issued in the future for settlement of VAT receivables outstanding, and, as aresult, may temporarily reduce levels of investment, which could have a material adverse effect onour business, results of operations, financial condition and prospects.

Our working capital may be increased by prepayments of corporate profit tax to the Ukraine taxauthorities

As a result of continued Government fiscal constraints, VAT refunds during the financial years2013 and 2014 were obtained against prepayment of current and future corporate profit tax in anamount determined by the Ukraine tax authorities based on varying percentages of each VATrefund amount at the time of receipt. The VAT refunds received in the financial years 2013 and2014 resulted in an increase of the prepaid corporate profit tax from US$24.9 million as at31 December 2012 to US$73.8 million as at 31 December 2014. During the year ended31 December 2014, we made prepayments of US$44.9 million in order to recover current VATincurred. The recovery of the prepaid corporate profit tax in Ukraine as well as the determination ofbalances due is subject to potential changes in the Ukrainian tax laws and regulations, the globalprices for iron ore and the underlying foreign exchange rates.

During the 2014 financial year, the hryvnia devalued from 7.993 to the US dollar as at31 December 2013 to 15.769 as at 31 December 2014, resulting in a translation loss ofUS$57.7 million on the balance of outstanding and unused prepaid corporate profit tax expressedin US dollars in Ukraine.

Similar to the approach taken by the Ukraine tax authorities during the 2014 financial year to settleoverdue VAT payable balances, the Ministry of Finance may issue bonds to settle unused prepaidcorporate profit tax that has been paid by Ukraine corporations. We expect that such bonds, ifissued, would trade at a discount to face value and a corresponding adjustment would have to bebooked and a financial loss would incur if sold prior to the maturity of the bonds. As of the date ofthis Prospectus, no announcement in respect of the issuance of such bonds was made by theMinistry of Finance. Consequently, no provision was recorded in the consolidated accounts for theperiod ended 31 March 2015. In addition to the possible financial loss related to a discount onissued bonds, the prepaid corporate profit tax is further exposed to a continued devaluation of thehryvnia compared to the US dollar.

At the date of this Prospectus, no regulation or law or other administrative orders have beenissued or made preventing or limiting the approach of the Ukraine tax authorities to arbitrarily seekprepayment of corporate profit tax on entities that are entitled to receive a VAT refund inaccordance with the law. As a requirement of the IMF for its funding package to the Governmentin 2014, requests for prepayments were to be discontinued. Despite this IMF requirement, prepaidcorporate profit tax may continue to be demanded in return for VAT refunds in the future and theamounts demanded may be in excess of the corporate profit tax then due and payable inaccordance with the relevant laws and regulation.

We have and may continue to incur increased debt levels and borrowing costs and exchange ratelosses as expressed in US dollars in respect of further prepayments of corporate profit tax requiredby the Ukraine tax authorities in exchange for VAT refunds and/or from discounts to the face valueof bonds that may be issued in the future for settlement of unused prepaid amounts, which maytemporarily reduce levels of investment, which could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

For further information on the non-repayment of VAT see ‘‘– Risks relating to operating in Ukraine– Our working capital may be increased and foreign exchange losses incurred by a delay or non-repayment of VAT by the Ukrainian tax authorities’’.

Inability to obtain financing from external sources could affect the Ukrainian economy

Ukraine’s internal debt market remains illiquid and underdeveloped as compared with markets inmost Western countries. In the aftermath of the emerging market crisis in the autumn of 1998, anduntil the second half of 2002, loans from multinational organisations such as the EBRD, the World

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Bank, the EU and the IMF comprised Ukraine’s only significant sources of external financing. From2003 until 2008, the international capital markets were Ukraine’s main source of external financingbut they ceased to be available from mid-2008 due to the global economic and financial crisis.

As a result, Ukraine sought financing from the IMF. In November 2008, the IMF approved a two-year stand-by arrangement (‘‘2008 SBA’’) with Ukraine for approximately US$16.4 billion to assistthe Government in restoring financial and economic stability. In 2008 and 2009, the totaldisbursement under the 2008 SBA amounted to approximately US$10.6 billion. In November 2009,the IMF suspended the next tranche under the stand-by arrangement in the amount ofUS$3.9 billion due to increased levels of political instability and controversies among the President,the Government and Parliament before the presidential elections.

On 28 July 2010, the IMF approved a new 29-month stand-by arrangement (‘‘2010 SBA’’) forapproximately US$15.2 billion in support of the Government’s economic adjustment and reformprogramme. In 2010, Ukraine received two tranches under the 2010 SBA. The 2010 SBA expiredin December 2012, totalling approximately US$3.4 billion. On 27 March 2014, the IMF agreed astaff-level agreement with the Ukrainian leadership on opening a two-year stand-by agreement(‘‘2014 SBA’’) worth between US$14 billion and US$18 billion. The EU and Japan declared theywould issue aid of EUR1.6 billion and US$1.5 billion, respectively, after Ukraine signs theagreement with the IMF. On 27 March 2014, the United States Congress approved a financial aidpackage to Ukraine. The bill provides US$1 billion in loan guarantees to Ukraine, and US$150million in financial aid to Ukraine and neighbouring countries. On 7 May 2014, Ukraine received thefirst tranche of US$3.2 billion under the arrangement with the IMF. On 26 May 2014, theGovernment signed loan agreements worth a total of US$1.48 billion with the World Bank. On29 August 2014, the Executive Board of the IMF approved the 2014 SBA second tranche worthSDR 914.67 million (US$1.39 billion). The IMF disbursed the 2014 SBA second tranche on4 September 2014. The next disbursements are subject to further reviews and performance criteria.

On 11 March 2015, the IMF approved a four-year extended arrangement under the Extended FundFacility (‘‘EFF’’) for Ukraine. The arrangement amounts to US$17.5 billion replacing the 2014 SBA.It was also announced that the IMF programme would be supported by other bilateral andmultilateral funding and, as a result, the total financing package for Ukraine would amount toapproximately US$40 billion. Ukraine received the first tranche of approximately US$5 billion fromthe IMF on 13 March 2015. Further disbursements will be based on standard quarterly reviews andperformance criteria.

Ukraine achieved its highest credit rating of B+ (with stable outlook) from Standard & Poor’s RatingServices (‘‘S&P’’) on 29 July 2010, following the presidential elections, the appointment of a newGovernment and the approval of a new US$15.2 billion loan programme to Ukraine by the IMF.Fitch set its credit ratings for Ukraine at B (with stable outlook) in October 2011. Moody’s set itscredit ratings for Ukraine at B2 in May 2009 (with negative outlook, which was revised to stable inOctober 2010 and to negative in December 2011). However, on 15 March 2012, S&P revised itsoutlook on Ukraine’s sovereign credit rating from stable to negative. In December 2012, S&Plowered the credit rating of Ukraine under long and short term local and foreign currencyobligations to ‘B (negative outlook)’, while Moody’s set its credit ratings for Ukraine at ‘B3 (negativeoutlook)’. On 28 June 2013, Fitch revised its outlook on Ukraine’s sovereign credit rating fromstable to negative, while on 20 September 2013 Moody’s lowered its credit ratings for Ukraine to‘Caa1 (negative outlook)’, citing Ukraine’s vulnerability to shifts in the international capital marketsdue to its large external financing requirement. On 26 December 2013, S&P revised its outlook onUkraine’s sovereign credit rating from negative outlook to the stable one following the financialsupport from Russia. In January and April 2014, Moody’s downgraded Ukraine’s sovereign ratingfrom Caa1 to Caa2 and then further to Caa3 with a negative outlook. On 11 July 2014, Standard &Poor’s Ratings Services revised its outlook on Ukraine from negative to stable. On 19 December2014, S&P downgraded Ukrainian long- and short-term foreign currency sovereign credit ratings to‘CCC-/C’ and long- and short-term local currency sovereign credit ratings to ‘CCC+/C’. The long-term Ukraine national scale rating was also downgraded to ‘uaB+’. On August 22 2014, Fitchdowngraded Ukraine’s long-term local currency Issuer Default Rating (IDR) to ‘CCC’ from ‘B-’ andaffirmed its long-term foreign currency IDR at ‘CCC’ and on 13 February 2015 further downgradedUkraine’s long-term foreign currency IDR to ‘CC’. The ratings on Ukraine’s senior unsecured localcurrency bonds were downgraded to ‘CCC’ from ‘B-’ while the senior unsecured foreign currencybonds affirmed at ‘CCC’. On 10 April 2015, S&P downgraded Ukraine’s long term foreign currencyIDR to ‘CC’ from ‘CCC’ and affirmed its local currency IDR at ‘CCC+’. It also affirmed the short

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term foreign and local currency sovereign credit ratings at ‘C’ and the national scale rating at‘uaB+’ with negative outlook. On 24 March 2015, Moody’s downgraded Ukraine’s sovereign creditrating from ‘Caa3’ to ‘Ca’. While Ukraine was able to successfully complete three Eurobond issuesin the aggregate amount of US$5.25 billion, borrow a syndicated loan in the amount of US$750million since 1 January 2013 and raise US$1 billion through the sale of a US-Backed Eurobondissue on 14 May 2014 (the ‘‘US-Backed Eurobonds’’), if Ukraine’s access to international debtmarkets were to become limited, the Government would have to rely to a significant extent onofficial or multilateral borrowings to finance part of the budget deficit, fund its payment obligationsunder domestic and international borrowings and maintain foreign exchange reserves. The futurestability of the Ukrainian economy continues to be largely dependent upon economic reforms andthe effectiveness of economic, financial and monetary measures as well as cooperation withinternational financial institutions to avoid the possible default.

Further external borrowings from multilateral organisations such as the IMF, the EBRD, the WorldBank or the EU may be contingent upon Ukraine’s satisfaction of certain requirements including:

* implementing strategic, institutional and structural reforms;

* managing the budget deficit in order to restore confidence in fiscal sector sustainability;

* reducing tax and budgetary arrears and indebtedness for electricity and gas; and

* improving the sovereign debt credit ratings.

If Ukraine is unable to meet these requirements, multilateral organisations may withhold or suspendtheir funding. A failure by official creditors and of multilateral organisations such as the EBRD, theWorld Bank or the EU to grant adequate financing combined with any inability to access theinternational capital markets and syndicated loan markets may put pressure on Ukraine’s budgetand foreign exchange reserves and have a material adverse effect on the Ukrainian economy and,as a result, on our business, results of operations, financial condition and prospects.

As at 1 January 2015, Ukraine’s international reserves decreased by 63% to US$7.53 billion fromUS$20.42 billion as at 1 January 2014, then fell further to US$5.63 billion as of 28 February 2015,reaching the lowest level in the last eleven years before increasing to US$9.92 billion as of 31 May2015. In December 2013, Russia subscribed for US$3 billion of Ukrainian sovereign bonds that aredue to mature in December 2015. Pursuant to the terms of such bonds, Ukraine gave anundertaking to Russia as part of this subscription to ensure that the total volume of Ukraine’s statedebt and state guaranteed debt shall not at any time exceed an amount equal to 60% of theannual nominal Ukraine’s GDP; should such covenant or any other covenant in Ukraine’s bondand/or debt documentation be breached, there is a risk that Ukraine will be required to repay suchdebt (and other debts that may be subject to a cross-default provision) at short notice, which couldhave a material adverse effect on the Ukrainian economy and, as a result, on our business, resultsof operations, financial condition and prospects. Even though the financing obtained through sale ofthe US-Backed Eurobonds in May 2014 and the two tranches of the loan received by Ukraineunder the 2014 SBA have reduced refinancing risk, Ukraine’s ability to refinance its debt couldcome under pressure once again if (i) relations between Russia and Ukraine further deteriorate and(ii) access to the international markets remains restricted in the medium term, and/or no additionalexternal financing is secured.

On 19 May 2015, the Parliament adopted a law of Ukraine ‘‘On Peculiarities of Transactions withState Debt, Debt Guaranteed by the State and Local Debt’’ (the ‘‘Moratorium Law’’). Pursuant tothe Moratorium Law, the Cabinet of Ministers of Ukraine shall have the right to introduce amoratorium on any payments under external borrowings of Ukraine and under certain externalborrowings of certain state enterprises, which are listed in the Moratorium Law. Kyiv City Councilshall also have the right to introduce a moratorium on payments under certain external borrowingsraised by it. In addition, if any such moratorium is introduced, it will also extend to the enforcementagainst any properties of the respective borrowers under the external borrowings specified by theMoratorium Law. The Moratorium Law came into force on 13 June 2015 and is effective until 1 July2016.

In addition, many companies in the Ukrainian private sector have significant levels of indebtedness,and as a result of the low credit ratings and low levels of international reserves of the sovereignstate of Ukraine, the private sector may experience difficulty accessing new financing. Althoughprivate-sector debt, unlike state debt, does not have a direct negative effect on the Government’sforeign currency reserves or liquidity, high levels of indebtedness of, and limited availability of new

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credit to, the private sector may complicate economic recovery and pose a significant risk in analready challenging economic environment. Any further deterioration in the economic environmentin Ukraine could have a material adverse effect on our ability to obtain refinancing, andconsequently have a material adverse effect on our business, results of operations, financialcondition and prospects.

The Ukrainian currency is subject to volatility which may adversely impact our results ofoperations and financial condition

The functional currency of our Ukrainian companies is the hryvnia. The functional currency of ourparent company and certain other non-Ukrainian businesses is the US dollar. On consolidation, theincome statements, balance sheets and cash flows of our subsidiaries for which the US dollar isnot the functional currency are translated into US dollars at the average rates of exchangeprevailing during the accounting period. The exchange rate between the hryvnia and the US dollarhas historically been volatile, and the translation effect of such fluctuations could have a materialadverse effect on both our individual and consolidated results of operations. Due to the absence inUkraine of a legislative basis for creating hedging instruments, the prevailing market practice inUkraine, to which we adhere, is not to hedge against currency fluctuations.

In view of the high dollarisation of the Ukrainian economy and the reliance of Ukrainian borrowerson external markets, Ukraine has become increasingly exposed to the risk of the hryvnia exchangerate fluctuations. While the US dollar/hryvnia exchange rate remained relatively stable from thefourth quarter of 2009 to the end of 2013, it depreciated sharply in 2014 by approximately 97.3%from 7.993 as at 31 December 2013 to 15.769 as at 31 December 2014, partly as a result of therecent escalation of the armed conflict in eastern Ukraine, the resulting financial instability and adecline in investor confidence in Ukraine’s macroeconomic outlook. The value of the hryvnia furtherdecreased by approximately 71.9% against the US dollar in February 2015. In March 2015 thevalue of the hryvnia increased by 12.7% against the US dollar. Our production and sales to ourcustomers are priced and earned in US$, while a substantial portion of our costs are incurred inhryvnia. Although we have benefitted from the depreciation in the hryvnia, as a significantproportion of our input costs (more than half) are incurred in hryvnia, there can be no assurancethat this trend will continue, and the hryvnia to US dollar exchange rate could experiencesignificant fluctuations in either direction in the future.

During 2014, the NBU renewed intervention through the sale of international reserves in an attemptto stabilise the hryvnia exchange rate, and to slow the currency devaluation. The NBU alsoadopted measures to limit foreign currency transactions in the shadow economy. Significantworsening of external conditions could lead to increased hryvnia volatility.

Based on amendments to certain laws of Ukraine on the NBU in November 2012, authority wasgiven to the NBU at its discretion to require the compulsory sale by Ukrainian companies of certainparts of their foreign currency revenues to alter the timing for effecting settlements in foreigncurrency under export contracts entered into with Ukrainian exporters and for supplying of relevantgoods, works and services under import contracts. The NBU in its discretion may use this authorityas necessary to support the hryvnia and may introduce further currency control measures in futureif deemed necessary.

Although the value of the hryvnia against the US dollar had remained stable during the period fromthe fourth quarter of 2009 until the beginning of 2014, the hryvnia depreciated sharply in 2014 andmay depreciate further in the future in case of continued or further civil disturbances, politicalinstability and military action in Ukraine, a lack of currency inflow from exports and foreigninvestment, limited foreign currency reserves, the need for borrowers to repay a substantial amountof short-term external private debt and requirements to pay a substantial amount of foreigncurrency for energy supplies. The depreciation of the hryvnia in 2014 was beneficial in terms of ourreported costs in US dollars, but reduced the value of our net assets at historical reported costs,which were denominated in local currency. If the hryvnia were to strengthen against the US dollar,this could have an adverse effect on our reported costs in US dollars. The Ukrainian currency may,however, appreciate if there is a significant increase of currency inflow from exports and foreigninvestments. Any strengthening of the local currency is likely to have a negative effect on our USdollar cost base. Any further currency fluctuations could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects.

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Levels of inflation in Ukraine have increased and could increase further

Following a period of low inflation in 2012 and 2013, the Ukrainian economy has experiencedsignificant consumer price inflation in 2014, with inflation levels increasing from 0.2% in January2014 to 24.9% in December 2014 according to the State Statistics Service of Ukraine. During theperiod from January to May 2015, consumer price inflation in Ukraine amounted to 46.0% ascompared to the corresponding period in 2014. In order to mitigate inflation and currencydevaluation risks, the NBU raised its discount rate from 14.0% to 19.5% on 6 February 2015forecasting 17.2% in consumer price inflation in 2015. With effect from 4 March 2015, the NBUdiscount rate has been further raised from 19.5% to 30%. A significant percentage of our costs aredenominated in hryvnia, and inflation in Ukraine may lead to increases in our hryvnia-denominatedcosts. Current levels of consumer price inflation in Ukraine, and any increase in inflation in futureperiods, could have a material adverse effect on our business, results of operations, financialposition and prospects. In addition, if the cumulative inflation rate over three years approaches orexceeds 100%, the accounting and reporting in hyperinflationary economies would have to beapplied under the accounting standard of the Group. This would require the Group to restate itsfinancial statements, including the corresponding figures for previous periods for the change in thegeneral pricing power of the functional currency.

Our ability to service debts in foreign currencies may be adversely affected by changes inapplicable currency rules and regulations in Ukraine

On 19 November 2012, resolutions of the NBU became effective introducing temporaryrequirements for the compulsory sale of 50% of foreign currency revenues received starting from19 November 2012 by Ukrainian exporters from sale of goods under foreign economic contracts.Pursuant to these resolutions, Ukrainian banks servicing the respective Ukrainian exporter’saccounts are required to initiate compulsory sales of foreign currency funds within one businessday of crediting such foreign currency funds to the Ukrainian exporter’s account, regardless ofwhether the Ukrainian bank has obtained instruction from its client.

The requirement for the compulsory sale of 50% of foreign currency revenues was, on numerousoccasions, extended by the NBU. In August 2014, the NBU increased the amount of foreigncurrency proceeds subject to the compulsory sale requirement to 100% of foreign currencyproceeds, but subsequently decreased it to 75% of foreign currency proceeds in September 2014until 2 December 2014. As of 3 December 2014, the mandatory exchange requirement of 75% offoreign currency proceeds was extended until 3 March 2015 and further extended to 3 June. Witheffect from 4 June 2015, the same mandatory requirement of 75% of foreign currency proceedswere further extended until 3 September 2015. Although such compulsory sale requirement istemporary, the NBU is authorised to adopt at any time a new resolution on compulsory sale offoreign currency proceeds for another period up to six months. The NBU intends to pursue suchprocess as necessary to support the hryvnia and may use further currency control measures in thefuture, if deemed necessary. Any further currency fluctuations may negatively affect the Ukrainianeconomy in general and, which could in turn have a material adverse effect on our business,results of operations, financial condition and prospects and impose risks associated with our furtherdevelopment and growth plans.

The effect of the compulsory conversion may result in hryvnia funds exceeding the immediatehryvnia needs of our Ukraine subsidiaries and, thus, could adversely affect our financial conditionand operations in Ukraine. Servicing of debts in US dollars or performance under any Surety mayalso be adversely affected by compulsory sale of foreign exchange revenues, if insufficient USdollar funds are available as a result of the compulsory conversion of US dollar export revenuesinto hryvnia. See ‘‘– Risks relating to our indebtedness and the Notes – Ukrainian currency controlregulations may impact FPM’s ability to make payments under the Note Suretyship’’. Further,excess hryvnia balances may cause a negative financial impact on the results of Ferrexpo in theevent of hryvnia devaluation, which could have a material adverse effect on our business, resultsof operations, financial condition and prospects.

In addition to compulsory conversion requirements, the NBU resolutions, which became effective on19 November 2012 (as subsequently extended by the NBU), reduced the maximum permittedperiod for effecting of settlements under export contracts from the former 180 calendar days to 90calendar days. Since, in practice, export sales from Ukraine are usually settled within 30 days afterdelivery of exported goods, such reduction of permitted settlement period had no immediateadverse impact. However, any failure by our counterparties to comply with such shortened period

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may result in imposition of foreign economic sanctions by Ukrainian authorities on Ferrexpo and/orits relevant counterparties which could have a material adverse effect on our business, results ofoperations, financial condition and prospects.

With effect from 23 September 2014, the NBU restricted cross-border payments of dividends byUkrainian companies until and including 3 March 2015, except for dividends payable in relation tothe shares in joint stock companies traded on Ukrainian stock exchanges. With effect from 4 March2015, the NBU extended the restriction on cross-border payments of dividends until 3 June 2015and cancelled the exception for dividends payable in relation to the shares in joint stock companiestraded on Ukrainian stock exchanges. With effect from 4 June 2015 these restrictions were furtherextended by the NBU until 3 September 2015. Therefore, Ukrainian companies will not be able tomake cross-border dividend payments until 3 September 2015. Further restrictions on the paymentof dividends to foreign shareholders may be applied in the future, particularly in the light of thecurrent shortage of foreign currency in Ukraine. It is not possible to predict the nature of suchadditional restrictions but there can be no assurance that they will not affect the ability of oursubsidiaries to remit funds to Ferrexpo Finance plc and, consequently, affect our ability to makepayments under the Notes.

Any future attempts to re-privatise private enterprises could lead to deterioration in the climatefor foreign direct investment in Ukraine

Foreign direct investment in Ukraine remains relatively low for an industrialised country with apopulation as large as that of Ukraine. As has happened in the past, an increase in the perceivedrisks associated with investing in Ukraine could dampen foreign direct investment and adverselyaffect the Ukrainian economy. Ukraine also may not remain receptive to foreign trade andinvestment. In particular, despite statements by a previous government that plans announced inearly 2005 to review the privatisation of a number of major companies were no longer underconsideration, in April 2015 the General Prosecutor’s Office of Ukraine announced the filing of aclaim for invalidation of the privatisation of shares in three Ukrainian energy companies. Any suchsteps, as well as any other developments which make Ukraine less attractive to foreign investors,could lead to a deterioration in the climate for foreign direct investment in Ukraine, which could inturn have a material adverse effect on the economy and thus on our business, results ofoperations, financial condition and prospects.

The business environment in Ukraine could deteriorate

Ukrainian enterprises have a limited history of operating in free-market conditions and have hadlimited experience (compared with companies in more developed jurisdictions) of entering into andperforming contractual obligations. Ukrainian enterprises, when compared to businesses operatingin more developed jurisdictions, are often characterised by management that lacks experience inresponding to changing market conditions and limited capital resources with which to develop theiroperations. In addition, Ukraine has a limited infrastructure to support a market system andcommunications, banks and other financial infrastructure are less well developed and less wellregulated than their counterparts in more developed jurisdictions. Ukrainian enterprises facesignificant liquidity problems due to a limited supply of domestic savings, few foreign sources offunds, high taxes and limited lending by the banking sector to the industrial sector, among otherfactors. Many Ukrainian enterprises cannot make timely payments for goods or services and owelarge amounts in taxes, as well as wages to employees. Any further deterioration in businessenvironment could have a material adverse effect on our business, results of operations, financialcondition and prospects.

Corruption and money laundering may have an adverse effect on the Ukrainian economy

Independent analysts, including the Financial Action Task Force on Money Laundering (‘‘FATF’’)and Transparency International, global anti-corruption civil society organisation, have identifiedcorruption and money laundering as problems in Ukraine. In accordance with Ukrainian anti-moneylaundering legislation which came into force in June 2003, the NBU and other state authorities, aswell as various entities performing financial transactions, are required to closely monitor certainfinancial transactions for evidence of money laundering. The current anti-corruption law becamefully effective from 1 January 2012. Simultaneously, major amendments were introduced to thecriminal code, the code of administrative offences and the code of criminal procedure. As of26 April 2015, the New Anti-Corruption Law has become fully operational and introduced further

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amendments to the criminal code, the code of administrative offences and the code of criminalprocedure.

From 27 October 2011, Ukraine has no longer been subject to FATF’s monitoring for the purposesof anti-money laundering / combating the financing of terrorism compliance. Although the newlegislation is expected to facilitate anti-corruption efforts in Ukraine, there can be no assurance thatthe laws will be effectively applied and implemented by the relevant supervising authorities. Anyfuture allegations of corruption in Ukraine or evidence of money laundering could have a negativeeffect on the ability of Ukraine to attract foreign investment and thus have a negative effect on theUkrainian economy which in turn could have a material adverse effect on our business, results ofoperations, financial condition and prospects.

The potential for labour and social unrest in Ukraine could have a materially adverse effect onour business

The failure of the Government and many private enterprises to pay full salaries on a regular basisand the failure of salaries and benefits generally to keep pace with the rapidly increasing cost ofliving have led in the past, and could lead in the future, to labour and social unrest. As of 1 May2015, Ukrainian employers had an outstanding indebtedness for salaries in the amount ofUAH1.5 billion (excluding the territory of anti-terrorist operations), as compared to UAH753 millionas at 1 January 2014, according to the SSSU. Labour and social unrest may have political, socialand economic consequences, such as increased support for a renewal of centralised authority,increased nationalism including calls for restrictions on foreign ownership of Ukrainian businesses,and violence. Any of these events could restrict our operations and lead to the loss of revenue,thereby materially adversely affecting both our ability to conduct our business effectively and themarket price of the Notes.

Ukraine’s physical infrastructure is in need of improvement and could deteriorate further

Ukraine’s physical infrastructure, including its power generation, transmission, communicationsystems and building stock, largely dates back to Soviet times and has not been adequatelyfunded and maintained over the past decade. Road conditions throughout Ukraine are relativelypoor in comparison with more developed countries. The Government has been implementing plansto develop the nation’s rail, electricity and telephone systems, which may result in increasedcharges and tariffs while failing to generate the anticipated capital investment needed to repair,maintain and improve these systems. The deterioration of Ukraine’s physical infrastructure couldhave an adverse effect on the national economy, disrupt the transportation of goods and supplies,add costs to doing business in Ukraine and can interrupt business operations. Any furtherdeterioration in Ukraine’s physical infrastructure could have a materially adverse effect on ourbusiness, results of operations, financial condition and prospects.

Uncertainties relating to the constitutional law of Ukraine could have a negative effect on theUkrainian economy

A number of events of a constitutional significance have occurred in Ukraine in recent years thathave caused and may in the future result in legal and political uncertainty. In 2010, a politicalreform introduced by the Law of Ukraine ‘‘On Changes to the Constitution of Ukraine’’ dated8 December 2004 (the ‘‘2004 Reform Law’’) was cancelled. The 2004 Reform Law provided forthe shift of Ukraine from a presidential to a parliamentary democracy and distributed a significantpart of the President’s powers to Parliament and the Government. The 2004 Reform Law waschallenged at the Constitutional Court of Ukraine and was declared unconstitutional on30 September 2010 (the ‘‘CCU Ruling’’). As a result, the Ukrainian Constitution was reversed backto its initial text adopted in 1996 and the President resumed his significant powers. Following theCCU Ruling, certain legislation may contradict the Ukrainian Constitution and require amendment.This may result in uncertainty regarding the distribution of powers among state authorities and maylead to further political uncertainty in Ukraine.

On 1 February 2011, the law amending the Ukrainian Constitution to unify the terms of office ofthe President, Parliament and local councils (the ‘‘2011 Constitution Amendment Law’’) cameinto effect. The 2011 Constitution Amendment Law provides for the reinstatement of the five-yearterm of office for Parliament which the CCU Ruling had reduced to four years.

Following the decision of the President and the Government to defer the signing of the AssociationAgreement on 21 November 2013, mass rallies took place in Kyiv and other cities of Ukraineexpressing public support for the political association and economic integration of Ukraine with the

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EU. Civil disturbances in Ukraine continued to escalate and on 21 February 2014 Parliamentadopted a law amending the Ukrainian Constitution and restoring the 2004 Reform Law. Allegedly,this law was adopted in breach of a number of procedural requirements which must be satisfied inorder to amend the Ukrainian Constitution. Therefore, there is a risk that the validity of this lawmay be challenged which may lead to further political uncertainty in Ukraine.

In addition, Ukrainian legislation does not clearly identify the legal consequences of the manner inwhich former President Yanukovych left the presidency. As a result, any acts of Mr. Turchynov asacting President until the inauguration of Mr. Poroshenko could be challenged by politicalopponents based on the legal uncertainty.

Recent political developments have also highlighted potential inconsistencies between the UkrainianConstitution and various laws and presidential decrees. Furthermore, such developments haveraised questions regarding the judicial system’s independence from economic and politicalinfluences. A number of factors could adversely affect political stability in Ukraine. These couldinclude:

* lack of agreement within the factions and among individual deputies in Parliament;

* disputes between factions supporting the President and the Government, and oppositionfactions on major policy issues, including Ukraine’s foreign, energy and cultural policies;

* court action taken by opposition parliamentarians against decrees and other actions of thePresident or the Government or Parliament; or

* court action by the President against parliamentary or governmental resolutions or actions.

If any law or act described above is successfully challenged based on its incompliance withconstitutional law, it may have negative effects on the Ukrainian economy and, consequently, couldhave a material adverse effect on our business, results of operations, financial condition andprospects.

Uncertainties relating to the legal system in Ukraine could have a negative effect on theUkrainian economy

Since independence in 1991, as Ukraine has been transforming from a planned economy to amarket-based economy, the Ukrainian legal system has also been developing to support thistransformation. Ukraine’s legal system is, however, in transition and is, therefore, subject to greaterrisks and uncertainties than more mature legal systems. In particular, risks associated with theUkrainian legal system include, but are not limited to:

* inconsistencies between and among the Ukrainian Constitution, laws, presidential decrees,and governmental, ministerial and local orders, decisions, resolutions and other acts;

* provisions in laws and regulations that are ambiguously worded or lack specificity and therebycreate difficulties when implemented or interpreted;

* the fact that it is not unusual in Ukraine for laws to be enacted with retroactive effect or to bepublished some time after their enactment;

* authority or guidance for interpreting provisions of Ukrainian legislation remains rare;

* a lack of judicial and administrative guidance on the interpretation of Ukrainian legislation,including the complicated mechanism through which the Constitutional Court of Ukraineexercises its constitutional jurisdiction;

* general inconsistency in the judicial interpretation of Ukrainian legislation in the same orsimilar cases;

* the relative inexperience of judges and courts in interpreting Ukrainian legislation, specificallyin dealings with business and corporate law;

* corruption within the judiciary;

* the fact that not all Ukrainian resolutions, orders, decrees, decisions and similar governmental,regulatory and judicial acts are readily available to the public or available in comprehensiblyorganised form; and

* a high degree of discretion on the part of governmental authorities, which could result inarbitrary actions.

Furthermore, several fundamental Ukrainian laws either have only recently become effective or arestill pending hearing or adoption by the Parliament. For example, the new budget and tax codes

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came into effect on 1 January 2011. In 2012 and in 2013, the laws on securities and depositorysystem were also amended significantly. Also, in January 2013, a number of amendments to thebankruptcy and insolvency law of Ukraine became effective, and a new system of registration ofrights to immovable property was introduced. Currently, several drafts of a new law on limitedliability companies are pending in Parliament. Ukraine’s real estate, land and construction laws andregulations have changed substantially and frequently over the last years. The recent origin ofmuch of Ukrainian legislation, the lack of consensus regarding the scope, content and pace ofeconomic and political reform and the rapid evolution of the Ukrainian legal system in ways thatmay not always coincide with economic development place the enforceability and underlyingconstitutionality of certain laws in doubt. This results in ambiguities, inconsistencies and anomalieswithin Ukraine’s legal and regulatory framework (see ‘‘– Risks relating to our indebtedness and theNotes – In the event of bankruptcy proceedings against FPM, Ukrainian bankruptcy law maymaterially adversely affect FPM’s ability to make payments to the Trustee on behalf of the holdersof the Notes’’). In addition, Ukrainian laws often contemplate implementing regulations, but theseregulations have either not yet been promulgated, leaving substantial gaps in the regulatoryinfrastructure, or have been promulgated with substantial deviation from the principal rules andconditions contemplated by the underlying laws, which results in a lack of clarity and an increasingnumber of conflicts with regulatory authorities. There are uncertainties relating to Ukraine’s judicialsystem, which may make legal recourse and enforcement difficult or impossible. These and otherfactors that have an impact on Ukraine’s legal system make an investment in the Notes subject togreater risks and uncertainties than an investment in a country with a more mature legal system.

In addition, Ukrainian corporate laws and regulations contain ambiguities, imprecision andinconsistencies which can make it difficult to comply with them. As a result, our prior transactionsmight not have been in compliance with all corporate requirements, procedures or formalities. Suchnon-compliance may result in fines, warnings from governmental authorities, orders to remedy theviolations, inability to increase share capital of a joint stock company, mandatory winding-upproceedings or requests to unwind a previous transaction. Although Ferrexpo does not expect thatany party would seek to review or modify any of these transactions or challenge any suchirregularities, there can be no assurance that this will not occur. Any successful challenge of ourprior transactions could have a material adverse effect on our business, results of operations,financial condition and prospects.

Uncertainties relating to the judicial system in Ukraine (including the difficulties in enforcingcourt orders and judgments) could have a negative effect on the economy

The independence of the judicial system and its immunity from economic and political influences inUkraine remain questionable. The system of constitutional jurisdiction is too complicated to ensurethe smooth and effective removal of discrepancies between the Ukrainian Constitution on the onehand, and various laws of Ukraine on the other hand.

The court system is understaffed and underfunded. Because Ukraine is a civil law jurisdiction,judicial decisions generally have no precedential effect on subsequent decisions, and courts aregenerally not bound by earlier decisions taken under the same or similar circumstances, which canresult in the inconsistent application of Ukrainian legislation to resolve the same or similar disputes.

Not all Ukrainian legislation is readily available to the public or organised in a manner thatfacilitates understanding.

On 12 February 2015, the Parliament adopted Law of Ukraine On Ensuring of the Right to a FairTrial (‘‘Fair Trial Law’’), which became effective on 28 March 2015. The Fair Trial Law is aimed atincreasing efficiency of the court system ensuring consistent application of legislation andestablishing legal and organisational grounds for judges’ evaluation and their disciplinary liability.

Enforcement of court orders and judgments can, in practice, be very difficult in Ukraine. The StateEnforcement Service is responsible for the enforcement of court orders and judgments in Ukrainebut after its liquidation pursuant to the resolution of the Cabinet of Ministers of Ukraine No. 17,dated 21 January 2015 its authority will be transferred to the Ministry of Justice of Ukraine.Enforcement procedures are often very time-consuming and may fail for a variety of reasons,including the defendant lacking sufficient funds, the complexity of auction procedures for the sale ofthe defendant’s property or the defendant undergoing bankruptcy proceedings. In addition, theState Enforcement Service has limited authority to enforce court orders and judgments quickly andefficiently. Ukrainian enforcement agencies are bound by the method of enforcement envisaged bythe relevant court order or judgment and may not independently change such method even if it

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proves to be inefficient or unrealisable. Furthermore, notwithstanding the successful execution of acourt order or a judgment, a higher court may reverse the court order or judgment and require thatthe relevant funds or property be restored to the defendant. In practice, the procedures employedby the State Enforcement Service do not always comply with the applicable legal requirements,resulting in delays to or failures in enforcement of court orders and judgments.

These uncertainties also extend to other rights, including investor rights. In Ukraine, there is noestablished history of investor rights or responsibility to investors and, in certain cases, the courtsmay not enforce these rights. When the courts do take a consistent approach in protecting rightsof investors granted under the applicable Ukrainian legislation, the Government and/or Parliamentmay attempt legislatively to overrule any such court decisions by backdating such legislativechanges to a certain date in the past. In addition, court claims are often used in the furtherance ofpolitical aims. Ferrexpo may be subject to such claims and may not be able to receive a fairhearing. Finally, court orders are not always enforced or followed by law enforcement institutions.

All of these factors make judicial decisions in Ukraine difficult to predict and effective redressuncertain. The uncertainties of the Ukrainian judicial system could have a negative effect on theUkrainian economy and on our business, results of operations, financial condition and prospects.

The interpretation and application of Ukrainian tax laws and regulations continues to evolve,which increases the risks associated with our operations and investment in Ukraine

Historically, Ukraine has had a number of laws relating to various taxes imposed by both centraland regional governmental authorities. Applicable taxes include VAT, corporate income tax (profitstax), customs duties, personal income tax, payroll (social) taxes and other taxes. Ukrainian taxlegislation has not been in force for as significant a period of time compared to more developedmarket economies, and, as a result, there is uncertainty as to its application.

Ukrainian tax legislation is subject to frequent changes and amendments, which may result ineither a more favourable environment or unforeseen complexities for Ferrexpo. For example, witheffect from 1 January 2011, the Ukrainian tax system was significantly reformed by the adoption ofthe Tax Code. Although the Tax Code is viewed by the Government as a significant step in theimplementation of the tax reform aimed at modernising and simplifying the Ukrainian tax system,the Tax Code has attracted wide public criticism and opposition from private entrepreneursthroughout Ukraine. Apart from the Tax Code, the system of taxation is frequently varied byinterpretations issued by the tax authorities. There may be significant uncertainty in the future as tothe implementation or interpretation of the new legislation. Furthermore, the complicated process oftax inspections and the contradictory rules on when they should be held reduce predictability forthe taxpayers.

Additionally, the Tax Code was significantly amended by laws approved by Parliament on28 December 2014 (most of them became effective starting from 1 January 2015). Suchamendments provide for a decrease in the number of taxes from 22 to 11 and significantly revisethe corporate profit tax computation rules, personal income tax rates, rate of the rent tax, andbroaden the tax base of a number of different taxes. As at the date of this Prospectus, there is noguidance as to how the amended rules should apply.

These amendments, for example, introduced real estate tax on commercial (non-dwelling) realestate situated in Ukraine. Production facilities are excluded from the scope of the real estate tax.However, it is unclear whether administration facilities and other premises, which are not expresslylisted in the exemption for production facilities, will be exempt from this tax.

In accordance with the amendments, the land tax rate will be determined by local authorities.However, the maximum allowed rate of land tax was increased from 1% to 12% of the normativeappraisal of the land plot for certain types of land plots. Therefore, it is not known whether theamount of land tax payable by us in 2015 will be less or more than in 2014.

Differing opinions regarding legal interpretation often exist both among and within governmentalministries and organisations, including the tax administration, creating uncertainties and areas ofconflict. See also ‘‘– Risks relating to operating in Ukraine – Our working capital may be increasedand foreign exchange losses incurred by a delay or non-repayment of VAT by the Ukrainian taxauthorities’’. Furthermore, tax laws are subject to changes and amendments, which could have amaterial adverse effect on our operations or financial condition.

Tax returns and supporting documents (including customs and currency control documentation) aresubject to review and investigation by a number of authorities, which are authorised by law to

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impose fines, penalties and interest charges for non-compliance. If violations of the tax lawsinvolving sums of UAH609,000 for 2014 and 2015 (approximately equivalent to US$26,600) (basedon the UAH1,218 living minimum set forth in the 2015 budget for January-December 2015) ormore are discovered, the criminal investigation authorities generally initiate criminal proceedingsagainst a corporate taxpayer’s general director, chief accountant or other senior managers. Thiscreates tax risks in Ukraine that are substantially more significant than those typically found incountries with more developed tax systems. Generally, tax liabilities of taxpayers remain open forre-assessment by Ukrainian tax authorities for three years after the filing of the relevant taxdeclarations. However, this statutory limitation period may not be observed, or may be extended, incertain circumstances. Moreover, the fact that a period has been reviewed does not exempt thisperiod, or any tax declaration/return applicable to that period, from further review (except in alimited number of circumstances in which such audits are not allowed).

On 1 April 2014, an amendment to the Tax Code came into effect whereby the subsoil tax rate isincreased to 5% of the value of certain ore minerals. Further, on 28 December 2014 anamendment to the Tax Code was adopted which envisaged, inter alia, an increase in the subsoiltax rate for iron ore to 8% of the value of such ore indexed to the content of iron in the oreeffective from 1 January 2015. These factors negatively impact the predictability of the country’staxation system and, therefore, have an adverse effect on business activity and, consequently, mayadversely affect our business, results of operations, financial condition and prospects and imposerisks associated with our further development and growth plans.

As at the date of the Prospectus, the Ukrainian tax authorities have reviewed substantially all ofthe tax returns of FPM up to 31 December 2012. See ‘‘Business Description – Litigation’’ for adiscussion of certain disputes between FPM and the local tax authorities. While we believe that weare currently substantially in compliance with the tax laws affecting our operations, except for theclaim by the tax authorities described above, the relevant authorities have taken differing positionswith regard to interpretative issues, which could, if upheld by the courts, have a material adverseeffect on our business, results of operations, financial condition and prospects.

The tax authorities could challenge some of the Group’s transactions on the basis of the‘‘substance over form’’ principle

The Ukrainian tax authorities and courts historically took the position that for tax purposes the formof a transaction prevailed over its substance. However, the Ukrainian tax authorities and courtsalike have recently paid greater attention to the substance of transactions for tax purposes. Therelevant practice is still developing and thus is not altogether clear or consistent. However, the riskthat appears to be emerging is that the Ukrainian tax authorities may claim that agreementslacking business purpose or whose only purpose is obtaining a tax benefit (based, primarily, onanalysis of the economic substance of the transaction rather than the supporting documents)should be accounted for tax purposes according to the substance of the transaction or disregardedfor tax purposes at all. This approach allows the tax authorities to challenge tax benefits obtainedby parties to the transaction and it appears that it is being widely applied. Therefore, althoughFerrexpo believes that the Group can demonstrate that all its transactions were concluded forproper business reasons and that they are in compliance with all applicable tax rules, there is arisk that the Ukrainian tax authorities might challenge some of the Group’s transactions. On thisbasis the Ukrainian tax authorities could attempt to challenge the Group’s tax benefits recognisedunder these transactions and also apply material penalties and fines which could have a materialadverse effect on the Group’s business, results of operations, financial condition and prospects.

The Group may be exposed to taxation in Ukraine if activities of non-Ukrainian companies of theGroup are treated as creating a permanent establishment for Ukrainian tax purposes

The Tax Code contains the concept of a permanent establishment in Ukraine as a mean for taxingforeign legal entities which carry out regular entrepreneurial activities in Ukraine beyond those ofpreparatory and auxiliary character. Ukraine’s double tax treaties with other countries, includingSwitzerland and the United Kingdom, contain a similar concept.

However, double tax treaties provide for a narrower definition of permanent establishment than theTax Code. Double tax treaties also provide that even if the Company is found to have a permanentestablishment in Ukraine, this should not affect exemption from taxation provided for elsewhere inthe double tax treaty (including those applicable to interest and dividends). Double tax treatiesoverrule Ukrainian tax law and the Tax Code expressly recognises this.

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Despite the above and although the Group believes that all companies of the Group conduct theiraffairs so that they should not be treated as having a permanent establishment in Ukraine, thepractical application in Ukraine of the concept of a permanent establishment under Ukrainian lawand double tax treaties is not well developed. For this reason, foreign companies having evenlimited operations in Ukraine, which would not normally satisfy the conditions for creating apermanent establishment under international rules, might be at risk of being treated as having apermanent establishment in Ukraine and hence being liable to Ukrainian taxation. Accordingly, noassurance can be given that the Group’s activities will not be treated by the Ukrainian authoritiesas creating such a permanent establishment.

If activities of any non-Ukrainian companies of the Group were treated as creating a permanentestablishment in Ukraine, such company would be subject to Ukrainian taxation on the part of itsincome that is attributable to that permanent establishment in a manner broadly similar to thetaxation of any Ukrainian legal entity (with 18% applicable corporate income tax rate). However,although Ukrainian tax law contains some attribution rules to determine the part of the income of aforeign entity that is attributable to any Ukrainian permanent establishment, these rules are not welldeveloped. There is, therefore, a risk that the tax authorities might seek to assess Ukrainian tax onthe entire income of such company, if it were treated as having a permanent establishment inUkraine. Having a permanent establishment in Ukraine may also have other adverse taximplications, including jeopardising the right to benefit from the reduced withholding tax rate underan applicable double tax treaty, and potentially affecting the Group’s VAT obligations. There is alsoa risk that penalties could be imposed by the tax authorities for failure to register the permanentestablishment with the Ukrainian tax authorities.

Any such taxes or penalties could have a material adverse effect on the Group’s business, resultsof operations, financial condition and prospects.

The Group may incur non-refundable advance CIT

Under the Ukrainian tax law, certain distributions of dividends by Ukrainian companies trigger anobligation to pay so-called advance corporate income tax (‘‘Advance CIT’’). Advance CIT is not awithholding tax on dividends, but in general represents an advance payment of Ukrainian CITtriggered by the distribution of dividends. Any Advance CIT has to be paid by the Ukrainiancompany distributing the dividends at the general CIT rate, accrued on the gross amount of thedividends distributed. Advance CIT is a domestic tax which applies to dividend distributions byUkrainian companies even if the recipient shareholders are not resident in Ukraine for taxpurposes. This tax may not be reduced or eliminated under a double tax treaty. Certain dividendsare exempt from Advance CIT, including, amongst others, to the extent they do not exceed thedividends received by the relevant company from its subsidiaries (whether Ukrainian resident ornon-resident), dividends paid on the income exempt from CIT, dividends paid from the taxed profitsin a distribution period, the corporate profit tax liability for which has been settled in full and other.

As a result, upon distribution of dividends to Ferrexpo or any intermediate holding companies, theUkrainian entity distributing such dividends may have to pay simultaneously (or beforehand)Advance CIT at a standard rate accrued on the amount of such dividends. Payment of AdvanceCIT would have to be made from the Ukrainian companies’ own funds irrespective of theavailability of taxable income within the relevant reporting period. In principle, any Advance CITcould then be set off against the relevant company’s regular CIT liability in the current orsubsequent reporting periods, without any time limitations.

Additionally to the Advance CIT on payments of dividends, starting from January 2013 companiesliable to CIT in Ukraine, whose income in the previous year exceeded UAH10 million and who didnot generate tax losses, are liable to monthly advance corporate income tax payments (‘‘MonthlyACIT’’) in the amount of 1/12 of the CIT due for the previous tax year. According to the Ukrainiantax authorities, the company which paid Advance CIT during the year may set off such AdvanceCIT against Monthly ACIT of the next tax year only. Therefore, if the CIT liable company paysdividends during the year, it should continue paying Monthly ACIT. Any overpayment in the amountof CIT incurred due to payment of two types of advance payments may be set off against CITliabilities of the current year (in an annual return) or of any following year. However, if the amountof CIT due from the company during a year is not significantly higher than the aggregate of theMonthly ACIT and Advance CIT, the company will have no outstanding tax liabilities to set offagainst the amounts of CIT paid in advance. Moreover, neither Monthly ACIT nor Advance CIT arerefundable in cash.

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Therefore, Ukrainian entities of the Group may attract non-refundable advance CIT paymentsobligations. Obligations of the Group to pay Advance CIT and Monthly ACIT may significantlyincrease its consolidated tax burden and could have a material adverse effect on the Group’sbusiness, results of operations, financial condition and prospects.

The Group’s working capital may be decreased due to introduction of an electronic system ofVAT administration

In July 2014, the Parliament adopted changes to the Tax Code introducing a special electronicsystem of VAT administration, effective as of 1 January 2015. On 28 December 2014, theParliament amended the Tax Code and postponed introduction of the special electronic system to1 February 2015 in test mode with full application from 1 July 2015. Such electronic systemestablishes special VAT accounts for each VAT payer in Ukraine. The VAT accounts will be usedto store advance payments of VAT paid by the taxpayer (which will be a pre-requisite for issue ofa valid VAT return to its customers). However, there is little guidance on how the system shouldoperate and whether it will be possible to include current VAT balances into the newly adoptedsystem due to possible technical constraints. The current wording of the Tax Code allowsrepayment of amounts from the VAT accounts (if they are in excess of the taxpayer’s current VATobligation). However, such repayments may not be processed adequately or effectively by theState Treasury Service of Ukraine (which will operate the VAT accounts). The inadequate orinefficient operation of the electronic VAT administration system could result in outflow of funds tothe VAT accounts of the Ukrainian companies of the Group which could adversely impact theGroup’s working capital, business, results of operation, financial condition and prospects.

Official Ukrainian statistics and economic data may not be accurate or reliable

Although a range of Government authorities, along with various ministries, the NBU and the SSSU,produce statistics on Ukraine and other data on its economy, such information may not be asaccurate or reliable as that compiled in more developed countries. We have not independentlyverified such official statistics and other data, and any discussion of matters relating to Ukraine inthis Prospectus is, therefore, subject to uncertainty due to questions regarding the completeness orreliability of such information. Certain statistical information and other data contained in thisProspectus have been extracted from official governmental sources in Ukraine and were notprepared in connection with the preparation of this Prospectus. In particular, figures relating toUkraine’s GDP and many other aggregate figures cited in this Prospectus may be subject to somedegree of uncertainty and may not be fully in accordance with international standards.

Furthermore, standards of accuracy of statistical data may vary from ministry to ministry and fromperiod to period due to the application of different methodologies. In this Prospectus, data ispresented as provided by the relevant ministry to which the data is attributed, and no attempt hasbeen made to reconcile such data to the data compiled by other ministries or by otherorganisations, such as the IMF. Starting in the first quarter of 2003, Ukraine has been producingdata in accordance with IMF’s Special Data Dissemination Standard. However, this IMF standardmay not be correctly applied.

The existence of a sizeable unofficial or shadow economy may also affect the accuracy andreliability of statistical information. Ukraine has experienced variable rates of inflation, includingperiods of hyperinflation. Unless indicated, the information and figures presented in this Prospectushave not been restated to reflect such inflation and, as a result, period-to-period comparisons maynot be meaningful. Prospective investors should be aware that none of these statistics have beenindependently verified by any person in connection with the Offering. We only accept responsibilityfor the correct extraction and reproduction of such information.

Risks relating to Ferrexpo Middle East

Political and economic risks in the UAE and the wider Middle East region, including terroristattacks and other acts of violence involving the UAE or neighbouring countries, could adverselyaffect Ferrexpo Middle East’s business

Ferrexpo Middle East, a sales and marketing company, is incorporated in the Jebel Ali Free Zone,in the UAE, which is an emerging market. Investors should be aware that investments in emergingmarkets are generally subject to greater risks than those in more developed markets, including, butnot limited to, risks such as political, social and economic instability, external acts of warfare andcivil clashes, government action or intervention, including tariffs, protectionism, subsidies,

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expropriation of assets and cancellation of contractual rights and regulatory, taxation and otherchanges in law, including currency conversion and transfer issues.

Since early 2011 there has been political unrest in a range of countries in the Middle East and inNorth Africa, ranging from public demonstrations against the government to, in extreme cases,armed conflict and civil war, which has given rise to increased political uncertainty across theregion. Although the UAE generally enjoys domestic political stability and good internationalrelations, there is a risk that regional geopolitical instability could impact the country. Potentialsources of further instability in the region include, but are not limited to, a worsening of thesituation in Iraq, spill over effects from the ongoing civil war in Syria, a further deterioration in thecurrent fractured relations between the United States and Iran, an escalation in the Israeli-Palestinian conflict and an escalation in the conflict between Israel and Iran over Iran’s nuclearprogramme.

In addition, terrorist attacks and other acts of violence or war involving the UAE or neighbouringcountries in the Middle East may adversely affect the UAE’s markets. There is also a risk thatregional militant groups could begin to target foreign nationals or businesses in the UAE followingsimilar attacks in Saudi Arabia and Yemen.

Ferrexpo Middle East acts as a sales and marketing company and outsources the majority of itsservices to Group companies located outside of UAE. Investors should note that Ferrexpo MiddleEast’s business and financial performance could be materially adversely affected by political,economic or related developments both within and outside the Middle East because of inter-relationships within the global markets, which in turn could have a material adverse effect on theGroup’s business, results of operations, financial condition and prospects.

Accordingly, investors should exercise particular care in evaluating the risks involved and mustdecide for themselves whether, in the light of those risks, their investment is appropriate.Generally, investment in emerging markets is only suitable for sophisticated investors who fullyappreciate the significance of the risks involved.

Investors may experience difficulties in enforcing foreign arbitral awards and foreign judgmentsin the UAE

The Notes, the Note Guarantee and Trust Deed are governed by English law. Disputes arisingunder the Notes, Trust Deed and the Note Guarantee are subject to being settled by arbitration inaccordance with the LCIA Rules.

The UAE is a civil law jurisdiction and judicial precedents in the UAE have no binding effect onsubsequent decisions. In addition, court decisions in the UAE are generally not recorded. Thesefactors create greater judicial uncertainty than would be expected in certain other jurisdictions.

The New York Convention entered into force in the UAE on 19 November 2006. In the absence ofany other multilateral or bilateral enforcement convention, an arbitration award rendered in Londonshould be enforceable in the UAE in accordance with the terms of the New York Convention.Under the New York Convention, the UAE has an obligation to recognise and enforce foreignarbitration awards, unless the party opposing enforcement can prove one of the grounds underArticle V of the New York Convention to refuse enforcement, or the UAE courts find that thesubject matter of the dispute is not capable of settlement by arbitration or enforcement would becontrary to the public policy of the UAE. There have been limited instances where the UAE courts,most notably the Fujairah Court of First Instance and the Dubai Court of Cassation, have ratified orordered the recognition and enforcement of foreign arbitration awards under the New YorkConvention.

How the New York Convention provisions would be interpreted and applied by the UAE courts inpractice and whether the UAE courts will enforce a foreign arbitration award in accordance with theNew York Convention (or any other multilateral or bilateral enforcement convention), remainslargely untested. The uncertainty regarding the interpretation and application of the New YorkConvention provisions by the courts is further reinforced by the lack of a system of binding judicialprecedent in the UAE. In particular, there remains a risk that notwithstanding Article 238 of FederalLaw No. 11 of 1992 (as amended by Federal Law No. 30 of 2005) (the ‘‘Law of Civil Procedure’’)or the terms of an applicable multilateral or bilateral enforcement convention, the UAE courts mayin practice still consider and apply the grounds set out in the Law of Civil Procedure related to theenforcement of domestic arbitral awards or foreign arbitral awards to the enforcement of a foreign

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arbitral award in any event. If this is the case, it is likely that a foreign arbitral award will be setaside by the UAE courts.

To the extent that the enforcement of remedies must be pursued in the UAE, it should be borne inmind that there is limited scope for self-help remedies under UAE law and that generallyenforcement of remedies in the UAE must be pursued through the courts. Furthermore, undercurrent UAE law, the courts are unlikely to enforce an English judgement without re-examining themerits of the claim and may not observe the choice by the parties of English law as the governinglaw of the relevant document. In the UAE, foreign law is required to be established as a questionof fact and the interpretation of English law by a court in the UAE may not accord with theinterpretation of an English court. In principle, courts in the UAE recognise the choice of foreignlaw if they are satisfied that an appropriate connection exists between the relevant transactionagreement and the foreign law which has been chosen. They will not, however, honour anyprovision of foreign law which is contrary to public policy, order or morals in the UAE, or to anymandatory law of, or applicable in, the UAE.

Risks relating to our ownership structure

Our majority shareholder exercises significant control over the Group and is connected to theChief Executive Officer

Our majority shareholder is Fevamotinico S.a. r.l. (‘‘Fevamotinico’’), a company indirectly whollyowned by The Minco Trust, the beneficiaries of which include Kostyantin Zhevago who is currentlythe Chief Executive Officer of Ferrexpo and a member of the Board of Directors as well as theExecutive Committee. Kostyantin Zhevago has the ability to influence the business indirectlythrough his beneficial interest in The Minco Trust, which as a 50.3% holder of the issued sharecapital has the ability to influence all actions that require shareholder approval, or day to daymanagement of the business in his capacity as Chief Executive Officer, including the approval ofsignificant corporate transactions, dividends, capital expenditures and key supplier contracts.Kostyantin Zhevago, Fevamotinico and The Minco Trust have, however, entered into a relationshipagreement with us to ensure that we are capable of carrying on our business independently, andto ensure, among other things, that transactions and arrangements between us and KostyantinZhevago, Fevamotinico, The Minco Trust and their associates are on an arm’s length basis and onnormal commercial terms. See ‘‘Shareholders and Related Party Transactions – RelationshipAgreement’’ for further information about the Relationship Agreement. Nevertheless, KostyantinZhevago’s interests may be different from those of other shareholders, and he may seek to causeus to take actions that are not in the best interests of the minority shareholders.

We may enter into transactions with our affiliates

We have engaged and may continue to engage in transactions with related parties, includingKostyantin Zhevago and companies controlled by him or in which he owns a controlling interest,and with entities with which the Executive Directors are connected. We are aware of ourobligations under the Listing Rules of the Financial Conduct Authority (the ‘‘Listing Rules’’) withrespect to related party transactions, and we have procedures in place to ensure that prospectiverelated party transactions are properly reported and approved, including by the shareholders wherenecessary. However, transactions may be entered into on terms that are not solely determined bymarket prices and that may not represent terms that would normally prevail between unaffiliatedparties.

Any change in the rights of minority shareholders may impact our ability to executemanagement’s strategy

FPM has a number of minority shareholders comprising legal entities, partnerships and individuals,most of whom are not known to us and who may have certain rights under Ukrainian law. Acertain portion of FPM shares are traded on the over-the-counter market in Ukraine. Minorityshareholders may gain further rights resulting from changes in law.

FPM is not in compliance with certain legislative requirements applicable to Ukrainian jointstock companies

The Law of Ukraine ‘‘On Joint Stock Companies’’ dated 17 September 2008 (the ‘‘JSC Law’’)became effective on 30 April 2009. Under the JSC Law joint stock companies, such as FPM,registered before 30 April 2009 were required to bring their constitutional documents in conformitywith the JSC Law requirements by 30 April 2011. In particular, such joint stock companies were

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required to (i) change names from open/closed joint stock companies to public/private joint stockcompanies, (ii) amend charters and internal regulations on the governing bodies in accordance withthe requirements of the JSC Law, and (iii) register the amendments to charters (the ‘‘TransitionConditions’’). FPM fulfiled all the Transition Conditions required by the JSC Law except forchanging the name from open joint stock company to public joint stock company. On 11 November2014, the National Commission for Securities and Stock Market (the ‘‘Ukrainian SEC’’) suspendedthe circulation of FPM’s shares until FPM fulfils all the Transition Conditions. If FPM does notchange its name in accordance with the JSC Law requirements, further financial or other sanctionsmay be introduced by the Ukrainian SEC which could have a material adverse effect on ourbusiness, financial condition, results of operation, and prospects.

There are weaknesses in corporate governance standards under Ukrainian law

Our operations are conducted entirely through Ukrainian companies. We may face obstacles inimplementing international best practice in mining operations at our facilities in Ukraine due to thelegacy of FPM’s previous state ownership. Disclosure and reporting requirements have onlyrecently been enacted in Ukraine. Although our Board of Directors and Executive Committee applyIFRS financial reporting and best practice risk management procedures, our principal operatingsubsidiary, FPM, has historically applied Ukrainian corporate practice and reporting procedures.Although these procedures and practices have been effective, FPM may face difficulties in correctlyapplying them in all circumstances.

Anti-fraud legislation has only recently been adapted to the requirements of a market economy andremains largely untested. Most Ukrainian companies do not have corporate governance proceduresthat are in line with U.S. standards, including the standards set forth in the U.S. Sarbanes-OxleyAct of 2002 or with generally accepted international standards. The concept of fiduciary duties ofmanagement or members of the board to their companies or shareholders remains undeveloped inUkraine. Violations of disclosure and reporting requirements or breaches of fiduciary duties by ourUkrainian subsidiaries or their management could significantly affect the receipt of materialinformation or result in inappropriate management decisions, which may have a material adverseeffect on our business, results of operations, financial condition and prospects. However, we arebound by our reporting obligations in the UK as a listed company.

Risks relating to our indebtedness and the Notes

Our ability to service our indebtedness depends upon the ability of our subsidiaries to paydividends and to advance funds

Because we conduct business primarily through Ferrexpo AG, Ferrexpo Middle East, FPM, andother subsidiaries, our ability to service our indebtedness, including the Notes, depends on theearnings and cash flow of Ferrexpo AG, Ferrexpo Middle East and FPM and our other subsidiariesand their ability to pay us dividends and to advance funds to us. The operating performance andfinancial condition of our operating subsidiaries and the ability of such subsidiaries to provide fundsto us will in turn depend, to some extent, on general economic, financial, competitive, market,regulatory and other factors, many of which are beyond our control. Our operating subsidiaries maynot generate income and cash flow sufficient to enable the Issuer to meet its payment obligationson the Notes. Other contractual and legal restrictions applicable to our subsidiaries could also limitour ability to obtain cash from them. Our rights to participate in any distribution of our subsidiaries’assets upon their liquidation, reorganisation or insolvency would generally be subject to prior claimsof the subsidiaries’ creditors, including any trade creditors and preferred shareholders.

The payment of dividends by FPM to its shareholders outside Ukraine, including Ferrexpo AG, isalso subject to a number of procedural requirements imposed by law and by the Charter and otherinternal documents of FPM. In particular, FPM is required to submit to its servicing bank a set ofdocuments prescribed by Ukrainian currency exchange regulations, in order to transfer dividends toFerrexpo AG. Tax is withheld at source on payments of dividends to Ferrexpo AG at the reducedrate of 5% under the Switzerland/Ukraine double taxation convention provided that (i) Ferrexpo AGowns at least 20% of the shares in FPM; and (2) it qualifies as the beneficial owner of dividends,or at the rate of 15% absent a tax residency certificate attesting to Ferrexpo AG’s tax residency inSwitzerland or failing to qualify for conditions mentioned above. With effect from 23 September2014, the NBU restricted cross-border payments of dividends by Ukrainian companies until andincluding 3 March 2015, except for dividends payable in relation to the shares in joint stockcompanies traded on Ukrainian stock exchanges. With effect from 4 March 2015, the NBU

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extended restrictions on cross-border payments of dividends until 3 June 2015 and cancelled theexception for dividends payable in relation to shares in joint stock companies traded on Ukrainianstock exchanges. With effect from 4 June 2015 these restrictions were further extended by theNBU until 3 September 2015. Therefore, any Ukrainian subsidiary which is organised as a limitedliability company under Ukrainian law will not be able to pay dividends until after 3 September2015. Furthermore, there can be no assurance that the currency control regulations currently inplace will not be extended or expanded in a manner that would further prevent Ferrexpo’sUkrainian subsidiaries from providing funds to Ferrexpo. Further restrictions on the payment ofdividends to foreign shareholders may be applied in the future.

The terms of other agreements to which we and our subsidiaries may be or become subject mayrestrict the ability of our subsidiaries to provide funds to us. In addition, we and our subsidiariesmay incur other debt in the future that may contain financial covenants more restrictive than thosecontained in the Trust Deed.

Goodwill impairment and other non-cash charges in our consolidated income statement, as well ascharges recognised directly in equity, such as actuarial losses and foreign exchange rateadjustments, if incurred, could potentially reduce the reserves available for distribution and thusreduce or prevent dividend payments to us.

If our operating subsidiaries’ future cash flows from operations and other capital resources areinsufficient for us to pay our obligations as they mature or to fund our liquidity needs, we and oursubsidiaries may, among other things be forced to:

* reduce or delay business activities and capital expenditures;

* sell assets;

* obtain additional debt or equity capital;

* restructure or refinance all or a portion of our debt on or before maturity; or

* forego opportunities such as acquisitions of other businesses.

These alternatives may not be able to be accomplished on a timely basis or on satisfactory terms,or at all. In addition, the terms of our existing and future debt, including the Notes, may limit theability of our operating subsidiaries to pursue any of these alternatives.

Our business may be adversely affected as a result of our substantial indebtedness

We and our subsidiaries have and will continue to have a substantial amount of outstandingindebtedness and obligations with respect to the servicing of such indebtedness. As at 31 March2015:

* we had long-term senior debt of US$480.2 million, ranking senior to the 2016 Notes, the 2019Notes and the Notes;

* the Issuer and the Guarantors together, after the elimination of any intercompanyindebtedness and liabilities, had total indebtedness (other than the 2016 Note Guarantee, the2019 Note Guarantee, the 2016 Note Suretyship or the 2019 Note Suretyship) ofUS$720.1 million of bank borrowings, all of which are secured and effectively rank senior tothe 2016 Notes, the 2019 Notes and the Notes. See ‘‘Description of Other Indebtedness’’ formore information; and

* in addition, there has been US$16.6 million of capital leases that effectively ranks senior tothe 2016 Notes, the 2019 Notes, the Notes, the 2016 Note Guarantee, the 2019 NoteGuarantee, the Note Guarantee, the 2016 Note Suretyship, the 2019 Note Suretyship and theNote Suretyship.

This substantial indebtedness could have an adverse effect on our business, including:

* requiring us to dedicate a substantial portion of cash flow to make payments onindebtedness, thereby reducing the availability of cash flow to fund working capital, capitalexpenditures, new acquisitions and other general corporate purposes;

* increasing our vulnerability to general adverse economic and industry conditions;

* limiting our flexibility in planning for, or reacting to, changes in our business and in the ironore industry;

* limiting our ability to make acquisitions or take other corporate actions;

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* placing us at a competitive disadvantage compared to competitors who have lessindebtedness in relation to cash flow; and

* limiting our ability to borrow additional funds and increasing the cost of any such borrowings,particularly because of the financial and other restrictive covenants contained in the Notes.

The 2016 Notes, with a principal amount outstanding at the date of this Prospectus ofUS$285.7 million, mature in April 2016, and prior to the maturity of the 2016 Notes we arerequired to make payments on our outstanding indebtedness as at 31 December 2014 ofapproximately US$300 million. The recent fall in benchmark iron ore prices and the resulting impacton the cash generation of the Group is likely to require certain debt facilities to be renewed orrolled over with extended repayment terms in order to ensure the Group has sufficient workingcapital in 2016. See Note 2 of the Notes to the Interim Financial Statements.

In addition, to the extent that our debt obligations are based on fixed interest rates, our ability toservice these debt obligations could be adversely affected by deflationary periods in which pricesfor our products may decline, resulting in reduced cash inflows.

The Conditions provide significant flexibility for value to leave the Group

The Conditions provide significant flexibility for value to leave the Group through dividends inrespect of the Parent’s ordinary shares and through investments in joint ventures and other entitieswhich we do not control. Although certain dividends and similar distributions are restricted, suchprovisions permit the payment of up to US$60 million per year in dividends in respect of theParent’s ordinary shares without regard to such restrictions and do not include any restrictions oninvestments by us. The making of such investments and the payment of such dividends mayreduce funds that would otherwise be available to the Issuer and/or the Guarantors to makepayments in respect of the Notes. See Condition 3.14 (Limitation on Restricted Distributions).

Restrictions in our debt instruments may limit our ability to operate our business

The Notes and certain of our other debt instruments contain covenants that limit our discretion withrespect to certain business matters. For example, these covenants will significantly restrict ourability, and the ability of certain of our subsidiaries to, among other things:

* incur additional debt;

* pay dividends or distributions on, redeem or repurchase capital stock;

* make certain restricted payments and investments;

* create certain liens;

* transfer or sell assets;

* engage in sale and leaseback transactions;

* merge or consolidate with other entities; and

* enter into transactions with affiliates.

These covenants could materially and adversely affect our ability to finance our future operationsor capital needs or to engage in other business activities. See ‘‘Description of Other Indebtedness’’and Condition 3 (Covenants).

Our subsidiaries have indebtedness that is secured and therefore effectively senior to the Notes,the Note Guarantee and the Note Suretyship

As at 31 December 2014, our operating subsidiaries had an aggregate amount of approximatelyUS$790.0 million of secured indebtedness (excluding capital leases). All of such securedindebtedness will be effectively senior to our obligations under the Notes and the Guarantors’respective obligations under the Note Guarantee and the Note Suretyship, which are unsecured. Asa result, if we default under the Notes, and this default triggers an event of default under any ofsuch secured indebtedness, holders of such secured indebtedness will have priority over theNoteholders to the extent of the assets securing such indebtedness.

The terms of the Notes allow us to increase the amount of our secured indebtedness under certainconditions. See ‘‘Description of Other Indebtedness’’ and ‘‘Terms and Conditions of the Notes –Condition 3 (Covenants)’’.

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We may not be able to finance a change of control offer required by the Trust Deed

Upon the occurrence of certain change of control events, we will be required to offer to repurchaseall outstanding Notes at 101% of the principal amount of the Notes plus accrued and unpaidinterest and additional amounts, if any, to the date of the repurchase. If any such change ofcontrol event were to occur, we may not have sufficient funds available at the time to pay the priceof the outstanding Notes. The change of control may cause the acceleration of other indebtednessthat may be senior to the Notes or rank equally with the Notes. In any case, we expect that wewould require third party financing to make a change of control offer. We may not be able toobtain this financing. See ‘‘Terms and Conditions of the Notes – Condition 5.3 (Redemption at theOption of the Holders Upon a Change of Control’’).

The claims of holders of the Notes may be limited in the event that we or one or more of theGuarantors is declared bankrupt

The Issuer, FPM and the Trustee will enter into a Surety Agreement to be dated on or about theIssue Date. Ukrainian bankruptcy regulations may prohibit FPM from making payments pursuant tothe Surety Agreement. Ukrainian bankruptcy regulations differ from bankruptcy laws of England andthe United States, and are subject to varying interpretations. There is not enough precedent to beable to predict how claims of holders of the Notes would be resolved in the event of thebankruptcy of FPM. In the event of the bankruptcy of FPM, its obligations to holders of the Noteswould be subordinated to the following obligations:

* obligations secured by pledges or mortgages of its assets;

* severance pay, employment-related obligations and payment of wages to FPM’s employees;

* claims of FPM’s creditors under insurance agreements;

* expenditures associated with the conduct of the bankruptcy proceedings and work of theliquidation commission;

* obligations arising as a result of causing harm to life or health of individuals, as well asmandatory pension and social security contributions;

* local and state taxes and other mandatory payments (including claims of the respectivegovernmental authorities managing the state reserve fund); and

* expenditures arising from measures to prevent property and ecological damage, harm to thehealth and safety of individuals.

In the event of the bankruptcy of FPM and, to the extent effected thereby, the Issuer or one of theother Guarantors, Ukrainian bankruptcy law may materially adversely affect their ability to makepayments to holders of the Notes.

In the event of bankruptcy proceedings against FPM, Ukrainian bankruptcy law may materiallyadversely affect FPM’s ability to make payments to the Trustee on behalf of the holders of theNotes

Claims against FPM may be incapable of enforcement upon commencement of bankruptcyproceedings. After any bankruptcy proceeding is commenced, the Ukrainian court imposes amoratorium on claims of creditors which became payable prior to the commencement of thebankruptcy proceeding. During the term of such moratorium, FPM would be unable to makepayments to the Trustee on behalf of the holders of the Notes, and the Noteholders’ claims againstFPM would not be enforceable in Ukraine. FPM may not be held liable in Ukraine for the non-performance of its obligations to the Noteholders’ resulting from the imposition of the moratorium.Upon the termination of the moratorium (other than as a result of FPM entering bankruptcyproceedings), the Noteholders would be entitled to make, and to enforce, claims against FPM inthe amounts existing as of the date when the moratorium was imposed.

Further, Article 20 of the Law of Ukraine ‘‘On Restoration of a Debtor’s Solvency or Declaration ofits Bankruptcy’’ dated 14 May 1992, as restated on 22 December 2011 (the ‘‘Bankruptcy Law’’),permits a court to invalidate agreements or reverse assets-related actions, entered into or made bya debtor after the commencement of the bankruptcy proceedings or within one year prior to thecommencement of the bankruptcy proceedings, upon application of an insolvency manager or acompetitive creditor, on the following grounds: (i) a debtor disposed of assets free of charge,assumed obligations without respective pecuniary actions of the other party, renounced its ownproperty claims; (ii) a debtor prematurely performed its property obligations; (iii) a debtor, prior to

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commencement of the bankruptcy proceedings, assumed obligations as a result of which it becameinsolvent or its performance of monetary obligations to other creditors in part or in full becameimpossible; (iv) a debtor disposed of or acquired assets at the prices respectively lower or higherthan market prices, provided that, at the time of assuming such obligation or as a result of itsperformance its assets were (became) insufficient to satisfy the claims of creditors; (v) a debtormade payment to a creditor or received assets in lieu of performance of monetary obligations onthe day when the amount of creditors’ claims exceeded the value of assets; (vi) a debtor providedsecurity in form of pledge to secure the performance of monetary claims.

The clawback provisions summarised above are a part of the restatement of the Bankruptcy Lawthat came into effect on 19 January 2013 and differs significantly from the version previously inplace. Therefore, as at the date of this Prospectus, such provisions may be subject to varyinginterpretations. If the Surety Agreement were to be declared invalid on any of the above grounds,the holders of the Notes would be required to repay to FPM all funds received pursuant to theSurety Agreement. Pursuant to Article 20(3) of the Bankruptcy Law, the holders of the Notes wouldhave the option either to request a debtor to pay the debt under the Surety Agreement togetherwith other first-ranking claims in the course of the bankruptcy proceedings or request a debtorspecific performance of its obligations under the Surety Agreement after the termination of thebankruptcy proceedings. There is a lack of certainty as to whether, in such event, the court mightalso impose other requirements as a result of the invalidity. In light of the risks associated with theUkrainian legal system no assurance can be given as to how the courts in Ukraine would react inthe event of the Surety Agreement being invalidated.

Furthermore, pursuant to Article 28 of the restated Bankruptcy Law, in case a financialrehabilitation procedure has been commenced in relation to a debtor, the insolvency manager isentitled to terminate, within a three month period from the date of decision on the financialrehabilitation of a debtor, any agreement entered into by a debtor prior to the commencement ofthe bankruptcy proceedings, which has not yet been performed in full or in part, provided that: (i)the debtor incurs losses as a result of the performance of such agreement; or (ii) the term of suchagreement is longer than one year or such agreement provides benefits to the debtor only in thelong-term perspective (other than in the case of manufacture of goods with a technological cycleexceeding the debtor’s financial rehabilitation period); or (iii) the performance of such agreementhampers the restoration of the debtor’s solvency.

Moreover, under the Bankruptcy Law FPM is deemed to be a town-forming enterprise and, being amining and concentration complex, is ranked as hazardous enterprise. According to the BankruptcyLaw, town-forming enterprises as well as a hazardous enterprises are subject to special rules oninsolvency, including, inter alia, the participation of state and municipal authorities in any insolvencyproceedings and a prohibition on auction sales of their assets other than as part of an integralproperty complex. Insolvency proceedings may also become protracted upon request by state and/or municipal authorities if they provide suretyship for FPM’s liabilities. However, if FPM’s debts arenot serviced pursuant to the repayment schedule set out in the suretyship, the holders of the Notescould demand payment from the respective state and/or municipal authorities. In the event that asurety breaches its obligations with respect to at least one third of creditors’ claims to a debtor,such breach could be a ground for early termination of the administration of assets or financialrehabilitation stages of the bankruptcy proceedings and commencement of the liquidation stage ofthe bankruptcy proceedings.

UAE’s insolvency law is relatively untested, and UAE courts have dealt with very few insolvency-related actions. The lack of judicial development and practical application of the UAE insolvencylaw may, to the extent that UAE law applies, impact creditors’ rights, the ability of Noteholders toenforce their rights and the priority of the claims of the Noteholders

As there has been, to date, little practical application of bankruptcy, insolvency, reorganisation,composition, moratorium or similar law in the UAE, to the extent such law applies, it is unclear howthe courts of the UAE would construe or enforce, if at all, the obligations owed by Ferrexpo MiddleEast in the Note Guarantee contained in the Trust Deed, to which it is a party. There can be noassurance that a UAE court would compel a liquidator of Ferrexpo Middle East to perform or causeto be performed any of its obligations under any of its agreements during a winding-up process.

After declaration of bankruptcy has been made, Book Five of Federal Law No. 18 of 1993 (the‘‘Commercial Code’’) provides that certain transactions may be set aside or not be binding on thegeneral body of creditors, including payments for debts before the repayment date, payment of

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debts with something other than that agreed and providing security or guarantees for a pre-existingdebt. In addition, the Commercial Code provides that any other transaction that is detrimental tocreditors can be set aside if the contracting party was aware at the time of entering into thecontract that the debtor had ceased to pay its debts.

There are no exact comparable ‘‘financial preference’’ or ‘‘fraudulent preference’’ provisions underUAE laws to those as understood under English law. However, UAE laws do provide for a‘‘suspect’’ period commencing from the date when a UAE Court determines the bankrupt ‘‘ceasedto pay its commercial debts’’ within the time limits for due payment. Where a UAE Courtdetermines that a commercial enterprise is bankrupt, it will identify the date on which thecommercial enterprise provisionally suspended payment of its debts, which can be up to two yearsprior to the declaration of bankruptcy. During this suspect period there is the opportunity for theCourt to set aside certain transactions undertaken during the suspect period. The CommercialCode specifies various transactions which may be set aside if they occur during this suspectperiod.

Also, UAE law provides that all of a debtor’s assets will stand as security for the payment of itsdebts and that all creditors will share equally in such security, except for those creditors whoseclaims have preference as a matter of UAE law.

Exchange rate risks and exchange controls generally

Principal and interest on the Notes will be paid in US dollars. This presents certain risks relating tocurrency conversions if an investor’s financial activities are denominated principally in a currency orcurrency unit (the ‘‘Investor’s Currency’’) other than US dollars. These include the risk thatexchange rates may significantly change (including changes due to the devaluation of the US dollaror revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over theInvestor’s Currency may impose or modify exchange controls. An appreciation in the value of theInvestor’s Currency relative to US dollars would decrease (a) the Investor’s Currency equivalentyield on the Notes, (b) the Investor’s Currency equivalent value of the principal payable on theNotes and (c) the Investor’s Currency equivalent market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchangecontrols that could adversely affect an applicable exchange rate. As a result, investors may receiveless interest or principal than expected, or no interest or principal at all.

Swiss law may limit Ferrexpo AG’s liability for payments due in respect of the Notes under theNote Guarantee and the gross-up obligation in respect of the Swiss Guarantor may not be validand may prejudice its enforceability

The granting of a Note Guarantee by Ferrexpo AG (or any other Guarantor organised under thelaws of Switzerland (any such Guarantor, a ‘‘Swiss Guarantor’’) as well as any other undertakingcontained in any agreement having the same or a similar effect, such as, but not limited to, thewaiver of set-off or subrogation rights or the subordination of intra-group claims, granted by theSwiss Guarantor for the benefit of the Swiss Guarantor’s direct and indirect parent (such as theCompany in relation to Ferrexpo AG) and sister companies (so-called ‘‘Up-stream or Cross-streamObligation’’) are subject to certain restrictions and risk being held invalid or partially invalid underSwiss corporate law.

In addition, the enforcement of the Swiss Guarantor’s Note Guarantee may give rise to Swisswithholding taxes (of up to 35% at present rates, subject to applicable double taxation treaties) tothe extent that the payment or enforcement of such Note Guarantee or security are regarded as adeemed dividend distribution. Under Swiss law, any obligation of the Swiss Guarantor to gross-up,indemnify or otherwise hold harmless the holders of the Notes for the deduction of Swisswithholding tax may not be valid and, thus, may prejudice the enforceability of any such obligation.In addition, any obligation to gross-up, indemnify or otherwise hold harmless the holders of theNotes for the deduction of Swiss withholding tax in connection with a Note Guarantee of the SwissGuarantor would in any case be limited by the amount of the freely distributable equity of theSwiss Guarantor. Further, payments under the Swiss Guarantor’s Note Guarantee may requirecertain prior corporate formalities to be completed, including, but not limited to, obtaining an auditreport, shareholders’ resolutions and board resolutions.

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There are limitations on the effectiveness of guarantees in the UAE

UAE courts are unlikely to enforce an English judgment without re-examining the merits of theclaim, including the validity of the obligations of the parties contained in the underlyingdocumentation. If a UAE court were to re-examine the merits of a claim made against FerrexpoMiddle East for payment under the Note Guarantee, notwithstanding that the Note Guarantee isgoverned by English law, the UAE court may interpret the Note Guarantee in light of UAE lawprinciples rather than English law principles.

If the Note Guarantee were considered by UAE courts, in light of judgments to date, there is someambiguity as to whether it would be considered a ‘‘civil guarantee’’, and therefore governed by theprovisions of the UAE Civil Code, or a ‘‘commercial guarantee’’ under the Commercial Code.According to Article 73 of the Commercial Code, a guarantee shall be commercial if the guarantorguarantees a debt which is deemed to be commercial with respect to the debtor, provided that nolaw or agreement stipulates otherwise, or if the guarantor is a commercial enterprise with aninterest in guaranteeing the debt. Different interpretations of Article 73 have been applied by UAEcourts, for instance, some decisions indicate that a guarantee will be a ‘‘commercial guarantee’’ (asopposed to a ‘‘civil guarantee’’) if it secures a commercial primary obligation (provided that noagreement or law stipulates otherwise). However, other decisions indicate that a guarantee will onlybe a ‘‘commercial guarantee’’ if the guarantee is granted for consideration or for the commercialpurpose of the guarantor.

If the guarantee were to be interpreted as a ‘‘civil guarantee’’, Chapter V of the Civil Code wouldapply. Of particular importance is Article 1061, which requires that guarantees must be issued withrespect to a specified debt or a thing certain in amount. That is, the obligation of a guarantor isincidental to the obligations of the principal debtor and the obligations of a guarantor will only bevalid to the extent of the continuing obligations of the principal debtor. Thus, in the event of anyillegality, invalidity or unenforceability of the primary obligations of the principal debtor, theobligations of the guarantor in respect of any such primary obligations may be discharged,notwithstanding any agreement contained in the Note Guarantee. It is possible that UAE courtsmay not enforce the Note Guarantee where the primary obligations of the Issuer are deemed to beinvalid, illegal or unenforceable. In order to enforce a guarantee under the laws of the UAE, theunderlying debt obligation for which such guarantee has been granted may need to be provedbefore the UAE courts. Furthermore, should the Note Guarantee be deemed a ‘‘civil guarantee’’,the time bar in Article 1092 of the Civil Code would apply. Specifically, the provision provides thatif a debt is due, the creditor must claim for it within six months from the date on which it fell due,otherwise, the guarantee will be deemed to have been discharged.

The laws of the UAE do not contemplate a guarantee by way of indemnity of the obligations of thedebtor by the guarantor and instead contemplate a guarantee by way of suretyship. Accordingly, itis not possible to state with any certainty whether a guarantor could be obliged by the UAE courtsto pay a greater sum than the debtor is obliged to pay or to perform an obligation that the debtoris not obligated to perform.

Consequently, were a UAE court to re-examine the merits of a claim made against FerrexpoMiddle East for payment under the Note Guarantee, if the Issuer’s obligation to make paymentunder the Notes cannot be proven to the satisfaction of the UAE court, the court may concludethat there is no obligation on Ferrexpo Middle East to make payment in the full amount claimedunder the Note Guarantee. Furthermore, notwithstanding that the Note Guarantee is governed byEnglish law, if a UAE court were to apply UAE law principles when assessing a claim in respect ofthe Note Guarantee, Ferrexpo Middle East may be released from its obligations under the NoteGuarantee if the relevant claim is not made within six months of payment becoming due under theNote Guarantee.

Ukrainian currency control regulations may impact FPM’s ability to make payments under theNote Suretyship

The NBU is empowered to establish policies for and to regulate currency operations in Ukraine andhas the power to establish restrictions on currency operations and repatriation. Ukrainian currencycontrols and practice are subject to continuing change, with the NBU exercising considerableautonomy in interpretation and practice.

The obligations of FPM under the Note Suretyship will constitute a suretyship under Ukrainian law.Under applicable Ukrainian legislation, a resident Ukrainian entity is required to obtain an individuallicence from the NBU (a ‘‘Foreign Payment Licence’’) in order to make cross border payments

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pursuant to a suretyship issued in favour of a foreign entity in respect of obligations of a foreigndebtor (although no Foreign Payment Licence is required for a resident Ukrainian entity to issuethe suretyship). However, the NBU does not issue Foreign Payment Licences in advance or forcontingent payments when the amount and date of a cross border payment are not known. Takinginto account that the NBU has discretion in the issuance of Foreign Payment Licences, it might notgrant a Foreign Payment Licence. The failure or refusal of the NBU to grant such a ForeignPayment Licence should not affect the validity of the underlying legal obligation and such failure orrefusal by the NBU may be challenged in a Ukrainian court. The Ukrainian court may order thatthe NBU issue the Foreign Payment Licence should it decide that such Foreign Payment Licencewas unlawfully rejected.

As a contingency measure aimed at the stabilisation of the Ukrainian currency market, the NBUtemporarily, from 23 September 2014 until 3 September 2015, prohibited the carrying out ofpayments by Ukrainian residents pursuant to the NBU’s individual licences, including the ForeignPayment Licence. There can be no assurance that this temporary prohibition will not be extendedand will not be in effect at the time FPM is required to make a payment under the NoteSuretyship. Ukrainian legislation provide for several exceptions from this prohibition, however noneof such exceptions are applicable to FPM.

The ability of FPM to make cross border payments under the Note Suretyship would be furtherimpeded by Ukrainian currency control regulations restricting a resident Ukrainian entity’s ability topurchase foreign currency in order to make payments under a suretyship issued with respect toobligations of a foreign debtor. In particular, FPM may make a cross border payment under theNote Suretyship only out of its own foreign currency funds and would not be entitled underUkrainian currency control regulations to borrow or purchase any foreign currency funds for thepurpose of making such cross border payment, irrespective of whether or not a Foreign PaymentLicence has been obtained by it for the purpose of making a payment under the Note Suretyship.FPM may also be restricted in its ability to use its own foreign currency funds for making paymentsunder the Note Suretyship due to the compulsory sale of foreign currency proceeds by Ukrainianexporters introduced by the NBU and which may be further extended by the NBU in its discretion.See ‘‘– Risks relating to operating in Ukraine – Our ability to service debts in foreign currenciesmay be adversely affected by changes in applicable currency rules and regulations in Ukraine’’.

Ukrainian law requires that, prior to the making of any payment under the Surety Agreement, FPMwould need to obtain the ‘‘documents confirming that the principal debtor has in fact failed todischarge the obligations which are secured’’ by the Surety Agreement. Although Ukrainianlegislation provides no guidance as to what such documents should be, it would be fair to assumethat this requirement should be deemed satisfied if FPM were to obtain a default notice and/or apayment demand from the Trustee under the Surety Agreement.

The validity of the Note Suretyship could be challenged

The Note Suretyship creates a suretyship (in Ukrainian, poruka), for the purposes of Ukrainian law.A suretyship is an ancillary undertaking of FPM in relation to the underlying obligations of theNotes and, therefore, if those obligations are invalid, the suretyship under the Note Suretyship willalso be invalid under Ukrainian law. Furthermore, if the underlying obligations are amended so asto increase the scope of responsibility of the surety or are assigned, the prior consent of the suretyshould be obtained to ensure continued validity of the Note Suretyship. The suretyship is not aguarantee (in Ukrainian, garantiya). For the avoidance of doubt, the obligations of FPM under theNote Suretyship shall not constitute a guarantee obligation as that term is interpreted underUkrainian law.

Under the Law of Ukraine ‘‘On Financial Services and the State Regulation of the Markets ofFinancial Services’’ dated 12 July 2001, suretyships are considered ‘‘financial services’’, which mayonly be rendered by a duly licensed bank or other financial institution or, as an exception, by anon-financial institution when expressly permitted by a law of Ukraine or the National CommissionCarrying out the State Regulation in the Area of Financial Services Markets (the ‘‘Commission’’).The Commission permitted non-financial institutions to issue suretyships, subject to compliance bythe issuer of a suretyship with anti-money laundering requirements and procedures. Ukrainiancompanies often conclude suretyship agreements, and neither the Commission nor Ukrainian courtshave as yet recognised such practice as invalid. However, due to a lack of guidance by theCommission with regard to the exact scope of such compliance, a particular surety could beviewed by the Ukrainian authorities or courts as not complying with such requirements and

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procedures and, accordingly, the legal capacity of such surety to issue a suretyship and the validityof any particular suretyship could be challenged. See also ‘‘– Risks relating to our indebtednessand the Notes – Ukrainian currency control regulations may impact FPM’s ability to makepayments under the Note Suretyship’’.

Payments under the Surety Agreement may be subject to withholding tax and an investor maynot be able to obtain relief under a double tax treaty if a tax residency certificate is not providedto FPM before the payment

Payments by FPM under the Surety Agreement (including payments in respect of interest, defaultinterest, indemnities etc.) to a non-resident payee (such as the Trustee or any Noteholder) may besubject to withholding tax at the rate of 15% (if payable to a non-resident legal entity) or 20% (ifpayable to a non-resident individual) subject to any reduction or full exemption pursuant to theterms of an applicable double tax treaty. See ‘‘Taxation – Ukraine – Payments under the SuretyAgreement’’. Based on a fair interpretation of applicable Ukrainian tax legislation, such Ukrainianwithholding tax should not apply to the payments under the Surety Agreement in respect of, andequal to, the nominal amount of the Notes. Under the terms of the Convention between theGovernment of the United Kingdom of Great Britain and Northern Ireland and the Government forthe Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes onIncome and Capital Gains signed on 10 February 1993 and in force from 11 August 1993 (the‘‘UK/Ukraine Double Tax Treaty’’), payments to the Trustee for the benefit of the Noteholdersunder the Surety Agreement may be exempt from withholding tax in Ukraine, provided that certainconditions set forth in the UK/Ukraine Double Tax Treaty and under applicable Ukrainian law areduly satisfied, in particular, the Trustee is regarded as the ‘‘beneficial owner’’ of such payments.There can be no assurance that the exemption from withholding tax under the UK/Ukraine DoubleTax Treaty is, or will continue to be, available. If, at any point in the future, the Trustee fails tosatisfy the ‘‘beneficial ownership’’ test in respect of payments under the Surety Agreement, theNoteholders may still benefit from the reduced withholding tax rate or exemption from Ukrainianwithholding tax if there is an effective double tax treaty of their residence jurisdiction with Ukraineand all conditions for application of such treaty relief are met. In particular, in order to benefit fromthe provision of such double tax treaty, a Noteholder must provide FPM with a tax residencycertificate issued by the competent authorities of the treaty state before the payment by FPMunder the Surety Agreement. If the investor fails to provide FPM with the residency certificate, anybenefits of the double tax treaty will not be available in the course of the payment and payment tohim may be subject to 15% withholding tax in Ukraine.

The gross-up obligation under the Surety Agreement may not be enforceable

Payments by FPM under the Surety Agreement may be subject to withholding tax at the rate of15% (if payments are made to a non-resident legal entity) or 20% (if payments are made to a non-resident individual). See ‘‘Taxation – Ukraine – Payments under the Surety Agreement’’. In theevent of the imposition of such tax, the Surety Agreement obliges FPM to pay additional amountssuch that the recipient receives the amount due to them had no such withholding been required.Ukrainian law generally prohibits payment of tax for another person and contractual provisionsrequiring such payment. In May 2012, the State Tax Service of Ukraine issued a letter expressingthe position that clauses in agreements between Ukrainian residents and their foreigncounterparties providing for the payment of an amount compensating a foreign counterparty for thewithholding of tax in Ukraine contradict certain provisions of Ukrainian legislation that prohibit aUkrainian resident from assuming a foreign counterparty’s tax payment obligation. Therefore, thereis a risk that such restriction would also apply to gross-up provisions of the Surety Agreement andobligations of FPM to pay additional amounts thereunder. As a result, Ukrainian courts mayconstrue the ‘‘gross-up’’ provisions in the Surety Agreement null and void and, therefore,unenforceable against FPM.

Foreign judgments may not be enforceable in Ukraine

Courts in Ukraine will generally not recognise and/or enforce any judgment obtained in a court of acountry other than Ukraine unless such enforcement is envisaged by an international treaty towhich Ukraine is a party, and then only in accordance with the terms of such treaty. There is nosuch treaty in effect between Ukraine and the United Kingdom or the United States.

In the absence of such international treaty, the Ukrainian courts may recognise and enforce aforeign court judgment only on the basis of the principle of reciprocity. Ukrainian legislation

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provides that unless proven otherwise the reciprocity is deemed to exist in relations betweenUkraine and the country where the judgment was rendered. However, Ukrainian legislation doesnot provide for any clear rules on the application of the principle of reciprocity and there is noofficial interpretation or established court practice on these provisions of Ukrainian legislation.Accordingly, the Ukrainian courts might not recognise or enforce a judgment rendered by UnitedStates or United Kingdom courts on the basis of the principle of reciprocity. Furthermore, theUkrainian courts might refuse to recognise and enforce a foreign court judgment on the basis ofthe principle of reciprocity on the grounds provided in Ukrainian legislation in effect on the date onwhich such recognition and/or enforcement are sought. Accordingly, the holders of the Notes andother parties to the Trust Deed and the Surety Agreement may be unable to enforce foreignjudgments in respect thereof in Ukraine. Since Ukraine is a party to the New York Convention, anarbitral award would be enforceable in Ukraine, subject to the terms of the New York Conventionand compliance with applicable Ukrainian procedural rules. See ‘‘Enforceability of Judgments’’.

Ukrainian legislation contains a vague and imprecise provision which may be interpreted asrequiring that any dispute between a Ukrainian legal entity and its foreign counterparty whichconcerns the interpretation or implementation of the Ukrainian legislation which governs foreigneconomic activities may be referred to, and reviewed by, a competent court of Ukraine only. Thereis no official interpretation of this provision, and management is unaware of any precedent wherebythis provision has been applied or enforced in practice. Based on a fair reading of the legislation, itappears that this provision should under no circumstances apply to a dispute between FPM andthe Trustee or a Noteholder concerning a contractual or factual matter which does not raise issuesunder, or is not governed by, Ukrainian law (such as a dispute concerning the determination of thescope or content of a party’s rights or obligations under the Notes, the Surety Agreement andTrust Deed).

The Notes may be redeemed prior to maturity

In the event that a change in tax law causes the Issuer or the Guarantors to be obliged toincrease the amounts payable in respect of any Notes due to any withholding or deduction for oron account of any present or future taxes, duties, assessments or governmental charges ofwhatever nature imposed, levied, collected, withheld or assessed by or on behalf of the UK,Switzerland, the UAE or Ukraine or any political subdivision thereof or any authority therein orthereof having power to tax, we may redeem all outstanding Notes in accordance with the Termsand Conditions. See Condition 5.2 (Redemption for Taxation Reasons).

As the Global Note Certificates are held by or on behalf of Euroclear, Clearstream, Luxembourgand DTC, investors will have to rely on their procedures for transfer, payment andcommunication with the Issuer or the Guarantors

The Notes will be represented by Global Note Certificates except in certain limited circumstancesdescribed therein. The Regulation S Global Note Certificate will be deposited with a commondepositary on behalf of Euroclear and Clearstream, Luxembourg. The Rule 144A Global NoteCertificate will be registered in the name of a nominee of, and deposited with a custodian for,DTC. Except in certain limited circumstances described in the Global Note Certificates, investorswill not be entitled to receive definitive Notes. Euroclear, Clearstream, Luxembourg and DTC willmaintain records of the beneficial interests in the Global Note Certificates. While the Notes arerepresented by the Global Note Certificates, investors will be able to trade their beneficial interestsonly through DTC, Euroclear and Clearstream, Luxembourg.

The Issuer and the Guarantors will discharge their payment obligations under the Notes by makingpayments through DTC or to the common depositary for Euroclear and Clearstream, Luxembourgfor distribution to their account holders. A holder of a beneficial interest in the Global NoteCertificates must rely on the procedures of DTC, Euroclear and Clearstream, Luxembourg toreceive payments under the Notes. The Issuer and the Guarantors have no responsibility or liabilityfor the records relating to, or payments made in respect of, beneficial interests in the Global NoteCertificates.

The Notes may not be a suitable investment for all investors

Each potential investor in any Notes must determine the suitability of that investment in light of itsown circumstances. In particular, each potential investor should:

* have sufficient knowledge and experience to make a meaningful evaluation of the Notes, themerits and risks of investing in the Notes and the information contained in this Prospectus;

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* have access to, and knowledge of, appropriate analytical tools to evaluate, in the context ofits particular financial situation, an investment in the Notes and the impact such investmentwill have on its overall investment portfolio;

* have sufficient financial resources and liquidity to bear all of the risks of an investment in theNotes;

* understand thoroughly the terms of the Notes; and

* be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic, interest rate and other factors that may affect its investment and its ability to bearthe applicable risks.

A potential investor should not invest in the Notes, which are complex financial instruments, unlessit has the expertise (either alone or with the help of a financial adviser) to evaluate how the Noteswill perform under changing conditions, the resulting effects on the value of such Notes and theimpact this investment will have on the potential investor’s overall investment portfolio.

There is no public market for the Notes

There is no existing market for the Notes, and there may be no future development of a market forthe Notes. Application has been made for admission to trading of the Notes on the Main SecuritiesMarket. However, an active trading market in the Notes may not develop or be maintained afterlisting. No assurance can be made as to the liquidity of any market that may develop for theNotes, the ability of Noteholders to sell the Notes or the price at which Noteholders may be able tosell the Notes. The liquidity of any market for the Notes will depend on the number of Noteholders,prevailing interest rates, the market for similar securities and other factors, including generaleconomic conditions and the Issuer’s financial condition, performance and prospects, as well asrecommendations of securities analysts. Disruptions recently experienced in the global capitalmarkets have led to reduced liquidity and increased credit risk premiums and have thereforeresulted in a reduction in investment in securities globally.

If an active trading market does not develop or cannot be maintained, this could have a materialadverse effect on the liquidity and the trading price of the Notes.

The market price of the Notes may be volatile

The market price of the Notes could be subject to significant fluctuations in response to actual oranticipated variations in our operating results and those of our competitors, adverse businessdevelopments, changes to the regulatory environment in which we operate, changes in financialestimates by securities analysts and the actual or expected sale of a large number of Notes, aswell as other factors, including the credit rating of the Group, and the trading market for notesissued by or on behalf of Ukraine as a sovereign borrower. In addition, in recent years the globalfinancial markets have experienced significant price and volume fluctuations which, if repeated inthe future, could adversely affect the market price of the Notes without regard to our operatingresults, financial condition or prospects or the credit rating of the Group.

The Notes will likely be issued with original issue discount

We expect that the Notes will be issued with original issue discount for U.S. federal income taxpurposes. Although the Notes are being issued at 100% of their principal amount, the issue priceof Notes will be their fair market value on the date of the Exchange (each as defined in ‘‘–Taxation – United States – Holding of the Notes’’), assuming that, as we expect will be the case,the Notes are ‘‘publicly traded’’ within the meaning of the relevant U.S. Treasury Regulations. If thefair market value of the Notes on the date of the Exchange is less than their principal amount bymore than a statutorily defined de minimis threshold, the Notes will be issued with original issuediscount. In that case, a U.S. Holder (as defined in ‘‘– Taxation – United States’’) that receivesNotes pursuant to the Exchange Offer will generally be required to recognise ordinary taxableincome in respect of the Notes in advance of the receipt of cash to which the income isattributable, regardless of the U.S. Holder’s regular method of tax accounting. See ‘‘Taxation –United States – Holding of the Notes – Notes Acquired in a Taxable Exchange – Original IssueDiscount’’ for a discussion of the tax implications of owning Notes with original issue discount.

Financial turmoil in emerging markets could cause the price of the Notes to suffer

The market price of the Notes is influenced by economic and market conditions in Ukraine and, toa varying degree, economic and market conditions in other CIS and eastern European countries

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and emerging markets generally. In the past, financial turmoil in Ukraine and other emergingmarkets has adversely affected market prices in the world’s securities markets for companies thatoperate in these developing economies. Even if the Ukrainian economy remains relatively stable,financial turmoil in these other countries could materially adversely affect the market price of theNotes. Since the beginning of the current financial and economic crisis, many global securitiesmarkets have experienced extreme price and volume fluctuations, particularly those in Ukraine andother developing economies. Continuation or intensification of financial or economic turmoil couldmaterially adversely affect the market price of the Notes.

Credit ratings of Ukraine, the Group or the Notes could adversely affect the market price of theNotes

Ukraine has been assigned long-term credit ratings of CCC- (negative outlook) by S&P, CC byFitch and Caa3 (negative outlook) by Moody’s. The Company has been assigned credit ratings ofCCC+ (negative outlook) by S&P, Caa3 (negative outlook) by Moody’s and CCC by Fitch. TheNotes are expected to be rated CCC+ by S&P, Caa3 by Moody’s and CCC by Fitch. A creditrating is not a recommendation to buy, sell or hold securities and may be subject to revision orwithdrawal at any time by the assigning rating organisation. Similar ratings on different types ofnotes do not necessarily mean the same thing. Ratings do not address the likelihood that theprincipal on the Notes will be prepaid, paid on an expected final payment date or paid on anyparticular date before the final maturity date of the Notes. Ratings also do not address themarketability of the Notes at any market price. The significance of each rating should be analysedindependently from any other rating. Any negative change in Ukraine’s, the Group’s or the Notes’credit rating could materially adversely affect the market price of the Notes.

In general, European regulated investors are restricted under the CRA Regulation from using creditratings for regulatory purposes, unless such ratings are issued by a credit rating agencyestablished in the EU and registered under the CRA Regulation (and such registration has notbeen withdrawn or suspended), subject to transitional provisions that apply in certain circumstanceswhilst the registration application is pending. Such general restriction will also apply in the case ofcredit ratings issued by non-EU credit rating agencies, unless the relevant credit ratings areendorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certifiedin accordance with the CRA Regulation (and such endorsement action or certification, as the casemay be, has not been withdrawn or suspended). Certain information with respect to the creditrating agencies and ratings referred to in this Prospectus is set out on the front cover of thisProspectus.

Payments of interest within the jurisdiction of a European Union Member State or Switzerlandare subject to the EU Savings Tax Directive or equivalent provisions

Under EC Council Directive 2003/48/EC on the Taxation of Savings Income (the ‘‘EU Savings TaxDirective’’), Member States are required to provide to the tax authorities of another Member Statedetails of payments of interest (or similar income) paid by a person within its jurisdiction to anindividual resident in that other Member State or to certain limited types of entities established inthat other Member State, except that Austria is required to impose a withholding system in relationto such payments for a transitional period (unless during such period it elects otherwise) (theending of such transitional period being dependent upon the conclusion of certain otheragreements relating to information exchange with certain other countries). A number of non-EUcountries and territories have adopted similar measures (for example, a withholding system in thecase of Switzerland).

On 24 March 2014, the European Council adopted an EU Council Directive (‘‘AmendingDirective’’) amending and broadening the scope of the requirements described above. TheAmending Directive requires Member States to apply these new requirements from 1 January2017, and if they were to take effect, the changes would expand the range of payments coveredby the EU Savings Tax Directive, in particular to include additional types of income payable onsecurities. The Amending Directive would also expand the circumstances in which payments thatindirectly benefit an individual resident in a Member State must be reported or subject towithholding. This approach would apply to payments made to, or secured for, persons, entities orlegal arrangements (including trusts) where certain conditions are satisfied, and may in some casesapply where the person, entity or arrangement is established or effectively managed outside of theEU; however, on 18 March 2015, the European Commission proposed the repeal of the EUSavings Tax Directive from 1 January 2017 in case of Austria and from 1 January 2016 in case of

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all other Member States (subject to on-going requirements to fulfil administrative obligations, suchas the reporting and exchange of information relating to, and accounting for withholding taxes on,payments made before those dates and to certain other transitional provisions in case of Austria).This is to prevent overlap between the EU Savings Tax Directive and a new automatic exchangeof information regime to be implemented under Council Directive 2011/16/EU on AdministrativeCooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The proposalalso provides that, if it proceeds, Member States will not be required to apply the newrequirements of the Amending Directive.

If a payment were to be made or collected through a Member State that has opted for awithholding system and an amount of, or in respect of, tax were to be withheld from that payment,then none of the Issuer, any Paying Agent or any other person would be obliged to pay additionalamounts with respect to any Note as a result of the imposition of such withholding tax.

The Issuer is required to maintain a Paying Agent with a specified office in a European UnionMember State that will not be obliged to withhold or deduct tax pursuant to European CouncilDirective 2003/48/EC or any other European Union Directive implementing the conclusions of theECOFIN Council meeting of 26-27 November 2000 or any law implementing or complying with orintroduced in order to conform to any such Directive. However, investors should be aware that anycustodians or intermediaries through which they hold their interest in the Notes may nonethelessbe obliged to withhold or deduct tax pursuant to such laws unless the investor meets certainconditions, including providing any information that may be necessary to enable such persons tomake payments free from withholding and in compliance with European Council Directive 2003/48/EC, as amended.

Investors who are in any doubt as to their position should consult their professional advisers.

A derogation has been granted by the Central Bank in relation to the Subsidiary Guarantors

Under Annex VI of the European Commission Regulation (EC) No 809/2004, as amended, aguarantor must disclose information about itself as if it were the issuer of that same type ofsecurity that is the subject of the guarantee. This normally requires the inclusion of a guarantor’sindividual financial statements in the prospectus relating to such securities. The Issuer applied tothe Central Bank for a derogation from the requirement for each of Ferrexpo AG, Ferrexpo MiddleEast and FPM to include their individual financial statements in this Prospectus. Under Regulation25(c) of the Prospectus (Directive 2003/71/EC) Regulations 2005, the Central Bank has grantedsuch a derogation. The equivalent information is included in the consolidated financial statementsfor the Group which are included elsewhere in this Prospectus.

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DOCUMENTS INCORPORATED BY REFERENCE

The following documents that have previously been published and have been filed with the CentralBank of Ireland shall be incorporated into, and form part of, this Prospectus:

(i) the Issuer’s audited statement of comprehensive income, statement of financial position,statement of cash flows and statement of changes in equity as of and for the years ended31 December 2012 (which can be viewed online at:http://www.ferrexpo.com/system/files/uploads/financialdocs/ffp-financial-statements-2012.pdf),31 December 2013 (which can be viewed online at:http://www.ferrexpo.com/system/files/uploads/financialdocs/ffp-financial-statements-2013.pdf)and 31 December 2014 (which can be viewed online at:http://www.ferrexpo.com/system/files/uploads/financialdocs/ffp-financial-statements-2014.pdf)and the audit report thereon;

(ii) the Group’s audited consolidated income statement, statement of comprehensive income,statement of financial position, statement of cash flows and statement of changes in equityas of and for the years ended 31 December 2012 (which can be viewed onlineat: http://www.ferrexpo.com/system/files/uploads/financialdocs/ferrexpo-ar12-18apr2013.pdf),31 December 2013 (which can be viewed online at:http://www.ferrexpo.com/system/files/uploads/financialdocs/ferrexpo-annual-report-2013.pdf)and 31 December 2014 (which can be viewed online at:http://www.ferrexpo.com/system/files/uploads/financialdocs/ferrexpo_ar2014.pdf) and the auditreport thereon; and

(iii) the Group’s unaudited consolidated income statement, statement of comprehensive income,statement of financial position, statement of cash flows and statement of changes in equity asof and for the three month period ended 31 March 2015 (which can be viewed online at:http://www.ferrexpo.com/system/files/press/unaudited-first-quarter-results-31-march-2015-v2.pdf).

Any documents themselves incorporated by reference into the documents incorporated byreference into this Prospectus shall not form part of this Prospectus.

The contents of any website referenced in this Prospectus do not form part of (and are notincorporated into) this Prospectus.

Cross-reference lists

The following information from the financial statements of the Issuer and the Group is incorporatedby reference in this Prospectus, and the following cross-reference lists are provided to enableinvestors to identify specific items of information so incorporated.

Issuer’s audited financial statements for the year ended 31 December 2012Auditors’ report Page 5– 6Statement of comprehensive income Page 7Statement of financial position Page 8Statement of cash flows Page 9Statement of changes in equity Page 10Notes to the financial statements Pages 11 – 26

Issuer’s audited financial statements for the year ended 31 December 2013Auditors’ report Pages 6 – 7Statement of comprehensive income Page 8Statement of financial position Page 9Statement of cash flows Page 10Statement of changes in equity Page 11Notes to the financial statements Pages 12 – 26

Issuer’s audited financial statements for the year ended 31 December 2014Auditors’ report Pages 6 – 7Statement of comprehensive income Page 8Statement of financial position Page 9Statement of cash flows Page 10Statement of changes in equity Page 11Notes to the financial statements Pages 12 – 27

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Group’s audited consolidated financial statements for the year ended31 December 2012Auditors’ report Page 72Consolidated income statement Page 73Consolidated statement of comprehensive income Page 74Consolidated statement of financial position Page 75Consolidated statement of cash flows Page 76Consolidated statement of changes in equity Page 77Notes to the financial statements Pages 78 – 129

Group’s audited consolidated financial statements for the year ended31 December 2013Auditors’ report Page 82 – 83Consolidated income statement Page 84Consolidated statement of comprehensive income Page 85Consolidated statement of financial position Page 86Consolidated statement of cash flows Page 87Consolidated statement of changes in equity Page 88Notes to the financial statements Pages 89 – 142

Group’s audited consolidated financial statements for the year ended31 December 2014Auditors’ report Pages 72 – 78Consolidated income statement Page 79Consolidated statement of comprehensive income Page 80Consolidated statement of financial position Page 81Consolidated statement of cash flows Page 82Consolidated statement of changes in equity Page 83Notes to the financial statements Pages 84 – 136

Group’s unaudited consolidated financial statements for the three monthperiod ended 31 March 2015Interim consolidated income statement Page 3Interim consolidated statement of comprehensive income Page 4Interim consolidated statement of financial position Page 5Interim consolidated statement of cash flows Page 6Interim consolidated statement of changes in equity Page 7Notes to the interim condensed consolidated financial statements Pages 8 – 23

Any information not listed in the table above but included in the documents incorporated byreference in this Prospectus is provided for information purposes only.

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EXCHANGE OFFER

The Issuer, in an Exchange Offer and Consent Solicitation Memorandum dated 28 May 2015,invited holders of its 2016 Notes that are outstanding to offer such notes for exchange inconsideration, inter alia, for the issue to such holders of the Notes. Pursuant to a Dealer ManagerAgreement, the Dealer Manager has agreed to act as dealer manager in relation to the ExchangeOffer and solicitation agent in relation to the Consent Solicitation. In the Dealer ManagerAgreement, the Issuer has agreed to reimburse the Dealer Manager for certain of its expenses,and has agreed to indemnify it against certain liabilities, incurred in connection with the ExchangeOffer and Consent Solicitation.

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USE OF PROCEEDS

Ferrexpo will not receive any proceeds from the issue of the Notes, which will be issued inexchange for Ferrexpo’s existing 2016 Notes and the proceeds originally received from the issue ofFerrexpo’s existing 2016 Notes will continue to be used outside of Switzerland in a manner thatwould not constitute a ‘‘detrimental use of proceeds in Switzerland’’ as interpreted by Swiss taxauthorities for the purposes of Swiss withholding tax.

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CAPITALISATION

The following table sets forth our consolidated cash and cash equivalents and our totalcapitalisation as at 31 March 2015 and is derived from our unaudited consolidated interim financialstatements for the three months ended 31 March 2015, prepared in accordance with IAS 34‘‘Interim Financial Reporting’’. The table below should be read in conjunction with ‘‘SelectedHistorical Financial Information’’, ‘‘Management’s Discussion and Analysis of Financial Conditionand Results of Operations’’ and our consolidated financial statements incorporated by reference inthis Prospectus.

As at31 March

2015

(US$ millions)CASH AND CASH EQUIVALENTS 493.9

Current loans and borrowings 249.3Non-current loans and borrowings 939.4Notes offered hereby —

TOTAL DEBT 1,188.7

TOTAL EQUITY 365.3

TOTAL CAPITALISATION 1,554.1

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SELECTED HISTORICAL FINANCIAL INFORMATION

The selected historical financial information provided below has been derived from our auditedconsolidated financial statements as at and for the years ended 31 December 2012, 2013 and2014 prepared in accordance with IFRS as adopted by the European Union and our unauditedconsolidated interim financial statements, as at and for the three months ended 31 March 2015,prepared in accordance with IAS 34 ‘‘Interim Financial Reporting’’. Our audited consolidatedfinancial statements as at and for the years ended 31 December 2012, 2013 and 2014 have beenaudited by Ernst & Young LLP.

You should read this selected historical financial information section along with ‘‘Management’sDiscussion and Analysis of Financial Condition and Results of Operations’’ and the consolidatedfinancial statements incorporated by reference in this Prospectus.

CONSOLIDATED INCOME STATEMENT DATA


31 March

2012 2013 2014 2014 2015

(US$ thousands)

REVENUE 1,424,030 1,581,385 1,388,285 413,499 257,597Cost of sales (690,729) (773,221) (647,960) (179,742) (109,946)

GROSS PROFIT 733,301 808,164 740,325 233,757 147,651

Selling and distribution expenses (311,964) (335,718) (311,514) (91,003) (57,145)General and administrative expenses (56,329) (54,839) (48,642) (10,951) (9,693)Net other expenses (18,814) (16,795) (47,920) (2,778) (8,693)Operating foreign exchange (loss)/gain(1) 653 622 76,372 36,313 23,039

PROFIT FROM CONTINUINGOPERATIONS BEFORE ADJUSTEDITEMS 346,847 401,434 408,621 165,338 95,159Adjusted non-operating items(2) (2,131) (42,216) (90,271) (2,535) (121)

PROFIT BEFORE TAX AND FINANCE 344,716 359,218 318,350 162,803 95,038Net finance expense (85,605) (63,581) (49,222) (13,948) (18,131)Non-operating foreign exchange (loss)/gain 6,622 9,755 (14,846) (3,867) (4,776)

PROFIT BEFORE TAX 265,733 305,392 254,282 144,988 72,131Income tax expense (47,135) (41,608) (70,442) (21,741) (13,703)

PROFIT FOR THE PERIOD 218,598 263,784 183,840 123,247 58,428

(1) Including foreign exchange gains recorded during the period ended 31 March 2015 as a result of the devaluation of the hryvnia.

(2) Including a write-down of the VAT receivable balance during the financial year ended 31 December 2013 and an impairmentloss on an investment recorded in the year ended 31 December 2014.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA

As at 31 December As at 31 March

2012 2013 2014 2014 2015

(US$ thousands)ASSETSProperty, plant and equipment 1,347,563 1,533,819 926,433 1,177,792 644,181Inventories(1) 146,473 239,166 206,709 182,047 158,035Trade and other receivables 116,553 102,498 87,226 115,006 84,137Cash and cash equivalents 596,560 390,491 626,509 366,364 493,902Other 551,309 666,395 288,018 561,813 263,008

TOTAL ASSETS 2,758,458 2,932,369 2,134,895 2,403,022 1,643,263

LIABILITIESBorrowings 1,019,985 1,029,239 1,304,627 1,045,705 1,188,704Trade and other payables 62,609 50,001 32,351 30,263 24,341Other 128,466 118,087 80,316 96,286 64,871

TOTAL LIABILITIES 1,211,060 1,197,327 1,417,294 1,172,254 1,277,916

Equity 1,547,398 1,735,042 717,601 1,230,768 365,347

TOTAL EQUITY AND LIABILITIES 2,758,458 2,932,369 2,134,895 2,403,022 1,643,263

(1) Including iron ore stockpiles amounting to US$61.6 million and US$54.2 million as at 31 March 2015 and 2014, respectively, aswell as US$82.0 million, US$58.3 million and US$12.4 million as at 31 December 2014, 2013 and 2012, respectively, whichwere classified as non-current as these stockpiles were not expected to be processed within one year.

CONSOLIDATED STATEMENT OF CASH FLOWS DATA


31 March

2012 2013 2014 2014 2015

(US$ thousands)

Net cash flows from operating activities 118,578 232,926 288,448 82,239 46,121Net cash flows used in investing activities (419,337) (357,184) (224,084) (77,707) (11,547)Net cash flows from/(used in) financingactivities 7,068 (81,555) 193,022 (26,522) (151,413)

Net cash flows (293,691) (205,813) 257,386 (21,990) (116,839)

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EBITDA

EBITDA is not a uniformly or legally defined financial measure. We define EBITDA as profit fromcontinuing operations before tax and finance plus depreciation and amortisation and non-recurringexceptional items included in other income and other expenses, share based payment expensesand the net of gains and losses from disposal of investments and property, plant and equipment.This differs in certain respects from the definition of Consolidated EBITDA that is used in thecovenants contained in the Conditions. See ‘‘Terms and Conditions of the Notes – Condition 19(Definitions)’’. The following table provides a reconciliation showing how EBITDA is derived fromprofit before tax and finance for the periods shown:


31 March

2012 2013 2014 2014 2015

(US$ thousands)

Profit before tax and finance 344,716 359,218 318,350 162,803 95,038Write-down of VAT receivable — 36,421 6,790 2,063 —Write-offs and impairment losses 836 854 83,534 76 3Loss on disposal of property, plant andequipment 4,067 8,492 4,825 2,109 1,054Share-based payments 1,608 1,266 530 152 98Amortisation and depreciation 54,169 99,645 82,269 22,558 15,416

EBITDA 405,396 505,896 496,298 189,761 111,609

Like many of our competitors, we present EBITDA because we believe it to be an importantsupplemental measure of our performance, and believe it is frequently used by securities analysts,investors and other interested parties in the evaluation of companies in our industry. Our EBITDAfigures are not, however, necessarily comparable to other companies’ EBITDA figures, as each iscalculated in its own way and must be read in conjunction with the explanations that accompany it.EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as asubstitute for an analysis of our results as reported under IFRS. Some of these limitations are:

* EBITDA does not reflect our cash expenditures or future requirements for capital expendituresor contractual commitments;

* EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

* EBITDA does not reflect the significant interest expense, or the cash requirements necessary,to service interest or principal payments, on our debts;

* although depreciation and amortisation are non-cash charges, the assets being depreciatedand amortised will often need to be replaced in the future and EBITDA does not reflect anycash requirements that would be required for such replacements; and

* the fact that other companies in our industry may calculate EBITDA differently than we do,which limits its usefulness as a comparative measure.

Because of these limitations, you should not consider EBITDA to be a measure of cash availableto us to invest at our discretion in the growth of our business.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read inconjunction with ‘‘Selected Historical Financial Information’’ and with the information relating to ourbusiness included elsewhere in this Prospectus. The discussion includes forward-lookingstatements that reflect the current view of our management and involve risks and uncertainties.Our actual results could differ materially from those contained in any forward-looking statements asa result of factors discussed below and elsewhere in this Prospectus, particularly in ‘‘Risk Factors’’.Investors should read the whole of this Prospectus and not just rely upon summarised information.

We are a Swiss-headquartered iron ore pellet producer. We own and operate two separate openpit iron ore mines and associated processing facilities in central Ukraine and have been engaged inthe mining and processing of high quality iron ore pellets for the global steel industry for over 35years. Iron ore pellets are an iron ore product used in the production of steel and are sold at apremium to other iron ore products as they increase productivity in the blast furnace, due to theirhigh iron content, low levels of impurities, spherical shape and uniform quality. We produced andexported 11.0 million tonnes of pellets in 2014 making us the largest exporter of iron ore pellets(by volume) in the FSU and the fourth largest producers of pellets (by volume), according to anApril 2015 report from CRU. Our pellets are delivered through our own logistics infrastructure thatincludes rail cars, barge and port facilities.

Our resource base consists of a magnetite mineral deposit with an average 32% iron content,which is particularly well suited for pelletising. The Kremenchug Magnetic Anomaly is a single 50kilometre-long mineralised structure, and within the area controlled by Ferrexpo, it is divided into 9adjacent deposits. As of 1 January 2015, we had an estimated total mineral resources ofapproximately 6.7 billion tonnes classified under the JORC Code, and in addition, we hadadditional estimated resources of approximately 13.1 billion tonnes classified under the FSUClassification. See ‘‘Reserves and Resources’’ and ‘‘Risk Factors – Risks relating to our operations– The volume and grade of our reserves and our rate of production may not conform to currentestimates’’.

For the three months ended 31 March 2015, total revenue decreased by 37.7% to US$257.6 millioncompared to US$413.5 million for the same period in 2014, driven by lower iron ore prices. For theyear ended 31 December 2014, our sales revenue decreased to US$1,388.3 million compared toUS$1,581.4 million in 2013, driven by lower iron ore prices, partly offset by higher sales volumes.For the year ended 31 December 2013, our sales revenue increased to US$1,581.4 millioncompared to US$1,424.0 million for the year ended 31 December 2012, driven by higher salesvolumes and prices. For the year ended 31 December 2012, our sales revenue decreased toUS$1,424.0 million. This decrease was mainly driven by lower sales prices in the global market(compared to record prices in 2011) due to a weakening economic environment in China.

For the three months ended 31 March 2015, EBITDA decreased to US$111.6 million compared toUS$189.8 million for the same period in 2014, driven by lower iron ore prices, partly offset bylower costs. EBITDA decreased to US$496.3 million for the year ended 31 December 2014 fromUS$505.9 million for the year ended 31 December 2013, driven by lower iron ore prices, partlyoffset by lower costs, higher sales volumes and positive foreign exchange effects from thedevaluation of the Ukrainian hryvnia. EBITDA increased to US$505.9 million for the year ended31 December 2013 from US$405.4 million for the year ended 31 December 2012, principally dueto higher production volumes and sales prices. See ‘‘Selected Historical Financial Information –EBITDA’’.

We recorded a net profit of US$183.8 million for the year ended 31 December 2014 compared toUS$263.8 million and US$218.6 million for the years ended 31 December 2013 and 2012,respectively. For the three months ended 31 March 2015, net profit was US$58.4 million comparedto US$123.2 million for the same period in 2014.

We have maintained a low net gearing (net financial indebtedness over net financials indebtednessplus shareholders’ equity) since listing our shares on the London Stock Exchange in 2007.Historically, we have been able to secure funding on the international debt markets, including asyndicated US$350 million revolving pre-export finance facility in September 2013, a syndicatedUS$420 million revolving pre-export finance facility in September 2011 and a US$500 millionEurobond issued on 7 April 2011. Continued financial uncertainty surrounding the IMF bailoutpackage and the position of private creditors towards Ukraine, combined with political instability and

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the ongoing conflict in the east of Ukraine have increased overall risk and have resulted in thebank lending market being unavailable for Ukrainian borrowers. The Group exchanged andcancelled US$214.3 million of the US$500 million Eurobond and issued new notes totallingUS$160.7 million pursuant to the February 2015 Exchange Offer. In the course of the February2015 Exchange Offer, we repaid bonds in an aggregate principal amount equal to US$53.6 million.For further details, see ‘‘Period ended 31 March 2015 compared to period ended 31 March 2014’’.

In 2014, our net financial indebtedness increased by US$39.4 million, to US$678.1 million, as at31 December 2014, compared to US$638.7 million as at 31 December 2013. In 2013, our netfinancial indebtedness increased by US$215.3 million to US$638.7 million as at 31 December2013, compared to US$423.4 million as at 31 December 2012. In 2012 our net financialindebtedness increased by US$343.2 million to US$423.4 million as at 31 December 2012. As at31 March 2015, our net financial indebtedness was US$694.8 million compared to US$679.3 millionas at 31 March 2014.

Our cash balance as at 31 March 2015 was US$493.9 million, compared to US$626.5 million,US$390.5 million and US$596.6 million as at 31 December 2014, 31 December 2013 and31 December 2012, respectively. For further details, see ‘‘– Year ended 31 December 2014compared to Year ended 31 December 2013’’ and ‘‘– Year ended 31 December 2013 compared toYear ended 31 December 2012’’.

We have invested approximately US$1.3 billion between 1 January 2011 and 31 March 2015 toincrease the quality and quantity of our pellet output by developing additional iron ore miningcapacity at FYM as well as executing a major modernisation of FPM’s mining and productionfacilities. As part of our modernisation and expansion programme, in November 2010 we approvedUS$647 million of capital expenditure, with three principal expenditure components.

* Ferrexpo Yeristovo Mine: US$267 million for the development of the FYM mine. The FYMopen pit mine is located approximately two kilometres north of the FPM mine. First ore wasreached in the second half of 2012 and the mine was put in production in 2013. Currently,ore extracted from the FYM mine is sent to FPM’s processing complex to be used in theproduction of pellets. For the three months ended 31 March 2015 and the years ended31 December 2014, 2013 and 2012, we spent US$3.7 million, US$74.0 million,US$100.3 million and US$146.3 million respectively, on the development of the FYM mine.This expenditure was primarily for mining equipment, stripping works and pit infrastructure. Intotal, we have spent US$604.1 million since commencing initial development of the FYM minein 2008.

* Mine Life Extension project at FPM: US$168 million over an eight year period to extend thelife of our existing mine at FPM by 12 years to 2038. For the three months ended 31 March2015 and the years ended 31 December 2014, 2013 and 2012, we spent US$0.1 million,US$12.2 million, US$14.5 million and US$48.6 million, respectively, on the mine life extensionproject. Expenditures on this project, have principally consisted of mining equipment andstripping works. Project costs have been impacted by higher than anticipated diesel costs,although this is expected to normalise over the life of the project. In line with the projectschedule, as of 31 March 2015, 32.3 million cubic metres of overburden had been removed,which represented 71% of the total overburden to be removed as part of the project.

* Quality Upgrade project at FPM: US$212 million to increase the quality of substantially all ourpellet output to 65% iron content in 2015. We have spent US$131.3 million since 2011,primarily on processing equipment such as vertical mills floatation cells. Remaining capitalexpenditure under this project includes construction of a new press filtration plant. Thisinvestment has been put on hold.

In October 2012, we approved US$30 million to begin construction of a 10 Mtpa concentrator atFYM to process the additional crude ore from the mine at FYM. In October 2013, we approved afurther US$40 million for site infrastructure including ground works and utilities associated with theconcentrator, although this project is currently on hold.

As of 31 March 2015, these programmes were substantially completed. For further details, see‘‘Business Description – Expansion of Our Mining Operations.’’

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The following table sets out our volumes of pellets produced, pellets sold, revenues, C1 cash costof production, EBITDA and net financial indebtedness to EBITDA for the years ended 31 December2012, 2013 and 2014 and the three months ended 31 March 2014 and 2015.

Year ended31 December

Three months ended31 March

2012 2013 2014 2014 2015

Pellets produced, own ore (thousandtonnes) 9,409 10,466 10,670 2,714 2,723Total pellet production (thousand tonnes) 9,690 10,813 11,021 2,816 2,885Sales volume (thousand tonnes) 9,675 10,689 11,167 2,844 2,793Revenues (US$ in millions) 1,424 1,581 1,388 413 258Average C1 cash cost of production (US$per tonne)(1) 59.6 59.8 45.9 50.5 33.2EBITDA(2)(4) (US$ in millions) 405 506 496 190 112EBITDA(2) (US$ per tonne) 41.9 47.3 44.4 66.8 40.1Net financial indebtedness/LTMEBITDA(3) 1.1 1.3 1.4 1.2 1.7

(1) C1 cash cost is a non-IFRS financial measure. See ‘‘Presentation of Certain Information – Non-IFRS Measures’’ and ‘‘– Factorsaffecting our business and trends – Cost of sales’’.

(2) EBITDA is a non-IFRS financial measure. See ‘‘Presentation of Certain Information – Non-IFRS Measures’’ and ‘‘SelectedHistorical Financial Information – EBITDA’’.

(3) EBITDA for the last twelve months.

(4) Published figure for the financial year ended 31 December 2012 changed as a result of the retrospective application of IAS 19revised.

The following table sets forth a breakdown of our revenues for the years ended 31 December2012, 2013 and 2014 and for the three months ended 31 March 2014 and 2015:



2012 2013 2014 2014 2015

(US$ millions)Export sales:62% iron content pellets 726.6 786.0 611.1 211.1 40.165% iron content pellets 603.2 709.9 679.6 184.5 203.5

Total 1,329.8 1,494.9 1,290.7 395.6 243.6

Domestic sales:62% iron content pellets 0.3 0.0 0.0 0.0 0.0Non-pellet sales(1) 94.0 86.5 97.6 17.9 14.0

Total revenue 1,424.1 1,581.4 1,388.3 413.5 257.6

(1) Primarily sales of gravel and sales related to our logistics and bunker business.

Factors affecting our business and trends

The key drivers of our business performance are the global demand for steel and iron ore, ouraverage realised pellet prices, our sales volumes, our cost of sales, and our selling and distributionexpenses.

Market demand for steel and iron ore

We operate in a highly volatile commodity market and our business is highly dependent on themarket price of iron ore. Sale prices and volumes in the worldwide iron ore market depend

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predominantly on the prevailing and expected level of supply and demand for iron ore, mainly fromsteel manufacturers, and the world steel industry is cyclical. In addition, there are a number ofother factors beyond our control which influence the world steel industry and therefore demand foriron ore and the parameters for the contract price which we are able to obtain for our iron ore. Atpresent, the global market price of iron ore is heavily dependent upon the steel sector in Asia,especially in China. Any potential contraction in demand or increase in supply may cause iron oreand pellet prices to fall.

Historically, changes in worldwide demand for steel have had a greater impact on demand forpellets than other iron ore products due to their higher cost. Since peaking in 2011 at over US$180per tonne, spot prices per tonne for iron ore (62% iron content fines to China) have declined, andby the end of March 2015 prices have reduced to approximately US$51 per tonne. The reason forthis decline in pricing has been widely attributed to a significant increase in supply from the majorproducers of seaborne iron ore, coupled with a slowdown in growth in China, which represents themain consumer of iron ore. For more information, see ‘‘Risk Factors – Risks relating to the industry– We operate in a highly volatile commodity market for steel and steel products, and decreases iniron ore prices may depress our margins’’ and ‘‘Industry’’.

Average received iron ore pellet prices

Our average received pellet price is dependent on market demand and global prices for steel andiron ore (over which we have little control as we are generally price takers) and our realised pricefor pellets can therefore vary significantly from period to period. The average pellet price is afunction of a number of factors, the most important of which are discussed below.

* Level of international iron ore prices and frequency of adjustments. During the past threeyears, there has been a marked shift in the pricing mechanism applied by the major iron oresuppliers. Historically, the industry determined prices once a year, based on an initial pricesettlement by any major iron ore producer with any major steel mill, which was accepted asthe ‘‘benchmark’’ price for the year by other iron ore producers and steel mills. During thefinancial crisis in late 2008 and 2009, however, iron ore spot prices fell from well above theannual benchmark price to well below the benchmark price. As a result, steel millsincreasingly refused to pay the contracted benchmark price and reverted to a spot marketrate for seaborne iron ore. Consequently the major iron ore producers, including Rio Tinto,BHP Billiton and Vale, formally abandoned the benchmark pricing system in 2010 and most ofthese producers agreed quarterly pricing with most of their customer base for periods afterApril 2010. Currently in the global iron ore market, there are a number of pricingmethodologies being applied by industry participants depending on geography and customer.Since 2010, we agreed a mixture of pricing arrangements with our long term customers,including monthly and quarterly index-based pricing arrangements and fixed quarterly and sixmonth prices. Our price is determined based on, among other factors, the benchmark pricefor 62% iron content fines (CFR China), pellet premium over fines, adjustments for quality(iron ore content and impurities such as phosphorus and silica) and delivery costs. Our pricestrategy is to follow international pricing trends, while continuing to focus on capturing themaximum price relative to our competitors’ delivered cost through ‘‘value in use’’ to thecustomer. We believe that our geographic proximity to key steel customers represents anattractive alternative to the major seaborne suppliers. In 2013, prices of 43% of Ferrexposales volumes were based on the Platt’s benchmark index, 40% of sales volumes was pricedon quarterly basis and 17% was priced on spot basis. As of 1 January 2014, quarterly pricingwas eliminated and all of the Group’s long-term sales contracts were based on a benchmarkindex formula. As the new pricing mechanisms are based on shorter time periods, we believethere is likely to be higher price volatility. Additionally, emphasis in the spot market isprogressively shifting towards CFR delivery and away from FOB pricing. This provides anadvantage to producers with low freight rates.

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The following table sets out the average spot price of Fe 62% fines (CFR China) and theaverage Baltic Exchange assessment for C3 Capesize route (Tubarao – Qingdao) rate for theyears ended 31 December 2012, 2013 and 2014 and the three month periods ended 31 March2014 and 2015.



2012 2013 2014 2014 2015

US$ per tonnePlatts Fe 62% Fines CFR China 130.1 135.4 96.9 120.4 62.4BFA Capesize C3 freight 19.8 21.0 20.6 22.3 10.6

* Product mix. We currently produce two types of iron ore pellets, 62% Fe pellets and 65% Fepellets. The pricing of iron ore pellets reflects their iron content, with higher iron contentpellets commanding a higher price per tonne. For the year ended 31 December 2014, 53% ofour production was 65% Fe pellets, with the balance being 62% Fe pellets. We increased theshare of 65% of Fe pellets to 85% of our total production following the successfulimplementation of our capital expenditure programme and Quality Updated project. See‘‘Business Description – Expansion of Our Mining Operations – Quality Upgrade Programme’’.

* Contract/spot mix. Our strategy has been and will remain centred on committing a largepercentage of our production to sales under a portfolio of long-term volume frameworkagreements with international customers which are focused on producing high value addedsteel products, in order to maximise stable and reliable revenue streams for the Group. In theyear ended 31 December 2014, sales to long-term customers accounted for approximately91% of our sales volumes from own ore.

To expand our long-term quality customer base in advance of the planned FYM mineexpansion, we are currently implementing an ongoing strategy to allocate a portion of oursales to potential new customers through trial spot cargos. In line with this strategy, we havesecured long-term contracts with JFE (Japan), NSSMC (Japan), Erdemir (Turkey), Dillinger(Germany) and Baosteel (China) as a result of recent trial shipments. We currently have trialcargoes planned with several other significant producers in Asia and Europe.

* Geographic mix of the markets into which we sell our pellets. Our average sales price isinfluenced by the geographic mix of our sales. Proximity to customers has an impact on ouraverage sales price per tonne due to the distances from the mine and therefore the cost oftransportation and shipment to the customer. We increasingly carry additional costs oftransportation of pellets by barges over the Danube or by ocean vessels to China and otherAsian customers on a CFR or similar basis, depending on the commercial terms of the sale.This cost is recorded in selling and distribution expenses, and we charge a higher price to thecustomer, which is, in turn, reflected in revenues. Growth markets, including Asian customerson a CFR or similar basis, accounted for approximately 35% of sales in the year ended31 December 2014.

We measure and benchmark our performance by reference to sales prices on a DAP/FOBbasis – that is, excluding the components of revenue associated with transportation costsbeyond the domestic borders of Ukraine. This approach facilitates comparison of ourperformance in different years and markets, and relative to competitors. Because our CFR orsimilar selling prices reflect reimbursed international transportation costs, an increase ordecrease in such costs will translate into increased or decreased revenues, gross margin andgross profit. Such costs are included in selling and distribution expenses, however, changes inrevenues associated with international freight do not affect significantly our margins orprofitability below the level of gross margin and gross profit.

Historically, the majority of our contracts have been priced and delivered on a DAF/FOBbasis. However, a growing portion of our sales in China and other Asian markets are madeon a CFR, or cost, insurance and freight (‘‘CIF’’) or similar basis. For the year ended31 December 2014, reimbursed international transportation costs added US$123.4 million toour revenue (compared to US$114.4 million and US$113.5 million for the years ended

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31 December 2013 and 31 December 2012, respectively). For the three months ended31 March 2015 and 31 March 2014, reimbursed international transportation costs representedUS$18.7 million and US$35.3 million, respectively.

Sales volumes

The following table sets out our sales and production volumes for the years ended 31 December2012, 2013 and 2014 and the three month periods ended 31 March 2014 and 2015.



2012 2013 2014 2014 2015

(kilotonnes)Sales volumes: 9,675 10,689 11,167 2,844 2,79362% iron content pellets 5,548 5,673 5,439 1,534 48865% iron content pellets 4,127 5,016 5,728 1,310 2,305Production: 9,690 10,813 11,021 2,816 2,88562% iron content pellets 5,517 5,825 5,218 1,462 43365% iron content pellets 4,173 4,988 5,803 1,354 2,452

Our sales volumes are constrained by the ore extraction capacity of our existing iron ore minesand processing capacity of our existing beneficiation and pelletising plants. The following otherfactors affect our sales volumes:

* Delivery logistics. Our sales volumes are affected by our ability to deliver our pellets to ourcustomers. We customarily deliver our production by rail and seaborne vessels andoccasionally transport our production by barge. We transport iron ore pellets primarily onthree routes: (i) in the direction of the Western border for most of our Traditional customers incentral Europe, (ii) in the direction of Izmail, Constanta and other ports for further delivery bybarges over the Danube to Traditional customers and (iii) in the direction of Yuzhny port onthe Black Sea for seaborne export trade.

Rail: We principally rely on rail transportation to the Ukrainian border, including both state-owned rail cars and our own rail cars. For the three months ended 31 March 2015, wetransported all of our production to the border by rail. During the years ended 31 December2011, 2012, 2013 and 2014, we purchased 1,267 additional rail cars from a related party tomitigate possible logistical constraints in the future. The purchase of 400 rail cars from arelated party, with an option to purchase an additional 600 rail cars, was approved at thegeneral meeting of the shareholders on 15 March 2011. In addition to the transaction above,on 24 May 2012, we obtained further shareholder approval for an option to purchase up to500 rail cars from the same related party by 31 December 2014. In February 2013, weexercised the right under this option to order 267 rail cars, which were delivered during thefinancial year 2013. The 267 rail cars received brought our total fleet to 2,220 rail cars by theend of the financial year 2013. In February 2014, we ordered another 300 rail cars, of which233 rail cars were under the authority of the shareholder approval obtained on 24 May 2012.Due to the events in eastern Ukraine, only 25 rail cars were delivered by the end of thefinancial year 2014 and an additional 27 rail cars were delivered in April 2015. As of the dateof this prospectus, all 52 rail cars delivered have been put into operation but there isuncertainty surrounding the delivery of the remaining rail cars ordered and partially prepaid.See ‘‘Shareholders and Related Party Transactions – Related Party Transactions’’.

Ocean access: Our TIS-Ruda port terminal on the Black Sea provides independent access tosix million tonnes of annual capacity for delivery of our pellets to the seaborne markets inAsia as well as to Turkey and the Middle East. The TIS-Ruda terminal is capable of directand full loading of up to post-panamax sized vessels. Our own transhipment vessel (‘‘IronDestiny’’) enables us to load capesize vessels, reducing our international freight costs. Themajority of our ocean vessel shipments are loaded through the TIS Ruda terminal and thebalance via the common user state-owned or private terminals at Yuzhny. We are alsoplanning to further develop our ship loading capabilities at the TIS-Ruda terminal in order toincrease shipments to our Growth markets and therefore further diversify our customer mix.

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Barges: Once our product arrives at certain designated trans-shipment points along theUkrainian border, it is loaded onto barges for continued shipment or delivery along the Rhine/Danube River corridor to customers in our Traditional markets. In January 2011, wecompleted the acquisition of First-DDSG Logistics Holding GmbH (formerly Helogistics). See‘‘Business Description – Selling, transport and distribution’’. This acquisition has provided uswith increased access to the European markets throughout the Rhine/Danube River corridorand enhances our logistical capability to transport our pellets from the transhipment points tothe end users, completing our logistics chain from production to customers. The Danube Riveris subject to high and low water levels, and occasional freezing, causing disruptions to normalshipping operations, which can affect delivery of our pellets and therefore our sales volumes.

* Proportion of 62% Fe and 65% Fe pellets. We currently mine three types of iron ore, K22and K23 from our FPM mine and K25 from our FYM mine. The K22 and K25 ore types havehigher iron content and therefore requires less processing to produce a higher iron contentpellets while K23 ore requires additional processing. For the year ended 31 December 2014,we produced 5.8 million tonnes of 65% Fe pellets, or 53% of our total production. In the yearended 31 December 2013, we produced 4.7 million tonnes of 65% Fe pellets, representingapproximately 45% of our total production from own ore, compared to 4.1 million tonnes, orapproximately 44% of production, for the same period in 2012. During the first three monthsof 2015, we completed the upgrade of our processing facilities to allow us to increase theproportion of 65% Fe pellets to 85% of total production. See ‘‘Business Description –Expansion of Our Mining Operations – Quality Upgrade Programme’’.

* Third party concentrate. FPM’s pelletising plant currently has approximately 0.5 Mtpa of spareprocessing capacity. We currently use the spare processing capacity of the pelletising plant toconvert iron ore and concentrate purchased on the market into iron ore pellets as and when itis profitable to do so. For the year ended 31 December 2012 and 2013, we produced 347and 281 kilotonnes from third party concentrate, respectively, of pellets from third partymaterials. We reduced production from third party concentrate as we increased production ofpellets from own ore. Sales of pellets produced using purchased ore and concentrate typicallygenerate lower margins than sales of pellets produced from our own ore, but contribute tobetter absorption of our fixed cost base.

Cost of sales

Cost of sales comprises the cash cost of production of pellets from our own ore, cost of productionof pellets from purchased ore and concentrate, depreciation and amortisation, along with othersundry production related items. A significant proportion of our input costs (over half) are incurredin Ukrainian hryvnia. As a result, our reported cost of sales is sensitive to the impact of domesticinflation and to the translation impact of exchange rate fluctuations between the hryvnia and theUS dollar. See ‘‘– Cost of Sales – Inflation’’ and ‘‘– Cost of Sales – Exchange rates’’ below.

* C1 cash cost. The main component of our cost of sales is the cash cost of production ofpellets from our own ore. To manage and evaluate our pellet production costs, we use ameasure we refer to as ‘‘C1 cash cost’’. Our definition of ‘‘C1 cash cost’’ includes theprincipal production inputs related to energy (including electricity, natural gas and fuel),materials (including grinding media), personnel, and maintenance services and consumables(including repairs and spare parts). C1 cash cost excludes costs such as depreciation,pension costs, stock movements, costs of purchased ore and concentrate as well asproduction costs of gravel and one-off items.

We define our ‘‘C1 cash cost of production per tonne’’ as the cash cost of production of owniron ore divided by the production volume of own iron ore.

In the year ended 31 December 2014, our average C1 cash cost per tonne reduced toUS$45.9 per tonne, compared to US$59.8 per tonne for the year ended 31 December 2013,due to the devaluation of Ukrainian hryvnia against the US dollar and lower oil prices. In theyear ended 31 December 2013, our C1 cost was US$59.8 per tonne, compared to US$59.6per tonne in the year ended 31 December 2012. For the three months ended 31 March 2015,our average C1 cash cost per tonne was US$33.2 per tonne compared to US$50.5 per tonnein the same period of 2014, reflecting devaluation of Ukrainian hryvnia against the US dollar,lower oil prices and increased efficiency.

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The following table shows a breakdown of our C1 cash cost of production per tonne of pellets forthe years ended 31 December 2012, 2013 and 2014 and the three month periods ended 31 March2014 and 2015:

Year ended 31 December Three months ended 31 March

2012 2013 2014 2014 2015

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

Energy 29.0 48.6% 29.8 49.9% 24.4 53.1% 27.2 53.8% 18.4 55.3%

Materials 12.1 20.3% 13.6 22.8% 9.4 20.5% 9.9 19.6% 7.0 21.1%

Personnel 6.8 11.5% 5.9 9.8% 4.4 9.7% 5.5 10.9% 2.5 7.6%

Maintenance services and

consumables 10.7 17.9% 8.3 13.9% 5.7 12.4% 5.9 11.7% 3.9 11.8%

Taxes 1.0 1.7% 2.2 3.6% 2.0 4.3% 2.0 4.0% 1.4 4.2%

Total C1 cash cost per

tonne 59.6 100.0% 59.8 100.0% 45.9 100.0% 50.5 100.0% 33.2 100.0%

Production from own ore

(kilotonnes) 9,409 10,466 10,670 2,714 2,723

The utilisation of key material and energy inputs are discussed below:

* Energy: FPM’s principal energy requirements are electricity, fuel and natural gas, whichtogether accounted for 53.1% of our total C1 cash cost for the year ended 31 December2014 and 48.6% and 49.9% for the years ended 31 December 2012 and 2013, respectively.For the three months ended 31 March 2015, energy represented 55.3% of our total C1 cashcost, compared to 53.8% in the same period of 2014. See ‘‘Risk Factors – Risks relating toour operations – Energy costs account for a large portion of our production costs and aregreater for pellets than for other iron ore forms, and increases in raw material and energycosts may affect our production costs disproportionately’’.

FPM is supplied with electricity by State Enterprise Energorynok on the basis of anagreement entered into in June 2004, which is generally extended on a semi-annual basis.FPM is supplied with natural gas under a supply contract with the national company Naftogaz.The contract sets out the expected delivery volumes per month. When available, we usealternative suppliers of natural gas. The use of independent gas suppliers does not increasecosts as their prices do not exceed the price of natural gas established by the Governmentfor Naftogaz.

The following table shows a breakdown of our energy costs per tonne of pellets for the yearsended 31 December 2012, 2013 and 2014 and the three month periods ended 31 March 2014 and2015:


2012 2013 2014 2014 2015

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

Total C1 cash cost per

tonne 59.6 100% 59.8 100% 45.9 100% 50.5 100.0% 33.2 100.0%

Energy 29.0 48.6% 29.8 49.9% 24.4 53.1% 27.2 53.8% 18.4 55.3%

Electricity 14.9 25.0% 15.2 25.5% 11.6 25.3% 13.6 26.9% 8.6 25.9%

Fuel (incl. diesel fuel) 5.9 9.8% 6.8 11.4% 6.0 13.0% 6.1 12.1% 3.3 9.8%

Gas 8.2 13.8% 7.8 13.0% 6.8 14.8% 7.5 14.8% 6.5 19.6%

Production from own ore

(kilotonnes) 9,409 10,466 10,670 2,714 2,723

Electricity tariffs are subject to regulation by the National Commission for State Energy andPublic Utilities Regulation (‘‘NCSEPUR’’), which sets tariffs for both industrial and householdcustomers. We believe that domestic inflation and the changes in the oil, gas and coal pricesare determining factors in tariff setting. For the year ended 31 December 2014, FPM’s

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average electricity price was US$71.9 per MWh. For the years ended 31 December 2013 and2012, FPM’s average annual electricity price was US$92.1 per MWh, and US$86.1 per MWh,respectively. For the three months ended 31 March 2015 and 2014, FPM’s average electricityprice was US$50.5 per MWh and US$86.2 per MWh, respectively, reflecting in part, thedevaluation of the hryvnia.

We mitigated the impact of the price increase by reducing our consumption per tonne ofpellet production. Our electricity consumption per tonne of pellets has decreased from 173.1kilowatt hours per tonne in 2012 to 165.1 kilowatt hours per tonne and 161.0 kilowatt hoursper tonne in 2013 and 2014, respectively, principally as a result of the BIP and efficienciesachieved through higher production volumes and processing of FYM ore. Our averageconsumption of electricity per tonne was 161.4 kilowatt hours per tonne in the three monthsperiod ended 31 March 2015, compared to 156.8 kilowatt hours per tonne in the same periodin 2014, reflecting increased production of high grade Fe 65 iron ore pellets, which requireadditional beneficiation. Our average cost of electricity per tonne of pellets from our own orewas US$11.6 for the year ended 31 December 2014 and US$14.9 and US$15.2 in 2012 and2013, respectively, following the devaluation of Ukrainian hryvnia against the US dollar. Forthe three months ended 31 March 2015, our average electricity cost per tonne of pellets wasUS$8.6 and US$13.6 in the same period in 2014.

Natural gas sales prices and tariffs for natural gas transportation in Ukraine are subject toregulation by the Cabinet of Ministers of Ukraine and NCSEPUR, which set prices in USdollars for natural gas sold domestically to industrial customers. This price setting is in turninfluenced by the price set by Russia, which supplies gas to Ukraine, as well as gas prices invarious countries of central Europe. In 2014 and the first quarter of 2015, Ukraine increasedgas imports from central Europe and reduced gas imports from Russia. On 1 April 2015,Ukraine and Russia reached a temporary agreement on gas supply for the second quarter of2015, pursuant to which it was agreed that the price of natural gas supplied by Gazprom willbe approximately US$248 per 1,000 cubic metres, with other terms of the temporaryagreement of October 2014 being extended until the end of June 2015. Natural gastransportation tariffs are also set by the NCSEPUR and payable to Naftogaz or Ukrtransgaz,the state-owned gas pipeline operator.

Gas is used mainly to fire the grate-kilns at the pelletising plant and the on-site water heatingplant that supplies hot water during the winter months. FPM’s consumption of gas is thereforeseasonal, ranging from approximately 12-13 million cubic metres per month during thesummer to approximately 16-17 million cubic metres per month during winter months. FPM isconnected to Ukrtransgaz’s pipeline network by a supply pipeline owned by Ukrtransgaz. Webelieve that the capacity of the supply pipeline represents approximately twice FPM’s currentgas requirements when operating at full capacity. FPM’s annual average natural gas pricesper 1,000 cubic metres were US$485.4 and US$480.1, in 2012 and 2013, respectively, andits average natural gas prices per 1,000 cubic metres were US$406.6 in the year ended31 December 2014. For the three months ended 31 March 2015, FPM’s average natural gasprice was US$354.5 per 1,000 cubic meters compared to US$393.5 per 1,000 cubic meters inthe same period in 2014.

FPM’s natural gas consumption was 17.0 cubic metres per tonne in 2012, 16.2 cubic metersper tonne in 2013 and 16.8 cubic meters per tonne in 2014. For the three months ended31 March 2015, our average natural gas consumption was 18.2 cubic meters per tonne ofpellets compared to 18.9 cubic meters per tonne of pellets in the same period of 2014. Onaverage our expenditure on natural gas per tonne of pellets from our own ore was US$8.2,US$7.8 and US$6.8, in the years ended 31 December 2012, 2013 and 2014, respectively,and US$7.5 and US$6.5 in the three month periods ended 31 March 2014 and 2015,respectively.

Fuel, including diesel, is used to operate our mining equipment. The principal factors affectingfuel consumption for any given period are mining and excavation man hours, which areimpacted by the stripping ratio and extraction volumes. Our diesel fuel consumption,measured as tonnes used per tonne of iron ore pellets produced, was 0.0048 and 0.0053 inthe years ended 31 December 2012, 2013 and 2014 respectively, reflecting an increase inoperational stripping volumes ratio. For the three months period ended 31 March 2015, ourfuel consumption per tonne was 0.0046. Fuel expenditures are affected by movements inworldwide oil prices. We aim to mitigate fuel price increases through the BIP. Overall fuel

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expenditures per tonne were US$5.9, US$6.8 and US$6.0 in the years ended 31 December2012, 2013 and 2014, respectively. For the three month period ended 31 March 2015, ourfuel expenditure per tonne was US$3.3, compared to US$6.1 per tonne in the same period of2014 reflecting lower oil prices and reduced fuel consumption.

Materials: Spending on materials accounted for 20.3%, 22.8% and 20.5% of our total C1 cashcost in the years ended 31 December 2012, 2013 and 2014 respectively. For the three monthperiod ended 31 March 2015, spending on materials accounted for 21.1%, compared to19.6% in the same period of 2014. Our principal materials are grinding bodies, explosives andbentonite. Our average annual expenditure for materials has historically been influenced byinflation in Ukraine (as the majority of these materials are sourced locally and purchased inhryvnia), and by international trends in certain commodities (such as grinding bodies, forexample, which are made from steel).

The following table shows a breakdown of our materials costs per tonne of pellets for theyears ended 31 December 2012, 2013 and 2014 and the three month periods ended 31 March2014 and 2015.


2012 2013 2014 2014 2015

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

(US$ per

tonne of

pellets)

%

of total

Production from

own ore

(kilotonnes) 9,409 10,466 10,670 2,714 2,723

Total C1 cash cost

per tonne 59.6 100.0% 59.8 100.0% 45.9 100.0% 50.5 100.0% 33.2 100.0%

Materials 12.1 20.3% 13.6 22.8% 9.4 20.5% 9.9 19.6% 7.0 21.1%

Grinding media 4.4 7.4% 4.2 7.0% 3.2 7.0% 3.6 7.2% 2.4 7.2%

Explosives and

blasting materials 1.7 2.8% 2.4 4.1% 1.4 3.1% 1.5 3.0% 0.9 2.7%

Other materials 6.0 10.1% 7.0 11.7% 4.8 10.4% 4.8 9.4% 3.7 11.2%

Our consumption of grinding bodies (the largest component of materials), measured in tonnesconsumed per tonne of iron ore pellets produced, was 0.0056, 0.0052 and 0.0052 in 2012,2013 and 2014, respectively and 0.0050 and 0.0051 for the three-month periods ended31 March 2014 and 2015, respectively. We have reduced consumption of grinding bodiesduring the periods discussed due to BIP measures and, recently, to processing of FYM ore.Average expenditure on materials per tonne was US$12.1, US$13.6, and US$9.4 for theyears ended 31 December 2012, 2013 and 2014, respectively, and US$9.9 and US$7.0 forthe three month periods ended 31 March 2014 and 2015, respectively. Cost movements wereprincipally attributable to inflation and changes in the international prices of steel products,domestic inflation and Ukrainian hryvnia devaluation against the US dollar.

Personnel: Personnel costs accounted for 11.5%, 9.8% and 9.7% of C1 cash costs per tonnein 2012, 2013 and 2014, respectively, and 10.9% and 7.6% of C1 cash costs per tonne in thethree month periods ended 31 March 2014 and 2015, respectively.

During the periods under review, personnel costs have been influenced by increasedproduction from own ore, efficiency gains arising out of outsourcing of non-core businessesand BIP initiatives, local inflation and devaluation of Ukrainian hryvnia exchange rate againstUS dollar. The average number of production workers on FPM’s payroll was 6,127 in 2012,6,473 in 2013 and 6,437 in 2014. As at 31 March 2015, the number of production workers onFPM’s payroll was 6,349. In addition, 1,219 production workers were employed by FYM as of31 March 2015.

Fluctuations in the US dollar/hryvnia exchange rate have also affected personnel costs. Asthe wages of FPM and FYM employees are denominated in local currency, changes in theexchange rate of the Ukrainian hryvnia against the US dollar affect our reported personnelcosts. The average production personnel costs per tonne for the years ended 31 December2012, 2013 and 2014 were US$6.8, US$5.9 and US$4.4, respectively and were US$5.5 and

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US$2.5 for the three months ended 31 March 2014 and 2015, respectively. This reduction incosts was due to improved productivity per employee, and Ukrainian hryvnia devaluationagainst the US dollar, partly offset by domestic inflation in Ukraine.

Business Improvement Programme: Our BIP aims to increase efficiency and reduceconsumption in the production process thereby reducing the C1 cash cost by 1% to 2% perannum. A major component of the BIP is to identify and implement material energy savingsprojects in our mining and processing operations. Since 2006, implementation of the BIP hasresulted in a significant decrease in the consumption per tonne in electricity and gas. Weestimate that as at 31 December 2014, the cumulative productivity gains since the inceptionof the BIP are approximately US$8.2 per tonne of pellets. A breakdown of the maincomponents of this programme is provided in the tables below.

Resource Savings under BIP since Inception in 2006

Resource Savings

Electricity, th. kWh 154,515Gas, th. M3 19,186Steam, Gcal 14,333Diesel fuel, t 3,715POL, t 174Lining steel, t 165Grinding bodies, t 3,499Tyres, pcs (heavy-duty trucks) 80Tyres, pcs (ancillary machinery) 205

Improvement in Consumption Norms

Norms 2005 2014

Three monthsended

31 March2015

Change %Three months

ended31 March

2015 vs 2005

Electricity kWh/t 205.5 161.02 161.4 (21%)Gas m3/t 22 16.78 18.2 (17%)Grinding bodies kg/t 6.4 5.16 5.1 (20%)

Energy represents a high proportion of our C1 cash cost of production. Consequently, a majorfocus of the BIP is to identify and implement material energy savings projects in our miningand processing operations. A series of projects have been engineered to enhance the energyefficiency of each of the four pelletising lines. For the year ended 31 December 2014, FPMreduced its average consumption per tonne of electricity by 24.5% compared to the sameperiod in 2013, reflecting higher production volumes and improved efficiency due to BIP.

Examples of BIP initiatives include:

* Reduction of power consumption at the tailings plant – During 2010 and 2011, weredesigned the piping system from the tailings dam to the processing plant to allowwater to flow by gravity (rather than via electrical pumps) to return to the processingplant for reuse.

* Mine dewatering system – In December 2011, the pit dewatering scheme at theLavrikovskoye deposit at the north end of the pit was changed from a double stagedewatering system to a single stage system, eliminating a transitional pumping stationand reducing electricity and maintenance costs as well as improving efficiency.

* Decrease in consumption of steel grinding media – By studying the pattern of powerconsumption at the FPM concentration plant, we assessed when grinding media werebeing over or under loaded. We then optimised the process for consistent loading ofgrinding media, leading to reduced grinding media consumption, more efficient energymanagement and more consistent particle size.

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Stripping ratio: The ‘‘stripping ratio’’ refers to the amount of overburden removed per tonne ofiron ore extracted, and functions as a general indicator of trends in ore extraction costs. Thecost of stripping is amortised into the future cost of sales for future production output. FPMtotal stripping ratio was 0.94, 0.95 and 1.01 cubic metres per tonne of ore mined in the yearsended 31 December 2012, 2013 and 2014, respectively. See ‘‘Business Description –Expansion of Our Mining Operations’’.

Weather: Extreme weather conditions, particularly in winter, can have a disruptive effect onmining operations at the open pit, as well as in the transportation of our products, particularlyseaborne transportation as well as the import to the processing facilities of third partypurchased concentrate. The consumption of some production inputs, such as natural gas, isseasonal, usually increasing during winter months.

Inflation: As the majority of our production costs are denominated in Ukrainian hryvnia,producer price index inflation in Ukraine is a significant factor driving costs. Local inflation isreflected in increased employee wages, consumable prices, and power generation costs,which are in turn reflected in our cost of sales.

The following table sets forth information with respect to increases compared to thecorresponding period of the previous year in certain inflation indices for Ukraine for the yearsended 31 December 2012, 2013 and 2014 and the three month periods ended 31 March2014 and 2015.


31 March

(Percentage increases) 2012 2013 2014 2014 2015

Consumer price index 0.6 (0.3) 12.1 1.7 36.3Producer price index 3.7 (0.1) 17.1 3.1 42.4

Source: National Bank of Ukraine.

Exchange rates: The majority of our revenues are earned in US dollars. However, over half ofour operating costs are priced in Ukrainian hryvnia. Any depreciation of the hryvnia relative tothe US dollar therefore reduces our costs when translated into US dollars, thereby increasingoperating margins, while hryvnia appreciation has the opposite effect. The hryvnia remainedstable during the financial years 2011, 2012 and 2013. During the 2014 financial year, theUkrainian hryvnia has devalued by approximately 97.3% against the US dollar; from 7.993 asat the beginning of the period to 15.769 as at 31 December 2014. The devaluation of theUkrainian hryvnia continued during the three month period ended 31 March 2015, and theUkranian hryvnia devalued from 15.769 at the beginning of the year to 23.443 as at 31 March2015, another decline of 48.7% compared to the US dollar. See ‘‘Exchange Rates’’.

The functional currency for each entity in the Group is determined as the currency of theprimary economic environment in which it operates. The functional currency of FPM and FYMis the Ukrainian hryvnia and the functional currency of Ferrexpo, Ferrexpo AG and FerrexpoMiddle East is the US dollar. Transactions in foreign currencies other than the functionalcurrencies are recorded at the rate prevailing at the date of the transaction. Monetary assetsand liabilities denominated in foreign currencies are translated to the functional currency atthe rate of exchange ruling at the balance sheet date, and non-monetary assets and liabilitiesare translated at the historic rate. For presentation of financial information, the incomestatements of subsidiaries are translated into our presentation currency, which is the USdollar.

In addition to this, the exchange rate differences arising on translation of balance sheet itemsdenominated in currencies other than the functional currencies of the reporting entities arerecognised in accordance with IAS 21, as a profit or loss in the period in which they arise.This includes foreign currency denominated trade receivables, trade payables and financialloans, except items that in substance form part of the Group’s net investment in a foreignsubsidiary, which are included in the translation reserve in equity.

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Operating foreign exchange gains and losses are those resulting from the Group’s operatingactivities. Our consolidated operating foreign exchange gains in the three months ended31 March 2014 and 2015 were US$36.3 million and US$23.0 million compared to gains in2012, 2013 and 2014 of US$0.7 million, US$0.6 million and US$76.4 million, respectively. Thesignificant increase in the foreign exchange gains during the 2014 financial year and the firstquarter of 2015 was a result of the significant devaluation of the Ukrainian hryvnia and thetranslation of US dollar denominated accounts receivable balances in Ukraine.

Non-operating foreign exchange gains and losses are predominately those associated with thesale of assets (including monetary assets), the translation of interest bearing loans andborrowings from third parties denominated in currencies different to the respective functionalcurrencies and transactional gains and losses from the conversion of cash balances incurrencies different to the local functional currencies at exchange rates different to those atthe initial recognition date. Our non-operating foreign exchange losses in the three monthsended 31 March 2014 and 2015 totalled US$3.9 million and US$4.8 million. These losses inthe periods ended 31 March 2014 and 2015, respectively, were mainly related to thetranslation of third party interest bearing loans and borrowings in Ukraine, which aredenominated in US dollar as well as other payable balances, which were partly offset bygains on US dollar cash balances held in Ukraine. The non-operating foreign exchange gainsand (losses) during the years ended 31 December 2012, 2013 and 2014 were US$6.6 million,US$9.8 million and US$(14.8) million, respectively.

The differences arising from the translation of assets and liabilities of entities with a differentfunctional currency, mainly Ukrainian hryvnia, than the presentation currency of the Group arerecorded in the translation reserve included in equity. These amounted to a total loss ofUS$627.6 million and US$449.9 million in the three months ended 31 March 2014 and 2015,respectively (before tax effect and including amounts attributable to non-controlling interests).The significant exchange difference on translating foreign operations in the three monthsperiod ended 31 March 2014 and 2015 is a result of the devaluation of the Ukrainian hryvnia,which has devalued by approximately 37.1% and 48.7% compared to the US dollar duringthese periods. The loss from translating foreign operations was US$0.8 million, US$0.4 millionand US$1,205.7 million as at 31 December 2012, 2013 and 2014, respectively. The hryvniadevalued by 97.3% during the 2014 financial year.

Non-C1 cash cost components of the cost of sales: The main components of pellets cost ofsales which are not included in the C1 cash cost of production are depreciation of existingproduction assets and the cost of purchasing and processing third party iron ore concentrate.The non-C1 cash cost included in the total cost of sales was US$33.8 million andUS$13.9 million as at the end of the three months ended 31 March 2014 and 2015,respectively, compared to US$77.7 million, US$101.2 million and US$96.7 million for theyears ended 31 December 2012, 2013 and 2014, respectively. Depreciation included in costof sales totalled US$18.5 million and US$11.8 million for the three months ended 31 March2014 and 2015, compared to US$39.3 million, US$78.7 million and US$64.1 million for theyears ended 31 December 2012, 2013 and 2014 respectively. The sharp increase indepreciation during the 2013 financial year is due to an increase of the existing productionassets to be depreciated, mainly due to the Yeristovo mine that began operating in January2013. The cost of purchasing and processing third party iron ore concentrate totalledUS$9.2 million and US$8.4 million for the three months ended 31 March 2014 and 2015,compared to US$29.3 million, US$34.8 million and US$27.1 million for the years ended31 December 2012, 2013 and 2014. Concentrate is used in the production of iron ore pelletsduring periods of surplus pelletising capacity and when market prices allow the Group to earnreasonable margins on the productions of pellets from third party concentrate.

Selling and distribution expenses

The main components of our marketing and distribution costs are railway freight costs in Ukraine(delivery to the border), as well as port charges and international freight for pellets shipped bywater (river and ocean vessels) to customers on a CFR or similar contractual basis.

Railway transportation services in Ukraine are provided by a state owned monopoly, Ukrzaliznytsia.The main port we use for seaborne sales (mainly Natural and Growth markets) is our TIS-Rudaterminal at Yuzhny on the Black Sea. We use Izmail, Constanta and other ports for shipments bybarges on the Danube to our Traditional customers in central and eastern Europe.

98

The following table sets forth a breakdown of the selling and distribution expenses for the yearsended 31 December 2012, 2013 and 2014 and for the three month periods ended 31 March 2014and 2015.


31 March

2012 2013 2014 2014 2015

(US$ millions, unless otherwise stated)Railway transportation 93.4 108.2 87.0 28.6 17.4Port charges 31.9 31.1 29.1 7.6 6.3International freight 113.5 114.4 123.4 35.3 18.7Costs of logistics business 27.5 33.0 26.6 7.2 5.5Other * 45.7 49.0 45.4 12.3 9.2

Total selling and distributionexpenses 312.0 335.7 311.5 91.0 57.1

Total sales volume (kilotonnes) 9,675 10,689 11,167 2,844 2,793Cost per tonne of pellets sold(US$/tonne) 32.2 31.4 27.9 32.0 20.4

* ‘‘Other’’ includes commissions, insurances, personnel, depreciation and advertising.

* Railway tariffs. Railway tariffs are regulated by the Government and are fixed by the Ministryof Transport, with cost of transportation depending on the categories of goods transportedand the route used. Railway tariffs are denominated in hryvnia. For the year ended31 December 2012 railway tariffs remained stable in local currency terms. For the year ended31 December 2013, railway tariffs increased by 4.7% in local currency terms. In July 2014,railway tariffs increased by 12.5% in local currency terms and in February 2015, railway tariffsincreased by 30% in local currency terms. These increases were offset by Ukrainian hryvniadevaluation against the US dollar. The Group owns 2,225 railway cars as at 31 March 2015,which enables us to receive a discount to the tariff applied for the cars owned byUkrzaliznytsia. Based on our usage, this discount currently represents between up to 8% oftransportation tariffs.

* Port charges. Port charges are mainly the handling costs, and also include the agents’commissions and the applicable storage costs. Port charges are regulated by the Governmentand fixed in US dollars and during the periods analysed herein remained relatively stable.

We own 48.6% of the TIS-Ruda terminal at Yuzhny port on the Black Sea. We benefit from adiscount when making shipments through the TIS-Ruda terminal which therefore makes suchshipment more economical.

* International freight. International freight includes costs related to delivery of Ferrexpo pelletsto final customers, where delivery costs are paid by Ferrexpo on CFR, CIF or similar terms.

Capital expenditure

Capital expenditure to develop and expand our operations is an important factor in our planning forincreased production capacity and is expected to have a material impact on our liquidity andfunding requirements for the foreseeable future. We have invested approximately US$1.3 billioninto our production and logistics operations since 1 January 2011. See ‘‘– Liquidity and capitalresources – Capital expenditure’’.

Recent Developments

Equity investment in Ferrous Resources Limited

On 30 April 2015, the Group announced that it had agreed to unconditionally tender for thedisposal of its entire stake in Ferrous to IEP Ferrous Brazil LLC for total cash consideration ofUS$41.8 million. On 9 June 2015, the Group announced that the conditions for the disposal of itsinterest in Ferrous had been satisfied and the US$41.8 million in proceeds for the disposal hadbeen received by the Group. The Group’s stake in Ferrous had been fully impaired during the

99

financial year 2014 but a revaluation gain of US$41.8 million was recognised in the statement ofother comprehensive income as of 31 March 2015. Now that the transaction is completed theamount of the fair value adjustment (US$41.8 million) will be reclassified and recognised in theincome statement.

Period ended 31 March 2015 compared to period ended 31 March 2014

Revenue

Our sales volume remained stable at 2.8 million tonnes for the three months ended 31 March 2015compared to the same period in 2014. Total revenue for the period ended 31 March 2015decreased by 37.7%, to US$257.6 million, compared to US$413.5 million for the same period in2014 and the decrease was due primarily to a decline in iron prices in the global markets. Duringthe three month period in 2015, the benchmark iron ore price for CFR Platt’s 62% Fe fines Chinaaveraged US$62.5 per tonne compared to an average of US$120.3 per tonne for the same periodin 2014 (minus 48.0%). The benchmark iron ore price reached a ten-year low of US$47.50 pertonne on 2 April 2015, and a continued low benchmark iron ore price, or any further decrease,could affect our revenue in subsequent periods. Our net realised DAF/FOB price for the periodended 31 March 2015 was 36% below the same period in 2014, outperforming the benchmark ironore price, which for the three months ended 31 March 2015 fell by 48%. This better performancewas due to an improved product mix, with a higher proportion of high quality premium 65% Fepellets sold, and lower freight rates. Demand for iron ore pellets remained stable in the first quarterof 2015. According to market indices, the average pellet premium in the Chinese spot market wasUS$26.5 per tonne for the three months ended 31 March 2015, compared to US$28.8 per tonnefor the same period in 2014. See ‘‘Business Description – Sales and marketing’’ for furtherinformation.

Cost of sales

Our total production volume increased by 2.5% to 2.9 million tonnes for the three month periodended 31 March 2015 compared to 2.8 million tonnes for the same period in 2014. The productionvolume of higher quality 65% iron content pellets increased by 81.1%to 2.5 million tonnescompared to 1.4 million in tonnes in the comparative period in 2014. Our total cost of sales for theperiod ended 31 March 2015 decreased by 38.8%, to US$109.9 million, compared toUS$179.7 million for the same period in 2014. The decrease was primarily a result of thecontinued devaluation of the hryvnia during the period as well as the positive effect ontransportation costs from lower oil prices and reduced stripping activities. During the period underreview, the Ukrainian hryvnia depreciated by 48.7% against the US dollar from 15.769 per USdollar at the end of 2014 to 23.443 per US dollar as at 31 March 2015. The average UAHexchange rate for the first three months in 2015 was 21.231 per US dollar compared to 8.856 perUS dollar in the same period in 2014 offsetting the negative effect from the lower sales prices. Ourrealised gross profit margin remained stable at to 57.3% compared to 56.5% in the same period in2014.

C1 cash cost

The average C1 costs in the first three months of 2015 reduced to US$33.2 per tonne comparedto US$50.5 per tonne for the same period in 2014. Approximately US$10.5 per tonne of thereduction resulted from the hryvnia devaluation with the remainder linked to lower oil prices andreduced stripping activities during the three months ended 31 March 2015.

The C1 costs per tonne also were positively affected by further improvement in consumption normsresulting from a slightly higher production volume.

The hryvnia averaged at 21.231 to the US dollar for the three months ended 31 March 2015compared to 8.856 for the same period in 2014. Approximately half of our production costs are inhryvnia.

Positive effects from the devaluation of the hryvnia were partially offset by local cost in inflationsuch as a 36.4% increase in electricity tariffs in local currency when compared to average tariffsduring the three month periods ended 31 March 2015 and 2014. On 28 December 2014, theParliament adopted a series of measures aimed at boosting budget revenues. This included an 8%royalty on the production of iron ore, increase in the general personal income tax rate (for incomeexceeding 10 minimum monthly salary payments, which is UAH 12,180 or approximately US$800)from 17% to 20% and an extension of the additional 1.5% tax (military duty) on salaries. The

100

royalty taxes may impact the C1 cost of production, although the Group expects to at least partiallyoffset them through higher volumes and production efficiencies.

Purchased concentrate

Cost of sales also includes iron ore concentrate purchased from third parties and converted intopellets. During the three month period ended 31 March 2015, we purchased the equivalent of0.2 million tonnes of pellets in concentrate form from third parties (amounting to US$8.4 million),compared to 0.1 million tonnes (amounting to US$9.2 million) for the three month period ended31 March 2014. The total volume of pellets produced from third party concentrate during the firstthree months of 2015 was 0.2 million tonnes compared to 0.1 million tonnes in the same period in2014.


Total selling and distribution expenses decreased by 37.2%, or US$33.9 million, to US$57.1 millionfor the period ended 31 March 2015, compared to US$91.0 million for the same period in 2014.The decrease was mainly driven by the sharp decrease of the freight rates applicable to ourshipments to customers made on a CFR basis and the positive impact of lower rail costs due tothe devaluation of the hryvnia as well as tariff discounts from the Ukrainian rail authorities for theGroup using its own rail wagons.

Our international freight costs decreased by US$16.6 million, to US$18.7 million, for the first threemonths of 2015 as a result of a lower C3 Index price compared to the same period in 2014. Theaverage C3 Index price was US$13.6 per tonne during the three months ended 31 March 2015,compared to US$23.8 per tonne for the same period in 2014. Sales made on a CFR basis were1.2 million tonnes in the first three months of 2015 compared to 1.3 million tonnes in thecomparative period in 2014.

Our distribution costs incurred in delivering product to the Ukrainian border decreased by 42.8% toUS$15.5 million compared to the same period in 2014 (US$27.1 million), equating to US$5.5 pertonne compared to US$9.5 per tonne in the same period in 2013. These costs benefitted fromdiscounts on rail tariff and the devaluation of the hryvnia. As at 31 March 2015, we owned 2,225rail cars and another 27 rail cars have been subsequently delivered and put into operation. Thedelivery of another 248 rail cars from a total of 300 rail cars ordered in February 2014 isoutstanding at the date of this Prospectus. As a consequence of the ongoing conflict in easternUkraine, the delivery of the rail cars is delayed and there is an uncertainty about the timing ofdelivery of these rail cars. See ‘‘Shareholders and Related Party Transactions – Three monthsended 31 March 2015’’.

General and administrative expenses

General and administrative expenses decreased to US$9.7 million for the period ended 31 March2015, compared to US$11.0 million for the same period in 2014. The decrease was mainly relatedto the devaluation of the hryvnia which positively affecting the Group’s costs in Ukrainedenominated in local currency. General and administrative expenses per tonne sold decreased toUS$3.5 in the three months period ended 31 March 2015 compared to US$3.9 in the same periodin 2014.

Other income and expenses

Other income increased to US$0.9 million for the period ended 31 March 2015, compared toUS$2.6 million for the same period in 2014, due lower recoveries received from insurance andlower proceeds from the sale of current assets, such as spare parts, in 2015.

Other expenses increased by US$4.2 million, to US$9.6 million, for the period ended 31 March2015, compared to US$5.4 million for the same period in 2014. The increase was primarily a resultof higher community support donations, which increased by US$6.4 million to US$8.1 million forthe period ended 31 March 2015, compared to US$1.7 million for the same period in 2014. Duringthe period ended 31 March 2015, other operating expenses decreased by US$1.7 million comparedto those as of 31 March 2014.

Other adjusting items

Other adjusting items decreased by US$2.4 million to US$0.1 million for the three months ended31 March 2015, compared to US$2.5 million for the same period in 2014. The decrease is

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predominantly related to the under recovery and write-off of VAT balances of US$2.1 millionrecorded in the comparative period as of 31 March 2014.

EBITDA

EBITDA decreased to US$111.6 million for the three months ended 31 March 2015, compared toUS$189.8 million for the same period in 2014. This decrease was predominantly driven by lowerprices for iron ore in the global market. The iron ore price for CFR Platt’s 62% fines Chinaaveraged at US$62.5 per tonne during the three months ended 31 March 2015 compared toUS$120.3 per tonne in the same period in 2014, which was a decrease of 48.0%. This effect waspartially offset by devaluation of the Ukrainian hryvnia resulting in lower C1 cash costs. Ouraverage C1 cash cost in the first three months of 2015 reduced to US$33.2 per tonne, comparedto US$50.5 per tonne for the same period in 2014. The EBITDA margin for the three monthsended 31 March 2015 was 43.3% compared with 45.8% for the same period in 2014. EBITDA is anon-IFRS financial measure and for more information, see ‘‘Selected Historical FinancialInformation – EBITDA’’.

Foreign exchange gains/(losses)

The hryvnia devalued during the three months ended 31 March 2015 by approximately 48.7%, from15.769 as at the beginning of the period to 23.443 as at end of 31 March 2015. During thecomparative period ended 31 March 2014, the hryvnia devalued compared to the US dollar by37.1%, from 7.993 at the beginning of the period to 10.955 as at 31 March 2014.

* Operating foreign exchange gains – operating foreign exchange gains decreased to US$23.0million for the three months ended 31 March 2015 compared to US$36.3 million for the sameperiod in 2014. The operating foreign exchange gain recorded as at 31 March 2015 and 2014are primarily related to the translation of accounts receivable balances held in Ukraine thatare denominated in US dollars. The lower gains as of 31 March 2015 are as a result of loweroutstanding receivable balances in Ukraine due to the lower prices for iron ore on the globalmarket.

* Non-operating foreign exchange losses – non-operating foreign exchange losses ofUS$4.8 million and US$3.9 million for the periods ended 31 March 2015 and 2014 are relatedto the net effects from the translation of interest bearing loans and borrowings from thirdparties and cash and cash equivalent balances held in Ukraine that are both denominated inUS dollars.

Finance income and expenses

Finance income was US$0.8 million for the three months ended 31 March 2015 compared toUS$2.7 million for the same period in 2014. The finance income of the comparative period ended31 March 2014 included US$2.1 million related to the reversal of a discount recovered in previousperiods related to outstanding VAT balances that were expected to be recovered. The vast majorityof this discount was released later in the financial year 2014 following the settlement of claims andissuance of bonds by the Ministry of Finance for overdue VAT receivable balances so that there isno such effect in the period ended 31 March 2015.

Finance expenses increased by US$2.3 million to US$18.9 million for the three months ended31 March 2015, compared to US$16.6 million for the same period in 2014. The increase of thefinance expenses during the first three months of the 2015 financial year is driven by new financefacilities secured and drawn after 31 March 2014.

Income tax expense

The Group pays tax in a number of jurisdictions. For the three months ended 31 March 2015, ourincome tax expense was recorded based on an expected tax rate of 19.0%, which is above therate of 15.0% applied for the same period in 2014, but below the effective tax rate of 27.7% forthe 2014 financial year. The effective tax rate is influenced by our mix of profits primarily betweenUkraine, Switzerland, the United Kingdom and Dubai, as well as the level of non-deductibleexpenses for tax purposes in the different jurisdictions. The effective tax rate for the 2014 financialyear was driven by expenses incurred in the second half of the 2014 financial year, such animpairment on an equity investment, the increase of the community support donations and thediscount on VAT bonds sold prior to its maturity that were not deductible from a tax perspectiveunder the enacted local tax legislations.

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VAT refunds in Ukraine are still subject to prepayments of corporate profit tax. As at 31 March2015, the balance of prepaid corporate profit tax in Ukraine was US$54.4 million compared toUS$73.8 million at the beginning of the year. The decrease was mainly driven by an additionaltranslation loss as a result of the continued hryvnia devaluation and a lower percentage ofcorporate profit tax to be prepaid for obtaining VAT refunds. It is expected that the total balance asat 31 March 2015 will be either offset against future profits or recovered through the issuance ofbonds by the Ministry of Finance, which are expected to trade with a discount to face value, ashappened during the financial year 2014 for overdue VAT receivable balances. As of the date ofthis Prospectus, there is an uncertainty as to the timing of the recovery of this balance. In light ofthis uncertainty, it was considered most appropriate to classify the entire balance as non-current inthe consolidated statement of financial position. The balance of prepaid corporate profit tax isexposed to the risk of further translation losses in case of a continued devaluation of the localcurrency in Ukraine.

Year ended 31 December 2014 compared to year ended 31 December 2013

Revenue

Total revenue for the year ended 31 December 2014 decreased by 12.2%, to US$1,388.3 million,compared to US$1,581.4 million in 2013, primarily a result of a 28.4% reduction in the averageCFR Platt’s 62% Fe fines China price in the global market. Our net realised DAP/FOB price, incontrast, fell by only 19.0% compared to a 28.4% fall in the Platts 62% Fe fines price. The effectof the lower sales prices was partially compensated by a higher sales volumes, which increased by4.5% to 11.2 million tonnes from 10.7 million tonnes in the comparative period. The Group alsoachieved an increase in the premium paid for iron ore pellets compared to iron ore fines andmoved all long-term contract pricing to relevant iron ore indexes, further offsetting the underlyingfall in price.

Total revenue in the year ended 31 December 2014 included other revenues of US$97.6 million,less than the US$86.5 million recorded in 2013, which were not related to pellet sales. Otherrevenues included bunker fuel sales and freight services provided by the Group’s logisticsoperation.

Cost of sales

Total cost of sales for the year ended 31 December 2014 was US$648.0 million compared toUS$773.2 million for the year ended 31 December 2013. The Group’s cost base benefited from alower C1 cost of production driven by the hryvnia devaluation during the 2014 financial year and aslightly higher pellet production volume, which increased by 0.2 million tonnes to 11.0 milliontonnes during the 2014 financial year. Our gross profit margin increased to 53.3% for the financialyear 2014 compared to 51.1% in 2013.

C1 cash cost

Our average C1 cash costs decreased by US$13.9 per tonne, to US$45.9 per tonne, for the 2014financial year compared to US$59.8 per tonne in the comparative period ended 31 December2013. During the 2014 financial year the Ukrainian hryvnia has devalued by approximately 97.3%against the US dollar, from 7.993 as at the beginning of the financial year to 15.769 as at31 December 2014, resulting in a positive effect on our average C1 cash costs as approximatelyhalf of such costs were denominated in hryvnia.


Cost of sales includes iron ore concentrate purchased from third parties and converted into pellets.During the year ended 31 December 2014, we purchased the equivalent of 0.4 million tonnes ofpellets in concentrate from third parties (amounting to US$27.1 million), compared to 0.3 milliontonnes (amounting to US$34.8 million) for the year ended 31 December 2013. The total volume ofpellets produced from third party concentrate in 2014 was 351 kilotonnes compared to 347kilotonnes in 2013.


Total selling and distribution expenses decreased by 7.2%, or US$24.2 million, to US$311.5 millionfor the year ended 31 December 2014, compared to US$335.7 million for the year ended31 December 2013. The decrease was mainly the net effect of higher international freight costs forshipments under the CFR basis and lower railway transportation costs in Ukraine.

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The volume of sales made on a CFR basis remained stable during the 2014 financial yearcompared to the 2013 financial year. The higher international freight costs were driven by a higherC3 index price, which averaged at US$22.0 per tonne for the 2014financial year compared toUS$21.0 per tonne (an increase of 4.8%) for the comparative period ended 31 December 2013.

Our distribution costs incurred in delivering product to the Ukrainian border decreased by 19.6%, toUS$82.7 million, compared to the 2013 financial year (US$103.3 million), equating to US$7.4 pertonne compared to US$9.7 per tonne in 2013. These costs benefitted from the devaluation of thehryvnia and discounts received for the use of the Group’s own fleet of rail cars. As at 31 December2014, we owned 2,225 rail cars. The delivery of 300 rail cars ordered in February 2014 wasoutstanding as of 31 December 2014.


General and administrative expenses decreased to US$48.6 million for the year ended31 December 2014, compared to US$54.8 million for the year ended 31 December 2013. Generaland administrative expenses per tonne sold decreased to US$4.3 in 2014 compared to US$5.1 in2013 as a result of higher sales volume and lower costs. The decrease of the costs was mainlyrelated to the devaluation of the hryvnia, which has a positive effect on the Group’s costs inUkraine denominated in local currency.


Other income was US$9.1 million for the year ended 31 December 2014, compared toUS$6.7 million for the same period in 2013. The increase is mainly due to higher recoveriesreceived from insurance.

Other expenses decreased by US$33.5 million, to US$57.0 million, for the year ended 31 December2014, compared to US$23.5 million for the year ended 31 December 2013. The increase wasprimarily a result of higher community support donations, which increased to US$39.1 millioncompared to US$10.1 million in the comparative period.

Other adjusting items

Other adjusting items increased by US$48.1 million, to US$90.3 million, during the 2014 financialyear compared to US$42.2 million for the 2013 financial year. The other adjusting items for the2014 financial year included an impairment in an equity investment in the amount ofUS$82.4 million whereas the comparative period included the effect from the under-recovery andwrite-off of VAT receivable balances in the amount of US$36.4 million. This amount also includedthe discount realised on VAT bonds received from the Ministry of Finance that were sold prior toits maturities during the 2014 financial year.

EBITDA

EBITDA decreased by 1.9%, or by US$9.6 million, to US$496.3 million in 2014, compared toUS$505.9 million in 2013. The decrease was mainly the result of the net effect of the lower salesprices achieved during the 2014 financial year, lower C1 cash costs as a result of the UAHdevaluation, an operating foreign exchange gain (see below) and higher community supportdonations. The EBITDA margin for the year ended 31 December 2014 was 35.7% compared with32.0% for the year ended 31 December 2013. EBITDA is a non-IFRS financial measure and formore information, see ‘‘Selected Historical Financial Information – EBITDA’’.

Foreign exchange gains

* Operating foreign exchange gains – operating foreign exchange gains of US$76.4 million andUS$0.6 million for the years ended 31 December 2014 and 2013, respectively. The increaseof the foreign exchange gains was primarily related to the translation of accounts receivablebalances held in Ukraine that were denominated in US dollars as a result of the significantdevaluation of the Ukrainian hryvnia during the 2014 financial year compared to the US dollar.

* Non-operating foreign exchange gains – non-operating foreign exchange losses ofUS$14.8 million for the year ended 31 December 2014, compared to a gain of US$9.8 millionfor the year ended 31 December 2013. The loss of US$14.8 million is related to the neteffects from the translation of interest bearing loans and borrowings from third parties andcash and cash equivalent balances held in Ukraine that were both denominated in US dollars.

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The gains shown in the 2013 financial year were primarily related to the conversion of USdollars for the settlement of liabilities denominated in Ukrainian hryvnia at an exchange ratehigher than the one applicable upon initial recognition.


Finance income was US$19.3 million for the year ended 31 December 2014 compared toUS$2.4 million for the year ended 31 December 2013. The finance income in 2014 included thereversal of a discount recorded in prior years in the amount of US$16.5 million. The discount wasrecorded in respect of outstanding VAT balances being heard in the court system that wereexpected to be recovered. No such discount was required as at 31 December 2014 due to positivedecisions made by the relevant courts and the receipt of bonds from the Ministry of Finance foroutstanding and overdue VAT balances.

Finance expenses increased by US$2.5 million to US$68.5 million for the year ended 31 December2014, compared to US$66.0 million for the year ended 31 December 2013. The increase of thefinance expenses during the 2014 financial year was driven by new finance facilities secured anddrawn during the year.

Income tax expense

Our effective income tax rate was 27.7% for the year ended 31 December 2014, compared to13.6% for the year ended 31 December 2013. The increase was a result of the change in theprofit mix between the different local jurisdictions and the increased level of non-deductibleexpenses for tax purposes according to enacted local tax legislations. The non-deductible expensesincluded the impairment in an equity investment, the community support donations as well as thediscount on VAT bonds sold prior to its maturities.

As at 31 December 2014, we prepaid corporate profit tax in the amount of US$73.8 million in orderto receive VAT refunds in Ukraine. See also ‘‘– Recent developments – Valued added tax’’.

Year ended 31 December 2013 compared to year ended 31 December 2012

Revenue

Total revenue for the year ended 31 December 2013 increased by 11.0% to US$1,581.4 millioncompared to US$1,424.0 million for the year ended 31 December 2012, and this increase wasmainly due to higher sales volumes and prices. Sales volumes for the period were 10.7 milliontonnes, a 10.5% increase from 9.7 million tonnes in the year ended 31 December 2012. In additionto the higher sales volume, the Group realised a 4% improvement in the sales price, whichreflected strengthening ore fines prices in the global market. The industry benchmark priceincreased during the financial year 2013 on average by US$5 per tonne (2013 CFR Platt’s 62% Fefines China: US$135 per tonne versus 2012 CFR Platt’s 62% Fe fines China: US$130 per tonne).

Total revenue in the year ended 31 December 2013 included other revenues of US$86.5 million,less than the US$94.0 million recorded in 2012, which were not related to the pellet sales. Theseother revenues include bunker fuel sales and freight services provided by the Group’s logisticsoperation.

Cost of sales

Total cost of sales for the year ended 31 December 2013 was US$773.2 million compared toUS$690.7 million for the year ended 31 December 2012. The absolute increase in our cost ofsales was primarily driven by higher production volumes during the financial year 2013 whichincreased from 9.7 million in 2012 to 10.8 million in 2013. Our gross profit margin was 51.1% in2013 in line with 2012 (2012: 51.5%).

C1 cash cost

The average C1 costs in 2013 were in line with 2012 at US$59.8 per tonne (2012: US$59.6 pertonne). The increase of electricity tariffs was offset by the efficiencies gained through the inclusionof FYM ore into our production in January 2013. The C1 cost declined in each quarter of the yearfollowing the ramp up of production at FYM in the first quarter and the start of full commercialproduction from FYM ore in the third quarter of 2013. The C1 cost in the fourth quarter of 2013was US$57.6 per tonne, compared to US$63.9 per tonne in the first quarter of the same year.

Approximately half of our C1 cash costs are denominated in hryvnia. The hryvnia remained stablethroughout the financial year 2013, on a comparable level to 2012.

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Cost of sales also includes iron ore concentrate purchased from third parties and converted intopellets. During the year ended 31 December 2013, we purchased the equivalent of 378 kilotonnesof pellets in concentrate from third parties (amounting to US$34.8 million), compared to 281kilotonnes (amounting to US$29.3 million) for the year ended 31 December 2012. The total volumeof pellets produced from third party concentrate in 2013 was 347 kilotonnes compared to 281kilotonnes in 2012.


Total selling and distribution expenses increased by 7.6%, or US$23.7 million, to US$335.7 millionfor the year ended 31 December 2013, compared to US$312.0 million for the year ended31 December 2012. The increase was driven by higher volumes shipped and higher market ratesfor capesize vessels. This effect was partially offset by logistic cost saving as a result of capitalinvestments in our ship loading top-off facilities, the use of more capesize vessels and own railcars compared to 2012.

Despite lower sales volume to export customers in our Growth market, the international freightcosts for pellets remained on the same level as those in 2012 due to higher market rates forcapesize vessels – US$114.4 million during the financial year 2013 compared to US$113.5 millionin 2012. The effect of the increase of the market rates for capesize vessels in 2013 was partiallyoffset by the saving made as a result of our capital investments in ship loading top-off facilities.

Our sales volumes increased by 10.5% in the year ended 31 December 2013 to 10.7 milliontonnes of pellets compared to 9.7 million tonnes of pellets in the year ended 31 December 2012.Of the volumes sold, 47% was sold to our Traditional export customers in central and easternEurope compared to 49% in 2012. Our selling and distribution expenses were affected by anincrease of the sales volumes and higher railway tariffs which increased by 4.7% during thefinancial year 2013. The effect from higher railway tariffs was partially mitigated by discountsreceived for higher volumes transported using our own rail cars in the year ended 31 December2013 compared to the same period in 2012. As a result of increased sales volumes and higherrailway tariffs, railway transportation costs increased by 15.8% to US$108.2 million in the yearended 31 December 2013, compared to US$93.4 million in the year ended 31 December 2012, asour Traditional customers largely receive their product by rail.


General and administrative expenses decreased slightly to US$54.8 million for the year ended31 December 2013, compared to US$56.3 million in the year ended 31 December 2012. Generaland administrative expenses per tonne sold were US$5.1 in 2013 compared to US$5.8 in 2012,with this decrease due to higher sales volume and slightly lower costs.


Other income was US$6.7 million for the year ended 31 December 2013, compared toUS$11.3 million for the same period in 2012, mainly due to lower lease income.

Other expenses decreased by US$6.7 million to US$23.5 million for the year ended 31 December2013, compared to US$30.2 million for the year ended 31 December 2012. The decrease isprimarily a result of lower community support donations. These decreased by US$10.7 million toUS$10.1 million for the year ended 31 December 2013 compared to US$20.8 million for the sameperiod in 2012.

EBITDA

EBITDA increased by 24.8%, or by US$100.5 million, to US$505.9 million in 2013, compared toUS$405.4 million in 2012. The increase was a result of higher sales volumes and prices and stableC1 costs during the financial year 2013. The EBITDA margin for the year ended 31 December2013 was 32.0% compared with 28.5% for the year ended 31 December 2012. EBITDA is a non-IFRS financial measure and for more information, see ‘‘Selected Historical Financial Information –EBITDA’’.

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Foreign exchange gain/(loss)

* Operating foreign exchange gains – operating foreign exchange gains of US$0.6 million andUS$0.7 million for the years ended 31 December 2013 and 2012 respectively. The hryvniaremained stable against the US dollar at UAH7.99 during the financial year ended31 December 2013

* Non-operating foreign exchange gains – non-operating foreign exchange gain of US$9.8 millionfor the year ended 31 December 2013, compared to a gain of US$6.6 million for the yearended 31 December 2012. The gains in both periods are primarily related to the conversionof US dollars for the settlement of liabilities denominated in Ukrainian hryvnia at an exchangerate higher than the one applicable upon initial recognition.


Finance income was US$2.4 million for the year ended 31 December 2013 compared toUS$2.6 million for the year ended 31 December 2012 reflecting lower average cash balances. Theaverage cash balance in 2013 was US$435.6 million compared to US$743.4 million in 2012.

Finance expenses decreased by US$22.2 million to US$66.0 million for the year ended31 December 2013, compared to US$88.2 million for the year ended 31 December 2012. Thefinance expense of the comparative period ended 31 December 2012 included a US$20.0 milliondiscount to reflect the time value of money on outstanding VAT balances that were expected to berecovered after more than one year. This discount was increased by US$3.7 million in 2013. Inaddition to the increase of the discount as of the end of the period ended 31 December 2013, anadditional provision in the amount of US$36.4 million was recorded to reflect the discount onoutstanding VAT balances expected recovered during the financial year 2014 through the issue offinancial instruments as has been the practice in the past in Ukraine. The amount ofUS$36.4 million is reflected separately in the income statement and not included in financeexpense.

Income tax expense

Our effective income tax rate was 13.6% for the year ended 31 December 2013 compared to17.8% for the year ended 31 December 2012. The decrease is a result of the reduction of thestatutory tax rate in Ukraine and the change in the mix of profits between the different localjurisdictions.

As at 31 December 2013, we prepaid corporate profit tax in the amount of US$87.5 million in orderto receive VAT refunds in Ukraine. See also ‘‘– Recent developments – Valued added tax’’.

Liquidity and capital resources

Our principal sources of funds are cash generated from operations and amounts drawn downunder short and long-term credit facilities available. Our principal uses of funds are operatingexpenses and the service of debt and capital expenditures to renew and enhance our productionfacilities.

Working capital movements

The main components of working capital include trade receivables and payables, VAT receivablebalances, prepaid corporate profit tax and inventories.

In addition to sales volume and pricing, our trade receivables are determined by the paymentterms we negotiate with our customers and the geographic sales mix. Typically, the payment termsfor our products vary from prepayments to 30 days. As a result, the amount of trade receivablesmay significantly fluctuate from period to period. Our closing trade and other receivables amountedto US$115.0 million and US$84.1 million for the periods ended 31 March 2014 and 2015,respectively, and US$116.6 million, US$102.5 million and US$87.2 million for the years ended31 December 2012, 2013 and 2014 respectively.

Our trade payables include amounts due to suppliers for production equipment, other inputs andservices under typical payment terms. Our trade and other payables amounted to US$30.3 millionand US$24.3 million at 31 March 2014 and 2015 respectively, US$62.6 million, and US$50.0million and US$32.4 million for the years ended 31 December 2012, 2013 and 2014.

As we are principally an exporter, we do not have a substantial amount of VAT received ondomestic sales which can be offset against VAT paid on supplies of goods and services. We

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therefore receive repayment from the Government of VAT paid on operating and capitalexpenditures purchases to the extent that it has not been offset by local sales, which affects ourworking capital requirements and accordingly our level of funding and interest expense. As a resultof delayed VAT refunds obtained and increased capital expenditures, our gross VAT balanceoutstanding in Ukraine increased to US$318.2 million as at 31 December 2013, compared toUS$301.5 million 2012. During the 2014 financial year, the significant devaluation and the issuanceof bonds by the Ministry of Finance to settle accumulated outstanding and overdue VAT balancesreduced the outstanding balance significantly to US$72.8 million. We received bonds at face valueof UAH1,607.1 million (US$135.6 million at the exchange rate at the date of issuance). The Groupsold all of these bonds prior to 31 December 2014 and their maturity, receiving proceeds ofUAH1,256.8 million (US$97.1 million) resulting in an average discount of 21.8% in local currency.During the 2014 financial year, the Ukrainian hryvnia devalued compared to the US dollar from7.993 as at 31 December 2013 to 15.769 as at 31 December 2014 resulting in a total translationloss of US$126.4 million on the total gross VAT balances (including bonds). We received regularVAT refunds during the three months ended 31 March 2015 having a positive effect on the closingbalance as of 31 March 2015, which amounted to US$46.1 million as of 31 March 2015, after anadditional translation loss of US$23.6 million during this period as a result of the further hryvniadevaluation.

As a result of continued Government fiscal constraints, VAT refunds during the financial years2012, 2013, 2014 and during the first three months of 2015 were obtained against a prepayment ofcurrent and future corporate profit tax by an amount determined by the Ukraine tax authoritiesbased on varying percentages of each VAT refund amount at the time of receipt. This resulted inan increase of the prepaid corporate profit tax balance in Ukrainian hryvnia. The balance of prepaidcorporate profit tax was US$94.4 million and US$54.4 million as at 31 March 2014 and 2015,respectively, compared to US$24.9 million, US$87.5 million and US$73.8 million as at 31 December2012, 2013 and 2014. The Group recorded translation losses of US$24.4 million andUS$24.3 million for the three months ended 31 March 2014 and 2015 respectively, andUS$57.7 million for the year ended 31 December 2014 on the prepaid corporate profit tax balancein Ukraine.

Our inventories include raw materials and consumables used in production, work in progress andfinished goods. Our inventories amounted to US$182.0 million and US$158.0 million as at 31 March2014 and 2015, respectively. As at 31 December 2012, 2013 and 2014 our inventories totalledUS$146.5 million, US$239.2 million and US$206.7 million, respectively. The main factor resulting inthe increase of inventories during these periods was the stockpile of lean ore mined, but notexpected to be processed within one year. Consequently, this portion of the inventories is classifiedas non-current and totalled US$54.2 million and US$61.6 million as at 31 March 2014 and 2015,respectively, compared to US$12.4 million, US$58.3 million and US$81.9 million as at 31 December2012, 2013 and 2014.

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Cash flows

The table below summarises our cash flows for the three months ended 31 March 2014 and 2015and the years ended 31 December 2012, 2013 and 2014.


31 March

(US$ millions)2012 2013 2014 2014 2015

EBITDA 405.4 505.9 496.3 189.8 111.6Working capital movements (128.2) (103.0) (15.3)(1) (29.1) (23.8)Interest paid (55.6) (57.0) (61.3) (4.9) (13.2)Income tax paid (99.8) (108.3) (58.1) (35.5) (5.4)Other effects (3.2) (4.7) (73.2) (38.1) (23.1)

Net cash flow from operatingactivities 118.6 232.9 288.4 82.2 46.1Sustaining capital expenditure (113.5) (86.7) (80.2) (27.4) (6.4)

Free cash flow 5.1 146.2 208.2 54.8 39.7Development capital expenditure (315.7) (191.1) (154.3) (50.7) (5.9)Distributions to shareholders (39.0) (77.9) (76.9) (31.9) (31.9)Purchase of available for saleinvestments — (82.4) — — —Proceeds from borrowings andfinance 64.0 26.3 392.5 14.1 —Repayment of borrowings andfinance (13.2) (19.3) (119.0) (7.2) (116.4)Arrangement fees paid (4.7) (10.6) (3.6) (1.5) (3.1)Other (payments)/receipts 9.8 3.0 10.5 0.4 0.8

Net increase/(decrease) in cashand cash equivalents aftercurrency translation differences (293.7) (205.8) 257.4 (22.0) (116.8)

Cash and cash equivalents atthe beginning 890.2 596.6 390.5 390.5 626.5Currency translation differences 0.1 (0.3) (21.4) (2.1) (15.8)

Cash and cash equivalents atthe end of the period 596.6 390.5 626.5 366.4 493.9

Interest-bearing loans andborrowings at the end of theperiod (1,020.0) (1,029.2) (1,304.6) (1,045.7) (1,188.7)

Net financial indebtedness at theend of the period (423.4) (638.7) (678.1) (679.3) (694.8)

(1) The movement in the year ended 31 December 2014 includes the effect of a VAT receivable balance amounting toUS$ 97.1 million recorded through VAT bonds.

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Cash and cash equivalents

The balance of cash and cash equivalents increased from US$626.5 million as at 31 December2014 to US$493.9 million as at 31 March 2015, compared to US$596.6 million as at 31 December2012 and US$390.5 million as at 31 December 2013. The balance of cash and cash equivalents atthe end of the comparative period ended 31 March 2014 was US$366.4 million. The decrease ofthe balance as at 31 March 2015 was primarily due to a repayment of US$53.6 million to thebondholders in relation to the February 2015 Exchange Offer. In addition to this repayment, theGroup also repaid US$55.0 million on its US$420 million revolving pre-export finance facility.

Ferrexpo operates in Ukraine and holds sufficient liquidity to ensure its operations remainunaffected as far as possible by currency and other financial controls which may be introduced.The policy of the Group is to hold liquidity in Ukraine sufficient to cover three months of operatingcosts and sustaining capital expenditure in the event that funds cannot be remitted or it isconsidered in the best interests of the Group not to remit such funds. Balances are held wherepossible in US dollars. As a result of devaluation of the hryvnia and local VAT refunds the balancemay increase from time to time above this level and currently reflects approximately twelve weeksof operating costs and capital expenditure requirements in Ukraine. The cash held in Ukraine isconsidered to be available for operations and is confirmed as such by the Group’s principal bankon a weekly basis, however, due to the inherently weak financial system, this could becometemporarily or permanently unavailable. See ‘‘Risk factors – Risks relating to operating in Ukraine –Risks relating to the Ukrainian banking sector and our principal bank in Ukraine could impair ourbusiness, restrict our ability to use cash held in Ukrainian banks or lead to a total loss of fundsheld in Ukraine’’, ‘‘– The business environment in Ukraine could deteriorate’’, and ‘‘– Risks relatingto the Ukrainian Banking Sector and our principal bank in Ukraine could impair our business,restrict our ability to use cash held in Ukrainian banks or lead to a total loss of funds held inUkraine’’.

Net cash flow from operating activities

Our net cash flows from operating activities decreased to US$46.1 million for the three monthsended 31 March 2015, compared to US$82.2 million for the same period in 2014. The decreasewas mainly driven by lower sales prices that were partially offset by lower production cost. The netcash flows from operating activities totalled US$118.6 million, US$232.9 million andUS$288.4 million in the years ended 31 December 2012, 2013 and 2014.

The working capital movements were stable for the three months periods ended 31 March 2014and 2015 and totalled US$29.1 million and US$23.8 million, respectively. Working capital outflowsin the years ended 31 December 2012, 2013 and 2014 were US$128.2 million, US$103.0 millionand US$15.3 million. The outflows in the financial years 2012 and 2013 were affected by theincrease of the Ukrainian VAT receivable balances caused by delayed or absent VAT refunds. Forfurther details, see ‘‘Liquidy and capital resources – Working capital movements’’.

Interest paid include the interest payments made for our finance facilities in place, mainly related toa US$500 million Eurobond issued in April 2011, a syndicated US$420 million revolving pre-exportfinance facility drawn in October 2011 and a US$350 million revolving finance facility drawn inAugust 2014. The interest on the Eurobond is payable on a semi-annual basis on 7 April and7 October. The net financial payments for the three months ended 31 March 2014 and 2015 doconsequently not include the interest coupon payment.

Other effects are mainly related to share of profit from associates, pension and other non-cashitems such as operating foreign exchange gains and losses. The other effects totalledUS$38.1 million and US$23.1 million for the three months ended 31 March 2014 and 2015,compared to US$3.2 million, US$4.7 million and US$73.2 million for the years ended 31 December2012, 2013 and 2014. The significant higher effect in 2014 and the first quarter of 2015 wasrelated to operating foreign exchange gains as a result of the significant devaluation of theUkrainian hryvnia compared to the US dollar during 2014 and the first quarter of 2015.

Capital expenditure

In budgeting for and making capital expenditures, we analyse planned capital expenditure in termsof:

Sustaining capital expenditure: maintenance and modernisation of existing facilities and equipment;and Development capital expenditure: further mine expansion, resource development, andconstruction of new facilities or procurement of new equipment.

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We have invested approximately US$1.3 billion between 1 January 2011 and 31 March 2015 toincrease the quality and quantity of our pellet output by developing additional iron ore miningcapacity at FYM as well as executing a major modernisation of FPM’s mining and productionfacilities. The following table sets out our capital expenditure for the years ended 31 December2011, 2012 and 2013 and the three month periods ended 31 March 2014 and 2015.


31 March

2012 2013 2014 2014 2015

(US$ millions)Sustaining capital expenditure 113.5 86.7 80.2 27.4 6.4Development capital expenditure 315.8 191.1 154.3 50.7 5.9

Total 429.3 277.8 234.5 78.1 12.3

For the three month period ended March 2015, our total capital expenditure was US$12.3 millioncompared to US$ 78.1 million for the same period of 2014. Total capital expenditure for the yearsended 31 December 2014, 2013 and 2012 was US$ 234.5 million, US$277.8 million andUS$429.3 million, respectively. Sustaining capital expenditure for the three months ended 31 March2015 comprised US$5.7 million at FPM and US$0.7 million at other subsidiaries, compared to,respectively, US$26.8 million and US$0.6 million in the same period of 2014.

Capital expenditure for the year ended 31 December 2014 included US$77.7 million in sustainingcapital expenditure at FPM for modernising existing equipment and processing facilities andUS$ 2.5 million in our other subsidiaries, mainly related to our barging operations. Capitalexpenditure for the year ended 31 December 2013 included US$81.0 million in sustaining capitalexpenditure at FPM and US$5.7 million in our other subsidiaries. Capital expenditure for the yearended 31 December 2012 included US$113.5 million in sustaining capital expenditure, includingUS$108.4 million at FPM for modernising existing equipment and processing facilities, andUS$5.1 million in our other subsidiaries.

For the year ended 31 December 2014, development capital expenditure of US$154.3 millionincluded US$ 56.0 million for development of FPM and US$74.0 million for development of FYM.For the year ended 31 December 2013, development capital expenditure of US$191.1 million(compared to US$315.8 million at 31 December 2012) included US$61.9 million for thedevelopment of FPM (compared to US$83.7 million at 31 December 2012) and US$100.3 millionfor the development of FYM (compared to US$146.3 million at 31 December 2012). Developmentexpenditure for FPM and FYM included mining equipment and stripping works while at FPM it alsoincluded investments for improving the quality of our pellets. These development expenditures formpart of the US$647 million capital investment programme approved in November 2010.

In addition, during the year ended 31 December 2014, we invested US$8.1 million for developmentof the Belanovskoye deposit, US$1.2 for development of the Northern Deposits and US$15.0 onlogistics and infrastructure, including railcars. During the year ended 31 December 2013, we spentUS$6.5 million on the development of the Belanovskoye deposit (compared to US$32.9 million forthe year ended 31 December 2012) and US$1.1 million the development of the Northern Deposits(compared to US$8.9 million for the year ended 31 December 2012) and US$21.3 million onlogistics and infrastructure, including rail cars and specially adapted sea-going transfer vessel(compared to US$43.5 million for the year ended 31 December 2012).

As of 31 December 2014, our modernisation and expansion programmes were substantiallycompleted, with the final sections of additional floatation facilities commissioned in the first quarterof 2015.

In the current low priced iron ore market environment, however, we are pausing significant newgrowth projects until appropriate gearing levels are reached. Low level capital expenditure will bemade to maintain the project capability. Sustaining capital expenditures are estimated to be in therange of US$50 million to US$100 million annually.

For a further description of our development and improvement projects, see ‘‘Business Description– Expansion of Our Mining Operations’’.

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Distribution to shareholders

A special dividend of US$38.6 million and US$38.4 million (6.6 US cents per Ordinary Share) wasdeclared for the financial years 2013 and 2014, of which US$31.9 million were paid as of the endof the three month periods ended 31 March 2014 and 2015, respectively. Those paid during thefinancial years 2012, 2013 and 2014 totalled US$39.0 million, US$77.9 million and US$76.9 million.The dividend payments made during the financial years 2013 and 2014 included a special dividendfor the financial years 2012 and 2013 totalling US$38.7 million and US$38.6 million (6.6 US centsper Ordinary Share), respectively.

The totals of paid and declared dividends for the financial years 2012, 2013 and 2014 were 35.5%,29.4% and 41.9% of the respective profits for these years. For further details on our dividendpolicy, see ‘‘Business Description – Dividend Policy’’.

Borrowings

Our net financial indebtedness at 31 March 2014 and 2015 was US$679.3 million andUS$694.8 million, compared to US$423.4 million, US$638.7 million and US$678.1 million as at theend of the financial years 2012, 2013 and 2014, respectively. Our net financial indebtedness toEBITDA ratio was 1.66 as at 31 March 2015, which is below the Group’s internal limit of 2.5 times.

Debt facilities drawn at 31 March 2014 and 2015 amounted to US$1,043.1 million andUS$1,190.8 million, compared to US$1,028.4 million, US$1,036.3 million and US$1,308.3 million asat 31 December 2012, 2013 and 2014. The average maturity as at 31 March 2015 was 1.9 yearscompared to 1.7 years as at 31 December 2014.

In April 2011, we issued a US$500 million unsecured Eurobond maturing on 7 April 2016. See‘‘Description of Other Indebtedness – Ferrexpo 2016 Notes’’.

On 2 September 2013, the Issuer, Ferrexpo Middle East and Ferrexpo AG entered into acommitted pre export finance facility for an amount up to US$500.0 million (the ‘‘2013 PXF’’). Theagreement provided for a US$350 million revolving loan facility from the effective start date whichwas declared on 8 August 2014. The 2013 PXF remains open for additional bank commitments byway of an accession to the facility up to its maximum size of US$500 million.

On 29 August 2014, the available bank commitments under the 2013 PXF at the effective date ofUS$350 million were fully drawn down. Amounts advanced under this facility bears interest at afloating rate of 3.25% per annum over LIBOR (plus any mandatory costs associated withsyndication in the European markets). See ‘‘Description of Other Indebtedness’’.

On 24 February 2015, the Group exchanged and cancelled US$214.3 million of the 2016 Notesand issued new notes totalling US$160.7 million and repaid bonds in an aggregate principalamount equal to US$53.6 million. The new notes are repayable in two equal instalments on 7 April2018 and 7 April 2019 and have a 10.375% interest coupon payable semi-annually in arrear. Theremaining outstanding 2016 Notes in the amount of US$285.7 million mature on 7 April 2016 andhave a 7.875% interest coupon.

Neither the Company nor any of its subsidiaries are currently subject to externally imposed capitalrequirements other than a bank covenant requirement to maintain consolidated equity in the Groupof at least US$500 million, including minority interests and excluding foreign currency translationadjustments. In addition, the 2013 PXF and the pre export finance facility entered into in 2011contain a covenant that requires the Group to maintain net financial indebtedness at a level below3.0 times EBITDA on a rolling basis, tested semi-annually.

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Contractual obligations

The following are the contractual maturities of financial liabilities by interest type:

As at 31 March 2015

Less thanone year

One totwo years

Three tofive years

More thanfive years Total

Interest bearingEurobond — (284) (155) — (439)Syndicated bank loans – secured (208) (158) (263) — (629)Other bank loans – secured (21) (20) (40) — (81)Other bank loans – unsecured (2) (1) (4) (2) (9)Finance lease liability (4) (3) (9) — (16)Interest accrued (15) — — — (15)Future interest payable (59) (31) (36) — (126)Non-interest bearingTrade and other payables (24) — — — (24)Accrued liabilities and deferred

income (22) — — — (22)Other financial liabilities — — — — —

Total Cash Flow Maturity(1) (355) (497) (507) (2) (1,361)

(1) Net of arrangement fees in accordance with IAS 39.

Qualitative and quantitative analysis of market risk

We have exposure to the following types of market risk:

* Credit risk

* Liquidity risk

* Market risk – including currency risk, interest rate risk and commodity risk.

The Board of Directors has overall responsibility for the establishment and oversight of our riskmanagement framework.

The Group’s risk management policies are established to identify and analyse the risks that theGroup faces, to set appropriate risk limits and controls, and to monitor risks and adherence tolimits. Risk management policies and systems are reviewed regularly to reflect changes in marketconditions and our activities. We aim to develop, through our training and management standardsand procedures, a disciplined and constructive control environment in which all employeesunderstand their roles and obligations.

Our Audit Committee oversees how management monitors compliance with our risk managementpolicies and procedures and reviews the adequacy of the risk management framework in relation tothe risks we face. The Audit Committee is assisted in its oversight role by Internal Audit. InternalAudit undertakes both regular and ad hoc reviews of risk management controls and procedures,the results of which are reported to the Audit Committee and the Chief Financial Officer (‘‘CFO’’).

The Group operates a centralised financial risk management structure under the management ofthe Executive Committee, which is accountable to the Board. Our Executive Committee delegatescertain responsibilities to the CFO. The CFO’s responsibilities include authority for approving allnew physical, commercial or financial transactions that create a financial risk for the Group.Additionally, the CFO controls the management of treasury risks within each of the business unitsin accordance with a Board approved Treasury Policy.

Natural hedges that can be identified and the effectiveness of which can be quantified are used inpreference to financial risk management instruments. Derivative transactions may be executed forrisk mitigation purposes only, as speculation is not permitted under the approved Treasury Policy.Such transactions are designed to have the effect of reducing risk on underlying market or creditexposures. Appropriate operational controls ensure operational risks are not increaseddisproportionately to the reduction in market or credit risk.

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As of the date of this Prospectus, we have not used any financial risk management instrumentsthat are derivative in nature or other hedging instruments.

Credit risk

Trade and other receivables

The Group, through its trading operations, enters into binding contracts which contain obligationsthat create exposure to credit, counterparty and country risks. It is our primary objective to managesuch risks to reduce uncertainty of collection from buyers. A secondary objective is to minimise thecost of reducing risks within acceptable parameters.

Trade finance is used to balance risk and payment. These risks include the creditworthiness of thebuyer, and the political and economic stability of the buyer’s country. Trade finance generally refersto the financing of individual transactions or a series of revolving transactions and are often self-liquidating whereby the lending bank stipulates that all sales proceeds to be collected are appliedto settle the loan, the remainder returned to the Group. Trade finance transactions are approved bythe Group treasurer. The primary objective of the treasurer in evaluating these transactions is toensure that the margins paid and conditions applicable to such finance should be the same orbetter than those which other organisations with similar creditworthiness would achieve, andcompared with other alternative financing available to us.

Credit risk is the risk associated with the possibility that a buyer will default, by failing to makerequired payments in a timely manner, or to comply with other conditions of an obligation oragreement. Where appropriate, we use letters of credit to assist in mitigating such risks orprepayments prior to delivery.

Counterparty risk crystallises when a party to an agreement defaults. Where letters of credit areused to minimise this risk, we use a confirming bank with a similar or higher credit rating as theissuing bank to mitigate country and/or credit risk of the issuing bank.

Country risk is the potential volatility of foreign assets, whether receivables or investments, that isdue to political and/or financial events in a given country. During the periods ended 31 March2015, 31 December 2014 and 2013, all our pellets sales were made to customers outside ofUkraine, compared to minor sales totalling US$0.3 million made to customers in Ukraine during thefinancial year ended 31 December 2012

Group treasury monitors the concentration of all outstanding risks associated with any entity, orcountry and reports to the CFO on a timely basis.

Investment securities

The Group limits its cash exposure to credit, counterparty and country risk by only investing inliquid securities and with counterparties outside Ukraine that are incorporated in an A+ or better(S&P) rated OECD country. A ratings approach is used to determine maximum exposure to eachcounterparty. Cash not required within three months for production, distribution and capitalexpenditures is invested with counterparties rated by S&P or Moody’s at a level of long-term BBB(S&P) or short-term A3 (S&P) or better.

Recognising that the principal activities of the Group are predominantly in Ukraine, specialconsideration is given to Ukrainian transactional banking counterparties where the sector is smalland constrained by the sovereign credit rating. Exceptions may be made under the followingconditions:

* the counterparty is resident in Ukraine; and

* the counterparty is included in the top 15 financial institutions in Ukraine based on theGroup’s assessment of the financial institution.

Cash and deposits are held with Bank Finance and Credit (Bank F&C), our principal bank inUkraine, a related party financial institution which is registered with the NBU as a bank thatreceives and disburses payments to/from Ukraine under Group intercompany loans and is anapproved Ukrainian counterparty. We are therefore exposed to Ukraine country risk. For furtherinformation, see ‘‘Risk Factors – Risks relating to the Ukrainian banking sector and our principalbank in Ukraine could impair our business, restrict our ability to use cash held in Ukrainian banksor lead to a total loss of funds in Ukraine.’’

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Guarantees

The Group’s policy is to provide financial guarantees under limited circumstances only for thebenefit of wholly owned or substantially wholly owned subsidiaries. At 31 March 2015, Ferrexpo AGand the Issuer were jointly and severally liable under a US$420 million revolving pre-export financefacility having an available and outstanding balance of US$277.5 million (31 March 2014: US$420million; 31 December 2014: US$332.5 million). Additionally, Ferrexpo AG, the Issuer and FerrexpoMiddle East were jointly and severally liable under a new US$350 million revolving pre-exportfinance facility, which was fully drawn as of 31 March 2015.

Ferrexpo, Ferrexpo AG and Ferrexpo Middle East are guarantors to the 2016 Notes, which are duefor repayment on 7 April 2016. Additionally the 2016 Notes benefit from a surety agreementprovided by FPM.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximumexposure to credit risk as at end of the periods ended 31 March 2015 and 2014 and the yearsended 31 December 2014, 2013 and 2012 was as follows:


31 March

2012 2013 2014 2014 2015

(US$ millions)Cash and cash equivalents 596.6 390.5 626.5 366.4 493.9Trade and other receivables 116.6 102.5 87.2 115.0 84.1Other financial assets 0.8 15.1 8.9 14.1 8.2

Total maximum exposure tocredit risk 714.0 508.1 722.6 495.5 586.2

Liquidity risk

Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due.Our approach is to ensure, as far as possible, that we will always have sufficient liquidity to meetour liabilities when due, under both normal and stressed conditions, without incurring unacceptablelosses or risking damage to our reputation by holding surplus cash or undrawn credit facilities.

We prepare detailed rolling cash flow forecasts, which assist us in monitoring cash flowrequirements and optimising our cash return on investments. Typically, we ensure that we havesufficient cash on demand and/or lines of credit to meet expected operational expenses for aperiod of 30 days, including the servicing of financial obligations; this excludes the potential impactof extreme circumstances that cannot reasonably be predicted, such as natural disasters.

Currency risk

We are exposed to currency risk on sales, purchases and borrowings that are denominated in acurrency other than the respective functional currencies of the Group. Operating currencies for thegroup are primarily the Ukrainian hryvnia, but also US dollars, Swiss francs, Euro and poundssterling.

Our major lines of borrowings and the majority of our sales are denominated in US dollars, withcosts of local Ukrainian production mainly in Ukrainian hryvnia. The NBU manages and determinesthe official exchange rates. An inter-bank market for exchange of currencies exists in Ukraine andis monitored by the NBU. The Group, through its financial institutions, exchanges currencies atbank offered market rates. During the period ended 31 March 2015, the Ukrainian hryvnia devaluedcompared to the US dollar from 15.769 as at 31 December 2014 to 23.443 as at 31 March 2015resulting in significant translation losses on assets denominated in Ukrainian hryvnia (e.g. property,plant and equipment, Ukrainian VAT and prepaid corporate profit tax). These losses are recognisedin the translation reserve, which increased by a total of US$449.9 million (before tax effect andincluding amounts attributable to non-controlling interests) and reduced the shareholders’ equity inthe same amount during the three months ended 31 March 2015.

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The devaluation of the Ukrainian hryvnia reduced the operating costs of the production unit in USdollar terms and the value of hryvnia payables recorded in the statement of financial position at theyear end in US dollars. As the majority of sales and receivables are denominated in US dollars,the devaluation in the local currency resulted in operating exchange gains recorded in the incomestatement. On the other hand, US dollar-denominated loans held by the Ukrainian subsidiary willresult in non-operating exchange losses. Trade receivables and trade payables in other currenciesare not hedged as a forward market for the Ukrainian hryvnia is generally not available.

Other Group monetary assets and liabilities denominated in foreign currencies are consideredimmaterial as the exposure to currency risk mainly relates to corporate costs within Switzerlandand the United Kingdom. The net monetary assets after deducting monetary liabilities denominatedin euro are considered to be immaterial to the Group.

A sensitivity analysis of foreign currency exposures indicates that a 20% strengthening of the USdollar against the following currencies at the period end would have increased/(decreased) incomestatement and equity amounts shown below. This assumes that all other variables, in particularinterest rates, remain constant.

As at31 December

2014

As at31 March

2015

(US$ millions)UAH 9.6 7.9EUR 1.1 0.9CHF 0.0 0.0

Total 10.7 8.8

A 20% weakening of the US dollar against the above currencies would have an equal but oppositeeffect to the amounts shown above, on the basis that all the other variables remain constant.

Interest rate risk

We predominantly borrow funds that are at floating interest rates and are exposed to interest ratemovements. The interest rate exposure to US dollars remained relatively low during the period, andno interest rate swaps have been entered into in this or prior periods.

We do not account for any fixed rate financial assets and liabilities at fair value through profit orloss, and we do not hold any derivatives (e.g. interest rate swaps). Therefore a change in interestrates would not affect profit or loss with respect to our fixed rate obligations.

With respect to variable rate obligations, as at the year end, an increase of 100 basis points ininterest rates would have decreased equity and profit or loss by the amounts shown below. Thisanalysis assumes that all other variables, in particular foreign currency rates, remain constant.

As at31 December

2014

As at31 March

2015

(US$ millions)Net finance charge (1.1) (1.8)

A decrease of 100 basis points would have a negative effect of US$1.6 million for the periodended 31 March 2015 and a positive effect of US$0.3 million for the year ended 31 December2014, on the basis that all the other variables remain constant.

Commodity risk

We are exposed to movements in the price of iron ore, but do not have a commodity riskexposure to our financial assets and liabilities once the sale has been made. Trade receivables arebased on a fixed contract price, and so do not fluctuate with iron ore market prices. Similarlyfinished goods are held at cost, with revaluation to a spot price not applicable for iron ore pellets,there being no tradable exchange in the product to ascertain its market value.

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General explanation of certain income statement line items


General and administrative expenses consist principally of wages and other personnel costs ofemployees not involved in the production process or in selling and distribution at FPM and FYM aswell as the costs of personnel at other corporate entities (namely Ferrexpo, Ferrexpo AG, theIssuer and Ferrexpo Middle East). Additional general and administrative expenses includemaintenance of non-production assets including offices and fees paid to consultants and otheroutside professionals.

Write-offs and impairment losses

This item includes principally impairment of goodwill, equity investments and property, plant andequipment as well as write-offs of inventories that are not considered sellable; impairment of value-added taxes formerly deemed recoverable or the effect of reversals of such impairments and write-offs.

Other income and expense

Other income consists principally of income from the sale of surplus spare parts for maintenanceand income from operating leases. Other expense consists principally of charitable donations tosupport local community projects, losses on disposals of property, plant and equipment and finesand penalties paid.

Net gain/(loss) from associates and disposal of subsidiaries

Net gain/(loss) from associates and disposal of subsidiaries consists principally of profits/(losses)arising on the disposal of a number of non-core subsidiaries and associates and the share ofprofits/(losses) based on our percentage ownership interest in associates that are not consolidatedin our financial results.

Finance income and expense

Finance income consists principally of interest income on cash balances on term deposits and onother loans made by us. Finance expense arises principally from interest expense on bankfinancing and bank charges, and includes arrangement fees and other expenses associated withobtaining financing, as well as the effect from discounting receivable balances (including overdueVAT balances) expected to be received after more than 12 months after the period end.

Foreign exchange gain/(loss)

Transactions in foreign currencies are recorded at the rate prevailing at the date of the transaction.Monetary assets and liabilities denominated in foreign currencies are translated into the functionalcurrency at the rate of exchange ruling at the balance sheet date and non-monetary assets andliabilities at the historic rate. Foreign exchange differences arising on translation are recognised inthe income statement.

Income taxes

Our income is mainly subject to taxation in Ukraine, Switzerland and the United Kingdom. Whilethe corporate income tax rate varies in each jurisdiction, and may change from time to time. Thetax rates applicable in Ukraine and the United Kingdom decreased gradually from 21% in 2012 to18% in 2014 and from 24.0% in 2012 to 21% in 2014, respectively. While the tax rate in Ukraineis expected to remain at 18% for the 2015 financial year, the applicable tax rate in the UnitedKingdom will further decrease to 20% effective 1 April 2015. In Switzerland, the statutory incometax rate depends on the taxable status of the respective entity and varies from 7.8% to 10% forthe Group’s Swiss entities. The applicable tax rates for the different entities in Switzerlandremained stable during the financial years 2012, 2013 and 2014. No significant change of the taxrate is expected for the financial year 2015.

Our consolidated effective tax rates were 17.8% for 2012, 13.6% for 2013, and 27.7% for 2014.This increase of the tax rate for the financial year 2014 was a result of the change in the profit mixand significantly higher level of non-deductible expenses in Ukraine and Switzerland including thediscount recorded on the VAT bonds sold at a discount and the impairment loss recorded on anequity investment.

For the purpose of interim financial statements, the income tax expenses are recorded based onmanagement’s expected tax rate for the financial year taking into account potential changes in the

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profits for the different jurisdictions and the level of non-deductible expenses. For the three monthsended 31 March 2015, our income tax expense was recorded based on an expected tax rate of19.0%.

Critical accounting policies and judgements

The preparation of consolidated financial statements in conformity with IFRS requires managementto make estimates and assumptions that affect the amounts reported in the consolidated financialstatements and accompanying notes. These estimates are based on information available as at thedate of authorising the consolidated financial statements for issue. Actual results, therefore, coulddiffer from those estimates. Information about significant areas of estimation, uncertainty and criticaljudgements made by management in preparing the consolidated financial information is set outbelow.

Revenue recognition

For the sales to most of our customers, we invoice and recognise 95% or 98% of the provisionallyagreed purchase price as revenue upon delivery and when the risk and rewards of ownershippasses as defined in the specific sales contract. The remaining balance related to the pelletsdelivered is recognised as accrued revenue and the final invoice is issued upon confirmation of thefinal discharge quality and quantity and the final price based on the agreed pricing formula (indexbased) with the customer. The initially accrued revenue is consequently released at the point oftime of issuance of the final invoice.

Property, plant and equipment

The determination of fair value and value in use requires management to make estimates andassumptions about expected production and sales volumes, commodity prices (considering currentand historical prices, price trends and related factors), reserves, operating costs, closure andrehabilitation costs and future capital expenditure. These estimates and assumptions are subject torisk and uncertainty; hence there is a possibility that changes in circumstances will alter theseprojections, which may impact the recoverable amount of the assets. In such circumstances, someor all of the carrying value of the assets may be impaired and the impairment would be chargedagainst the income statement.

The calculation of the average stripping ratio is based on the total estimated proved and probablereserves and is used to determine whether stripping costs are capitalised as mining assets anddepreciated based on the unit of production method or whether costs are expensed.

Goodwill and other intangibles

Formal impairment tests are carried out annually for goodwill. Formal impairment tests for all otherassets are performed when there is an indication of impairment. At each reporting date, anassessment is made to determine whether there are any indications of impairment. We conduct aninternal review of asset values annually which is used as a source of information to assess for anyindications of impairment.

External factors, such as changes in expected future processes, costs and other market factors arealso monitored to assess for indications of impairment. If any indication of impairment exists anestimate of the asset’s recoverable amount is calculated. The recoverable amount is determined asthe higher of fair value less direct costs to sell and the asset’s value in use.

If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired and animpairment loss is charged to the income statement so as to reduce the carrying amount in thestatement of financial position to its recoverable amount.

Fair value is determined as the amount that would be obtained from the sale of the asset in anarm’s length transaction between knowledgeable and willing parties. Fair value for mining assets isgenerally determined as the present value of the estimated future cash flows expected to arisefrom the continued use of the asset, including any expansion prospects, and its eventual disposal,using assumptions that an independent market participant may take into account. These cash flowsare discounted by an appropriate discount rate to arrive at a net present value of the asset.

Value in use is determined as the present value of the estimated future cash flows expected toarise from the continued use of the asset in its present form and its eventual disposal. Value inuse is determined by applying assumptions specific to our continued use and cannot take intoaccount future development. These assumptions are different to those used in calculating fair value

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and consequently the value in use calculation is likely to give a different result (usually lower) to afair value calculation.

In testing for indications of impairment and performing impairment calculations, assets areconsidered as collective groups and referred to as cash generating units. Cash generating units arethe smallest identifiable group of assets, liabilities and associated goodwill that generate cashinflows that are largely independent of the cash inflows from other assets or groups of assets.Goodwill acquired through business combinations has been allocated for impairment testingpurposes to one cash generating unit. This represents the lowest level within the Group at whichgoodwill is monitored for internal management purposes.

The impairment assessments are based on a range of estimates and assumptions, including:

Estimates/assumptions: Basis:* Future production Proved and probable reserves, resource estimates and, in certain cases,

expansion projects* Commodity prices Contract prices, and longer-term price protocol estimates* Exchange rates Current market exchange rates* Discount rates Cost of capital risk adjusted for the resource concerned

Fair value of financial instruments

Where the fair value of financial assets and liabilities recorded in the statement of financial positioncannot be derived from active markets, they are determined using valuation techniques includingthe discounted cash flows models. The inputs to these models are taken from observable marketswhere possible, but where this is not feasible, a degree of judgement is required in establishing fairvalues. The judgements include considerations of inputs such as liquidity risk, credit risk andvolatility. Changes in assumptions about these factors could affect the reported fair value offinancial instruments.

Defined benefit pension liability

The valuation for defined benefit superannuation schemes requires management to makejudgements as to the nature of benefits provided by each scheme and thereby determine theclassification of each scheme. For defined benefit schemes, management is required to makeannual estimates and assumptions about future returns on classes of scheme assets, futureremuneration changes, employee attrition rates, administration costs, changes in benefits, inflationrates, exchange rates, life expectancy and expected remaining periods of service of employees. Inmaking these estimates and assumptions, management considers advice provided by externaladvisers, such as actuaries.

Provision for site restoration

Our accounting policy for the recognition of site restoration provisions requires significant estimatesand assumptions such as: requirements of the relevant legal and regulatory framework; themagnitude of possible contamination and the timing, extent and costs of required closure andrehabilitation activity. These uncertainties may result in future actual expenditure differing from theamounts currently provided.

The provision recognised is periodically reviewed and updated based on the facts andcircumstances available at the time. Changes to the estimated future costs are recognised in thestatement of financial position by adjusting both the closure and rehabilitation asset and provision.

Deferred income taxes

Our accounting policy for taxation requires management’s judgement as to the types ofarrangements considered to be a tax on income in contrast to an operating cost. Judgement isalso required in assessing whether deferred tax assets and certain deferred tax liabilities arerecognised on the statement of financial position. Deferred tax assets, including those arising fromun-recouped tax losses, capital losses and temporary differences, are recognised only where it isconsidered more likely than not that they will be recovered, which is dependent on the generationof sufficient future taxable profits. Deferred tax liabilities arising from temporary differences ininvestments, caused principally by retained earnings held in foreign tax jurisdictions, are recognisedunless repatriation of retained earnings can be controlled and are not expected to occur in theforeseeable future.

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Assumptions about the generation of future taxable profits and repatriation of retained earningsdepend on management’s estimates of future cash flows. These depend on estimates of futureproduction and sales volumes, commodity prices, reserves, operating costs, closure andrehabilitation costs, capital expenditure, dividends and other capital management transactions.Judgements are also required about the application of income tax legislation. These judgementsand assumptions are subject to risk and uncertainty, hence there is a possibility that changes incircumstances will alter expectations, which may impact the amount of deferred tax assets anddeferred tax liabilities recognised on the statement of financial position and the amount of other taxlosses and temporary differences not yet recognised. In such circumstances, some, or all, of thecarrying amount of recognised deferred tax assets and liabilities may require adjustment, resultingin a corresponding credit or charge to the income statement.

Current income taxes

Current income taxes are computed based on enacted or substantially enacted local tax rates andlaws at the reporting date and the expected taxable incomes of the subsidiaries for the respectiveperiod.

Current income taxes are recognised as an expense or income in the consolidated incomestatement unless related to items recognised in the consolidated statement of comprehensiveincome or directly in equity or if related to the initial accounting for a business combination.

Judgement is required for prepaid income taxes in respect of their recoverability and the timing ofthe recovery. If the prepaid income taxes are expected to be recovered after more than 12 monthsafter the end of the reporting period, these balances are classified as non-current.

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RESERVES AND RESOURCES

Reserves and Resources

Investors should note that we have prepared the Ore Reserve and Mineral Resource estimatesprovided in this Prospectus to comply with the JORC Code. We also refer to resource estimatesprepared in accordance with the classification system and estimation methods for reserves andresources established in the FSU and last revised in 1983 (‘‘FSU Classifications’’). Reserves andresource estimates classified under the JORC Code and the FSU Classification do not necessarilycomply with SEC Industry Guide 7. See also ‘‘Risk Factors – Risks relating to our operations –The volume and grade of our reserves and our rate of production may not conform to currentestimates’’.

There are three principal differences between reporting under SEC Industry Guide 7 and the JORCCode:

* SEC Industry Guide 7 does not recognise the classification referred to as ‘‘resources’’ in theJORC Code. As a result, SEC registrants are permitted only to report Proven and ProbableOre Reserves;

* under SEC Industry Guide 7, reserves must be estimated on the basis of current economicand legal conditions, whereas the JORC Code permits the use of ‘‘realistic’’ assumptions,which may include forecast prices and reasonable expectations that required permits will begranted in the future and contracts will be entered into for the sale of production; and

* SEC Industry Guide 7 requires a feasibility study in order for an undeveloped mineral depositto be classified as a reserve (for large metal mining projects, a ‘‘bankable’’ feasibility studywould be required). In contrast, the JORC Code does not require that a final feasibility studyhas been undertaken for the declaration of reserves, but it does require that appropriatestudies have been carried out that have determined there is a mine plan that is technicallyachievable and economically viable. No technical/economic study is required under the JORCCode for the declaration of resources.

Accordingly, investors should be aware that if we were preparing the reserves and resourcesinformation in this Prospectus in accordance with SEC Industry Guide 7, we would not bepermitted to report any resources, and the amount of reserves we have estimated may be lower.

Resources, where appropriate, are constrained spatially within a notional iron ore pellet sellingprice of US$95.9 per tonne. Cut off grades and pit limits were calculated with an assumed iron orepellet selling price of US$87 per tonne.

Both reserves and resources assume production of pellets containing not less than 64.5% ironcontent total and not more than 5.7% of silica dioxide.

The tables below set out our estimates of iron Ore Reserves and Measured, Indicated and InferredMineral Resources as at 1 January 2015. Mineral Resources are reported inclusive of thoseresources reported as ore reserves.

Despite the recent large change to the iron ore price, this has led to no material changes in thestated reserves. This is due to the relatively low long term iron ore price that was used to initiallydetermine the reserves. As such all material assumptions and technical parameters used todetermine the resources and reserves have not materially changed.

Ore Reserve estimates as at 1 January 2015

Ore Reserves as at 1 January 2015 are estimated considering feasibility indices as follows:

1. For the GPL deposits:

* The resource limits were determined using a magnetic iron cut-off grade of 16% for theK22 and K231 ore bodies and 14% for the K233 ore body;

* The maximum internal dilution in the K22 and K231 orebodies from material with amagnetic iron grade below 19.5% included in the reserve is 10 metres or 2% of the totalreserves, while for the K233 orebody the same parameters are applied but with amagnetic iron grade below 15.0%;

* Reserves were determined using a selling price of $87/tonne FOB for a 65% Fe pellet atthe border of Ukraine. Reserves were converted to a saleable product using a 86% to93% Fe magnetic recovery;

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* Mineral Resources that are estimated outside ultimate pit boundaries are not includedinto the Ore Reserves;

* Reserves make an allowance for a mining loss of 2%;

* Reserves are stated for material delivered to the plant, including mining diltion of 2% atzero grade.

2. For the Yeristovskoye deposit:

* The resource limits were determined using a magnetic iron cut off grade of 14% for theK25 ore body;

* The maximum internal dilution in the K22 and K25 orebodies from material with amagnetic iron grade below 21.0% included in the reserve is 10 metres or 2% of the totalreserves, while for the K233 orebody the same parameters are applied but with amagnetic iron grade below 15.0%;

* Reserves were determined using a selling price of $87/tonne FOB for a 65% Fe pellet atthe border of Ukraine. Reserves were converted to a saleable product using a magneticrecovery of 86% to 93% Fe;

* Mineral Resources that are estimated outside ultimate pit boundaries are not includedinto the Ore Reserves;

* Reserves make an allowance for a mining loss of 2%; and

* Reserves are stated for material delivered to the plant, including mining diltion of 2% atzero grade.

The total Ore Reserve estimate for GPL of 778 million tonnes represents a decrease of176.6 million tonnes (18.5%) from the 954.6 million tonnes reported by third-party engineers in2008. We estimate the 1 January 2015 amount by subtracting the following volumes of oreextracted from GPL between 2008 and the end of December 2014 as shown in the table below:

Period

Tonnage of oreextracted

(million tonnes)

2008 27.4

2009 28.2

2010 28.5

2011 29.2

2012 29.1

2013 30.2

2014 30.5

The total Ore Reserve estimate for Yeristovskoye of 660 million tonnes represents a decrease of17.0 million tonnes (3%) from the reserve amount reported by third-party engineers in September2013. We estimate the 1 January 2015 amount by subtracting 17 million tonnes of ore extractedfrom Yeristovskoye between September 2013 and 31 December 2014.

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Deposit Ore Reserves

Proved(milliontonnes)

Fe gradetotal (% Fe

tot)

Fe grademagnetite

(% Femag)

Probable(milliontonnes)

Fe gradetotal (% Fe

tot)

Fe grademagnetite

(% Femag)

Gorishne-Plavninskoye(1) 181 26 17 475 30 22

Lavrikovskoye(1) 34 31 21 88 32 23

Yeristovskoye(2) 242 34 27 418 32 25

Belanovskoye

Galeschinskoye

Total 457 31 23 981 31 23

(1) The reserves estimates for the GPL deposits are those estimated in the report by Turgis Consulting (Pty) Ltd. dated 25 July2008, less our estimates of the volume of ore mined from GPL deposits between 2008 and the end of December 2014 from theestimates stated in that report.

(2) The reserves estimates for the Yeristovskoye deposits are based on a report by Royal Haskoning DHV (UK) Ltd. dated20 September 2013 less our estimates of the volume of ore mined between September 2013 and the end of December 2014.

Resource estimates as at 1 January 2015

Deposit Measured Indicated Inferred

Tonnage

(million

tonnes)

Fe grade

total (%

Fe tot)

Fe grade

magnetite

(% Fe

mag)

Tonnage

(million

tonnes)

Fe grade

total (%

Fe tot)

Fe grade

magnetite

(% Fe

mag)

Tonnage

(million

tonnes)

Fe grade

total (%

Fe tot)

Fe grade

magnetite

(% Fe

mag)

(magnetite, unless stated otherwise)

Gorishne-Plavninskoye(1) 263 29 19 1,012 31 23 1,275 31 23

Lavrikovskoye(1) 95 31 22 682 30 22 174 29 20

Yeristovskoye(2) 247 34 27 558 33 26 364 30 23

Belanovskoye(2) 336 31 24 1,149 31 23 217 30 21

Galeschinskoye(2)(3) 268 55 58 55

Total 941 31 23 3,669 33 22 2,088 31 22

(1) The resource estimates for the GPL deposits were calculated based on a review conducted by SRK in March 2008 less ourestimates of the volume of ore mined from the GPL deposit between 2008 and the end of December 2014.

(2) The resource estimates are based on a report by SRK (UK) dated 15 June 2007. The Mineral Resource estimate forYeristovskoye has been depleted in line with the volume of ore mined between September 2013 and the end of December2014 (totalling 17 million tonnes).

(3) Haematite deposit.

We have reported Mineral Resource estimates for the GPL, Yeristovskoye, Belanovskoye, andGaleschinskoye deposits as set out in the table above reflecting our confidence that these havebeen sufficiently well assessed to confirm that they are potentially economically viable inaccordance with the requirements of the JORC Code.

We have five other projects, namely the Manuilovskoye, Vasilievskoye, Kharchenkovskoye,Zarudenskoye and Brovarkovskoye deposits, where geological surveying has been completed butwhere either the continuity of the mineralisation or their potential to be exploited economically isunable to be confirmed in accordance with the JORC Code. We have reported resource estimatesfor these deposits in accordance with the FSU Classification of approximately 13.143 billion tonnesof in situ material in total. The majority of this (approximately 11.155 billion tonnes) falls within the‘‘C2’’ and ‘‘P’’ categories under the FSU Classification and is therefore at a very early stage ofexploration and part of which would not necessarily be classified as resources under the JORCCode. Under the JORC Code, resource estimates include that portion separately assigned to theproved and probable reserves. As a result, under no circumstance should the reserve estimates beadded to the corresponding resource estimates, as such reserves are already included within theresource estimates. For further information on the JORC Code definitions, see ‘‘Reserves andResources – Relevant JORC Code Definitions’’.

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For that portion of the resource estimates not already included within the reserve estimates, suchresource estimates are typically considered to be at the estimation stage prior to the application ofmore stringent economic criteria necessary to be reclassified as reserves, such as rigorouslydefined cut-off grade and mine design outlines, along with allowances for dilution and losses duringmining. Such amounts are estimates only and have been determined on the basis of expressionsof judgment by management, taking into account knowledge, experience and industry practice, andmay require revision based upon actual production experience. Due to lower certainty of theirrecoverability, the inclusion of resource estimates should not be regarded as a representation by usthat such amounts can necessarily be economically exploited, and investors are cautioned not toplace undue reliance upon such figures. In addition, investors should not assume that the resourceestimates are capable of being reclassified as reserves under the JORC Code. Therefore, noassurances can be given that the estimates of reserves or resources presented in this Prospectuswill ever be recovered at the tonnages and ore grades presented, or at all. See ‘‘Forward-LookingStatements’’ and ‘‘Risk Factors – Risks relating to our operations – The volume and grade of ourreserves and our rate of production may not conform to current estimates’’.

Reserve and Resource Reporting Basis of Preparation

In this Prospectus, reserve and resource estimates are reported as at 1 January 2015, unlessotherwise stated. We compile our reserve and resource statements in accordance with the criteriafor internationally recognised reserve and resource categories as included in the JORC Code. Inthis Prospectus, reserve and resource estimates initially prepared by us in accordance with theFSU Classification, have been substantiated by evidence obtained from SRK’s site visits andobservation and are supported by details of drilling results, analyses and other evidence and takeaccount of all relevant information supplied by the Company’s management and the Directors.

Before reporting, three consecutive steps of work are conducted:

1. Internal geological auditing of exploration practices, validation, QA/QC analysis, and 3Dcomputer modelling of the deposits. This is conducted by our geological team, which employsboth Ukrainian and JORC reporting standards, each as described in this section. We prepareour reserve and resource statements according to current Ukrainian mining industry reportingstandards, which provide instructions as to how certain deposits are to be explored andevaluated. These statements are then correlated with the broadly equivalent categories andterms under JORC reporting standards.

2. Independent auditing of geological models, exploration strategies, methods and methodologyof resource estimation. SRK was chosen for this work due to their knowledge and experiencein FSU countries. Our resource reports and the results of internal auditing as well as 3Dcomputer geological models are reviewed and verified by SRK. In addition, we havedeveloped financial risk assessment practice in calculation and estimation of our mineralassets.

3. Mine optimisation using mineral resource model and reserve calculation within optimised mineboundaries based on economic assumptions.

Accuracy of reserve calculations and resource estimates are assessed by internal and externalmethods. Internally, results from different methodological approaches are used: polygonal, statistical(IDW) and geostatistical (Ordinary Kriging). Each of our technical reports contain results of QA/QCanalysis and estimation. Since collecting more exploration data improves our knowledge of thedeposits, including their geological structure and grade continuity, methods to calculate thereserves and estimate the resources are subject to change. Comparison between different methodsof estimation gives a basis for accuracy assessment. Our internal analysis has shown that ourreserves and resources are within limits of accuracy as follows:

* Proved reserves – 2-5%

* Probable reserves – 5-10%

* Measured resources – 5-12%

* Indicated resources – 10-20%

* Inferred resources – 20-50%

External methods of accuracy assessment include re-estimation and re-calculation within optimisedmine boundaries and reconciliation.

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Ukrainian mining standards

Current Ukrainian mining industry reporting standards are advanced FSU standards that have beenmodified in accordance with the United Nations framework for the reserve and resourceclassification system. Ukrainian standards set out three groups of criteria to classify iron orereserves and resources:

* geological classes, which group iron ore deposits in accordance with their geological structure;

* exploration classes, which take into account the level of geological and technical studyperformed on the deposit;

* economic classes, which consider the economic significance of the deposit (its commercialvalue),

Geological Class

The geological structure of the deposit is defined by the level of certainty about the shape of theore body, its internal structure, iron grade continuity, and the distribution of impurities, which areengineering and mining conditions on which both exploration strategy and the choice of miningmethod are based.

Our deposits belong to geological class 2, which means the ore body is of changeable thicknessand is complicated by internal layers of barren rock and/or faults and iron grade variation is withinlimits of 40 – 100%.

Exploration class

The exploration class is based on the level of study of the chemical and mineral composition of thedeposit’s ore, its quantity, quality and treatment characteristics as well as the geological structureand the hydrogeological, engineering and mining conditions of the deposit, which are then used ina definitive feasibility study and mine design.

According to the level of geological and technical study ore reserves are divided into two classes:

Explored reserves is the volume of the iron ore body which has been studied in sufficient detail toconduct an engineering design of the mine and/or processing facility. The class of exploredreserves consists of three reserve categories – A, B, and C1.

Preliminary explored reserves is the volume of the iron ore body which has been studied insufficient detail to determine its possible economic importance. The general parameters thatinfluence the choice of mining and processing methods are evaluated based on direct observations,loose or irregular exploration grid and extrapolation. Extrapolation is conducted by comparison withdeveloped or explored deposits belonging to the same geological class and based on the results ofgeological, geophysical, geochemical and other studies. The class of preliminary explored reservesincludes one reserve category – C2.

According to the level of detail of the geological study, mineral resources are also divided into twoclasses:

Prospective resources is the volume of iron ore which quality and quantity estimations based onthe results of geological, geophysical, geochemical and other studies have identified with a lowlevel of confidence. According to the level of detail of the geological study, prospective resourcesare divided into two resource categories P1 and P2:

Inferred mineral resources is the volume of iron ore that can potentially form a mineral deposit ofcertain geological class. Estimation results are based on positive stratigraphical, lithological,mineragenic, palaeogeographical or other preconditions established for a prospective area wherethe mineral deposit has yet to be discovered. The quantity of the resources is inferred by analogywith other prospective areas where mineral deposits of the same geological class have alreadybeen discovered.

The FSU Classification system is, however, both more complex and more rigid than its westerncounterparts.

In general, A and B resources for deposits such as those managed by Ferrexpo require relativelyclose spaced drilling at a spacing of 200m or less and/or mining development, C1 resourcesrequire drilling at a spacing of no more than 400m while C2 resources can be based on a widerdrillhole spacing and/or extrapolation from C1 resource areas. P1 resources are often based on

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sparse sampling data or extrapolation beyond C2 resources and P2 resources are commonlybased on geochemical or geophysical exploration.

Given that the geological and structural complexity of the iron ore deposits at FPM are consideredto be low, the consistent distribution of the mineralisation throughout the orebodies and the quantityand quality of the data on which the resource estimates are based, SRK considers that, in thiscase, A and B reserves are equivalent to the Measured Resource category as defined by theJORC Code, C1 reserves to the Indicated Resource category and C2 reserves to the InferredResource category. In some instances P1 reserves are also converted to the Inferred Resourcecategory although this is dependent on the level of understanding of geological and gradecontinuity of the particular deposit and also the deposit must be demonstrated to be potentiallyeconomic.

Economic Class

According to the level of economical study of the deposit, reserves and resources are subdividedinto three classes as follows:

GEO-1 – explored reserves on which a definitive feasibility study was performed. Economicefficiency and economic indices were proved by GKZ.

GEO-2 – preliminary explored reserves on which a preliminary feasibility study was performed andwhich are economically viable for further exploration. Both economic efficiency and temporaryeconomic indices were approbated by either GKZ or investor.

GEO-3 – reserves and resources on which either economic evaluation or geological assessmentwere performed. Economic efficiency and economic indices were agreed by the investor to thegeological study.

In addition to the above classes of reserves and resources there are four other groups inaccordance with their commercial importance:

* Balanced reserves/resources – reserves/resources for which exploitation is economicallyprofitable and efficient using current modern equipment, technique and technology. It isguaranteed that mining, processing and utilisation methods are rational and environmentallysafe.

* Provisionally balanced reserves/resources -reserves/resources for which exploitationprofitability and efficiency cannot be unambiguously determined at the time of the definitivefeasibility study or part of balanced reserve that cannot be currently exploited for any otherreason.

* Out of balance reserves/resources – reserves/resources for which exploitation is inefficient ornot economic at the moment of their feasibility study but can be both efficient and economicin the future.

* Economic significance not determined – reserves/resources which are subject to preliminaryfeasibility, economic evaluation or geological assessment and for which technical andeconomic indices are assumed.

The Ukrainian reserves/resources classes and their categories are summarised in the table below:

Commercial importanceEconomicalstudy

Geological and technicalstudy Category

Balanced GEO-1 Explored reserve A and BGEO-2 Explored reserve B and C1GEO-2 Preliminary explored reserve C2

Provisionally balanced GEO-1 Explored reserve BGEO-2 Explored reserve C1GEO-2 Preliminary explored reserve C2

Economic significance not determined GEO-3 Preliminary explored reserve C2GEO-3 Prospective resource P1 and P2GEO-3 Inferred resource —

In terms of adaptation of reserve/resource classes and categories to the international standards,the State Commission on Reserves of Ukraine currently adopts the United Nation Framework

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Classification System, which in terms of definition of reserves categories is analogous to the JORCCode, states the following:

* Explored balanced reserve of GEO-1 category A and partly category B can be correlated withproved reserves;

* Explored balanced reserve of GEO-2 category B and partly of category C1 can be correlatedwith probable reserves.

In this respect, the majority of explored reserves of GEO-2 category C1, preliminary exploredreserves of GEO-2 and GEO-3 category C2, as well as prospective resources of GEO-3 categoriesP1 and P2 can usually be correlated with the definition of the Mineral Resource group under theJORC Code guidelines.

As stated above, SEC Industry Guide 7 does not recognise the classification of mineral resourcesunder either the JORC Code or the FSU Classification.

JORC Code

Correlation between Ukrainian mining standards and JORC standards is based on the definitions ofdifferent resource categories. The main principles on which the correlation is based are geological,mining and ore processing factors and the level of detail to which the deposit was drilled.

The geological factors are:

* Geological structure of the deposit;

* Morphology of the ore body;

* Grade continuity.

The mining factors are:

* Geotechnical and hydrogeological conditions of ore and wall rock;

* Specific gravity and bulk density measurements;

* Mining method, including internal and external dilution.

The processing factors are:

* Iron magnetic content in the concentrate produced;

* Iron magnetic recovery into the concentrate;

* Concentrate yield.

Altogether these factors are objective preconditions of the level of detail of the deposit study, whichin turn determines the level of economic evaluation and accuracy of assessment and financial risk.

The JORC Code recognises a fundamental division between resources and reserves.

Ore Reserves, as defined by the JORC Code, are the economically mineable part of Measured orIndicated Resources. Reserves are designated as either Proved or Probable, and are derived fromthe corresponding measured and indicated resource estimates by including allowances for dilutionand losses during mining. It is an explicitly stated further requirement that other modifyingeconomic, mining, metallurgical, marketing, legal, environmental, social, and governmental factorsare also taken into account in determining the extent to which resources can be converted toreserves.

Resources are based on mineral occurrences quantified on the basis of geological data and anassumed cut-off grade, and are divided into measured, indicated and inferred categories reflectingdecreasing confidence in geological and grade continuity. No allowances are included for dilutionand losses during mining, but the reporting of resource estimates carries the implication that thereare reasonable prospects for eventual economic exploitation. Resources may therefore be viewedas the estimation stage prior to the application of more stringent criteria for reserve definition, suchas rigorously defined cut-off grade and mine design outlines, along with allowances for dilution andlosses during mining. Under this system of reporting, it is common practice for companies toinclude in the resource category material with a high expectation of conversion to reserves, but forwhich final technical and economic viability has yet to be determined.

Mining companies that file registration statements or periodic reports with the SEC are required toreport their reserves in accordance with SEC Industry Guide 7. Under SEC Industry Guide 7, a‘‘reserve’’ is defined as ‘‘that part of a mineral deposit which could be economically and legally

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extracted or produced at the time of the reserve determination’’. Definitions of proven reserves andprobable reserves are included below.

Relevant JORC Code Definitions

The relevant definitions from the JORC Code are as follows:

A Mineral Resource is defined in the JORC Code as a concentration or occurrence of solidmaterial of economic interest in or on the Earth’s crust in such form, grade (or quality), andquantity that there are reasonable prospects for eventual economic extraction (‘‘MineralResource’’). The location, quantity, grade (or quality), geological characteristics and continuity of aMineral Resource are known, estimated or interpreted from specific geological evidence andknowledge, including sampling.

Mineral Resources are subdivided into Measured, Indicated and Inferred categories as set outbelow.

* A measured mineral resource is defined as that part of a Mineral Resource for which quantity,grade (or quality), densities, shape, and physical characteristics, are estimated with a highconfidence sufficient to allow the application of Modifying Factors to support detailed mineplanning and final evaluation of the economic viability of the deposit (‘‘Measured MineralResource’’). It is based on detailed and reliable exploration, sampling and testing informationgathered through appropriate techniques from locations such as outcrops, trenches, pits,workings and drill holes. The locations are spaced closely enough to confirm geological and/orgrade continuity between points where data and samples are gathered. A Measured MineralResource may be converted to a Proved Ore Reserve or under certain circumstances to aProbable Ore Reserve.

* An indicated mineral resource is defined as that part of a Mineral Resource for whichquantity, grade (or quality), densities, shape, and physical characteristics are estimated with asufficient confidence to allow the application of Modifying Factors in sufficient detail to supportmine planning and evaluation of the economic viability of the deposit (‘‘Indicated MineralResource’’). It is based on detailed and reliable exploration, sampling and testing gatheredthrough appropriate techniques from locations such as outcrops, trenches, pits, workings anddrill holes, and is sufficient to assume geological and grade (or quality) continuity betweenpoints of observation where data and samples are gathered. An Indicated Mineral Resourcehas a lower level of confidence than that applying to a Measured Mineral Resource and mayonly be converted to a Probable Ore Reserve.

* An inferred mineral resource is that part of a Mineral Resource for which quantity and grade(or quality) are estimated on the basis of limited geological evidence and sampling (‘‘InferredMineral Resource’’). Geological evidence is sufficient to imply but not verify geological andgrade (or quality) continuity. It is based on exploration, sampling and testing informationgathered through appropriate techniques from locations such as outcrops, trenches, pits,workings and drill holes. An Inferred Mineral Resource has a lower level of confidence thanthat applying to an Indicated Mineral Resource and must not be converted to an OreReserve. It is reasonably expected that the majority of Inferred mineral Resources could beupgraded to Indicated Mineral Resources with continued exploration.

An ore reserve is defined in the JORC Code as the economically mineable part of a Measuredand/or Indicated Mineral Resource (‘‘Ore Reserve’’). It includes diluting materials and allowancesfor losses which may occur when the material is mined or extracted and is defined by studies atPre-Feasibility or Feasibility level as appropriate that include application of Modifying Factorsdemonstrate that, at the time of reporting, extraction could reasonably be justified. The referencepoint at which Reserves are defined, usually the point where the ore is delivered to the processingplant, must be stated. It is important that, in all situations where the reference point is different,such as for a saleable product, a clarifying statement is included to ensure that the reader is fullyinformed as to what is being reported.

Ore Reserves are subdivided into proved ore reserves and probable ore reserves, as set outbelow.

* A proved ore reserve is the economically mineable part of a Measured Mineral Resource(‘‘Proved Ore Reserve’’). A Proved Ore Reserve implies a high degree of confidence in theModifying Factors.

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* A probable ore reserve is the economically mineable part of an Indicated, and in somecircumstances, a Measured Mineral Resource (‘‘Probable Ore Reserve’’). The confidence inthe Modifying Factors applying to a Probable Ore Reserve is lower than that applying to aProved Ore Reserve.

Except for certain resource estimates prepared in accordance with the FSU Classification, thereserve and resource estimates provided in this Prospectus comply with the reserve and resourcedefinitions of the JORC Code. The resource estimates shown include that portion separatelyassigned to, and presented as, Proved and Probable Reserves.

Relevant United States Definitions

Under the current United States requirements as adopted by the SEC, a reserve is defined as‘‘that part of a mineral deposit which could be economically and legally extracted or produced atthe time of the reserve determination’’.

* Proven (Measured) Reserves are defined as reserves for which (i) quantity is computed fromdimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality arecomputed from the results of detailed sampling; and (ii) the sites for inspection, sampling andmeasurement are spaced so closely and the geologic character is so well defined that size,shape, depth and mineral content of reserves are well established.

* Probable (Indicated) Reserves are defined as reserves for which quantity and grade and/orquality are computed from information similar to that used for Proven (Measured) Reserves,but the sites for inspection, sampling and measurement are further apart or are otherwise lessadequately spaced. The degree of assurance, although lower than that for proven (measured)reserves, is high enough to assume continuity between points of observation.

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BUSINESS DESCRIPTION

Investors should read the whole of this Prospectus and not just rely upon summarised informationincluding the tables in this section. Where stated, information in this section has been extractedwithout material adjustment from ‘‘Selected Historical Financial Information’’.

Business Overview

We are a Swiss headquartered iron ore pellet producer with assets in Ukraine and transport andsales operations throughout the world. Since our initial public offering (‘‘IPO’’) in June 2007, wehave maintained a premium listing on the main market of the London Stock Exchange. Accordingto an April 2015 report by CRU, we are the largest producer and exporter of iron ore pellets in theFSU (by volume) and fourth largest supplier of pellets (by volume) to the steel industry.

In 2014, we produced 11.0 million tonnes of pellets, a 1.9% increase compared to 2013. Iron orepellets are a superior quality input used in the production of steel and sold at a premium to ironore fines and lump. Iron ore pellets are the most productive iron ore medium used in the steelmanufacturing process due to their high iron content, low levels of impurities, spherical shape anduniform quality. They also have the lowest environmental impact compared to other types of ironore products used at steel works.

We are export-oriented, with virtually all of our sales made to a diversified customer base inAustria, China, Japan, Germany, Slovakia as well as other European and Asian countries. Weoperate marketing offices in China, Japan, Singapore, Switzerland, the UAE and Ukraine which areour dedicated marketing and trading arms and manage our customer relationships. We build long-term relationships with customers who produce high-quality steel and enjoy a competitiveadvantage in their chosen markets. We generally enter into long-term supply contracts, which arepriced is US dollars, with such customers. Combined with our low cost base, this approachfacilitates stable sales volumes across business cycles, and we have maintained positive operatingcash flows in each quarter since 2006.

We believe our resource base is one of the largest iron ore deposits in the world. As of 1 January2015, we had 6.7 billion tonnes of JORC classified resources and, in addition, we had 13.1 billiontonnes of FSU classified resources. At today’s production rates, we believe we have enoughreserves for more than fifty years of production. Our resource primarily consists of a series of ninemagnetite mineral deposits, with an average iron content of 32%. We are currently exploiting threeof the nine ore bodies through FPM, our principal operating asset and production facility, and FYM,(see resource map under ‘‘– Existing Operations – Operating Assets’’). The ore mined isbeneficiated into high grade concentrate, which is then fired into iron ore pellets. We currently selltwo types of pellets, FPP which have 65% Fe content and FBP which have 62% Fe content. Ofthe 11 million tonnes of pellets produced during the year ended 31 December 2014 (2013:10.8 million tonnes), 5.8 million tonnes, or 53%, were higher grade 65% Fe FPP, an increase of16% compared to 5.0 million tonnes, or 46%, of 65% Fe PPP produced in 2013.

We have invested approximately US$2 billion into our mining and logistics operations since ourIPO in 2007, of which approximately US$1.3 billion has been invested since 1 January 2011. As of31 December 2014, we have completed a major modernisation and expansion programme of ourmining and logistics operations, which included an upgrade of our existing facilities and thedevelopment of a new open pit mine and associated infrastructure. As a result, in 2015 we expectto reach an annualised exit rate of production of 12 million tonnes of pellets per annum containingan increasing percentage of 65% Fe grade pellets, rising to predominantly all 65% Fe pellets in2016. The increase in volume, combined with higher average iron content of our pellets, shouldenable us to further expand our high quality customer base and achieve higher pricing comparedto the 62% Fe fines benchmark price.

History and Group Structure

Mining operations began at the site of the current FPM mining facility in the 1960s with productionof iron ore concentrate commencing in 1970 and iron ore pellets in 1977. Initially, the businesswas owned by the Union of Soviet Socialist Republics (‘‘USSR’’) and operated as a stateenterprise under the name Dneprovsky Mining and Concentration Plant. Its name was changed tothe Poltava State Mining and Concentration Plant in 1981. Following the collapse of the USSR andUkraine’s declaration of independence in 1991, the entity was registered by the ExecutiveCommittee of Komsomolsk City Council of Poltava region on 5 January 1995, as an open joint

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stock company with the state of Ukraine, represented by the Ministry of Industry of Ukraine, as thesole founder. The entity’s official name in English was JSC Poltava GOK, which was subsequentlychanged to Ferrexpo Poltava GOK Corporation and then to FPM. The state sold its ownership inFPM through privatisation of FPM’s shares, which commenced in February 1995 and was finalisedin April 2001. During 1996-2006, Kostyantin Zhevago through affiliated companies acquired up to85% of FPM’s shares. Kostyantin Zhevago’s interest in FPM was subsequently sold down throughthe initial public offering of Ferrexpo in June 2007, following a Group reorganisation in May 2007.Since 1995, FPM has conducted seven share placements, the last of which took place in 2008.Currently, FPM has a total of 191 million shares issued, of which Ferrexpo AG owns 97.3%.

Fevamotinico currently holds 50.3% of Ferrexpo which in turn holds 97.3% of FPM throughFerrexpo AG. Fevamotinico is indirectly wholly owned by The Minco Trust, one of the beneficiariesof which is Kostyantin Zhevago. The remaining 2.7% of the shares of FPM are owned by otherlegal entities and individuals (including employees of FPM). See ‘‘Shareholders and Related PartyTransactions’’.

The following chart shows the structure of the Group including the Company and its principalsubsidiaries as of 31 December 2014:

** Ferrexpo Services Ltd. is a nominal holder of 0,001% in the capital of these subsidiaries *** DP Ferrotrans is a nominal holder of 0,001% in the capital of this subsidiary

Ferrexpo Services Ltd (Ukraine)

Ferrexpo AG (Switzerland)

50.3% 23.86% 25.84%

100%

Ferrexpo PLC (U.K.)

Fevamo�nico S.a.r.l. BXR Group Ltd. Public

LLC Ferrexpo Yeristovo GOK

(Ukraine)

Ferrexpo Middle East FZE

(U.A.E.)

Ferrexpo Hong Kong Ltd.

(China)

LLC Ferrexpo Belanovo GOK

(Ukraine)

100%

100%

LLC TIS-Ruda (Ukraine)

DP Ferrotrans (Ukraine)

United Energy Company LLC

(Ukraine)

OJSC Ferrexpo Poltava Mining

(Ukraine)

Minori�es

100%**

Nova Logis�cs Ltd.

(Ukraine)

First-DDSG Logis�cs

Holding GmbH (Austria)

Ferrexpo Finance PLC (U.K.)

100%

Ferrexpo Singapore Pte Ltd.

(Singapore)

100%**

49.9% 51% 100% 100% 100%

100% 100%

2.7%

97.3%

Ferrexpo Interna�onal Shipping

Ltd. (Marshall Islands)

Iron Des�ny Ltd (Marshall Islands)

100%

100%

Universal Services Group Ltd. (Ukraine)

100%***

Arlington Ltd. (U.K.)

100%

The Group’s holding company, Ferrexpo, has been premium listed on the main market of theLondon Stock Exchange since its initial public offering in June 2007. Ferrexpo was incorporated on22 April 2005 in England and Wales under the Companies Act 1985 as a public company limitedby shares with registered number 5432915. Its registered office is at 2-4 King Street, London,SW1Y 6QL, United Kingdom, and the telephone number is +44 (0)20 7389 8300.

Ferrexpo AG’s principal place of business and registered office is at Bahnhofstrasse 13, CH-6340,Baar, Switzerland, the telephone number is +41 41 769 3660. Ferrexpo AG, a wholly ownedsubsidiary of Ferrexpo, is a Swiss stock corporation pursuant to Articles 620 et seqq. of the SwissCode of Obligations (Aktiengesellschaft). It was incorporated on 6 November 2001, and isregistered in Baar, Canton of Zug, with company number CHE-109.378.764. Its principal activitiesare the sale of iron ore pellets produced by FPM and the holding of participating interests in theGroup’s subsidiaries.

The Issuer is a UK finance and administration company, through which the Group sources themajority of its borrowings to fund its operating activities and growth projects. The Issuer wasincorporated as Ferrexpo UK Limited on 29 September 2003 in England and Wales under theCompanies Act 1985 as a private company limited by shares with registered number 04914716. On6 May 2010 it was re-registered as a public company limited by shares and changed its namefrom Ferrexpo UK Limited to Ferrexpo Finance plc. Its registered office is at 2-4 King Street,London, SW1Y 6QL, United Kingdom, the telephone number is +44 (0)20 7389 8300.

The Group’s principal operating subsidiary is FPM. FPM was incorporated as a joint stockcompany on 5 January 1995 in Ukraine under Ukrainian law with identification number 00191282 in

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the Uniform State Register of Enterprises and Organizations of Ukraine. Its registered office is at16, Budivelnykiv Street, Komsomolsk, Poltava Region, 39802, Ukraine, and the telephone numberis +380 53 487 4352.

The Group also includes Ferrexpo Middle East. Ferrexpo Middle East was incorporated as a freezone establishment on 14 March 2011 under UAE law with licence number 126286. Its registeredoffice is at 1203, The Galleries – 04, Jebel Ali Down Town P.O. Box 18341, Dubai, the UAE, andthe telephone number is +971 4 88 330 74.

Key Achievements since Bond Issue in 2011

Our key business objective is to continually reduce operational and financial risk while furtherdeveloping a high quality asset base that delivers good returns throughout the commodities cycle.

Since our bond issuance in April 2011, we have achieved the following:

* Developed resource base. We reached first ore at the Yeristovskoye open pit deposit at theend of 2012, and as of 31 March 2015 we have produced a total of 6.8 million tonnes ofpellets using Yeristovo ore. We have also completed the associated mining infrastructure forthe pit, including a state of the art wash centre, a tyre handling facility, a service centre, arepair centre and a welding shop. As of 31 March 2015, US$604.1 million has been investedin the Yeristovo pit and infrastructure.

* Maintained competitive costs. Yeristovo ore has higher average iron content and is cheaper tomine than the deposits at FPM. Since January 2014, when the average UAH exchange ratewas 7.993 to the US dollar, the Ukrainian hryvnia has depreciated to UAH23.443 to the USdollar as of 31 March 2015. As approximately half of our production costs, before devaluation,were in local currency, the hryvnia devaluation has reduced our operating costs, as expressedin US dollars. Our C1 cash cost was further reduced by lower mining costs at FYM and theassociated fixed cost benefits due to higher volume output. As a result, our average C1 costreduced from US$50.5 per tonne for the three month period ended 31 March 2014 toUS$33.2 per tonne for the three months period ended 31 March 2015. As a result, our costof production remains globally competitive on the industry cost curve (see ‘‘Industry’’).

* Overall modernisation of existing FPM facilities. As a result of our planned modernisationprogramme between 2011 and 2014, we have been able to increase the amount of ore wecan crush, beneficiate and pelletise. This will allow the Group to increase pellet productionfrom own ore by approximately one third, to an annualised rate of approximately 12 Mtpa in2015.

* Installed additional stages of beneficiation in the FPM process plant to improve pellet quality.In 2014, FPM installed and commissioned two new floatation sections and upgraded itsexisting floatation section. This allows for more concentrate to be floated in the productionprocess, thereby increasing the amount of 65% Fe pellets that can be produced. In the past,the limited floatation capacity has restricted FPM’s ability to increase 65% Fe pelletproduction. 65% Fe pellets are regarded as a premium product in the industry, as theycontain lower levels of silica compared to 62% Fe pellets, as well as having an increased ironcontent. By increasing our supply of 65% Fe pellets we are able to target new premiumcustomers. We have executed this quality improvement project while simultaneouslyexpanding current production levels. See ‘‘Business Description – Expansion of Our MiningOperations – Quality Upgrade Programme’’.

* Expanded premium customer base. Since 2010, we have started regular supply to severalpremium steel mills in the seaborne market and signed associated long term volume contractswith these customers. In particular, Ferrexpo increased sales into Japan, Germany and thetop tier of Chinese steel mills which reflects our strategy of maintaining a geographicallydiversified sales portfolio with ‘crisis resistant’ steel mills. According to Japanese importstatistics, Ukraine is now the second largest supplier of iron ore pellets to Japan (after Brazil),the majority of which are supplied under long-term contracts by Ferrexpo.

* Indexation of pellet pricing and increased realisations. Since 2010, the methodology used toagree pricing between iron ore suppliers and steel mills has moved from an annualbenchmark pricing system decided on a negotiated basis, to an index pricing methodologybased on various short term time periods. Currently, there are a number of index pricingmethodologies being applied depending on geography and customer. The table below showsthe approximate breakdown of sales by contract type comparing 2011 with 2014.

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(Figures represent percentage of sales volume, unless otherwisestated) FY 2014 FY 2011(1)

Monthly index 79% 8%

Spot fixed 8% 28%

Current quarter index 5% 0

Lagging 3 month index 8% 4%

Quarterly negotiated 0 60%

Total sales volume (Mt) 11,167 9,976

% index linked 100% 72%

(1) 2011 was a transitional year with regards to the change in global pricing mechanisms. As a result there were provisionaland retrospective pricing adjustments. The figures provided in the table should be regarded as approximate.

We have improved our price realisations relative to the prevailing market indices by increasingthe proportion of sales to the Far East on a CFR basis and reducing our freight costs. Thishas resulted in a higher netback price for the Group which has in turn allowed us to achievebetter prices with our European customers. Lastly, as indicated in the point above, we haveincreased our sales to first class steel mills who value pellets for their steel production.

* Expanded logistics infrastructure. We have successfully improved our logistics infrastructuresince 2011, as summarised below:

* Reduced freight costs to the Far East. We have reduced our cost of freight to the FarEast by 20% per tonne primarily due to increased utilisation of capesize vessels and thecommencement of our own transhipment facilities, which has enabled us to efficientlyload larger vessels at our port facilities. For the year ended 31 December 2014, weloaded 22 capesize vessels, each carrying an average of 170,000 tonnes of pellets,compared to 9 capesize vessels loaded in 2011 and nil in 2010.

* Increased rail car fleet. As of 31 December 2014, we owned 2,225 rail cars compared to933 as of 30 December 2010. Our own rail cars allow us to transport a high proportionof our pellets to border points, reducing our reliance on state rail cars and lowering ourtransportation costs.

* Integrated barging operations. The barging operations we acquired in January 2011provide us the capability to deliver pellets directly from the mine to the customer via theDanube River, further enhancing our customer service to steel mills in central Europe.

* Extended mining and exploration licences. We have extended the Yeristovo mining licence to2032 and have also extended the exploration licences for the Brovarkovskoye,Kharchenkovskoye, Manuilovskoye, Vasilievskoye and Zarudenskoye deposits (the NorthernDeposits) to 2018.

All of the above milestones have been executed as part of a comprehensive financial plan with afocus on maintaining healthy credit metrics and high levels of liquidity pursuant to our conservativefunding policy.

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Key Strengths

We believe our business is well positioned due to the following key strengths:

Premium iron ore product producer

Ferrexpo produces iron ore pellets which are considered a premium priced product in the steelindustry. The high quality of the Group’s products and the reliability and consistency of supply haveenabled the Group to establish long-term relationships with some of the world’s leading steelproducers, in some instances, over several decades. Our products are particularly popular withthose mills that produce steel for premium applications and require high quality inputs. These topproducers enjoy a competitive advantage in their chosen markets, and our close ties with thesecustomers help us to maintain stable iron ore pellet sales volumes across business cycles.

In addition, our magnetite product has a lower environmental impact than competing hematiteproducts, and its high iron content, low levels of impurities, spherical shape and uniform qualitycontribute to higher blast furnace productivity.

Reliable and competitive cost producer on a delivered basis

We believe we are a competitive seaborne producer of iron ore and one of the lowest costproducers of high quality iron ore in the world. Ferrexpo’s operations currently remain broadlyunaffected by the current political instability in Ukraine and our operations continue to maintainproduction and supply our high quality customer base with premium iron ore pellet products, as wehave done throughout our 35-year production history.

For the three months ended 31 March 2015, our C1 cash cost of production of pellets from ownore was US$33.2 per tonne. Our relatively low pelletising costs allow us to be among the mostcompetitive iron ore pellet producers globally. From the chart below, according to CRU, it can beseen that Ferrexpo is the third lowest cost pellet producer. CRU’s cost analysis is based on theconcept of business costs. These include not just the site operating costs of the mining operation,but also the realisation costs associated with transporting products to market, sales and marketingexpenses, plus the financing of inventories, goods in transit, and receivables. In addition and ofparticular importance in iron ore, business costs include any discount or premium that may beassociated with product quality compared with the benchmark product. The concept of businesscosts permits a direct comparison among different products produced in different locations.

Business cost curve, pellets , 2015 ($/tonne)

Cumulative production, M tonnes Source: CRU Iron Ore Cost Model 2015

0

20

40

60

80

100

120

140

160

180

0 50 100 150 200 250 300 350

Cliffs (average)

LKAB (average)IOC

Ferrexpo

Samarco

Vale (average)

Costs normalised to basis of 62% sinter fines cfr Qingdao

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Well invested asset base that has recently undergone a significant modernisation programme

Since our IPO on the London Stock Exchange in 2007 we have invested approximately US$2 billioninto our mining, production and logistics operations, of which approximately US$1.3 billion hasbeen invested since 1 January 2011. This investment has allowed us to reduce operating risk by:

* Accessing low cost crude ore (through the development of the FYM open pit);

* Mining crude ore from two mines;

* Modernising our processing facility to allow us to beneficiate additional ore and increase ourpellet output;

* Installing fine grinding and additional floatation cells to increase the overall iron ore contentand quality of our product; and

* Developing our marketing and logistics capabilities enabling us to expand our premium steelcustomer base.

This investment has included a significant refurbishment and modernisation of FPM’s productionfacilities with an investment of US$414 million, including increasing FPM’s output capacity by onethird to 12 Mtpa.

We have also invested US$799 million into growth projects. These projects include a qualityupgrade project to allow us to produce 12 million tonnes of pellets of all 65% Fe quality, FPM’smine life extension programme to increase FPM’s mine life to 2038 as well as the development ofour new FYM open pit (and associated mining infrastructure and utilities).

Finally, we have invested US$122 million to develop our logistics operations. This includes thepurchase of rail cars to ensure rail car availability to transport our pellets to border dispatch pointsas well as significantly reducing our seaborne shipping costs by being able to competitively ship,via capesize vessels, to the Far East. We also have the capability to deliver product into Europevia barge in addition to rail.

As of 31 December 2014, the quality upgrade and the FYM development projects weresubstantially completed, with the final sections of associated floatation facilities commissioned inthe first quarter of 2015. As a result, in the first three months of 2015, we increased the proportionof high quality 65% Fe pellets to 85% of our total production.

Following the above investments, we believe that we can significantly reduce our capitalexpenditure in the current iron ore price environment to a level of sustaining capex of betweenUS$50 million to US$100 million per annum. The actual amount of sustaining capex per annum willbe determined by the iron ore price and our cash generation ability as well as our aim to balancecapital expenditure with dividend payments and gross debt reduction. We believe we have a wellinvested asset base which is efficient and low cost and that can sustain a future annualised exitrate of production of 12 million tonnes of 65% Fe pellet output per annum.

High quality and diverse customer portfolio under long-term framework agreements

We remain committed to our long-term framework agreements with customers that are focused onproducing high value added steel products. We have supplied many of our existing customers for anumber of decades. Ukraine’s proximity to major steel producing regions allows us to ship at acompetitive cost to customers in central and eastern Europe and the Far East compared to ourmajor iron ore pellet competitors, located primarily in Brazil. Our marketing strategy is focused onsupplying a geographically diversified customer base with approximately 90% of production underlong-term framework agreements, leading to more reliable off-take, consistent cash inflows andreduced customer concentration risk. In recent years, we have engaged in a targeted trial cargoprogramme to expand our customer portfolio in line with our marketing strategy and this hasresulted in new long term contracts being signed in Germany, Turkey, Japan and China.

Integrated rail, port and shipping and barging capabilities

A key aspect of long-term sustainable competitive costs with consistent production and productdelivery is an integrated and efficient logistics system. In this context, we hold a 48.6% stake inthe TIS-Ruda port terminal at Yuzhny on the Black Sea with a capacity of 6 Mtpa, for whichFerrexpo has first right of access. We have invested in upgrading our loading facilities and shippingcapabilities to allow for loading of capesize vessels. For the years ended 31 December 2014 and2013, we loaded 22 capesize vessels, each carrying an average of 170,000 tonnes of pellets,compared to 17 capesize vessels loaded in 2012, nine loaded in 2011 and none in 2010.

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* As of 31 December 2014, we owned 2,200 rail cars, allowing us to transport a highproportion of our pellets to border points with our own fleet, and thus reducing our reliance onstate rail cars and lowering our transportation costs.

* For the year ended 31 December 2014, Ferrexpo shipped approximately 1.1 million tonnes ofpellets to customers in Europe via its 139 strong barge fleet. On average, depending onwater levels in the Danube River, it can ship up to 1.5 million tonnes a year via barge.

Significant resource base to support current production levels

Our resource base is situated along a 50 kilometre mineral deposit, which allows us to efficientlyexpand production through brownfield developments. As of 1 January 2015, we have estimatedproved and probable reserves of 1.5 billion tonnes classified according to the JORC Code. Thesereserves are included in our estimated resources of approximately 6.7 billion tonnes classifiedaccording to the JORC Code (of which 3.7 billion tonnes are in the Indicated category resourcesand approximately 2.1 billion tonnes are in the Inferred category). In addition, as of 1 July 2014,we had estimated resources of 13.1 billion tonnes under the FSU Classification. For more detailedinformation on reserves and resources, see ‘‘Reserves and Resources’’ and ‘‘Business Description– Reserves and Resources’’.

Our ore body has been classified into nine deposits of which the first three have been developedinto two open pit mines:

* FPM exploits the GPL deposits. The FPM mine has consistent geology and a long-lifeproduction profile until 2038, based on annual mining output of approximately 30 milliontonnes.

* FYM exploits the Yeristovskoye deposit. Our development of the FYM mine fully utilisesknown and existing technology and infrastructure, as well as our current skills. FYM has anapproximate mine life until 2037 based on annual average output of 28 million tonnes.

Strong corporate governance and experienced management team

Consistent with the premium listing of our equity securities on the London Stock Exchange’s MainMarket, we follow robust corporate governance and internal control procedures, and are overseenby our Board of Directors, which follows the independence requirements of the UK CorporateGovernance Code. We are managed by an Executive Committee comprised of individuals with anaggregate of over 100 years of experience in global resources industries. Members of our seniormanagement also have a detailed knowledge of the Ukrainian business and political environment,iron ore mining and pellet production, project delivery, marketing and financial management.

Ferrexpo’s Chief Executive Officer, Kostyantin Zhevago, is a beneficiary of the Minco Trust which,indirectly through Fevamotinico, holds 50.3% of the shares in the Company. Mr Zhevago is a long-term investor focused on developing a high quality sustainable business. He has unparalleledexperience of operating in Ukraine which can be a difficult and at times unstable environment. MrZhevago’s experience is of significant value to Ferrexpo and all its shareholders.

The strategy of the Board, including Mr Zhevago, is to operate to the highest internationalstandards of governance, transparency and fairness.

Strategy

In the current iron ore market environment, and in line with our cash generation ability, ourpriorities are:

* To improve the efficiency and competitiveness of our operations;

* To continue to invest where adequate returns can be made and financial resources areavailable;

* Pay dividends commensurate with our earnings and balance sheet capacity; and

* Target prudent balance sheet ratios with net debt levels commensurate with forecast longterm iron ore prices and the risk profile of our business.

Our full strategic objectives are listed below.

Maintain appropriate credit metrics and sufficient financial liquidity

We have maintained strict financial discipline during the past several years. Key tenets of ourfinancial strategy include principally funding capital expenditures out of operating cash flows,

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maintaining sufficient liquidity to service our short term debt obligations and retaining competitivecredit metrics. As of 31 March 2015, we had US$493.9 million of cash on our balance sheet andour net gearing (net financial indebtedness over net financial indebtedness plus shareholders’equity) was 65.5% (compared to US$626.5 million of cash and net gearing of 48.6% as of31 December 2014) while our net financial leverage (net financial indebtedness to EBITDA) was1.7 times (compared to 1.4 times as of 31 December 2014).

The purpose of the Exchange Offer is to extend the maturity of our outstanding 2016 debtobligations to more closely match our cash generation in the current low iron ore priceenvironment.

Maintain competitive cost of production and high operating efficiency

To remain profitable throughout the commodity cycle, it is necessary to be competitively placed onthe global iron ore cost curve. It is our strategy to reduce costs by increasing output, continuouslyimplementing best operating practice and where possible reducing consumption norms of keyinputs per tonne through our BIP, in addition to reducing our cost of delivery to European andAsian markets. Approximately 50% of our production and distribution costs to the Ukrainian borderare in local currency which has recently benefitted from the devaluation of the hryvnia which hasdepreciated from 7.993 per US dollar as of 1 January 2014 to 23.443 per US dollar as of 31 March2015. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results ofOperations – Cost of Sales – Business Improvement Programme’’.

Increase the iron content and the quality of our product mix

As we sell a high quality iron ore product, we benefit from a price premium compared to iron orefines and lump. We are on track to increase the proportion of 65% Fe pellets to substantially all ofproduction by the end of 2015. For the year ended 31 December 2014, 53% of our production wascomposed of 65% Fe, with the remainder of production having an iron content of 62%. For thequarter ended 31 March 2015, 85% of total pellet output had an iron content of 65%. As weproduce fewer 62% Fe pellets, and sell more 65% Fe pellets, we expect to take on additional highquality customers, especially in North East Asia and Western Europe. We also expect to achievehigher average price realisation due to the higher iron content and lower levels of impurities in 65%Fe pellets.

Develop our customer portfolio

We are a single commodity producer and as such look to continually reduce risk. It is our strategyto deal under long-term contractual arrangements with the world’s leading steel producers who arefocused on producing high quality steel for premium applications, and who will themselves remainprofitable through steel price fluctuations. According to CRU, we are a top five global exporter ofpellets. As we increase our output to 12 million tonnes of pellets per annum and increase theamount of high quality FPP we produce, we believe we can win new business by continuing tooffer a quality product, reliable supply and excellent customer service, positioning ourselves as analternative and credible supplier of pellets to top steel mills alongside the major iron ore producers.

Maintain and develop our logistics capabilities

An integrated and cost-effective logistics infrastructure is essential for a bulk commodity miner as itenables customer relationships to be developed, costs to be reduced and supply reliability to beenhanced, thus increasing long-term profitability and reducing risk.

It is our strategy to maintain and develop, where appropriate, our own logistics capabilities addingto rail, port and shipping capability both within and outside Ukraine. This enables us to service ageographic spread of top steel mills reducing our reliance on any one region and, importantly,allows us to establish a reputation as a reliable global supplier of pellets.

Train and develop the Group’s employees

We believe it is essential to train and develop our employees, as a skilled and motivated labourforce will underpin innovation and business improvement, helping us to develop our reserve baseand sustain production for decades to come.

The majority of Ferrexpo’s employees are based in Ukraine. Mining is part of Ukraine’s history andculture. The country has a large, well-educated and dedicated work force and the Group iscommitted to further developing the skills of its people. As of 31 December 2014, the Groupemployed approximately 9,800 employees.

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Maintain a social licence to operate

In order to succeed as a large business operating in a major town, we believe we should be asignificant asset to our country of operation and local community. The town of Komsomolsk wasestablished in 1960 to service our operations. We are the largest employer in the town, which hasa population of approximately 55,000 people, of which approximately 23% of the workingpopulation are employed by us.

We have been a consistent employer, investor and tax payer through the commodities cycle andthrough periods of political instability. Since our IPO on the London Stock Exchange in June 2007,we have paid US$500 million in income and other taxes in Ukraine as well as US$84 million forroyalty payments, while we have invested approximately US$1.7 billion into our Ukrainianoperations.

We have also invested US$82 million into local community initiatives since our IPO. These fundshave supported the social infrastructure in Komsomolsk and the surrounding area. This includescommunity spend on medical facilities, social services, education, religion, culture and sportingactivities.

Due to our presence as a major local employer and its contributions to community initiatives, webelieve unemployment in Komsomolsk is significantly below the national average, and the averagesalary is significantly above the national average according to the municipal (Komsomolsk) statisticscommittee.

To date, we have not experienced any labour or social related disruptions at our operations. Ourstrategy is to operate responsibly and sensitively and to assist the local community.

Develop our significant unexploited resources

In the current low priced iron ore market environment, new growth capital expenditure will bereduced to maintain the strength of our balance sheet. In this context, projects such as theconstruction of a 10 million tonne per annum concentrator at FYM, or significant investment atFBM to reach first ore, have been put on hold, while low level capital expenditures will be made tomaintain the integrity of these projects. See ‘‘– Capital Expenditure Programme’’.

Evaluate relevant investment opportunities

We evaluate opportunities that are potentially value accretive to the Group and that can reduceoperational risk. For example, the acquisition, refurbishment and operation of Iron Destiny, theGroup’s transhipment vessel, has contributed towards significantly lower freight costs.

Maintain high standards of corporate governance

The Board remains dedicated to maintaining the highest standards of corporate governance in theconduct of its business throughout the Group, as well as instilling a culture of commitment andaccountability in all employees. We have been, and are fully, compliant with the Listing Rules,Disclosure and Transparency Rules, the UK Corporate Governance Code, Financial Services andMarkets Act 2000 the UK Bribery Act 2010 and IFRS accounting standards, amongst others.

As a result of our strategy, we believe that we have several key strengths which includes a highquality iron ore product that achieves a price premium compared to benchmark iron ore products; awell invested asset base that can support current production levels; a significant reserve base tosupport our production profile, an integrated logistics system that ensures reliable supply of productto our high quality customer base; a competitive cost position in the global seaborne market and aknowledgeable and loyal workforce.

Reserves and Resources

We hold mining licences for four deposits of magnetite ore, and we have extended the duration offive licences relating to exploration of the Northern Deposits to 2018. All of these deposits arelocated within the Kremenchuk Magnetic Anomaly on the banks of the Dnieper River in centralUkraine. We currently mine the GPL deposits in one large open-pit mining operation, which is morethan seven kilometres long by two kilometres wide and over 350 metres deep. We are also miningfrom our new open pit mine which is exploiting the Yeristovskoye deposit.

We have approximately 6.7 billion tonnes of estimated JORC resources based on Group estimates(of which 1.0 billion tonnes are classified in the Measured category, 3.7 billion tonnes are in theIndicated category and 2.1 billion tonnes are in the Inferred category, as classified under the JORC

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Code). Included in these resources are Proved and Probable iron Ore Reserves of 1.5 billiontonnes, of which 794 million tonnes are located within the GPL deposits. Based on the 2011 oreproduction level of 29.6 million tonnes, the existing mine has an estimated production lifespan inexcess of 25 years.

The tables below set out our estimated JORC-classified reserves and resources as at 1 January2015.

Reserve estimates as at 1 January 2015

Deposit Proved, Mt Fe total, %

Femagnetite,

%Probable,

Mt Fe total, %

Femagnetite,

%

Gorishne-Plavninskoye(1) 181 26 17 475 30 22

Lavrikovskoye(1) 34 31 21 88 32 23

Yeristovskoye(2) 242 34 27 418 32 25

Total 457 31 23 981 31 23

(1) The reserves estimates for the GPL deposits are those estimated in the report by Turgis UK Consulting (Pty) Ltd. dated 25 July2008 less our estimates of the volume of ore mined from GPL deposits between 2008 and the end of December 2014.

(2) The reserves estimates for the Yeristovskoye deposits are based on a report by Royal Haskoning DHV (UK) Ltd. dated20 September 2013 less our estimates of the volume of ore mined from the Yeristovskoye deposit between September 2013and the end of December 2014.

Resource estimates as at 1 January 2015

Deposit

Measured,

Mt Fe total, % Fe mag, %

Indicated,


Inferred,


Gorishne-Plavninskoye(1) 263 29 19 1,012 31 23 1,275 31 23

Lavrikovskoye(1) 95 31 21 682 30 22 174 29 20

Yeristovskoye(2) 247 34 27 558 33 26 364 30 23

Belanovskoye(2) 336 31 24 1,149 31 23 217 30 21

Galeschinskoye(2) — — — 268 55 — 58 55 —

Total 941 31 23 3,669 33 22 2,088 31 22

(1) The resource estimates for the GPL deposits were calculated based on a review conducted by SRK in March 2008 less ourestimates of the volume of ore mined from GPL deposits in 2008 (27.4 million tonnes), 2009 (28.2 million tonnes), 2010(28.5 million tonnes), 2011 (29.2 million tonnes), 2012 (29.1 million tonnes), 2013 (30.2 million tonnes) and the end ofDecember 2014 (30.5 million tonnes).

(2) The resource estimates are based on a report by SRK (UK) dated 15 June 2007. The Mineral Resource estimate forYeristovskoye has been depleted in line with the volume of ore mined between September 2013 and the end of December2014 (totalling 17.0 million tonnes).

For more information, see ‘‘Reserves and Resources’’.

Existing Operations

Operating Assets

Our principal operating asset and production facility is FPM, where we process the iron ore wemine into iron ore concentrate and pellets. FPM has a production history of over 35 years. It isreported that, according to the state enterprise Ukrpromzovnishexpertyza (Ukrainian IndustrialExternal Expertize), FPM is the largest producer of iron ore pellets (by volume) in Ukraine, and thelargest Ukrainian exporter of iron ore pellets (by volume). In July 2012, we reached first ore at ourFYM deposit and have begun ramping up commercial production of ore from this mine, producing3.4 million tonnes of pellets for the year ended 31 December 2014, compared to 2.1 million tonnesof pellets for the year ended 31 December 2013. For the year ended 31 December 2014, FPMproduced 7.3 million tonnes of pellets from its own iron ore resources (and a further 0.2 milliontonnes from purchased ore, and concentrate), compared to 8.4 million tonnes of pellets from ownore and a further 0.3 million tonnes from purchased ore and concentrate for the year ended31 December 2013.

For the year ended 31 December 2014, pellet production from own ore was 10.7 million tonnes.This represented an increase of 2% compared to the same period in 2013. Total pellet productionfor the year ended 31 December 2014, including third party materials, was 11.0 million, an

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increase of 2% compared to the same period in 2013. Total production of 65% Fe pelletsincreased by 16%, to 5.8 million tonnes, compared to 2013. Production was constrained in thesecond quarter of 2014, due to a scheduled refurbishment of pellet line number 3, and due toreductions in electricity supply during December 2014, which resulted in the loss of 144 kilotonnesof production.

For the three months ended 31 March 2015, we reported record first quarter production of2.9 million tonnes, an increase of 2.5% compared to the quarter ended 31 March 2014. Productionof our premium 65% Fe pellets was a quarterly record at 2.5 million tonnes, an increase of 81%compared to the first quarter of 2014.

Year ended 31 December

2012 2013 2014(2)

Iron ore pellet production(1) 9,409 10,466 11,02165% Fe pellets 4,118 4,725 5,21862% Fe pellets 5,291 5,741 5,803

(1) From our own ore. In addition, pellets from purchased third party concentrate and ore were, 281 kilotonnes, 347 kilotonnes and350 kilotonnes for the years ended 31 December 2012, 2013 and 2014 respectively.

(2) Including first commercial ore production from FYM. For the year ended 31 December 2013, FYM produced 2.1 million tonnesof pellets of which 1.3 million tonnes were 62% iron content pellets and 745.2 kilotonnes were 65% Fe pellets. For the yearended 31 December 2014, FYM produced 3.4 million tonnes of pellets of which 1.0 million tonnes were 62% Fe pellets and2.4 million tonnes were 65% iron content pellets.

We currently produce both 62% Fe pellets and higher quality 65% Fe pellets. Approximately 53%of our pellet production for the year ended 31 December 2014 was 65% Fe pellets, with theremainder being 62% Fe pellets. Following the completion of our quality upgrade capital investmentprogramme in 2014 we expect to produce approximately 9.5 million tonnes of 65% Fe pellets in2015.

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The following chart shows the location and Mineral Resources of our iron ore deposits.

FPM Mine

FPM consists of a mine, concentrating and pellet processing facilities that exploit the GPL deposits(as can be seen in the chart above). As of 1 January 2015, the GPL deposits had iron oreresources of 3.3 billion tonnes, of which approximately 778 million tonnes were Proved andProbable Ore Reserves with an average iron content of 29% under the JORC Code. FPM isadjacent to rail and port facilities on the Dnieper River, and the mine is approximately sevenkilometres long and over 350 metres deep. FPM operates an open pit mining operation extracting

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approximately 30 Mtpa of crude ore. FPM has operated successfully for over 40 years without anysignificant disruptions or delays in production.

At our production facilities, the crude ore is ground and crushed to remove the rock and thenconcentrated and fired to produce iron ore pellets which have an average iron content of 63.5%.FPM’s production facilities have technical capacity to produce 12 Mtpa of pellets. Output, however,in the past has been limited to approximately 10 Mtpa due to the amount of crude ore availablefrom the FPM pit and certain bottlenecks in concentrating and pelletising. These factors, however,have largely been addressed as part of our capital expenditure programme to reach first ore atFYM, extend the life of mine at FPM and modernise and upgrade the processing facilities at FPM.See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operation –Capital expenditure’’.

Upgrades completed to the production process since the year ended 31 December 2010 are:

— modernisation of the main electrical sub-station number 1 due to increasing powerrequirements for additional equipment in the crushing and beneficiation plant;

— installation of vertimills to allow for further fine grinding of material before it is sent tofloatation;

— construction of a new floatation unit;

— modernisation of the existing floatation unit including installation of vertimills;

— construction an additional floatation unit to process tailings from the above floatation sectionsto liberate further iron ore;

— construction of a new tailings handling facility to accommodate the increased volumes that willbe processed as we increase our production of own ore to 12 Mtpa;

— replacement of concentrate mixers in the pelletising plant for blending of limestone and/orbentonite with iron ore concentrate

— replacement of a third of pellet line number three

FYM Mine

We reached first ore from the Yeristovo pit in the second half of 2012 and as of 31 December2014, produced a total of 6.8 million tonnes of pellets from this ore. This mine is locatedapproximately two kilometres north of the FPM mine. As of 1 January 2015, the deposit hadestimated iron ore Mineral Resources of 1.2 billion tonnes as classified under the JORC Code, ofwhich 660 million tonnes were Proved and Probable Ore Reserves with an average iron content of33%. We plan to mine approximately 28 million tonnes of ore per year from the FYM pit once ithas fully ramped up, equating to an estimated mine life of approximately 30 years.

The development of FYM has diversified our mining operations away from a single miningoperation. As of 31 March 2015, at FYM we have spent approximately US$604.1 million on amining fleet, including 31 CAT 793D trucks and 8 Hitachi/CAT excavators, stripping operations andconstruction of world class utilities since commencing initial development of this mine in 2008. Theramp up of FYM ore to approximately 15 Mtpa is enabling us to increase our total pellet productionfrom own ore by one-third to 12 Mtpa.

The next major phase of our growth capital expenditure programme involves a further increase inoutput from the FYM mine, and the construction of a 10 Mtpa concentrator at FYM to process theore into 67% iron content concentrate. As we announced on 7 October 2014, in the current lowpriced iron ore environment the FYM concentrator project will be slowed and resumed whenappropriate, while low level capital expenditures will be made to maintain the project integrity.

See ‘‘Business Description – Expansion of Our Mining Operations – Developing the Yeristovskoyedeposit’’.

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Production process

The production process consists of mining and beneficiation (crushing and concentration) toincrease the iron content of the ore before pelletisation.

Chart of FPM’s production process

Mining. Mining operations at our two open pits include drilling equipment, blasting processes,excavation, mining transport, and facilities for power delivery. Mining is carried out usingconventional open-pit mining technology. Ore is loaded onto trucks (90 – 220 tonnes each) andtransported to reloading stations, where it is reloaded onto rail cars for transport to the crushingplant. Waste (overburden) is transported by truck or bulldozer either to in-pit temporary wastedumps or in-pit reloading stations where it is reloaded onto rail cars and hauled to the surfacewaste dump. Ore and waste are transported separately in order to optimise costs.

Crushing. Mined ore is transported directly from the open pit storage site at the FPM and FYMmines to FPM’s two crushing plants using electric locomotives and side dumping ore cars. The

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crushing plants incorporate a primary crushing unit, two identical medium and fine crushing unitsand a dry magnetic separation unit with a current combined installed capacity of 30 Mtpa. Thecrushing plants have multiple crushing lines equipped with modern and fully automated conecrushers and screens. In addition, Barmac 9000 high-speed impact crushers are installed in the drymagnetic separation plant. In the crushing plants, the mined ore goes through three stages ofcrushing by cone crusher, a preliminary screening for ore quality, a fine crushing stage, and finallydry magnetic separation with additional crushing of the magnetic products using an impact speedrotary crusher.

Beneficiation. After crushing and magnetic separation, the ore is fed into two plants, which contain56 crushing equipment modules, 376 magnetic separators and 14 spiral classifiers, 424 hydrocyclones of various types (350, 500 and 710) and a fleet of pumping equipment. These plants arecontrolled using an automated management system and contain reverse captive floatation toupgrade the resultant mined ore (average ore grade of approximately 31% iron content) intoconcentrate (up to 67% iron content). The plants each have several lines of rod and ball mills,spiral classifiers and cyclones for grinding ore and modern floatation equipment. The floatationequipment uses technology and procedures developed by Metso Minerals (Sweden) and theMekhanobrchermet Institute (Ukraine). Each plant has a maximum capacity of 1,300 tonnes perhour and a combined installed capacity of 14.8 Mtpa of concentrate.

In 2013 and 2014, FPM modernised six beneficiation sections which included grinding,classification and separation (wet magnetic) equipment. It also installed and commissioned ten newverti-mills which allow for further fine grinding of the material before it is sent to floatation.

In 2014, two new floatation sections were installed and commissioned and the existing floatationsection was modernised. As a result, increased volumes of concentrate can be floated in theproduction process increasing the amount of 65% Fe pellets that can be produced. A new pumpingstation was also constructed and commissioned in order to handle the increased tailing volumes.

Pelletising. The concentrate is further processed in the pelletisation plant. It is pumped from thebeneficiation plant as pulp and combined with small amounts of dolomitic limestone and bentoniteclay to produce the pellet material. It is then condensed in radial thickeners and, finally, transportedfor dewatering with disk vacuum filters through the pulp separator. The pelletising plant has fourgrate-kiln induration lines with annular ring cooling systems procured from Metso Minerals (formerlyAllis Chalmers). This technology minimises environmental discharge and produces very hard ironore pellets that can be handled and transported long distances without significant degradation andthat are unaffected by extreme weather conditions, relative to other iron ore products. Each of thelines is equipped with a thickener, homogenisation tank, disc filters and pellet balling drums toprepare the raw unfired pellets and a pelletiser consisting of travelling grate, rotary kiln and ringcooler. The pelletising plant has a design capacity of 12 Mtpa, and excluding periods formaintenance and repairs, the maximum capacity of each line is approximately 3.3 Mtpa, althougheach pelletising line has an average capacity of approximately 3.0 Mtpa based on 2014 year endproduction levels.

Cost of production

Globally we believe we are an efficient producer of iron ore concentrate with competitive pelletisingcosts. This has allowed us to maintain positive operating cash flow in each quarter since 2006.

We define the ‘‘C1 cash cost of production per tonne of pellets’’ as the cash cost to produce atonne of pellets from own ore to the mine gate, calculated as the C1 cash cost divided byproduction volume from own ore. This excludes costs such as depreciation, pension costs, stockmovement, costs of purchased ore and concentrate, production cost of gravel, and one-off items.The largest components of our C1 cash cost are listed below:

* energy costs, including electricity, fuel and natural gas (53.1% of the C1 cash cost for theyear ended 31 December 2014);

* labour cost (9.7% of the C1 cash cost for the year ended 31 December 2014); and

* grinding media (7.0% of the C1 cash cost for the year ended 31 December 2014).

For further details, see ‘‘Management’s Discussion and Analysis of Financial Condition and Resultsof Operations – Cost of Sales’’.

For the year ended 31 December 2014, our average C1 cash cost decreased to US$45.9 pertonne from US$59.8 per tonne in 2013. The 23.2% decline reflects the positive contribution from

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FYM ore, following the ramp up of the mine in the first half of 2013, as well as the betterabsorption of fixed costs due to higher volume output and the depreciation of the hryvnia againstthe US dollar.

The hryvnia remained stable during the financial years 2013, 2012 and 2011. During 2014, itdevalued against the US dollar from 7.993 as at 1 January 2014 to 15.821 as at 31 December2014. See ‘‘Exchange Rates’’.

Raw materials and energy

The principal inputs used to produce iron ore pellets at our mining facility are raw materials(principally steel grinding bodies, explosives and blasting materials, spare parts and replaceableequipment) and energy (principally electricity, gas and fuel). Raw materials are both sourceddomestically and imported. Ferrexpo’s policy has been to maintain a large supplier base in order toavoid supplier-related risks. Raw materials and energy together represented approximately 86.8%,86.6% and 86.0% of our C1 cash costs for the years ended 31 December 2012, 2013 and 2014,respectively.

Steel grinding bodies

FPM obtains most of the steel grinding bodies that it uses in the crushing process from Ukrainianproducers, principally Ferrolit, Metinvest (Azovstal, Mariupol) and Evraz (Nizhny Tagil, Russia),under supply contracts. Alternative suppliers are available. The Group is also considering internalproduction or utilisation of alternative materials. Steel grinding bodies represented approximately7.4%, 7.0% and 7.0% of our C1 cash costs for the years ended 31 December 2012, 2013 and2014, respectively.

Electricity

Electricity in Ukraine is generated from a number of sources, approximately 50% of which isnuclear, with the remainder comprised of hydro energy and fossil fuels. Compared to theinternational market, the reliance of Ukraine on nuclear and hydro energy provides a lower inputcost to the Group. FPM is supplied with electricity by State Enterprise Energorynok on the basis ofan agreement entered into in June 2004, which is extended on a semi-annual basis. Electricitytariffs are subject to regulation by the NCSEPUR, which sets minimum tariffs for both industrial andhousehold customers. Payments for electricity are calculated monthly based on the amountconsumed and the prevailing wholesale electricity price in Ukraine.

For the year ended 31 December 2014, FPM’s average electricity price was US$71.9 per MWh.For the years ended 31 December 2013 and 2012, FPM’s average annual electricity price wasUS$92.1 per MWh, and US$86.1 per MWh, respectively.

Based on 2014 production levels, the power demand for the existing FPM mining facility (withoutauxiliary consumption) averages 220MWh at nominal capacity, at 100% utilisation of equipmentunder normal working conditions, with a peak loading of 256MWh. The total power demand for theFPM mining facility is expected to increase to an average of 350MWh with a peak loading of480MWh when the Yeristovskoye deposit becomes fully operational. Power is supplied from thelocal Kremenchug switchyard which also supplies 300 to 320MWh of power to the surroundingdistrict. Substation ‘‘Kremenchugskaya’’-330 kV has three transformers with 350MVA each. Thecurrent capacity of one transformer over its life cycle is 150MW. With normal scheme of powersupply the current capacity of the entire substation is 450MW. In emergency-repair mode thecurrent capacity of substation may vary from 150 MW to maximum.

Based on the calculation of the ‘‘Ukrenergosetproekt’’ institute, with the installation of the 4thtransformer and reconstruction of substation ‘‘Kremenchugskaya’’-330kV carried out, the capacity ofsubstation ‘‘Kremenchugskaya’’-330kV can be increased to 450MW in different operation modes,which will be insufficient when all the capacities of Poltava, Yeristovo and Belanovo Mining are putinto operation. It is considered reasonable to construct substation 330/150kV ‘‘Komsomolkaya’’ withinstallation of 2 transformers with capacity of 250MW each.

A third party company, Komsomolsk Cogeneration Company (‘‘KCC’’), in which Kostyantin Zhevagohas an ownership interest, has completed a definitive feasibility study for construction of electricitygeneration facilities located near the Yeristovskoye site, with capacity of 450 MWh Uponcompletion of this project, FPM may purchase electricity from KCC at market prices.

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Natural gas

Under Resolution No: 647 of the Cabinet of Ministers of Ukraine dated 26 November 2014, FPMwas required to purchase natural gas exclusively from Naftogaz, Ukraine’s state-owned natural gascompany, during the period from 1 December 2014 until 28 February 2015. Natural gas is suppliedby Naftogaz, under a supply contract. Natural gas sales prices and tariffs for natural gastransportation in Ukraine are subject to regulation by the Cabinet of Ministers of Ukraine andNCSEPUR, which set prices for natural gas sold domestically to industrial customers. This pricesetting in turn is influenced by the price set by Russia, which supplies gas to Ukraine. Natural gastransportation tariffs are also set by the NCSEPUR and payable to Naftogaz or Ukrtransgaz, thestate-owned gas pipeline operator. FPM’s average annual natural gas price per 1,000 cubic metreswas US$485.4, US$480.0 and US$407 in 2012, 2013 and 2014, respectively. Natural gasrepresented approximately 13.8%, 13.1% and 14.8%, respectively of our C1 cash cost for theyears ended 31 December 2012, 2013 and 2014, respectively.

Gas is used mainly to fire the grate-kilns at the pelletising plant and the on-site water heating plantthat supplies heating water during winter months. FPM’s consumption of gas is seasonal, rangingfrom approximately 11 to 14 million cubic metres during summer to approximately 16 to 19 millioncubic metres during winter months. FPM is connected to Ukrtransgaz’s pipeline network by asupply pipeline owned by Ukrtransgaz, to which FPM pays a distribution fee, which averagedUS$38.4, US$37.6 and US$28.7 per 1,000 cubic metres in 2012, 2013 and 2014, respectively. Webelieve that the capacity of the supply pipeline represents approximately twice FPM’s current gasrequirements when operating at full capacity.

We expect that prices of energy, including natural gas, are likely to increase above current levelsover time. See ‘‘Risk Factors – Risks relating to operating in Ukraine – Any further unfavourablechanges in Ukraine’s regional relationships, especially with Russia, may adversely affect theUkrainian economy’’ and ‘‘– We depend on Ukrainian power and gas distribution networks for thecontinuous supply of gas or electricity’’.

A number of independent gas suppliers have become active market participants following recentdisputes between Naftogaz and Russia’s Gazprom on natural gas supply and pricing. DuringJanuary 2009, when Gazprom cut the supply of natural gas to Ukraine, FPM used independentsuppliers in order to mitigate the supply risk. The use of independent gas suppliers did notincrease costs as their prices were not higher than the price established by the Government forNaftogaz.

To reduce power consumption, save energy resources and improve the efficiency of powerequipment, we have developed and implemented a number of projects. These projects include theinstallation of a two component gas and coal dust burner, which uses gas and coal dust as asource of fuel, and the modernisation of the steam piping systems to include insulation and smallerdiameter pipes, thereby reducing heat loss.

Fuel

Fuel is used primarily to run mining equipment to transport iron ore and overburden. FPM issupplied with fuel mainly by UkrTatNafta, which is located in Kremenchug approximately 20kilometres from the FPM mine, on the basis of three annual contracts. Alternative suppliers areavailable. Prices are set out for each delivery lot and depend on market factors. The price of fuelin Ukraine generally follows trends in international oil prices.

Fuel represented approximately 9.8%, 11.4% and 13.0% of our C1 cash costs for the years ended31 December 2012, 2013 and 2014, respectively.

Maintenance

Maintenance, including spare parts and replaceable equipment, represented approximately 17.9%,13.9% and 12.4% of our C1 cash cost for the years ended 31 December 2012, 2013 and 2014,respectively.

FPM and FYM have their own maintenance department which are responsible for routinemaintenance and repair of the vast majority of the mining fleet, plant equipment and infrastructure.

FPM has ongoing contracts with Metso Minerals for the maintenance and supply of spareequipment in the crushing and beneficiation plant. It has service contracts with Sumitec Ukraine(for servicing Komatsu dump trucks), Zeppelin Ukraine GMBH (for servicing Caterpillar bulldozers

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and trucks), Euromash (for servicing of Hitachi excavators and trucks) and Atlas Copco (forservicing of drilling equipment). These suppliers have offices on FPM’s premises.

FPM uses an ERP system to monitor its fixed capital stock which improves the planning andefficiency of equipment maintenance, for example trucks used in the pit have been fitted with GPStracking systems. This allows for better scheduling of ore pick-ups thereby improving overall miningefficiency. As a result we have reduced the downtime for trucks waiting to load and increased themining fleet capacity.

FYM has a service contract with Zeppelin Ukraine, who is the sole representative of Caterpillar inthe country. Zeppelin performs maintenance and repairs on all of FYM, FPM and FBM CATequipment and also ensures delivery of spare parts. This includes CAT dump trucks, wheel andcrawler dozers and Bucyrus hydraulic excavators. Zeppelin’s thorough and experienced approachto maintenance and repairs ensures the performance of FYM’s primary mining fleet and helps toreduce equipment idle time.

Business Improvement Programme

Our BIP aims to increase efficiency and reduce consumption in the production process therebyreducing the C1 cash cost by 1% to 2% per annum.

The goals of the BIP include increasing ore throughput at the plant, managing the truck fleet moreeffectively, identifying and removing operational bottlenecks, and better process management tosave costs.

Gas and electricity represent approximately 40% of our cash cost of production and a majorcomponent of the BIP is to identify and implement material energy savings projects in our miningand processing operations.

For the year ended 31 December 2014, FPM reduced its average consumption per tonne inelectricity and gas by 23% and 24% respectively, compared to 2005 which was the year before theBIP was initiated.

The average C1 cost for the year ended 31 December 2014 was US$45.9 per tonne and weestimate that the cumulative productivity gains since the inception of the BIP are approximatelyUS$8.2 per tonne of pellets. As such, we believe that the BIP has reduced the C1 cost by 17.9%at current 2014 prices.

Resource Savings under BIP since Inception in 2006

Resource Savings

Power (million kWh) 155Steam (Gcal) 14,333Grinding media (tonnes) 3,499Diesel fuel (million litres) 4.23Gas (th.m3) 19,186Lining (tonnes) 165Giant tires (pcs) 80Ancillary fleet tyres (pcs) 205Bentonite (tonnes) 257

Improvement in Consumption Norms

Norms 2005 2014

Ch %(2014 vs

2005)Electricity kWh/t 205.5 159.2 (22.5%)Gas m3/t 22 16.8 (23.6%)Grinding bodies kg/t 6.4 4.4 (31.3%)

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Examples of BIP initiatives include:

* Decrease in consumption of steel grinding media – By studying the pattern of powerconsumption at the FPM concentration plant, we assessed when grinding media were beingover or under loaded. We then optimised the process for consistent loading of grinding media,leading to reduced grinding media consumption, more efficient energy management and moreconsistent particle size.

* Reduction of power consumption at the tailings plant – During 2010 and 2011, we redesignedthe piping system from the tailings dam to the processing plant to allow water to flow bygravity (rather than via electrical pumps) to return to the processing plant for reuse.

* Mine dewatering system – In December 2011, the pit dewatering scheme at theLavrikovskoye deposit at the north end of the pit was changed from a double stagedewatering system to a single stage system, eliminating a transitional pumping station andreducing electricity and maintenance costs as well as improving efficiency.

Continuous mine, fleet and supplier management

In addition to our business improvement project, we are optimising our Group mining plan for FPMand FYM based on a one mine concept and a steady state of production of twelve million tonnesof pellets per annum. Since implementation in January 2015, this has resulted in a reduction in theamount of material moved and reduced the required mining fleet, increasing fleet utilisation.

Other actions taken include reviewing our top twenty supplier contracts in order to obtain savingsin the current market environment. We also continue to implement best global mining practise withstandardised programmes across the business especially in drilling and blasting and personalprotective equipment.

Overall, we believe these actions contribute towards a lower cost of production, for the Group, ona per tonne basis.

Selling, transport and distribution

We sell the majority of our exports on a DAP/FOB basis, while sales to other customers are madeon a DES/CFR or equivalent basis. The average FOB cost of transportation of our pellets wasUS$15.2 per tonne, US$14.2 per tonne and US$13.0 per tonne for the years ended 31 December2012, 2013 and 2014, respectively.

We deliver our product by rail, barge and seaborne vessels. We transport iron ore pellets primarilyon three routes: (i) in the direction of the Western border for most of our Traditional customers incentral Europe, (ii) in the direction of Izmail and other ports for further delivery by barges on theDanube River to Traditional customers and (iii) in the direction of Yuzhny port on the Black Sea forseaborne export trade. See ‘‘Management’s Discussion and Analysis of Financial Condition andResults of Operation – Sales volumes – Delivery logistics’’.

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Our strategy is to expand our logistics infrastructure ahead of planned production growth. Thisincludes further developing our port and barge facilities to allow for CFR delivery to customers inAsia and Western Europe.

Rail

Pellets are predominantly transported by rail to Ukrainian border dispatch points and accounted forall sales volumes in the year ended 31 December 2014. Most pellets are shipped by rail to theWestern Ukrainian border or to one of the Black Sea ports via the State Railway Administration ofUkraine (Ukrzaliznytsya) pursuant to an indefinite term contract. The applicable rail tariffs areregulated by the state. See ‘‘Risk factors – Risks relating to our operations – Increases intransportation costs and disruptions to transportation could have a material adverse effect on ourbusiness, results of operations, financial condition and prospects’’ for details of increases in tariffs.We rely upon Slavutich-Ruda-Ukraine Ltd., a logistics agent, for the coordination of rail transit andcustoms clearance.

We operate our own loading railway station at the FPM mine. At 31 December 2014, we owned2,200 rail cars enabling us to reduce our reliance on state rail wagons to transport our pellets. Thislowers our transportation costs, guarantees rail wagon availability and helps to prevent the risk ofcontamination of our pellets in transit.

Barges

River transport from FPM provides additional capacity and can be used as a back-up in case ofinterruptions in rail transport. In January 2011, we completed the acquisition of DDSG operationsfor US$37.8 million in cash. DDSG group is one of the largest inland waterway transportationcompanies operating on the Danube and Rhine rivers. It employs approximately 400 people,including leasing crews, and operates 139 barges. It transports iron ore pellets as well as otherbulk cargos along the Danube and Rhine rivers from the ports of Ismail (Ukraine), Constanta(Romania) and Rotterdam (the Netherlands), to various locations in the central and eastern Europe.DDSG transported approximately, 1.2 million tonnes, 1.1 million tonnes and 1.1 million tonnes ofFerrexpo pellets to Ferrexpo’s core customer in central Europe for the years ended 31 December2012, 2013 and 2014, respectively.

DDSG enables us to further control the supply chain securing existing customer relationships andproviding increased access to European markets throughout the Rhine/Danube River corridor,solidifying our presence as the regional market leader in iron ore pellet supply.

Ocean access

Pellets transported by ocean vessels accounted for 57.0%, 63.6% and 63% of our sales volumesin 2012, 2013 and 2014, respectively. Pellets transported by ocean vessels are generally

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transported by rail to Yuzhny port on the Black Sea, which is our principal port for seaborneexports. FPM has an agreement in place with the state-owned Port Yuzhny authority, which isresponsible for handling pellets shipped through the port (including unloading them from the railcars, storing them at the port and loading them on board the designated vessels for onwardshipment).

In 2007, we acquired a 48.6% stake in TIS-Ruda, a Ukrainian enterprise which owns and managesa berth in Yuzhny port. As part of the deal FPM acquired first right of access on capacity of 6Mtpa of dry bulk materials. The port was initially designed for vessels of carrying capacity of up to100,000 tonnes, and historically has loaded vessels in the range of 70,000 to 85,000 tonnes. Wehave enhanced the capability to load capesize vessels, typically around 170,000 tonnes, by part-loading the ships at berth to approximately 120,000 tonnes and topping them off further out at seato the maximum capacity of the vessel, using a transhipment fleet and recently our own speciallyadapted sea-going transfer vessel. For the years ended 31 December 2012, 2013 and 2014 weloaded 17, 22 and 22 capesize vessels, respectively.

In addition to the significantly lower freight rates usually available for shipping with larger capesizevessels, they are generally able to load at faster rates than smaller panamax vessels, increasingthe efficiency of our port operations. Also, the TIS-Ruda terminal stockpile areas allow for constantdeliveries from our mining operations bringing greater efficiency to our upstream logistics chain.Furthermore the installation of a screening mechanism at the train unloading port (as well as usingour own rail cars) has assisted in reducing pellet contamination at the TIS-Ruda port. See ‘‘Riskfactors – Risks relating to our operations – Increases in transportation costs and disruptions totransportation could have a material adverse effect on our business, results of operations, financialcondition and prospects’’.

Ahead of the ramp up of production from our development of the Yeristovskoye deposit, we willlook to further develop our ship loading capabilities at the TIS-Ruda terminal allowing us toincrease our exports to key Asian markets.

FPM also uses Slavutich-Ruda-Ukraine Ltd. to handle pellets exported through Izmail or Renebarge ports on the Danube River as well as transhipments at the Romanian port of Constantawhich acts as a load port for pellets destined to our customers in central Europe.

Capital expenditure programme

We primarily finance capital investment out of operating cash flows. We intend, where possible,and taking into account the volatility in iron ore pricing, to maintain low debt levels in relation toour earnings.

We have invested approximately US$1.3 billion between 1 January 2011 and 31 December 2014to increase the quality and quantity of our pellet output by developing additional iron ore miningcapacity at FYM as well as executing a major modernisation of FPM’s mining and productionfacilities. As of 31 December 2014, these programmes were substantially completed, with the finalsections of additional floatation facilities commissioned in the first quarter of 2015.

The next phase of investment at FYM will be commenced at an appropriate time in accordancewith our overall strategy. This phase will principally involve additional stripping works, followingwhich we will have mining capacity in excess of our processing capabilities. We will then look toconstruct a 10 million tonne per annum concentrator to process the 28 million tonnes of crudeFYM ore that can be mined annually at full capacity yielding around 10 million tonnes of pelletequivalent output in the form of high quality 67% Fe concentrate.

Expansion of our mining operations

Since 2011 we have undertaken a number of development and improvement projects, includingnew mine development and the upgrading and expansion of existing processing capacity. As aresult we are on track to increase our output (from 9.0 million tonnes of own ore production in2010 to an annualised rate of 12 million tonnes in 2015); improve the quality of our product (weexpect over 75% of our production in 2015 to be 65% Fe premium pellets up from 53% ofproduction in 2014) and drive down our overall cost of production through increased operatingefficiency. For further information about the risks and uncertainties relating to our expansion planssee ‘‘Risk Factors – Risks relating to our expansion plans’’ and ‘‘Management’s Discussion andAnalysis of Financial Condition and Results of Operations – Liquidity and capital resources –Capital expenditure’’.

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Quality upgrade programme

In November 2010, the Board of Directors approved a US$212 million investment programme toincrease the average quality of our pellet output from 63.3% iron content to 65% iron content.

In order to upgrade the quality of our pellet product, we are required to increase the overall ironcontent of our concentrate. The primary method we are using to achieve this is through vertimillfine grinding technology and floatation. This will allow us to produce concentrate with an average67% iron content (compared to the current average iron content of 65%) and will ensure all of ourpellet product contains 65% iron content. In addition to the modernisation and construction of newconcentrate facilities, we are building a new filter plant to supply the higher quality concentrate tothe pelletisers. We have set out the steps required to achieve this below.

* Construction of a new floatation unit consisting of vertical mills and floatation tanks to allowfor further fine grinding of material before it is sent to floatation, completed in 2014.

* Modernisation of the existing floatation unit, completed in 2014.

* Construct an additional floatation unit to process tailings from the above floatation sections toliberate further iron ore, completed in 2014.

* Upgrade and expand our tailings facilities to accommodate the increased volumes that will beprocessed as we increase our production of own ore to 12 Mtpa, completed in 2014.

* Construct a new filter plant at our pelletising facility which will accommodate the filtering ofthe higher grade concentrate, to be completed between 2015 and 2017.

Since the start of the project, we have invested US$131.3 million primarily on additional processingequipment such as the new vertical mills, two new floatation cells and modernisation of the existingfloatation unit. The construction phase of this project was substantially completed as of31 December 2014, with the final sections of the floatation facilities commissioned in the firstquarter of 2015. Following final commissioning of the floatation cells in the first quarter of 2015, weexpect to ramp up production of 65% iron content pellets. Remaining expenditure of approximatelyUS$90 million comprises the construction of a new press filtration plant and authorisation of thisproject is subject to iron ore prices in future periods.

Mine life extension programme

Capital expenditure of US$168 million over a period of 8 years was approved in November 2010 toextend the estimated life of the existing FPM mine by 12 years to 2038. Since 2011 we haveinvested US$121.1 million and 64% of the expected stripping has been completed.

Developing the Yeristovskoye deposit

We hold a licence to mine the Yeristovskoye iron ore deposit at FYM, which is locatedapproximately two kilometres north of the FPM mine. See ‘‘– Regulatory and health and safetymatters – Mining Licences’’. The FYM deposit as of 1 January 2015 had estimated resources of1,169 million tonnes under the JORC Code, of which approximately 660 million tonnes were provedand probable reserves with an average iron content of 33%. Assuming an iron ore production rateof 28 Mtpa (broadly similar to FPM’s current production), it has the capacity to add approximately23 years to the Group’s production profile.

We achieved first ore from the Yeristovskoye deposit in the second half of 2012 and have sinceproduced 6.8 million tonnes of pellets from ore extracted from FYM as of 31 December 2014.Since commencing initial development of the mine in 2008 we have invested a total ofUS$604.1 million. For the years ended 31 December 2012, 2013 and 2014, we spentUS$146.3 million, US$73.9 million and US$74.0 million, respectively. This expenditure was primarilyfor mining equipment, stripping works, pit infrastructure and associated infrastructure such as awash centre, tyre handling facility, service centre, repair centre and welding shop.

The FYM mine is managed and operated independently from the existing FPM mine, although itsproximity to the FPM mine will facilitate the sharing of certain facilities and resources, particularlyduring the early years of operation. The ore initially extracted from the FYM mine is beingprocessed using FPM’s spare processing capacity. We expect this will deliver approximately15 million tonnes of primary crushed ore to FPM processing facilities for conversion intoapproximately 5.5 million tonnes of pellets. Together with output from the FPM mine, we expect toincrease our annualised pellet production from 9.0 Mtpa of own ore in 2010 to an annualised rateof 12 million tonnes of pellets from own ore in 2015.

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The next phase of investment at FYM concerns the construction of a 10 Mtpa concentrator toprocess the remaining crude ore that can be mined annually at the FYM pit. In October 2012 and2013, the Board of Directors approved US$30 million and US$ 40 million respectively to begin thisdevelopment. As of 31 December 2014, US$7.8 million had been spent and these projects wereput on hold due to the current low iron ore price environment.

Commercialisation of undeveloped deposits

We hold iron ore extraction licences for the Belanovskoye and Galeschinskoye deposits as well asexploration licences for the Vasilievskoye, Kharchenkovskoye, Manuilovskoye, Brovarkovskoye andZarudenskoye deposits (collectively known as the Northern deposits). Belanovskoye has estimatedtotal JORC classified resources of 1,702 million tonnes, while Galeschinskoye’s resources areestimated at 326 million tonnes.

An initial assessment of the Northern deposits has been undertaken and a total in situ resource of13.2 billion tonnes classified according to the FSU Classification, has been delineated. We arecarrying out preliminary evaluation work of the Belanovskoye and Galeschinskoye depositsregarding the most appropriate method of maximising our value by accelerating thecommercialisation of our extensive undeveloped ore deposits. Our options include developing thedeposits ourselves, introducing development partners and the selective early development of thepotentially higher grade formations within a given deposit, or a combination thereof. These depositsare along the strike from the current pit and near the Group’s existing logistics infrastructure.

Non-core business opportunities

Our business plan is not predicated on vertical or horizontal integration. We may, however, fromtime to time consider bolt-on acquisitions. We currently have an interest in the followingopportunities which may be commercially developed in the future if the projects meet the Group’sown economic and financial requirements, including strategic fit and internal rate of return criteria.

Oil and gas licences

FPM has a 9.95% share in LLC Atol and a 9.0% stake in each of LLC AMA and LLC Amtek,companies which together own the rights to a number of licences for oil and gas deposits in theDnepr basin in Ukraine. Kostyantin Zhevago indirectly owns a 75% share in LLC Atol and 50%stake in each of LLC AMA and LLC Amtek. The values of the licences were fully written off in2010. Development of these licences in the future are subject to meeting our own economic andfinancial requirements, including strategic fit and internal rate of return criteria, at which point weand our principal shareholder would consider further development options.

Sales and marketing

Overview

Our products are mainly sold in international markets. We have exported nearly all of ourproduction outside of Ukraine in the last three years and in the three months to 31 March 2015.We remain committed to our long-term framework agreements with customers that are focused onproducing high value-added steel products. We have supplied many of our existing customers for anumber of decades.

Ukraine’s proximity to major steel producing regions allows us to ship at a competitive cost tocustomers in central and eastern Europe, the Middle East, China and elsewhere in Asia comparedto our major iron ore pellet competitors. Our marketing strategy is focused on supplying ageographically diversified customer base with approximately 91% of production under long-termframework agreements, leading to more reliable off-take, consistent cash inflows and reducedcustomer concentration risk.

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The following table shows our principal export markets for iron ore pellets for the years ended31 December 2012, 2013 and 2014 and the three months ended 31 March 2014 and 2015:


31 March

2012 2013 2014 2014 2015

(US$ thousands)Austria 339,725 381,675 318,707 105,455 67,327China 529,664 435,471 327,579 85,562 43,482Germany 40,486 80,814 103,495 38,337 36,062Slovakia 141,765 127,029 132,958 45,889 27,739Czech Republic 112,623 123,600 110,680 39,326 23,406Japan 33,389 130,429 166,385 45,113 20,101Turkey 73,180 184,234 99,192 20,384 10,169South Korea — — — — 8,259Hungary 2,063 — 9,421 — 5,120Serbia 19,723 31,647 22,278 15,488 1,921India 23,068 — — — —Russia 8,875 — — — —Romania 5,167 — — — —

Total exports 1,329,728 1,494,899 1,290,695 395,554 243,586

Customer base

We divide the markets for our products as follows:

* Traditional markets: these lie within central and eastern Europe and include steel plants thatwere initially designed to use Ferrexpo pellets. We have well-established logistics routes andinfrastructure to service these steel mills by both river barge and rail.

* Natural markets: these markets include Turkey, the Middle East and Western Europe and arelocated where we have an additional logistics cost advantage compared to more distantproducers. We currently have a relatively low market share in these markets which offeropportunity to grow our sales.

* Growth markets: these markets are in Asia and have the potential to deliver new andsignificant sales volumes to the Group.

The following table shows our principal markets for iron ore pellets for the periods indicated.

For theYear ended 31 December As at 31 March

2012 2013 2014 2014 2015

(kilotonnes)Traditional markets 4,679 5,006 5,453 1,536 1,471Natural markets 884 1,932 1,837 841 769Growth markets 4,101 3,748 3,881 467 553

Total exports 9,665 10,686 11,171 2,844 2,793

Domestic market 10 0 0 0 0

Total sales 9,675 10,686 11,171 2,844 2,793

Customers in our Traditional markets comprise steel plants in central and eastern Europe.Ferrexpo AG has longstanding relationships with most of these key strategic customers. Some ofthese customers operate iron making facilities that were specifically designed to use FPM’s pelletsas feedstock and have well-established transport and logistical links to the FPM mining facility. Wecan deliver in small lots on a ‘just in time’ basis to Traditional customers, which provides minimum

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working capital application by our customers and maximum timing and product type flexibility. Dueto our relative proximity, we benefit from low transportation costs compared to our internationalseaborne competitors located in Brazil, Africa and Russia. We have direct customer supplycontracts, and do not deal through sales and logistics agents. We believe we are the leading pelletsupplier to customers in Austria, Slovakia, the Czech Republic and Serbia. See ‘‘Risk Factors –Risks relating to our operations – We depend on a limited number of customers and markets’’.

Our sales strategy is to maintain and consolidate our Traditional markets in central and easternEurope while attempting to maximise opportunities for sales growth in our Natural markets inWestern Europe, Turkey and the Middle East, where we believe we have a natural logisticaladvantage, as well as expanding into our Growth markets in the Far East. We believe that, forcustomers throughout Europe and Asia, our products represent an attractive alternative to those ofBrazilian and Canadian suppliers due to our relative proximity. We have steadily been reducing outcost of sea freight by developing a cost effective capability to load standard capesize vessels,typically around 170,000 tonnes. As a result we have been able to match C3 freight from Brazil toChina and the Far East. This has allowed us to develop our market share in Japan. As of31 December 2014, we were the second largest pellet supplier to Japan with a 11% market share(source: Tex report).

We have an ongoing strategy to allocate a portion of our sales to potential new customers throughtrial spot cargos. In line with this strategy, we secured long-term contracts with Baosteel (China),JFE (Japan), Nippon Steel (Japan), Erdemir (Turkey), Dillinger (Germany) and ThyssenKrupp(Germany).

Volume framework agreements

Our strategy has been and is expected to remain centred on committing a large percentage of ourproduction to sales under a portfolio of long-term agreements with international customers whichare focused on producing high value added steel products, in order to maximise stable and reliablerevenue streams for the Group. For the years ended 31 December 2012, 2013 and 2014 long-termcustomers accounted for approximately 75%, 83% and 91% of our sales volumes from own orewhile for the three months ended 31 March 2014 and 2015 those sales accounted forapproximately 88% and 88%, respectively.

Our long term agreements typically range from 2 to 10 years and cover key commercial termsincluding product type, volume, pricing basis, quality, payment terms and delivery requirements.Any adjustments to these terms are mutually agreed periodically. See ‘‘– Sales and Marketing –Pricing’’ for details of how prices are set. The agreements generally contain provisions for adjustingshipments by up to 10% of the amount specified in the supplement at either the seller’s option orby mutual option. The agreements also generally specify that pellets must have an iron content of62% or 65%, and contain a price adjustment formula based upon the actual iron content andquality of the pellets supplied. In the event of any significant shortfall between the volumesspecified in the contract and the amounts delivered, we discuss the issues with the customer inquestion and agree an appropriate commercial resolution.

We generally sell any iron ore pellets, which are not accounted for under long term agreements,on shorter term contracts consistent with the terms of trade in certain markets. Approximately 25%,17% and 9% of our pellets were sold according to these shorter term contracts in 2012, 2013 and2014, respectively and 12% in the three months ended 31 March 2015 (compared to 12% in thesame period in 2014).

Approximately 25% of our contracts on open credit terms require payment thirty days after shippingthe products. For sales into China and India, we require customers to open irrevocabledocumentary letters of credit, payable on presentation, and established with an international bankaccepted by us and in a form acceptable to us. For sales into CIS countries, we require paymentprior to loading.

Pricing

Iron ore pellets are generally priced at a premium compared to iron ore in fines or lump form. Thispremium price is due to the cost of producing pellets and also because pellets provide iron andsteelmakers with a higher level of productivity in the blast furnace, requiring less coke in the ironmaking production process. Our pellets are relatively low in alumina and phosphorus, which isparticularly important to flat steel manufacturers. Moreover, unlike concentrate, which is costly and

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difficult to ship during very cold weather, pellets can be shipped all year because the lowermoisture content and compression of the iron ore into pellets inhibits freezing. See ‘‘Industry’’.

Since 2010, the industry methodology used to agree pricing between iron ore suppliers and steelmills has moved from an annual benchmark pricing system decided on a negotiated basis to anindex pricing methodology based on various short term time periods. Currently, there are a numberof index pricing methodologies being applied depending on geography and customer. The tablebelow shows our approximate breakdown of sales by contract type comparing 2011 with 2014.

(Figures represent percentage of salesvolume, unless otherwise stated) FY 2014 2011(1)

Monthly index 79% 8%

Spot fixed 8% 28%

Current quarter index 5% 0

Lagging 3 month index 8% 4%

Quarterly negotiated 0 60%

Total sales volume (Mt) 11,167 9,976

% index linked 100% 72%

(1) 2011 was a transitional year with regards to the change in global pricing mechanisms. As a result there were provisional andretrospective pricing adjustments. The figures provided in the table should be regarded as approximate.

As the new pricing mechanisms are based on shorter time periods, we believe it leads to higherprice volatility. Additionally, emphasis in the spot market is progressively shifted towards CFRdelivery (i.e. price agreed as landed price at the disport) away from DAP/FOB pricing (price agreedat load port and customer bears freight cost). This provides an advantage to those producers withlow freight rates.

We have improved our price realisations relative to the prevailing market indices by increasing theproportion of sales to the Far East on a CFR basis and reducing our freight costs. This hasresulted in a higher netback price for the Group which, combined with targeted placement of oursales volume, has in turn allowed us to achieve better prices with our European customers.

Our price strategy is to follow international pricing trends, while continuing to focus on capturingthe maximum price relative to our competitors’ delivered cost through ‘‘value in use’’ to thecustomer. We believe that our geographic proximity to key steel customers represents an attractivealternative to the major seaborne suppliers due to the lower costs of transporting pellets over ashorter distance from Ukraine.

The average achieved sales price is influenced by our product mix of 62% Fe pellets versus 65%Fe pellets. Although pricing of pellets is determined by supply and demand and quality parameters,the cornerstone of the iron ore pricing system is the delivered price of an iron unit (where 1% Fe =1 iron unit). Iron ore pellets with a higher iron content will yield a higher FOB price.

We are focusing on achieving higher prices through increasing our pellet quality from 62% Fe to65% Fe pellets, in order to capture the maximum price relative to our competitors’ delivered cost tothe customer. In the first quarter of 2015, approximately 85% of our production volume consisted of65% Fe pellets, which achieve a higher price per tonne than 62% Fe pellets. Through thesuccessful completion of our Quality Upgrade Programme, we aim for 100% of our pelletproduction to consist of 65% Fe pellets in 2016. See ‘‘– Expansion of Our Mining Operations –Quality Upgrade Programme’’. We believe that this will also better position us to capture newmarkets in Europe (where we have a logistical supply advantage), and in Asia as the quality of ourpellets improves.

Marketing

Ferrexpo AG, together with Ferrexpo Middle East, negotiates all of the sales contracts for ourpellets outside Ukraine, arranges export transportation from Ukraine by barge, rail and ocean-goingvessels and carrying associated risks, invoices, insurance, transportation (including ocean vesselchartering, and carriage of quality risks) and arranges customs formalities on FPM’s behalf.Ferrexpo AG and Ferrexpo Middle East purchase pellets from FPM on either a FOB or a DAP

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basis at prices negotiated to reflect the cost and risk carried by Ferrexpo AG and Ferrexpo MiddleEast plus a profit margin for providing full sales and logistics services for sales plans and long-termmarket developments. In most cases Ferrexpo AG and Ferrexpo Middle East sell the pellets to theend customer on the same delivery terms or on CIF, CFR or similar terms.

Ferrexpo’s marketing organisation comprises a front office, with marketing and sales managersbased near major customers in Vienna, Kyiv, Shanghai, Singapore, Tokyo and Dubai, and a backoffice team in Baar (Switzerland). We currently have four marketing managers, a freight managerand a chief marketing officer who is responsible for the overall implementation of our sales andmarketing strategy and associated logistics.

We incorporated Ferrexpo Middle East, our Dubai sales office, in March 2011 as part of ourstrategy to expand the Group’s marketing reach into the Middle East and Asia ahead of plannedincreases in the Group’s output with the commissioning of FYM.

Competitive environment

The international iron ore export market is highly competitive, with four large producers dominatingthe export market and several mid-tier producers operating in selected markets. The principalfactors affecting competition are price, quality, range of products offered, reliability andtransportation costs. Historically, central and eastern European markets have been the primarymarkets for our pellets, although we have expanded our sales into Western Europe (where webelieve we have a natural logistical advantage) and Asia, primarily China and Japan. We considerthat our principal pellet competitors are Vale, Luossavaara Kiirunavaara AB (LKAB), Iron OreCompany of Canada (IOC), Samarco, Lebidinsky-GOK, Mikhailovsky-GOK and Severny-GOK. Forfurther information about the competitive environment and industry see ‘‘Industry’’.

Regulatory and health and safety matters

Mining Licences

Exploration licences are required to search for mineral deposits in Ukraine. There is a requirementto obtain a separate licence for the extraction of natural resources from deposits which aredeemed to be of national importance. Mining (extraction) licences together with correspondinglicencing agreements and the working programme (which maps out required critical path items interms of mine development), grant the right to work deposits for a specified resource, but do notconvey ownership of the deposit, which is the exclusive property of the Ukrainian people. Mininglicences allow the owner to extract iron ore from the relevant mine for an agreed period of time.The procedure and conditions for obtaining licences by way of tender and any exemptions from thetender process were approved by the Cabinet of Ministers of Ukraine. Licences may be extended,without a public tender, if the holder applies for the extension at least six months prior totermination of the mining licence (or three months in the case of exploration licences). Generally,licences are not transferable, although they may be re-issued or amended in case of reorganisationof the licence holder or in certain other specified cases. Changes in the ownership structure of thelicence holder do not affect the licence.

Licences may be revoked under certain circumstances, including, among others, where the licenceholder no longer wishes to use or misuses the relevant natural resources, if the holder fails tocomply with the disclosure and other obligations required by the licence and the licencingagreement (including the requirement to start work within the statutory two-year time limit followingissuance of the licence) or if a court declares that either the licence or the tender by which it wasawarded is invalid.

We hold a number of mining and exploration licences as described below.

Gorishne-Plavninskoye and Lavrikovskoye deposits. FPM currently holds licences for the extractionof iron ore from the GPL deposits, which were issued by the then subsoil licencing authority (theState Committee for Geology and Use of Natural Resources of Ukraine) on 29 July 1997. Theselicences expire in July 2017 (unless extended). The licences are subject to conditions that FPMcomplies with the requirements of the state environmental agency of the Poltava region, makesmandatory payment for geological works and prepares annual reports on its deposits in theprescribed form. The Lavrikovskoye deposit is also used to store overburden, which maycontravene the terms of its existing licence.

Yeristovskoye deposit. FPM obtained a licence for the extraction of iron ore from the Yeristovskoyedeposit, which was issued by the Ministry of Ecology and Natural Resources of Ukraine on

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27 August 2002. This licence was re-issued in the name of FYM in 2009. This licence wasextended in 2012 and expires in 2032. It contains similar conditions to the licences for the GPLdeposits and certain additional requirements, such as annual monitoring of radiation to be carriedout.

Other deposits. On 20 December 2004, FPM obtained a further two licences for the extraction ofiron ore from the Belanovskoye and Galeschinskoye deposits which expire in December 2024 and2016, respectively. These licences were re-issued in the name of FBM in 2009.

FPM has extended its licences for exploration of the five Northern Deposits, which are along thestrike from the current pit. These are Vasilievskoye, Zarudenskoye, Brovarkovskoye,Kharchenkovskoye and Manuilovskoye deposits.

Mining allotments

Mining allotments are documents which evidence the right to use the land area of a particulardeposit for mining works. FPM holds a mining allotment for the GPL deposits and FYM holds amining allotment for the Yeristovskoye deposit which were issued by the State Committee ofUkraine on Supervision of Labour Protection on 27 December 2000 and by the State Committee ofMining Supervision and Industrial Safety on 4 September 2012, respectively. The mining allotmentfor the GPL deposits was issued for an unlimited period while the allotment for the Yeristovskoyedeposit was issued for a period of twenty years and is due to expire 27 August 2032. FBM intendsto apply for mining allotments for the Belanovskoye and Galeschinskoye deposits when it isrequired to do so (the terms are prescribed in the working programme which is the attachment tothe mining licence; typically applications for mining allotments are made one year beforecommencing mining operations). No mining allotments are required for deposits for whichexploration licences are held.

Environmental standards

All operating units are required to develop and implement environmental management systems inline with Group policy, which meets existing environmental regulatory requirements. Our operatingpractices and growth plans will be implemented in a manner consistent with the principlesunderlying long-term sustainable resource development, balancing the long-term environmentalconsequences of our actions against short-term economic returns.

All new medium and large capital projects will include environmental risk assessments andmitigation plans.

The table below shows emissions of key performance indicators in thousand tonnes for the yearsended 31 December 2012, 2013 and 2014 and the three months ended 31 March 2014 and 2015.


31 March

2012 2013 2014 2014 2015

(kilotonnes)EmissionsTotal gas emissions 6,332 5,815 6,474 1,700 2,153Of which:Nitrogen dioxide 3,293 2,762 3,755 972 1,215Carbon monoxide 2,226 2,107 2,391 644 759Sulphur dioxide 813 946 328 85 179Total solid emissions 3,296 5,828 6,087 1,474 1,065

Total emissions 9,628 11,643 12,561 3,175 3,218

For the years ended 31 December 2012, 2013 and 2014 FPM spent US$11.4 million,US$7.3 million and US$5 million, respectively, on the implementation of environmental measures.For the periods ended 31 March 2014 and 2015 the cost for environmental measures wasUS$0.7 million and US$0.2 million, respectively.

For the year ended 31 December 2012 costs for the implementation of environmental initiativeswere UAH91.2 million (US$11.4 million). Payments for emissions and waste placement amounted

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to UAH31.2 million (US$4.0 million). In 2013, FPM spent UAH58.4 million (US$7.3 million) on theimplementation of environmental initiatives. Payments for emissions and waste placementamounted to UAH46.9 million (US$5.9 million). In 2014, FPM spent UAH91.5 million(US$7.7 million) on the implementation of environmental initiatives and UAH61 million(US$5.1 million) for payments for emissions and waste placement. For the three months ended31 March 2015 FPM spent UAH5.6 million (US$0.2 million) on the implementation of environmentalinitiatives, compared to UAH6.3 million (US$0.7 million) for the same period in 2013. Payments foremissions and waste placement for the three months ended 31 March 2015 amounted toUAH9.3 million (US$0.4 million), compared to UAH915.7 million (US$1.7 million) for the sameperiod in 2014.

Environmental management systems

The primary responsibilities of FPM’s dedicated Environmental Department are to ensure that allnecessary permits are in place, to undertake monitoring in accordance with the prevailingregulatory requirements and to supervise the implementation of an agreed programme ofenvironmental improvements based on the department’s own assessments. Environmental laws inUkraine set requirements for the protection of the natural environment, the use of naturalresources, emissions into the atmosphere and water and waste disposal.

FPM and FYM hold permits and approvals in accordance with the current environmental legislationof Ukraine, namely permits for atmospheric emissions and special water use and will apply forpermits and/or register declarations for waste management once the relevant procedure is adopted.

The FPM permit for air pollutant emissions is valid 2013-2018, and the permits for special wateruse are valid from 2014 until 2017 and 2019.

The Company conducts research work ‘‘Environmental and social surveys to estimate the impact ofeconomic activity on the environment’’. On 6 June 2012, FPM, obtained from UkrSEPRO acertificate of Environmental Management System (‘‘EMS’’) conformity with ISO 14001:2006(#2.039.06956-12). In 2014, the certified EMS was audited by the regional branch of SE‘‘Poltavastandartmetrologiya’’ and the compliance of the current system with ISO 14001:2006 wasconfirmed.

Until 2007, the environmental monitoring and management programme was designed solely tomeet the current statutory requirements. In 2006, however, the Environmental Department startedto develop a full EMS in accordance with ISO 14001. The EMS was externally audited by theUkrainian UkrSEPRO authority and given a certificate of conformity with ISO 14001 which is valid2012 – June 2017.

Project evaluation

In 2007 we endorsed the Equator Principles as a benchmark when evaluating new projects. Aspart of any new project proposal, we will undertake an environmental impact assessment which willbe reviewed alongside other project evaluation documents presented to the Board of Directors forapproval. During 2009 we completed an independent review of the Ukrainian EIA (OVOS), whichcovers our regulatory environmental requirements, for the Yeristovskoye mine pre-strip and theactual environmental performance of current FYM operations against the requirements of theInternational Finance Corporation’s (IFC) Environmental and Social Performance Standards. Weremain committed to applying the IFC requirements as we prepare plans for further development ofthe Yeristovskoye mine.

Environmental initiatives

In accordance with the requirements of the Ukraine Law on Environment Protection, FPM annuallydevelops measures for improving the ecological situation in the areas in which we operate andwhich are approved by the relevant state regulatory agencies. These measures mainly concernwater and air protection, waste treatment, sound management of underground resources, andplanting greenery on the production site. Historically, FPM has spent an average of 2-3% of itsrevenues in hryvnia on its environmental initiatives. UAH91.2 million (US$11.4 million),UAH58.4 million (US$7.3 million) and UAH59.7 million (US$5.0 million) were spent onenvironmental initiatives in 2012, 2013 and 2014, respectively. For the periods ended 31 March2014 and 2015 UAH6.3 million (US$0.7 million) and UAH5.6 (US$0.2 million) were spent onenvironmental initiatives, respectively.

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Air quality

FPM carefully monitors and controls dust and gas emissions to ensure that air quality is notadversely impacted by its operations. In recent years, there have been a substantial number ofinitiatives taken to meet this need. In 2010, initiatives for the reduction of air pollution includedstabilising banks of dry waste material by sowing grass on them, and intensive watering of thework face in the pit after blasting and in dry weather.

Water management

FPM uses approximately 570 million cubic metres of water each year, most of which is recycledthrough the tailings facility, although approximately 5.5 million cubic metres is extracted from acombination of the local river and the municipal drinking water supply. The Tailings Storage Facility(TSF) also receives the treated effluent from Komsomolsk’s sewage treatment plant. Excess waterfrom the TSF is passed through an extensive bio-engineered treatment system commissioned inMay 2002. Storm water from the site is treated in a new cascade treatment plant with a filteringdam commissioned in late 2005. The plant is designed to remove suspended solids and organicpollutants. Other rain and melt water is pumped to the slurry pit for clarification; in the case ofexcess water it is directed to the bio-engineered treatment unit for additional treatment togetherwith the remainder of the TSF dam-filtered water. During 2006 and 2007, the washing facilities ofthe mining transport department were rebuilt to prevent the pollution of ground water by oilproducts that had been carried by the surface water as it drained away, as had previouslyoccurred due to damage to the washing area and dirt collector.

In 2010, initiatives for the protection of the local river system included advanced water treatment ofclarified water at the sludge depository in the biological purification plant; this ensured that theconcentration of pollutants in the water discharged into the local river system lay within thestandard accepted range.

FYM discharged 11.4 million cubic meters, 18.4 million cubic meters and 20.9 million cubic metersof natural water, requiring no treatment, into the Dnieper River for the years ended 31 December2012, 2013, 2014, respectively and 5.1 million cubic meters for the three months ended 31 March2015.

Waste management

For the period ended 31 March 2015, the GPL open pit has generated some 11.1 million tonnes ofwaste rock that is deposited in two dumps, while FYM has generated 5.6 million tonnes of wasterock and sand as of the same date, which is being deposited at two Yeristovo waste dumps.Annual monitoring of the western and eastern dumps indicates that run-off from the waste rockdumps has no negative effect on air quality or water basins, and vegetation has been successfullycultivated on the inaccessible and abandoned areas of the rock dumps.

Waste rock from future operations, including the Yeristovo pit now being excavated, is beingdeposited at these two dumps or used to back-fill part of the GPL pit. Other measures includingplanting seedlings and more mature deciduous and coniferous trees and shrubs, and sowing andmaintaining grassland assist in the absorption of gases that would otherwise pollute the air, whilstalso reducing noise. Investment in waste management, including management of the depositingsites and the tailings dam, allows for the use of slurry (tailings) and stripping material in production,as well as securing the continuous operation of the water recycling system to supply water to thecompany departments.

Mine closure and rehabilitation

We recognise that our activities have an impact on the environment and the communities in whichwe operate. We are aware that a commitment to sustainability requires FPM to prepare now forthe cessation of mining operations even though that eventuality remains many years in the future.

In 2005, we developed a closure and rehabilitation design for the existing GPL pit and associatedwaste rock dumps. Every second year this plan is reviewed by the Yuzhgiproruda design institute;the most recent review took place in 2012. On the basis of the reviewed design, FPM adjusts itsreserves for the restoration of mining lands.

The site will be restored primarily as forest, with an area of open water remaining in part of theopen pit. We will fully provide for the costs of mine closure and rehabilitation as they develop, andwe are committed to complying fully with the terms of our operating licences and the requirementsof Ukrainian law.

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Health and safety standards

We are required to comply with a range of health and safety laws and regulations, and considerthe health and safety of our employees to be our highest priority. In accordance with Ukrainianlaw, we have developed a health and safety policy applicable to our operations and categories ofactivity. All of our operating assets are required to develop and implement health and safetymanagement systems in line with this policy, including performance management. Compliance withthis policy is monitored through a three-tiered system. Daily control is conducted by operatingpersonnel, engineers and technicians. Our production managers carry out weekly inspections, andsenior management conducts periodic inspections with governmental personnel. All personnel aregiven annual medical tests and provided with special clothing, footwear and other protectiveequipment as required by applicable regulations. FPM owns medical facilities at the Poltava site.Maintaining the health and welfare of our employees is an important objective of our management.Accordingly, the medical facilities are available at no cost or at subsidised rates to our employeesand their dependants. Ferrexpo also provides technical training for all employees consistent withtheir duties and responsibilities. In particular, investment has been made in facilities for health andsafety training. A department has been created within FPM with responsibility for all aspects ofhealth and safety, security and environmental protection. The department is responsible for air andwater testing laboratories, the medical centre, fire prevention service, gas service, civil defence andemergency response headquarters and workshops. The department reports directly to the CEO ofFPM.

FPM is subject to an annual inspection by the State Committee of Industrial Safety, LabourProtection and Mining Supervision, which is responsible for inspecting working conditions, safetystandards and equipment.

In accordance with the current Law of Ukraine on Labour Safety the statutory minimal level ofexpense for labour safety is set at 0.5% of the total salary fund for the previous year (until 2012 itwas 0.5% of the company’s sales proceeds). Nevertheless, in compliance with the collectivebargaining deed for the mining and metallurgical industry sector for 2011-2012, FPM maintainedthis cost at 0.6% of sales proceeds.

For the years ended 31 December 2012, 2013 and 2014, FPM statutory payments amounted toUS$9.5 million, US$10.6 million and US$7.4 million, respectively. For the periods ended 31 March2014 and 2015, FPM statutory payments amounted to US$1.0 million and US$0.6 million,respectively, representing 0.30% and 0.38% of sales revenue, respectively.

We believe that we are in compliance in all material respects with applicable health and safetylegislation in Ukraine and have obtained confirmation of OHSAS 18001 certification, theinternationally recognised standard for health and safety management. The OHSAS specificationsets out requirements for an occupational health and safety (‘‘OH&S’’) management system, toenable an organisation to control its OH&S risks and improve its performance. We areimplementing a number of measures to improve the health and safety of our workers in thecollective bargaining agreement with our workforce, including the introduction of enhanced OH&Sstandards, upgrading technology, introducing systemic changes and sanitary measures, betterprotective equipment and health care measures.

FPM’s system for health and safety was audited in February 2012 for compliance with the newversion of DSTU OHSAS 18001:2010 by the auditors from the regional office of thePoltavastandartmentrologiya State Agency. The audit confirmed that FPM systems are operated inaccordance with the standard’s requirements.

The main health and safety hazards at the FPM mining facility involve the danger of falling fromheights, electrocution and vehicle accidents. FPM is currently investigating recent accidents for thepurpose of improving work-site safety. Road traffic accidents are the most common cause of injuryor fatalities in mining operations. More sophisticated traffic monitoring equipment is beingintroduced to improve road safety conditions at the pit. We are also focusing on training andinstilling a culture of safety that encourages reporting of all non-compliance with safety policies andprocedures. We expect that the number of reported health and safety policy violations andaccidents is likely to increase initially as a result of the increased emphasis on safety reporting. In2012, 2013 and 2014, FPM, our principal operating subsidiary, recorded 10, 10 and 7 accidents,respectively, which are defined as work-related injuries that prevent the affected employee fromworking for at least one day. This is slightly higher than the domestic industry average as ourpolicy is to report all accidents and injuries rather than only those required by Ukrainian legislation.

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Employees experience accidents at our facilities and in 2014, FPM, FYM and FBM had 10, 10 and7 accidents. For the three months ended 31 March 2015, there have been 4 work relatedaccidents at FPM. No accidents occurred at the other subsidiaries. In 2014 FPM recorded twofatalities and one in 2013 while FBM recorded a fatality in 2014. There were no fatalities at theGroup’s operations for the year ended 2012. There have been no fatal accidents since31 December 2014.

Operational hazards and insurance

Our operations are subject to numerous operating risks, including geological conditions, seismicactivity, climatic conditions, and interruptions to power supplies, environmental hazards, technicalfailures, fires, explosions and other accidents which may occur at a mine, processing plant orrelated facility. These risks and hazards could result in damage to production facilities, personalinjury, fatalities, environmental damage, business interruption and possible legal liability.

FPM and FYM maintain mandatory insurance policies against certain types of risk in accordancewith Ukrainian law. Specifically, it insures all vehicle drivers and employees engaged in hazardousoccupations (such as blasting) against death or injury in accordance with Ukrainian law. It alsoinsures assets that are pledged as security for loans against loss or damage and maintains aninsurance policy in respect of liability for damage to the environment in relation to the use of itstailings pond. FPM and FYM do not have full coverage against loss of or damage to all of its plantand equipment, losses arising from interruption of business or third party liability in respect ofaccidents occurring on its premises or as a result of its operations, including environmentaldamage. See ‘‘Risk Factors – Risks relating to our operations – We are not insured againstcatastrophic loss and other liabilities’’. We periodically evaluate the procurement of additionalinsurance cover. As Ukrainian law currently prohibits foreign insurance companies from operatingdirectly in Ukraine, the underdeveloped insurance market in Ukraine offers only limited opportunitiesfor insuring risks associated with our business, and reinsurance with an international insurancehouse would substantially increase costs.

In line with the current Ukrainian legislation, we are required to carry out workplace assessmentsevery five years and identify lists of professions impacted by harmful production factors; for suchprofessions favourable retirement benefits are established. FPM last conducted such a workplaceassessment in 2010. One of FPM’s employees did not agree with the results and filed a lawsuit. In2010 the case was tried in the district court, in 2011 it was heard in Poltava Oblast Court ofAppeals and in 2012 in the Superior Specialised Court. All the courts ruled in favour of FPM andconfirmed the workplace assessment results. There were no current claims outstanding as of31 December 2014. Any further such events could materially adversely affect our business, resultsof operations, financial condition and prospects.

Social and community programmes

The town of Komsomolsk was established adjacent to the original Poltava mine to support itsmining and processing operations. We remain the largest employer in the town, which has apopulation of approximately 55,000 people. We estimate we employ approximately 23% of theworking population. FPM has been a significant investor in local community initiatives from theoutset, investing funds in the social infrastructure of Komsomolsk and the surrounding area. Thesefunds have been spent on medical facilities, social services, education, religion, culture andsporting activities, as well as on the maintenance of certain of the city’s social and culturalstructures. Total expenditure on social projects was US$20.8 million (UAH166 million) in 2012,US$10.1 million (UAH85 million) in 2013, US$39.1 million in 2014 and US$8.1 million in the firstquarter of 2015. The majority of the expenditure was used to support local and regional publicorganisations whose finances were under strain. Examples of donations made include the purchaseof medical equipment for hospitals (notably in Komsomolsk), care for the elderly, heating andlighting for local infrastructure and general repairs for schools and hospitals. Links with the localcommunity are strengthened by meetings of senior management with heads of schools andcolleges, supporting local celebration days, giving vocational guidance and vacation work to thestudents of local schools and organising student excursions to Poltava and its museum.

Historically, we have employed a significant number of people in providing support services to ourmining activities. In many cases, these services can be made available on a commercial basis toother enterprises within the local community which in turn improves the viability and sustainabilityof the local economy. Poltava has offered finance and other support to employees who provide

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these in-house services so as to encourage them to transform internal departments into stand-alone businesses.

Intellectual property

The Group undertakes its mining and processing operations in line with established internationalpractice. It is our strategy to be a fast follower of any new technologies and as such we do notinvest specifically in our own new research and development.

We do not own any material intellectual property rights in respect of our technologies or productionmethods and processes. FPM obtains rights to use its principal equipment and technology uponpurchase. There are currently three patents registered in the name of FPM. Two of these patentsare registered with the Russian patent office and the third patent is registered with the Ukrainianstate patent bureau. These patents relate to improvements in the concentration process andmanagement does not consider them to be material to its business.

The ‘‘Ferrexpo-Poltava Mining’’ trademark was registered in 1996 with the Ukrainian Institute ofIndustrial Property (UKRPATENT) and with the International Bureau of WIPO located in Geneva,Switzerland in 1997.

Employees and employee relations

As of 31 March 2015, we had a combined total of 9,798 full time employees. Additional informationconcerning the average number of our employee’s by category (based on management information)for 2012-2014 is set forth in the table below.

As of 31 DecemberAs of

31 March

2012 2013 2014 2015

Production 7189 7797 7,860 7,781Sales, marketing and distribution 171.16 172 179 180Administration & other employees 2198 1727 1,863 1,837

Total 9,558 9,696 9,902 9,798

We do not have individual contracts with our employees in Ukraine other than with our seniormanagers. As of 31 March 2015, approximately 88.6% of FPM’s personnel were members ofFPM’s Trade Union, while FYM has established a Labour Collective Council consisting of 11elected representatives of the employees at FYM. Such representatives are authorised by theemployees to negotiate and sign any collective arrangements or agreements on behalf of FYM’semployees. There have been no significant industrial actions or labour disputes at FPM since itsprivatisation in 1995 or at FYM since its inception. In 2006, FPM resolved a dispute with FPM’sTrade Union relating to the basis for calculating employees’ salaries through arbitration. FPM isrequired under Ukrainian law to enter into a collective bargaining agreement with its employeesrepresented by FPM’s Trade Union. The collective bargaining agreement provides for certainbenefits for the employees (including, among other things, additional retirement benefits, vacationrights and medical insurance). On 16 February 2012, FPM entered into a new collective agreementwhich has remained unchanged since then. In terms of the agreement, FPM has agreed toincrease individual salaries in line with the level of inflation experienced in the previous year. It isanticipated that the terms of the collective agreement will be renegotiated in 2015 as a result ofunion leadership elections held before the end of 2014. We consider that we have good relationswith our employees.

Worker salary levels are specified in the collective bargaining agreement with FPM’s Trade Union.The minimum salary level for unskilled workers is set with reference to the statutory minimumwage which is determined in the Ukrainian state budget annually. Effective from 1 January 2015,the minimum monthly wage was set at UAH1,218 for the period from January 2015 to 30 November2015, and UAH 1,378 from 1 December 2015. Accordingly, workers with the lowest qualificationsare entitled to the minimum wage of UAH1,218 per month. Salary levels at FYM and FBM are setwith reference to salary ranges in force at FPM. Salary levels are higher for employees working instrenuous working conditions and employees with qualifications. Additional compensation is paid for

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items such as overtime work and shift work. Workers also receive a bonus based upon productionlevels. We believe that the wages paid by us are higher than average wages in Ukraine, althoughthey tend to be less than the average wages paid by other Ukrainian mining companies. Inaddition, FPM provides financial support (mainly in the form of providing guarantees for loans takenout by employees to purchase homes) to enable specialists to relocate to the town of Komsomolskto take up employment. We do not believe that increases in salaries and benefits will have amaterial impact on our financial condition, together with a freeze on hiring additional workers andnatural attrition, will enable us to manage our real labour costs over this period.

FPM makes mandatory contributions, equal to 39.1% of total payroll in 2014, to the Ukrainian stateretirement fund and other mandatory state funds as part of its statutory employer’s contribution tosocial security taxes on behalf of its employees. It does not finance any voluntary (non-state)retirement schemes for its employees, although we may consider implementing such a voluntaryretirement scheme if the Parliament passes legislation which reforms the Ukrainian pensionssystem. There is no automatic retirement age for workers, although the general statutory retirementage is 60. Employees working in hazardous conditions may retire earlier, at age 50 or 55,depending on their type of employment and the hazard level. The average age of employees atthe mine is 41 years.

We believe that, taking into account production levels, our headcount is consistent with or betterthan most of our CIS competitors. However, it is significantly higher than producers of iron ore inother parts of the world and productivity per worker is relatively low. The primary reason is that wedo not currently outsource ancillary services, which is a holdover from our prior state ownership.For example, within FPM, approximately 33% of all employees are support personnel. Our labourrates, however, are relatively low, with the majority of our employees receiving approximatelyUS$520 per month in 2014 and approximately US$642 per month in 2013 (calculated using theaverage exchange rates for the respective years). Labour costs represented 7.6% and 11.0% ofC1 cash costs during the three month periods ended 31 March 2015 and 31 March 2014respectively, and 11.5%, 9.8% and 9.7% of our C1 cost for the years ended 31 December 2012,2013 and 2014, respectively.

Our goal is to bring our current workforce in line with international industry standards by reducingour headcount, primarily through outsourcing of support functions and natural attrition, increasingour average wages, and increasing productivity. We believe that plan will ameliorate inflationarypressure on our labour costs, as well as increasing our workers’ standard of living. We face certainstatutory constraints, however, in seeking to reduce headcount, and any reduction has beenachieved mainly through natural departures without forced redundancies. As a result, there can beno assurance that we will succeed in reducing our headcount or lowering our overall employmentcosts, which may impair our competitiveness compared with iron ore producers with loweremployment costs per tonne of iron ore produced.

Long term incentive plan

In addition to an annual cash bonus scheme (the short term incentive plan), we implement a long-term incentive plan for our employees which provides for annual awards of performance sharesand options up to an aggregate limit of 200% of salary in normal circumstances. The LTIPframework was approved by shareholders at the 2008 Annual General Meeting. Initial awards weremade in 2008 with the same number of shares being given to participants at the same level in theorganisation. Further awards have been made each year since then to a slightly larger number ofparticipants, on a similar basis. These awards are in the form of performance shares which vestaccording to the extent to which Ferrexpo’s three year total shareholder return (‘‘TSR’’) matches oroutperforms that of a comparator index (the ‘‘Index’’), as discussed below.

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The Remuneration Committee has chosen relative TSR as the primary long-term incentive measureas it considers this to be the most objective external measure of the Group’s success. TheRemuneration Committee reviewed the constituents of the Index and their weightings prior to thegrant of the 2015 LTIP awards and made some changes to both. The constituents, as at the dateof the latest grant in April 2015, are set out below:

Aggregate Index component Constituents Weighting

Global diversified miners (8.0%each)

ValeBHP BillitonAnglo American

Rio TintoGlencore

40%

Focused iron ore miners (10% each) AssoreCliffs Natural ResourcesFortescue Metals Group

Kumba Iron OreAtlas IronMount Gibson Iron

60%

TSR is calculated on a common currency basis to ensure that comparisons with internationalcomparators listed overseas are fair.

The Remuneration Committee has discretion to review the comparator index if any of theconstituent companies are affected by corporate events such as mergers and acquisitions.

The Remuneration Committee also reviews the constituents and their weightings prior to the startof each LTIP cycle to ensure they remain appropriate.

No performance shares will vest if Ferrexpo’s TSR underperforms the comparator index. 20% willvest if Ferrexpo’s TSR is equal to Index TSR. Full vesting will occur only if Ferrexpo’s TSRexceeds the Index by at least 8% per annum; there will be straight-line pro rata vesting in betweenthose points. In addition, for any shares to vest, the Remuneration Committee must be satisfiedthat the recorded TSR is a fair reflection of Ferrexpo’s underlying business performance. Thevesting schedule is illustrated below:

Dividends will accrue on performance shares over the vesting period, and be paid on shares thatvest. In the event of a change of control, awards will be pro-rated for time and performance. TheRemuneration Committee will retain discretion to vary this treatment if it deems it to be inshareholders’ interests to do so.

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Vesting of LTIP awards

LTIPs awarded since 2008 have vested at the end of their respective vesting periods as follows:

Years ended31 December 2010 2010 2011 2012 2013 2014

Year of award 2008 Transitional award(2-year vesting period)

2008 2009 2010 2011 2012

% vested 0.0 92.0 100.0 91.0 22.9 0.0

LTIP: share ownership guidelines

The Remuneration Committee has agreed that, Executive Directors and members of the ExecutiveCommittee should, in line with the practice among FTSE 250 companies, be encouraged to buildup a holding of shares of equivalent value to a year’s salary (in the case of Executive Directors) orsix months’ salary (for other members of the Executive Committee). Executives will be encouragedto retain their vested LTIP shares on an after-tax basis until the applicable guideline is achieved.

Share options

The LTIP also allows for the grant of options to acquire Ordinary Shares at a specified exerciseprice to the extent that performance conditions have been satisfied after a specified vesting period.The exercise price will not be less than the market value of an Ordinary Share at the time ofgrant.

The Grantor has discretion as to which type of incentive it will use and whether it will grant anindividual a performance share award, a share option or a combination of the two. In countrieswhere an award or option involving real shares is not appropriate or feasible for legal, regulatory ortax reasons, a phantom version may be used. This will deliver a cash payment equal to the netbenefit a participant would have derived from the vesting or exercise of a performance shareaward or share option.

To date all awards have been of performance shares. No grants of options have yet been madeand there are at present no plans to make any.

Eligibility

All our employees and Executive Directors are eligible to participate in the LTIP at the discretion ofthe Grantor. In practice grants under the LTIP have been limited to the senior management (about30 individuals).

Individual limits

The maximum number of Ordinary Shares that an Executive Director and/or an employee mayacquire pursuant to performance share awards or options granted to him in any twelve monthperiod under the LTIP may not have an aggregate market value, as measured at the date of grant,exceeding 200% of the Executive Director’s annual base salary or such higher limit as the Grantormay determine is appropriate in exceptional circumstances in any individual case. Market value forthis purpose will be based on the average closing middle market quotations for an Ordinary Shareas derived from the Daily Official List of the London Stock Exchange for the five dealing daysimmediately preceding the date of grant.

Grant of performance share awards and options

The Grantor (at the recommendation of the Remuneration Committee) may grant performanceshare awards or options under the LTIP at any time during the period of six weeks following theCompany’s announcement of its results for any period or at such other time as the Grantorconsiders that exceptional circumstances exist which justify a grant. No payment will be requiredfor the grant of a performance share award or option.

Release or exercise of performance share awards and options

Performance share awards (which are made in the form of a nil-cost option to acquire shares)normally vest at the end of a three year period. The Transitional award made in 2008 had a two-year vesting period. The relevant performance conditions are measured over these vesting periods,which start at the beginning of the financial year in which a performance share award or option isgranted. Subject to fulfilment of the performance condition, vested performance shares become

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exercisable after the end of the performance period of each award. Share options (if any aregranted) will either become exercisable on the third anniversary of grant or on each anniversary ofgrant in equal tranches over the three year period. Vested performance shares or options areexercisable for a maximum of seven years, after which they will lapse.

Share options (if any are granted) will entitle participants to acquire Ordinary Shares at a price perOrdinary Share which will be fixed by the Grantor at the time of grant. The exercise price perOrdinary Share will not be less than the market value of such a share on the date of grant, or, incase of an option to subscribe for newly issued Ordinary Shares, if greater, the nominal value ofan Ordinary Share. Market value will be based on the average closing middle market quotations ofan Ordinary Share as derived from the Daily Official List of the London Stock Exchange for thefive dealing days immediately preceding the date of grant.

Performance share awards and options may normally only vest if the participant remains in ouremployment. If a participant leaves employment during the vesting period, any unvested part of hisaward will normally lapse. However, a performance share award or option may be retained in theevent of a participant’s death or if the reason for leaving is injury, disability, ill-health, redundancy,the sale of the business or company in which the participant is employed, or any other reason ifthe Grantor so decides. In such circumstances, a performance share award or option will vest inaccordance with the normal vesting schedule to the extent that the performance condition hasbeen satisfied (as determined by the Grantor) at that time. The Grantor, however, has a discretion,where it considers it appropriate, to allow a performance share award or option to vest immediatelyupon the cessation of employment to the extent that, in the Grantor’s opinion, the performancecondition has been satisfied (measured, if appropriate, over a shortened period of performance) atthe date of leaving. In both cases, the number of Ordinary Shares which may be acquired will bereduced on a time pro-rated basis to reflect the proportion of the vesting period which has notbeen completed prior to the cessation of employment.

In the event of a takeover, merger, reconstruction or amalgamation, demerger or voluntary winding-up of the Company, performance share awards or options which have not yet vested will vest tothe extent that the performance condition has been satisfied (as determined by the Grantor andmeasured (if appropriate) over a shortened period of performance) at the date of the relevantevent. The number of Ordinary Shares which may be acquired will be reduced on a time pro-ratedbasis to reflect the proportion of the vesting period which has not been completed at the time ofthe relevant event. The Grantor has a discretion to allow performance share awards or options tovest to a greater or lesser extent if it considers it appropriate having regard to the circumstancesof the transaction and our financial performance up to the date of the relevant event. Performanceshare awards or options may also be exchanged for performance share awards or options overshares in the acquiring company.

Scheme limits

To the extent that new Ordinary Shares are to be issued to satisfy share awards and optionsgranted under the LTIP, no performance share award or option may be granted under the LTIP if itwould cause the aggregate number of Ordinary Shares that are capable of being issued pursuantto performance share awards and options granted under the LTIP, when added to the number ofOrdinary Shares issued or issuable pursuant to rights to subscribe for Ordinary Shares grantedduring the preceding 10 years under any other discretionary executive share plan operated by theCompany, to exceed 10% of the issued ordinary share capital of Ferrexpo from time to time.

The listing bonuses granted upon the Company’s IPO in 2007 to certain of the Directors and to theSenior Managers do not count towards the percentage limits stated above.

If awards or options are to be satisfied by a transfer of Ordinary Shares, the percentage limitsstated above will not apply.

Adjustment of awards and options

In the event of any rights or capitalisation issue, sub-division, consolidation, reduction or othervariation of our share capital or the implementation of a demerger, or the payment of a dividend inspecie or a super-dividend which would otherwise materially affect the value of an award or option,the Grantor may adjust the number of Ordinary Shares subject to awards and options and anyexercise price payable on the exercise of options.

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Participant’s rights

Benefits under the LTIP are not pensionable.

Awards granted under the LTIP are not transferable and may only be released to or exercised bythe persons to whom they were granted or their personal representatives.

Rights attaching to Ordinary Shares

Ordinary Shares allotted or transferred under the LTIP rank pari passu with Ordinary Shares of thesame class then in issue (except in respect of entitlements arising prior to the date of allotment ortransfer).

Amendments

The Grantor may amend the LTIP. However, the provisions governing eligibility requirements,equity dilution, individual participation limits and the adjustments that may be made following arights issue or any other variation of capital cannot be altered to the advantage of eligibleemployees or participants without the prior approval of Shareholders in general meeting (exceptminor amendments to take account of a change in legislation or to obtain or maintain favourabletax, exchange control or regulatory treatment or to benefit administration).

The Grantor may adopt appendices to the LTIP without Shareholder approval to take account ofany applicable legislation or to obtain or maintain favourable tax, exchange control or regulatorytreatment for employees or any member of the Group.

Termination

The LTIP will terminate on the tenth anniversary of adoption, or such earlier time as the Grantormay determine, after which time, no further awards may be granted but the rights attaching toexisting awards will not be affected by such termination.

Employee Trust

The LTIP operates in conjunction with an employee discretionary trust (the Ferrexpo AG ListingBonus Trust) established by one of the Company’s subsidiaries (the ‘‘Trust’’). The beneficiaries ofthe Trust are the employees and former employees of the Group, and their spouses, widows,widowers and children or stepchildren under the age of 18. The Trust may grant performanceshare awards and options to eligible employees and acquire and hold Ordinary Shares required tosatisfy awards and options granted under the LTIP. Existing Ordinary Shares may be acquired bythe trustee of the Trust or we may issue new Ordinary Shares to the trustee. The Company andany relevant subsidiaries have provided sufficient funds by way of loan or gift to the trustee of theTrust to enable it to fulfil its obligations under the LTIP. The company that established the Trusthas the power to appoint new and additional trustees or to remove any trustee. It also has thepower to amend the trust deed with the agreement of the trustee. The trustee is entitled to anindemnity out of the assets of the trust fund and, if they are insufficient, from the Company or itsrelevant subsidiaries against claims, costs and liabilities that it may incur in carrying out its duties(other than where it has been fraudulent, negligent or guilty of gross misconduct). The aggregatenumber of Ordinary Shares that the Trust and any other trust set up for the benefit of non-executive directors may hold at any time is limited to 5% of the Company’s issued share capital.

Dividend policy

We aim to pay modest consistent dividends through the economic cycle. An ordinary dividendnormally is composed of an interim and final dividend of approximately equal proportions. Specialdividends are paid when the financial performance or operating achievements of the companywarrant this and it is affordable with reference to the available liquidity and debt repayment profileof the Group. We paid total ordinary dividends of 6.6 US cents per share for 2012 (amounting toUS$38.8 million), 6.6 US cents per share for 2013 (amounting to US$39.0 million) and 6.6 UScents per share for 2014 (amounting to US$38.7 million). We paid special dividends of 6.6 UScents per share for 2012 (amounting to US$38.7 million), 6.6 US cents per share for 2013(amounting to US$38.6 million) and 6.6 US cents per share for 2014 (amounting toUS$38.6 million).

Dividends will be declared in US dollars. We may only pay dividends if distributable reserves areavailable for this purpose. As a holding company, the ability of the Company to pay dividends willprincipally depend upon dividends or interest paid to it by its subsidiaries.

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Depending on our future financial position and expected cash flows from operations, we may in thefuture consider a share buyback or other forms of return of capital to shareholders by reference tothe Group’s overall financial position.

Although we are incorporated in England and Wales, the Directors currently intend to conduct ouraffairs in a manner such that it continues to be regarded as resident in Switzerland, and not in theUK, for Swiss and UK tax purposes and for the purposes of the Switzerland/UK Double Taxationconvention. Any dividends paid by us will be regarded as Swiss dividends rather than UKdividends.

Litigation

We are currently disputing several tax claims by the local tax authorities mainly in relation to VAT.The aggregate amount claimed by the tax authorities together with applicable fines and penalties isapproximately UAH7.8 million (US$0.6 million). We dispute the basis on which the tax authoritiesare claiming these amounts and the certain claims are currently subject to legal proceedings in theUkrainian courts. See ‘‘Risk Factors – Risks relating to our operations – We are in disputes withthe Ukrainian tax authorities’’.

We have been involved in legal proceedings relating to the ownership of FPM that we have thusfar been successful in defending. However, the Claimants in these legal proceedings have the rightof appeal, and if they are successful, Ferrexpo’s ownership of FPM could ultimately decrease. See‘‘Shareholders and Related Party Transactions – Shareholder Litigation’’.

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INDUSTRY

Introduction

Over 98% of the iron ore mined worldwide is used in the production of pig iron, which is theprincipal raw material used to make steel. Steel is produced either through the blast furnace/basicoxygen furnace process, or via the electric arc furnace (‘‘EAF’’) process. The BF/BOF processliberates iron by smelting iron ore in a blast furnace (‘‘BF’’), which is then converted into liquidsteel in a basic oxygen furnace (‘‘BOF’’). In the EAF process, iron, steel scrap and often directreduced iron are melted to produce steel. The majority of the world’s crude steel is produced via ablast furnace. In 2014, global steel production totalled an estimated 1.76 billion tonnes, of whichBF/BOF steel production accounted for about 1.14 billion tonnes.

Overview of the steelmaking process via Blast Furnace or Electric Arc Furnace technology

Most iron ore resources are located in iron-rich sedimentary rocks known as banded ironformations. Hematite and magnetite are the most common types of iron bearing minerals. Hematitetypically contains 60-67% iron content while magnetite ore has lower iron content of typicallybetween 30-40% iron content. Due to the lower iron ore content in magnetite ore, once mined itneeds to be beneficiated/manufactured into a higher iron content product. Hematite ore is complexand costly to beneficiate and is usually mined at a grade of up to 65%.

Iron ore, coke and limestone are used in a blast furnace to produce a molten iron, or pig iron,which is the primary raw material used to produce crude steel in a basic oxygen furnace. As a ruleof thumb, every tonne of pig iron requires the equivalent of 1.4 to 1.8 tonnes of iron ore(depending on the type of iron ore used).

The iron ore, coke and limestone are poured into the top of the furnace while blasts of hot air areinjected into openings at the bottom of the furnace. The iron ore, coke and limestone are known asthe ‘‘charge’’ of the blast furnace. The hot air injected into the furnace burns the coke which thengenerates the heat and the reducing gas that separates the oxygen from the iron in the iron ore.The temperature can reach as high as 1,500C in the middle of the blast furnace and 1,900C at thebottom of the blast furnace. The resulting molten (liquid) iron slowly descends toward the bottom ofthe furnace together with the slag which floats on top of the molten iron, both are drained from thefurnace through different tapping holes. The molten iron, which is typically referred to as pig iron, isthen transported to a basic oxygen furnace, where it is converted into crude steel.

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Blast furnace diagram

(source: Jefferies modern day iron age, January 2010)

There are three principal forms of iron ore used in a blast furnace to produce pig iron: fines, lumpand iron ore pellets. The higher the iron content of the ore fed into the blast furnace, the moreefficient the furnace and the lower the cost per tonne of pig iron, all else equal. The productivity ofa blast furnace also depends on the chemical constituents of the iron ore being used. Silica,alumina, moisture, and other impurities in the iron ore reduce the productivity of a blast furnacewhile limestone can remove some of the impurities and increase productivity. Steel production fromore with a high level of impurities also increases the environmental impact of the steelmakingprocess, which is an important decision for steel mills based in developed economies andincreasingly a growing consideration for the Chinese steel industry. For these reasons, iron oreswith high levels of impurities generally sell at lower prices than ores that are more pure.

Sinter fines and lumps are produced from higher grade ores and are separated by screening andsorting according to particle size (neither product is typically concentrated/beneficiated, unlikepellets which come from lower grade ores). Smaller particles, measuring around 6.3mm indiameter, are known as iron ore fines. Most quoted iron ore prices in the general media andfinancial markets refer to the price of iron ore fines (typically 62% Fe content, which is the Platt’sIODEX benchmark product) since fines are the most common iron ore product in the world.

The larger particles are known as iron ore lump, naturally-occurring clumps of iron ore with adiameter of more than 6.3mm but usually less than 31.5mm. According to CRU, the depletion oflump ores has been significant in recent years as the major iron ore producers in Australia minedeeper into their respective ore bodies.

Fines need to be agglomerated into sinter at the steel mill’s sinter plant before it can be used in ablast furnace. This is to ensure there is adequate airflow in the blast furnace. Sintering increasesthe operating cost of fines and as such fines have a lower relative value compared to lump andpellets.

Lumps and pellets can be charged directly into a blast furnace, without sintering, to produce pigiron. Lump ore is faster to disintegrate (break down under thermal load) in the blast furnace,thereby lowering its efficiency.

Pellets are usually the most desirable form of iron ore as they make a major contribution to theproductivity of the blast furnace. Pellets have higher iron content and lower gangue content thansintered fines or lump and can be made to a precise composition to meet specific customerrequirements. They are also easier to transport than fines or lump. Pellets are therefore considereda premium product, well-suited towards production of higher quality steel products and as suchreceive a price premium. Pellets are, however, more costly to produce than fines or lump.

To produce iron ore pellets, low-grade iron ore, typically magnetite ore, is first crushed and groundvery finely to liberate the iron minerals in the ore. After crushing and grinding, waste material isseparated from the iron minerals which are further processed into a concentrate using gravitationaland magnetic concentration methods. After the iron ore concentrate is de-watered, the product is

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mixed with a clay-binding agent and a small amount of limestone and then rolled into small balls,which are then heat-hardened at high temperatures in a kiln to create iron ore pellets. Iron orepellets are cylindrical and are typically 8-18mm in diameter. The pelletising process is energyintensive due to the required crushing and grinding as well as the use of gas in the pelletisers/kilns. Operating costs for the pelletising process can be between US$10 and US$30 per tonne. Weestimate that the cost to build a 10 million tonne pellet plant is in the region of US$1 billion. Thusthe sector has high capital barriers to entry which is reflected in the lack of new seaborne supplycompared to the iron ore fines market.

Steel Production

As the main raw material required for the steelmaking process, the dynamics of the iron oremarket are linked to the steel market. Over the past ten years, global consumption of steel hasbeen driven largely by urbanization in emerging economies, most notably China, as can be seenfrom the graph below.

World steel produc�on: the emergence of China

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Crude steel output (M tonnes)Annual change in crude steel output (M tonnes)

Source: CRU Crude Steel Market Outlook February 2015

In 2014, China produced 915 million tonnes of crude steel, while the rest of the world produced849 million tonnes. On 27 February 2015, CRU revised its Chinese steel forecasts primarily due toweakness in the construction sector and now expects Chinese steel production growth of 0.3% peryear to 2018 adding 12 million tonnes, compared to prior forecasts from November 2014 of 3.0%per year.

CRU expects steel production for the rest of the world to grow by a CAGR of 3.1% to 2018 adding112 million tonnes of crude steel from 2014. Within the rest of the world and during this timeperiod, CRU forecasts CAGR of 1.6% for Japan, 14% for South Korea, 16.4% for Turkey and0.4% for Germany. In general, these countries produce flat steel products and are where our corecustomers are located. In China we sell to the top steel mills including the second largest steel millin the world.

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The following graph and table show expected iron ore imports of the 15 largest importing countries.Going forward CRU expects imports of iron ore to increase in most of these countries except forItaly and Russia. Ferrexpo does not sell to or target either of these countries. Growth in imports isexpected to rebound in Japan as well as in Germany – Ferrexpo’s two key target markets.

Iron ore imports, top 15 countries/regions (Mt)

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CanadaNetherlandsTurkeyAustriaRussiaItalyUKFranceTaiwanMiddle EastOther EU-28GermanySouth KoreaJapanChina

CAGR Imports

2000-2014 2014-2018 (Mt)

Total world 7.1% 3.3% 1,582

China 20.3% 3.7% 1,081

Japan 0.2% 1.6% 141

South Korea 4.7% 1.4% 73

Germany -0.7% 0.4% 40

Other EU-28 -2.1% 1.5% 37

Middle East 7.7% 9.7% 45

Taiwan 3.0% 0.2% 22

France -1.4% 0.0% 15

UK -0.5% 1.5% 15

Italy -3.6% -1.7% 9

Russia 1.5% -8.3% 8

Austria 4.5% -0.1% 10

Turkey 6.3% 16.4% 14

Netherlands 1.2% 2.4% 9

Canada 2.4% -7.5% 7

Source: CRU Iron Ore Market Outlook April 2015

Iron ore demand

The demand for iron ore more than doubled between 2000 and 2014, according to CRU. Demandfor iron ore in all forms reached 2.07 billion tonnes in 2014, compared with 907 million tonnes in2000. The major driver of the demand for iron ore was the growth in Chinese demand. China wasalready the largest consuming country in 2000 because of the heavy preponderance of the BF/BOF process in Chinese steelmaking. Between 2000 and 2014, Chinese demand rose more thansevenfold reaching 1.24 billion tonnes in 2014. By 2014, China accounted for 60% of globaldemand for iron ore.

The growth in demand has now entered a slower phase. Between 2014 and 2018, total worlddemand is forecast to increase a further 4%, to reach 2.214 billion tonnes in 2018. CRU expectsChinese demand to fall to 1.22 billion tonnes in 2018 as a higher proportion of electric arc furnacesteel production comes into effect.

Fines are the predominant form in which iron ore is shipped. The share of fines rose between2000 and 2014 as a share of total consumption, from 56% to 67%, while the share of pellets fellfrom 27% to 20%. CRU expects some readjustment between 2014 and 2018, whereby the shareof fines should fall to 63% and the share of pellets should recover to 23%.

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Consumption of iron ore by country (Mt)

2000 2014 % Ch 2018f % ChAfrica 20 16 -22% 25 58%

South Africa 12 9 -23% 11 23%Central & South America 62 60 -3% 68 13%

Brazil 41 46 11% 48 6%North America 101 73 -27% 87 19%

Canada 15 12 -18% 13 7%USA 70 45 -37% 55 24%

Asia 404 1,589 293% 1,596 0%China 173 1,237 615% 1,223 -1%India 41 117 188% 121 3%Japan 129 133 3% 141 6%South Korea 37 69 88% 73 5%

CIS 118 128 8% 147 15%Russia 72 86 19% 94 10%Ukraine 40 37 -8% 46 25%

EU-28 160 136 -15% 141 4%Germany 44 40 -9% 40 1%

Non-EU Europe 8 16 83% 17 8%Turkey 8 14 76% 15 8%

Middle East 16 45 187% 54 20%Iran 10 25 147% 29 16%

Oceania 12 6 -51% 6 8%Total World 902 2,068 129% 2,143 4%

Source: CRU Iron Ore Market Outlook April 2015Consumption of pellets, lump and iron ore fines

Iron ore demand by product type, global (Mt)

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7Source: CRU Iron Ore Market Outlook April 2015

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Iron ore production/supply

Apparent production of iron ore by country (Mt)

2000 2014 % Ch 2018f % ChAfrica 47 117 149% 108 -8%

South Africa 34 75 122% 76 1%Central & South America 211 366 73% 451 23%

Brazil 185 349 89% 427 23%North America 116 108 -7% 117 9%

Canada 35 41 19% 37 -11%USA 61 50 -18% 61 21%

Asia 175 503 187% 341 -32%China 104 366 254% 207 -44%India 71 121 72% 127 4%

CIS 158 185 17% 185 0%Russia 87 96 10% 95 0%Ukraine 56 71 28% 76 6%

EU-28 27 31 16% 39 24%Sweden 20 26 25% 32 26%

Non-EU Europe 4 8 73% 8 1%Middle East 11 60 441% 54 -11%

Iran 8 47 495% 32 -31%Oceania 166 748 351% 872 17%

Australia 164 746 355% 870 17%Total World 916 2,125 132% 2,174 2%

Source: CRU Iron Ore Market Outlook April 2015Apparent production of pellets, lump and iron ore fines

The table above shows that between 2000 and 2014, approximately 1.2 billion annual tonnes ofnew iron ore supply have come into production. This has principally come from Brazil, China andAustralia. CRU forecasts that the rate of growth will slow going forward, reflecting the slowdown indemand. CRU projects that total iron ore supply will increase by 2% to 2.17 billion tonnes by 2018from 2.13 billion tonnes in 2014 and compared to 916 million tonnes in 2000 (growth of 132% from2000 to 2014). This can also be seen from the graph below which highlights the increase inproduction for export from the four largest producers – Rio Tinto, BHP Billiton, Fortescue (all inAustralia) and Vale in Brazil – together they account for over 66% of the world export market andhave increased their market share since 2009, as shown in the chart below. They are set toconsolidate the market even further on the basis of CRU’s current forecasts of production forexport. Chinese iron ore production, which increased by 254% between 2000 and 2014, is forecastto fall by 44% between 2014 and 2018, according to CRU. Although not all Chinese mines havehigh production costs, many do. Lower prices for iron ore are expected to compel many of thehigh-cost operations to close.

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Annual increases in export produc�on (Mt)

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4Source: CRU Iron Ore Market Outlook April 2015

The increase in supply of iron ore exports between 2000 and 2014 has principally come from theproduction of iron ore fines, with pellet exports showing an increase of only 35 million tonnes since2000, as can be seen from the table below.

Exports of iron ore (Mt)

2000 2014 IncreasePellets 106 141 35Lump 93 228 136Fines 265 1,012 747Total 464 1,381 917

Source: CRU Iron Ore Market Outlook April 2015

The significant increase in iron ore fines from Rio Tinto and BHP Billiton, which have the lowestproduction and capital costs per tonne of new and existing capacity, has added more supply at thelower end of the cost curve. This is reflected in the following CRU 2014 cost curve. The ironcontent of the new supply from Rio Tinto and BHP Billiton has been between 62% and 61%. Theincrease in supply from Fortescue (approximately 130 million tonnes since 2008) has had anaverage iron content of 58%.

From the charts below, it can be seen that Ferrexpo is positioned in the middle of the cost curveof the 2015 global cost curve for producers of iron ore in all forms. Ferrexpo, moreover, is at thebottom of the second quartile, when compared with other pellet producers only. These costs arebased on the concept of business costs. These include not just the site operating costs of themining operation, but also the realisation costs associated with transporting products to market,sales and marketing expenses, plus the financing of inventories, goods in transit, and receivables.In addition and of particular importance in iron ore, business costs include any discount or premiumthat may be associated with product quality compared with the benchmark product. The concept ofbusiness costs permits a direct comparison among different products produced in differentlocations.

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Business cost curve, iron ore in all forms, 2015 ($/tonne)

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Pellet production

According to CRU the largest pellet exporters in 2014 were as follows. Ferrexpo is ranked as thefourth largest exporter.

Top pellet exporters (Mt) 2014Vale (Brazil) 26.8Samarco (Brazil) 23.2LKAB (Sweden) 17.0Ferrexpo (Ukraine) 11.0Rio Tinto (IOC, Canada) 8.3Cliffs Natural Resources (USA & Canada) 6.4Metinvest (Ukraine) 5.4Metalloinvest (Russia) 3.9Total pellet export market 140.8% of top 8 exporters 72%

The 2014 cost curve above highlights the weighted average business costs for Samarco, Vale,LKAB, Ferrexpo, IOC and Cliffs Natural Resources. Of these producers, the two Brazilianoperations were the lowest cost, followed by Ferrexpo, according to CRU.

In 2014, Vale completed construction of new pelletising capacity of 8.3 million tonnes per annumand Samarco added another 7.5 million tonnes per annum. We expect that at least half of thisproduction will go to the Middle East to produce direct reduced iron for use in electric arc furnacesand as such not compete in the traditional blast furnace steel market. Overall, CRU expectsBrazilian pellet exports to increase by 16 million tonnes from an estimated 49 million tonnes in2014 to 64 million tonnes by 2018. No other significant increase in pellet supply is expected.

Industry Pricing

Since 2010, the industry methodology used to agree pricing between iron ore suppliers and steelmills has moved from an annual negotiated benchmark price to an index pricing methodologywhich better reflects current market price dynamics. Producers no longer set the market price, butrather are price takers with contracts based on a reference price plus or minus premia anddiscounts. Additionally, emphasis in the spot market is progressively shifted towards CFR delivery(i.e. price agreed as landed price at the discharge port) away from DAP/FOB pricing (price agreedat load port and customer bears freight cost). This provides an advantage to those producers withlow freight rates.

Reference prices have moved to a basis of $ per tonne, whereas previously they had been quotedas US cents per dry metric tonne unit (dmtu). The basis price is for 62% Fe sinter fines CFRQingdao, China. There is a premium for higher iron content and a discount for lower iron content.This structure reflects not only the iron content, but also the content of slag-forming elements thataffect the cost of making iron in the blast furnace. Actual selling prices may additionally reflectpremia or penalties for content of alumina, silica, sulphur, phosphorus and moisture as well as losson ignition.

In addition to the content of iron and other elements, there are premia for lump and pellets. Boththese products can be charged into a blast furnace without prior sintering and are thereforeinherently more valuable than sinter fines of comparable iron content. The lump and pellet premiamay move independently of the 62% Fe sinter fines marker in accordance with the specific supplyand demand conditions associated with each product.

There is a smaller spot market for pellets because there are few seaborne producers, and theprice structure is correspondingly opaque. The benchmark for pellets is FOB Brazil. This is linkedto the FOB Brazil fines price, which in turn is adjusted from the CFR China spot sinter finesbenchmark to take into account iron content and freight.

The premia paid for iron ore pellets in key non-Chinese markets have increased fromapproximately US$32.5 per tonne in calendar year 2013 to approximately US$37 per tonne incalendar year 2014. Pellet premia in these markets are agreed on an annual basis. Pelletpremiums remained stable in the first quarter of 2015, with the premium paid in Western Europeand North East Asia approximately US$32 to US$33 per tonne, in line with the average Chinesepellet premiums. The price generally reflects a limited reliable supply of high grade pellets andcontinued demand from steel mills for higher grade product. Over the medium to long term CRU

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believe pellet premiums will be supported by environmental restrictions in China leading to anincrease in imports of direct charge product such as pellets and lump. In addition, Chinese steelmills are likely to strive for higher value-added steel products in their production mix which will adddemand for higher quality iron ore feedstock such as pellets.

Lump premia depend on the availability of lump at any one time and also reflect in part the supplyand demand for pellets, which are a direct substitute. The premium averaged US$11.0 per tonne in2014 but was volatile over the course of the year, ranging between US$2.50 and US$22.00 overthe course of 2014. Between January and April 2015, the premium dropped from US$24.00 pertonne to US$6.00 per tonne but has since recovered from its lows.

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Pellets as a premium product

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Annual average prices for Brazilian iron ore, 65% Fe, $/tonne fob Tubarão

Data: CRU Iron Ore Market Outlook April 2015

Iron ore fine price movements in 2015

Following a 46.7% decline in the benchmark 62% Fe iron ore fines price CFR China in 2014, theprice has continued to fall and reached a ten year low of US$47.50 per tonne on 2 April 2015. Theaverage price during the first quarter of 2015 was US$62.40 per tonne, compared to US$71.75 pertonne as of 31 December 2014, while the average price in April 2015 was US$51.88 per tonne.

The price decline reflects the slowdown in Chinese steel production and, consequently, iron oredemand, as well as a significant increase in supply from three of the four major iron ore producers– Rio Tinto, BHP Billiton and Fortescue. CRU estimates that together these producers increasedexports from their Australian operations by 72 million tonnes in 2013 and 131 million tonnes in2014. CRU forecasts their exports to increase by a further 66 million tonnes in 2015. Overall, ironore exports reached 1,448 million tonnes in 2014 and CRU forecasts this to grow to 1,488 milliontonnes in 2015. The four major iron ore companies are likely to add approximately 87 milliontonnes while CRU expects a worldwide reduction of 47 million tonnes from other suppliers in 2015.A large adjustment to the supply of iron ore is expected to come from domestic production inChina, which CRU forecasts to fall by 72 million tonnes in 2015.

CRU now forecasts prices to remain near to current levels over the next two years. Weak demandfrom China, expansions at the major producers and the weakness of the currencies of the majorexporting countries should combine to prevent any major price rise. On 1 April 2015 CRU cut itsprice forecasts and now expects the benchmark 62% Fe fines CFR China benchmark to averageUS$53 per tonne in 2015 and US$54 per tonne in 2016 from US$65 per tonne and US$74 pertonne, respectively.

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The chart below shows CRU forecasts of the iron ore benchmark price to 2019. Prices areexpected to rebound from 2017 onwards, in both real and nominal terms. This view takes intoaccount the reduction in mine costs that the depressed prices have forced upon producers. Themarket price is expected to remain below the long-run equilibrium level. Further increases in priceare likely beyond 2019 as the market converges towards its long-run level.

A slight increase in price is realistic after the two very poor years that we have ahead

Data: CRU. Displacement calculated by taking y/y change in global iron ore demand and subtracting the y/y change in exports from the majors, including Hancock Prospecting and Anglo American.

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Iron ore price, 62% Fe fines, CFR China, $/t

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Nominal Real

2019 assumptions1. Prices sit at the 85th

percentile on the cost curve

2. Production costs are 5% lower than our cost curve

What has changed since our January 2015 forecast?

• A downward revision to Chinese demand

• Further cost reductions incorporated into the cost curve

• No return to equilibrium in this time frame based on our current view of displacement requirements

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Appendix

Seaborne freight:

Freight is an important influence on iron ore pricing. Since benchmark prices are quoted on a CFRQingdao basis, the prices received by exporters are the quality-adjusted benchmark less freight toQingdao. Prices to destinations other than Qingdao are then recalculated on a CFR basis byadding freight from the port of origin. Freight differentials depend on the supply and demand forships in each size class and vary considerably over time. For example, spot rates for capesizevessels from Brazil to China fluctuated between US$11 and US$28 per wet tonne during thecourse of 2014. Capesize is the most common class of vessels in use in the iron ore trade.Normally, freight rates are related directly to shipping distances and inversely to vessel size.

Freight rates for Capesize iron ore carriers ($/wet tonne)

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Data: CRU Monitor

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UKRAINIAN REGULATORY FRAMEWORK

General

Ukrainian law, notably the Subsoil Law, the Law of Ukraine No. 222-VIII on Licencing ofEntrepreneurial Activities, dated 2 March 2015, which came into force on 28 June 2015 (the‘‘Licencing Law’’), the Land Code of Ukraine, dated 25 October 2001 (the ‘‘Land Code’’) and theLaw of Ukraine No. 1264-XII On Environmental Protection, dated 25 June 1991 (the‘‘Environmental Law’’) and other laws and regulations, including resolutions of the Cabinet ofMinisters of Ukraine, impose a number of restrictions on mining companies in Ukraine. Suchrestrictions relate to, amongst other things:

* the procedure for obtaining rights to mineral deposits;

* the manner in which mineral deposits are exploited;

* the protection of the environment and prevention of pollution; and

* the health and safety of workers.

The Subsoil Law provides that the subsoil (including its mineral resources) is the exclusive propertyof the Ukrainian people and may only be granted for the use of legal entities and individuals.Mining companies in Ukraine can only prospect for and mine mineral resources pursuant toproduction sharing agreements or licences and permits granted by the relevant state authorities.Exploration and mining licences are generally sold on a competitive basis to the highest bidder atan auction (tender) according to the procedure adopted by the Cabinet of Ministers of Ukraine. Asof the date of this Prospectus, the procedure for issuance of special permits for subsoil use isgoverned by the Resolution of the Cabinet of Ministers of Ukraine No. 615 dated 30 May 2011.

Exploration and mining licences

A company that intends to develop an unexplored deposit (being a deposit whose resources havenot been estimated and approved by the Ukrainian State Commission on Mineral Reserves) mustfirst obtain an exploration licence and carry out prospecting works at its own expense. The StateService of Geology and Subsoil of Ukraine (the ‘‘Geology Service’’) currently grants explorationlicences for deposits to applicants for an initial period of five years (other than oil and gasdeposits), which may be extended for two further periods of up to five years each. The licence issubject to various conditions and may be suspended or revoked in specified circumstances.Prospecting work must begin within two years of the date of issue of the licence. If the geologicalexploration reveals the existence of commercially extractable minerals, the results of the surveymust be confirmed by the State Commission on Mineral Reserves of Ukraine and registered in theState Balance of Mineral Deposits of Ukraine. The applicant may then apply for a mining licenceand a mining allotment. The State Service of Ukraine for Mining Supervision and Industrial Safetygrants a mining allotment to applicants on submission of the mining licence, estimated reservesreport and field development or extraction programme. A mining company may also apply for amining licence for a deposit which has already been explored by the state and whose reserves areregistered in the State Balance of Mineral Deposits of Ukraine, subject to payment for thegeological data. The Geology Service also grants licences for the extraction of minerals (other thanoil and gas) for an initial period of up to 20 years. The licencee may apply to extend a mininglicence. A mining licence may be subject to special conditions relating, amongst other things, to themining technology used, environmental protection, scope of work and termination of miningactivities. In general, mining activities must begin within two years of the date of issue of themining licence. Mining licences may be suspended or revoked, or an extension may be refused, inspecified circumstances, including breach of licence conditions or non-payment of fees.

See ‘‘Business Description – Regulatory and health and safety matters – Mining Licences’’ and‘‘Business Description – Regulatory and health and safety matters – Mining allotments’’ for detailsof FPM’s and FYM’s exploration and mining licences and mining allotments. Mining companies aresubject to fees for conducting exploration and mining works which are calculated based on the typeof ore, size and geological features of the deposit, duration of mining works and other factors.

Ancillary licences

In addition to licences for exploration and mining, we are required to obtain a number of ancillarylicences in connection with our operations. FPM also has licences or permits to conduct ancillaryoperations, including the following:

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* supplying electricity at an unregulated tariff;

* supplying natural gas at an unregulated tariff;

* manufacturing explosives;

* blasting;

* operating telecommunications equipment and networks and using radio frequencies; and

* construction works.

Land

Land in Ukraine is divided into categories depending on its use. Land used for mining purposesfalls within the category of industrial land. Each category of land is subject to a particular legalregime. Mining companies may obtain rights to land following the allocation of a mining allotment(see ‘‘Exploration and mining licences’’ above). Under the Land Code, land may be held for miningpurposes under rights of ownership or rights of use. Rights of use may be conveyed pursuant to agrant of rights of permanent use or a lease. Only state and municipality-owned entities and certainother entities are eligible to hold land under rights of permanent use for the relevant purposesunder the current Land Code.

FPM has the right of permanent use of an area of approximately 4,998 hectares of land on whichits mine and production facilities are situated. The right of permanent use was granted by theKomsomolsk City Council on 26 December 2000 and FPM obtained a State Act on the Right ofPermanent Use of Land for the property on 20 June 2001. FPM has bought most of the landwhere its main industrial facilities are located (totalling approximately 435 hectares).

Land tax is assessed on the land currently occupied by FPM’s mining and production facilities atthe rate of approximately UAH10.5 million per year (US$0.67 million at the average exchange ratefor the financial year 2014). FPM leases the land over the Yeristovskoye deposit pursuant to threeland lease agreements entered into with the local village council for a term of 49 years. FYMsubleases the land over the Yeristovskoye deposit pursuant to respective sublease agreementswith FPM.

Environmental standards

Laws of Ukraine (principally the Environmental Law, the Subsoil Law and other regulations) containprovisions for the control and protection of the environment in Ukraine. These laws and regulationsgovern, amongst other things, the use of natural resources, the reclamation and restoration ofmining areas, ecological safety standards including atmospheric emissions, the treatment ofindustrial effluents, the use, handling and disposal of waste and the control of water resources.The use of the subsoil in such a manner as to adversely affect the condition of the subsoil, theenvironment or public health entails the termination of mining rights.

In addition, environmental protection legislation in Ukraine provides that subsoil users (includingmining companies) are liable for damage caused by the contamination of the environment anddeterioration of natural resources as a result of their activities. Mining activities are subject tomandatory ecological inspections. Mining companies are subject to payments for ecological taxbased on the actual levels of pollutants discharged. Mining sites must be liquidated or conservedafter mining operations cease and the land affected by mining operations must be restored forfuture use.

FPM’s mining and production facilities are subject to environmental monitoring and regulation withrespect to the following:

* air quality control with respect to dust and gas emissions from the open-pit mine, crushingand processing and waste (tailings dam) operations;

* the disposal of solid waste from the mine and town-site (including hazardous material andwaste rock);

* the disposal and storage of waste from the production facilities, mine water and sewage;

* the treatment of excess tailings dam water;

* monitoring ground water quality;

* the disposal of mine waste in dumps;

* the extraction of fresh water from the Dnieper River for use in mining and production; and

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* mining operations.

FPM has all the permits required for its current operations.

In addition to the above, FPM has adopted its own system of environmental standards andenvironmental controls. We consider that we have an effective internal environmental managementand monitoring system, including a dedicated ecology unit and an ecological laboratory whichcontinually monitors air and water quality, gas filtering equipment and the working environment. Allgas emission points are equipped with filters. Dust control measures have been implemented toprevent wind-borne dust pollution from the tailings dams. Most of the dam water is recycled for usein the production process; the excess is biologically treated before being released into theenvironment.

FPM is subject to monitoring by several national and regional environmental bodies, chiefly theState Department of Environmental Protection in the Poltava region, the Poltava RegionalEnvironmental Reconnaissance Institute and the State Committee of Ukraine on WaterManagement, and to regular and random inspections by the environmental authorities, includingannual monitoring of its tailings dam and waste dumps.

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MANAGEMENT

Directors and senior management

Management structure

We are managed by the Board of Directors of the listed entity, Ferrexpo plc, which is incompliance with the rules of the UK Listing Authority, and in accordance with the UK CorporateGovernance Code has a majority of independent non-executive directors (excluding the Chairman).The Board members bring many years of resource sector experience and knowledge from outsidethe company. The Board has a corporate governance framework that includes Board committees,internal procedures and Group policies (including business ethics, anti-bribery and corruption, andwhistleblowing) which are critical to the management of the Group, and good governance to aninternational standard.

The following are the members of the Board of Directors of Ferrexpo as at the date of thisProspectus.

Michael Abrahams (Chairman)Ferrexpo

Michael Abrahams joined the Board on 14 June 2007. He ischairman of the Prudential Staff Pension Scheme. He was deputychairman of Prudential plc until May 2000, and has served aschairman and as a director of a number of quoted and unquotedcompanies. He was chairman of the London Clinic until March2012 and of imJack plc until June 2011.

Kostyantin ZhevagoChief Executive OfficerFerrexpo

Kostyantin Zhevago joined the Board as a Non-executive Directoron 14 June 2007 and was appointed Chief Executive on1 November 2008. He is ultimately the controlling shareholderof Ferrexpo.

He has been a member of the Parliament since 1998 and iscurrently a member of the Parliamentary Committee on LawPolicy. From 2002 until 2012 he was a member of the permanentdelegation of the Parliament in the Parliamentary Assembly of theEuropean Council and a member of the Ukrainian faction of theCommittee for Parliamentary Cooperation between Ukraine andthe European Union. He has previously served as chairman of themanagement board and deputy chairman of the supervisoryboard of Bank Finance and Credit. Between 1993 and 1996, hewas financial director of the F&C group of companies in Ukraine.Until February 2014 he was a non-executive director of NewWorld Resources plc, a subsidiary of CERCL Holdings Limited(formerly BXR Holdings Limited).

Kostyantin Zhevago graduated from the Kyiv State EconomicUniversity in 1996, specialising in international economics.

Christopher MaweChief Financial OfficerFerrexpo

Chris Mawe joined the Board on 7 January 2008. He qualified asa Chartered Accountant with Coopers and Lybrand in 1991,having gained a First Class Honours degree in Engineering. Hehas held senior financial positions for many years, firstly with IMIplc both in the UK and Europe, and then with Carclo plc asfinance director. Before joining Ferrexpo he was finance directorof UK Coal plc.

Oliver BaringSenior Independent DirectorFerrexpo

Oliver Baring joined the Board on 1 December 2007. He waschairman of Mwana Africa plc from its reverse takeover of AfricanGold plc in September 2005 until August 2013, and a non-executive director of BlackRock World Mining Trust plc until June2014. He retired from UBS Warburg in 2001, having led theInternational Mining Group with responsibility for Africa andEurope. Previously he had been head of the UBS Warburg miningequity sales team and was responsible for its respected coverageand sales capability. He was a partner in Rowe and Pitman beforeits merger with SG Warburg.

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He is non-executive chairman of First Africa Holdings Limited,and of Sumin Resources Limited, and a member of the AdvisoryCouncil of Sentient Resources Fund.

Wolfram KuoniIndependent DirectorFerrexpo

Wolfram Kuoni joined the Board on 14 June 2007. He is thefounder and senior partner of Kuoni Attorneys-at-Law, Zurich,Switzerland, and serves on a number of boards of directors. Hehas over 13 years of experience in investment banking. Prior to2005, he held a number of positions within UBS InvestmentBanking (Zurich and New York), including head of the EuropeanExport and Project Finance Team. He also originated andstructured cross-border acquisitions and equity capital marketstransactions.

He graduated with a law degree from the University of Berne, andholds a doctorate in law from the University of Zurich and an MBAfrom INSEAD in France. He is a member of the Zurich Bar.

Ihor MitiukovIndependent DirectorFerrexpo

Ihor Mitiukov joined the Board on 14 June 2007. He is the senioradviser and head of country for Ukraine, Morgan Stanley. He wasthe general director of the Financial Policy Institute until March2008. From 2002 to 2005 he served as Extraordinary andPlenipotentiary Ambassador of Ukraine in the United Kingdom.He also represented Ukraine in the International MaritimeOrganisation. From 1997 to 2001 he served as Minister ofFinance of Ukraine and, from 1995 to 1997, as Ukraine’s SpecialRepresentative (with Vice-Prime Ministerial status) to theEuropean Union in Brussels. In 1994, he was deputy governorof the National Bank of Ukraine and then Vice-Prime Minister ofUkraine for Banking and Finance. Prior to that, he held variouspositions at Agrarian-Industrial Bank Ukraine, and was appointedas its deputy governor in 1992.

Ihor Mitiukov graduated from the Cybernetics Department, KyivState University and has a PhD in Economics (1985) from theInstitute of Economy, Academy of Sciences (Ukraine).

Bert NackenIndependent DirectorFerrexpo

Bert Nacken joined the Board on 1 August 2014. For 34 years atBilliton and then BHP Billiton, he worked in various operationaland management roles throughout the world, including asPresident of the Cerro Matoso ferro-nickel operation inColombia (1997-2001), as President of the Minera Escondidacopper mine in Chile (2004-2007), and most recently as the ChiefOperating Officer of BHP Billiton Western Australia Iron Ore(2009-2011). Since 2011 he has worked as a consultant to anumber of mining companies.

He obtained a PhD in Chemistry at Aachen University (Germany)before joining Shell/Billiton Research BV in the Netherlands as ametallurgist.

Miklos SalamonDirectorFerrexpo

Mike Salamon joined the Board on 27 March 2009. He is a non-executive director of Gem Diamonds. From 2007 until 2012 hewas executive chairman of New World Resources plc, asubsidiary of CERCL Holdings Limited (formerly BXR HoldingsLimited) and managing director of AMCI Capital, a private equityfund. Until April 2014 he was a non-executive director of CentralRand Gold Limited. With a career spanning more than 30 years,he has extensive knowledge of the international mining andextractive industries. Between 2003 and 2006, he served as anexecutive director of BHP Billiton with responsibilities for thealuminium, copper and nickel businesses. From 2001 to 2006, healso chaired BHP Billiton’s Operating Committee, which wasaccountable for inter alia the BHP Billiton group’s health, safety

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and environment, projects, purchasing and operating excellence.In 2001, Mr. Salamon oversaw the merger integration of Billitonplc and BHP Limited. He was a co-founding director of Billiton plcin 1997 and oversaw the company’s listing on the London StockExchange in 1997. Before 1997, he held a number of positions,first at Anglo American and later in the coal divisions of Shell andGencor Ltd.

He graduated in 1975 from The University of Witwatersrand,Johannesburg with a degree in Mining Engineering (Cum Laude)and obtained an MBA from the London Business School,University of London in 1981.

Mary ReillyIndependent DirectorFerrexpo

Mary Reilly joined the Board on 27 May 2015. She is a CharteredAccountant and a former audit partner of Deloitte LLP. Ms Reillyhas non-executive experience in the London DevelopmentAgency and LOCOG. She currently chairs the Audit and RiskCommittees of the UK Department of Transport and of CrownAgents Ltd, and is a non-executive director and chairs the AuditCommittee of the NASDAQ-listed internet media companyTravelzoo Inc.

Ms Reilly is a chartered accountant who graduated with a historydegree from University College London.

The following are the members of the Board of Directors of Ferrexpo AG.

Christopher MaweChief Financial Officer

Biographical details shown on page 185.

Lucio GenoveseDirector

Lucio Genovese joined the Boards of Ferrexpo AG and ofFerrexpo on 14 June 2007. He resigned from the Board ofFerrexpo on 1 August 2014. He is the chief executive officer ofNage Capital Management, a Swiss-based advisory andproprietary company specialising in the metals and miningsector, and serves on a number of boards of directors. He isthe non-executive chairman of Firestone Diamonds plc.

He was a non-executive director of Ferrous Resources Limitedfrom 5 March 2014 until 5 June 2015, and he has previouslyserved as investment officer and a member of the board of TajInvestment Limited with responsibility for its Indian public andprivate investment portfolio. Prior to that, he held a number ofpositions with Glencore International, including senior member ofthe Copper Division, CEO of CIS Operations, manager of theMoscow office and trader in the Ferrous Division. He was anassistant manager in the Audit Division ofPriceWaterhouseCoopers in South Africa. He is a CharteredAccountant (South Africa).

Wolfram KuoniDirector


The following are the members of the Board of Directors of the Issuer.

Christopher MaweChief Financial Officer


David LeonardDirector

David Leonard joined the Group as Company Secretary in August2008. In the past 10 years, he has held company secretarial postsat Eurotunnel, P&O and Nikanor plc.

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The following are the members of the FPM Managing Board. (There is also a Supervisory Boardconsisting of Nikolay Goroshko (Chairman), Volodymyr Badagov, Kostyantin Zhevago, ChristopherMawe, Anatoly Markelov and Anatoly Trefilov).

Viktor LotousHead of Managing Board andChief Operating OfficerFPM

Viktor Lotous joined FPM in 1986. He is a graduate of Kryvy RihMining and Ore Institute, and of the Kyiv State EconomicUniversity, specialising in Finance. He became chief engineer in1997 and Head of the Managing Board and Chief OperatingOfficer in April 2007.

Nikolay KladievChief Financial Officer,FPM

Nikolay Kladiev joined the Group in June 2005 and FPM inOctober 2007. Over the course of his career he has spent severalyears as an audit manager with Ernst & Young and CFO of alarge Russian factory. He is a Chartered Accountant (UK) andholds a Masters degree in International Economic Relations fromthe Kyiv National University of Economics.

Vladimir IvanovChief Production Officer,FPM

Vladimir Ivanov joined FPM in September 1989. He graduatedfrom the Kharkov polytechnic institute in 1983. Over the course ofhis career he has spent several years as an engineer at Kharkovtractor building plant. In October 2006, he was appointed asdeputy to the Chief Operating Officer, FPM responsible for theorganisation of production and implementation of newtechnologies. In October 2007, he became Chief Engineer andin January 2009 Chief Production Officer.

Dmitriy SpatarChief Commercial Officer,FPM

Dmitriy Spatar joined FPM in February 2006. He graduated fromthe Donetsk Technical University in 1997 and the UkrainianAcademy International Trading in 1999. Over the course of hiscareer he spent several years at ZAO Energotransinvest as aspecialist in commercial matters. In February 2006 he wasappointed an Executive Director on Strategic Development andCommercial Matters. In January 2009 he was appointed ChiefCommercial Officer.

Aleksandr KrasulyaChief Technical Officer,FPM

Aleksandr Krasulya joined FPM in 1984 having graduated fromthe Dnepropetrovsk Mining Institute. In 1989 he was appointed aChief Specialist on Concentration. In April 2000, he became ChiefTechnical Officer.

Ekateryna VavakaChief Accountant,FPM

Ekateryna Vavaka joined FPM in 1974. After graduating from KyivInstitute of National Economy in 1982, she became deputy ChiefAccountant. In 1989 she was appointed Chief Accountant.

The following are the members of the Board of Directors of FME:

Jason KeysChief Marketing Officer,Ferrexpo

Jason Keys joined Ferrexpo in July 2011. He held sales andmarketing posts at Rio Tinto Coal and Iron Ore and at BHP BillitonCoal for 12 years, and then led BHP Billiton’s Iron Orecommercial marketing team for five years before joiningFerrexpo. He holds a Bachelor of Commerce degree from theUniversity of Western Australia and is a Certified ProfessionalAccountant. In June 2014 he became a graduate of the AustralianInstitute of Company Directors.

Jatla SatyanarayanaDirector, FME

Mr. Satyanarayana joined Ferrexpo in June 2012. He has beenworking in the iron ore and steel industry for over 29 years with indepth knowledge of the Middle East, North Africa and SouthAsian markets. He has worked as the Marketing and SalesManager of Gulf Industrial Investment Company (now BahrainSteel), the operator of two large iron ore pelletizing plants inBahrain for 17 years and management positions in iron ore minesin India for 8 years. Mr. Satyanarayana is the Regional MarketingManager for Ferrexpo’s MENA and South Asian markets andholds the position of Director of Ferrexpo Middle East.

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Chris MaweChief Financial Officer,Ferrexpo


Lee McMahonDirector,FME

Lee McMahon joined Ferrexpo in October 2013. In addition toworking in private practice law firms, he worked as in-housecounsel for Xstrata Coal, Xstrata Iron Ore and DP World Ports.He holds a Bachelor of Business and Bachelor of Laws from theUniversity of Technology Sydney and is a practising Solicitor ofNSW and the High Court of Australia. Lee holds the positions ofGeneral Counsel for Ferrexpo and Director of Ferrexpo MiddleEast.

Board Committees

The following are our board committees:

Audit Committee Committee members: Wolfram Kuoni (Chairman), Oliver Baring,Ihor Mitiukov.

The Audit Committee is required to meet at least three times ayear at the most appropriate times in the reporting and auditprocess. The Committee monitors the integrity of our financialstatements, including its annual and interim reports, preliminaryresults announcements and any other formal announcementrelating to its financial performance, reviewing significant financialreporting issues and judgements which they contain. The AuditCommittee is also responsible for reviewing internal controls andrisk management systems, whistleblowing procedures andinternal audit processes, and oversees the relationship with theexternal auditors, including assessing the effectiveness of theaudit process and ensuring that the auditors retain theirindependence when they provide non-audit services to Ferrexpo.

Remuneration Committee Committee members: Oliver Baring (Chairman), Wolfram Kuoni,and Ihor Mitiukov.

The Remuneration Committee is required to meet at least twice ayear and is responsible for reviewing and approving all aspects ofremuneration for the Executive Directors and members of theExecutive Committee.

Nominations Committee Committee members: Oliver Baring (Chairman), MichaelAbrahams, Wolfram Kuoni, Ihor Mitiukov, Kostyantin Zhevago.

The Nominations Committee is required to meet at least once ayear. The role of the Nominations Committee is to identify andnominate, for the approval of the Board, candidates to fill Boardvacancies, having due regard for the need for balance anddiversity, including diversity of gender; the Committee also makesrecommendations to the Board on Board composition andbalance and on succession planning. The Committee consultsregularly with the Board when filling vacancies. The ExecutiveDirectors and Chairman also assist in identifying the scope andrequired skills for the vacant role.

Corporate Safety and SocialResponsibility (‘CSR’) Committee

Committee members: Viktor Lotous, Michael Abrahams,Kostyantin Zhevago

The CSR Committee meets at least once a year. Its role is toformulate and recommend to the Board policies on corporatesafety and social responsibility issues as they affect Ferrexpo’soperations. In particular it focuses on ensuring that effectivesystems and standards, procedures and practices are in place inthe Group. The CSR Committee is responsible in conjunction with

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the Executive Committee for reviewing management’sinvestigation of incidents or accidents that occur in order toassess whether policy improvements are required.

Committee of IndependentDirectors (‘‘CID’’)

Committee members: Oliver Baring (Chairman), MichaelAbrahams, Wolfram Kuoni, Ihor Mitiukov, Bert Nacken.

The CID considers and, if appropriate, authorises on behalf of theBoard related party transactions within the terms of Chapter 11 ofthe Listing Rules and otherwise ensures compliance with Chapter11 and with the Relationship Agreement entered into betweenFevamotinico, Kostyantin Zhevago, The Minco Trust and theCompany. The CID holds delegated authority to consider and, ifappropriate, authorise transactions where there is a risk of aconflict of interests of any member of the Board under therelevant section of the Companies Act 2006.

The Executive Committee The operational management of the Company is conductedthrough the Executive Committee. This consists of the ChiefExecutive Officer, the Chief Financial Officer and other seniorexecutives with talent and experience gained from internationalresource companies. This gives Ferrexpo expertise in depthacross all of its functional areas.

The following are the members of the Executive Committee:

Kostyantin ZhevagoChief Executive OfficerFerrexpo


Christopher MaweChief Financial OfficerFerrexpo


Nikolay GoroshkoGeneral Director, FYM

Nikolay Goroshko has worked for Ferrexpo since 1984. He is agraduate of the Kyiv Institute of National Economics, specialisingin Industrial Planning. He was appointed Acting Group ChiefFinancial Officer in April 2007 and Chief Commercial Officer ofGrowth Projects in December 2007. He became CFO of FYMupon its formation in July 2008, and General Director inNovember 2012.

Nikolay KladievChief Financial Officer,FPM


Victor LotousHead of Managing Board andChief Operating OfficerFPM


Jason KeysChief Marketing Officer,Ferrexpo


Greg NortjeHead of Human ResourcesFerrexpo

Greg Nortje joined Ferrexpo in January 2014. He held a variety ofHuman Resource leadership positions with Anglo American andBHP Billiton before establishing his own human resourcesconsultancy to a range of clients across the UK. He holds aBachelor of Arts degree and a post graduate Diploma inEducation from the University of the Witwatersrand, togetherwith management qualifications from the University ofStellenbosch Business School and the Gordon Institute ofBusiness Science.

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Jim NorthGroup Chief Operating Officer,Ferrexpo

Jim North joined Ferrexpo in November 2014. He was previouslyChief Operating Officer of London Mining plc, accountable forsetting the operational and investment strategy for its operationsand projects around the world. Prior to this he held a variety ofsenior operational management roles with Rio Tinto, BHP Billitonand Mount Isa Mines, in Africa, South America and Australia,where he focused on general management, project developmentand operations improvement and turnaround, across multiplecommodities including Iron Ore, Coal, Base Metals andAluminium.

In addition the finance function is complemented by an experienced Group treasurer responsible forensuring our liquidity, the raising of external bank debt, the investment of surplus funds and thecontrol over cash.

John ArnoldGroup TreasurerFerrexpo

John Arnold is a Chartered Accountant, and prior to joiningFerrexpo in January 2006, held a position of Head of CorporateSales at JPMorgan Chase Bank (Sydney) Treasury Servicesdivision for five years. Previously he worked for Baker HughesIncorporated, a global U.S. oil field services company, where heheld many finance and treasury positions in liquiditymanagement, cross border finance, entity structuring,acquisitions, risk management, and debt finance. Prior tomoving to Sydney he worked as Regional Treasurer for AsiaPacific/Middle East Company, based in Singapore, for eightyears.

The persons listed in ‘‘Management structure’’ under ‘‘The Executive Committee’’ above and JohnArnold make up the management team (the ‘‘Management Team’’).

Certain Information on the Members of the Board of Directors and Management Team

Ferrexpo’s registered address is the business address of the members of the Board of Directors ofthe Issuer, Ferrexpo and Ferrexpo AG, the Managing Board of FPM and the Management Team:2-4 King Street, London SW1Y 6QL, United Kingdom.

No member of the Board of Directors and no Management Team member has been convicted ofany fraudulent offences, publicly incriminated, and/or sanctioned by statutory or regulatoryauthorities (including professional associations) within the past five years.

No member of the Board of Directors and no Management Team member has, within the past fiveyears, been deemed by a court or any other statutory or regulatory authority to be unfit formembership in an administrative, management, or supervisory body of a company or to be unfit toexercise management duties or to manage the business of an issuer.

There are no family relationships among the members of our Board of Directors and ManagementTeam members.

No member of the Board of Directors of the Issuer has a potential or actual conflict of interestbetween any duties owed to our members and his/her private interests and other duties.

As disclosed elsewhere in this Prospectus, the Group purchases materials and services fromentities under the common control of Kostyantin Zhevago and has entered into transactionalbanking agreements with a financial institution controlled by Kostyantin Zhevago. No other memberof the Board of Directors or the Management Team of Ferrexpo has a potential or actual conflict ofinterest between any duties owed to our members and his/her private interests and other duties.

No member of the Board of Directors of Ferrexpo AG has a potential or actual conflict of interestbetween any duties owed to our members and his/her private interests and other duties.

No member of the Managing Board of FPM has a potential or actual conflict of interest betweenany duties owed to members of the Group and his/her private interests and other duties.

No member of the Board of Directors of FME has a potential or actual conflict of interest betweenany duties owed to our members and his/her private interests and other duties.

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SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major shareholders

The total number of 10p ordinary shares in issue is 613,967,956 including 25,343,814 shares heldin treasury and 3,162,399 shares held in the employee benefit trust reserve. The number of votingshares outstanding is 585,461,743 as at 31 March 2015. The following table shows the top 10shareholders of Ferrexpo as of 31 March 2015.

Shareholder Holding % Holding

Fevamotinico S.a.r.l.(1)(2)(3) 296,077,944 50.30CERCL Holdings Limited(4) 140,456,035 23.86Norges Bank Investment Management 10,392,779 1.77Franklin Templeton Investments 9,842,590 1.67J P Morgan Asset Management 9,137,703 1.55M&G Investment Management Ltd (UK) 4,304,546 1.30Barclays Stockbrokers Ltd 5,085,478 0.86Hargreaves Lansdown AM 4,939,788 0.84Eaton Vance Investment Managers 8,743,018 0.73TD Direct Investing (Europe) 4,246,260 0.72

(1) The ultimate beneficial owner of Fevamotinico is The Minco Trust. Beneficiaries of the Minco Trust include KostyantinZhevago.

(2) On 16 September 2008, Ferrexpo repurchased 19,398,814 of its own Ordinary Shares from Fevamotinico, an entity undercommon control, at the market price of £1.673 per share for settlement on 19 September 2008. The gross consideration paidamounted to US$58.2 million.

(3) On 19 December 2013, Fevamotinico disposed of shares, reducing its holding to 50.30%.

(4) On 27 February 2014 BXR Holdings Limited (now CERCL Holdings Limited) disposed of shares, reducing its holding to23.86%.

At 31 March 2015 Ferrexpo’s freefloat was 25.84%.

Save as disclosed above, in so far as is known to us, there is no other person who as at the dateof this Prospectus is, directly or indirectly, interested in 3% or more of our issued share capital, orof any other person who can, will or could, directly or indirectly, jointly or severally, exercise controlover us.

The Issuer’s total number of £1 shares outstanding is 550,000.

Shareholder Litigation

In the ordinary course of business, the Group is subject to legal actions and complaints.Management believes that the ultimate liability, if any, arising from such actions or complaints willnot have a material adverse effect on the financial condition or the results of future operations ofthe Group.

The Group is currently involved in a share dispute which commenced in 2005 and which wasdisclosed and, as appropriate, updated in the Group’s 2007 IPO prospectus and subsequentinterim and annual report and accounts as well as in its Eurobond prospectuses.

In 2005, a former shareholder (the claimant) in FPM brought proceedings, in the Ukrainian courts,seeking to invalidate the share sale and purchase agreements pursuant to which a 40.19% stakein FPM was sold to nominee companies that were previously ultimately controlled by KostyantinZhevago, amongst other parties. This 40.19% stake has subsequently been diluted to 14%following share issues by FPM.

Following various court rulings in favour of the defendant in some cases and the claimant inothers, on 21 April 2010 the High Commercial Court of Ukraine granted the cassation complaint ofthe former shareholder and invalidated the respective share sale and purchase agreements withoutruling on any consequences of such invalidity.

On 2 December 2014, the Supreme Court reversed the April 2010 judgment of the HighCommercial Court of Ukraine, which had previously invalidated the SPA, and remitted the case forlegal review by the High Commercial Court of Ukraine. On 16 February 2015, the High CommercialCourt of Ukraine dismissed the claims of the former shareholders of FPM in relation to theinvalidation of the SPA and upheld the decisions of the commercial courts of the first and secondinstances. Accordingly the SPA remains valid.

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On 6 October 2011, the former shareholder filed a separate claim in Ukraine alleging that as aresult of the invalidity of the share sale and purchase agreements with respect to the 40.19% stakein FPM, their rights were infringed by the capital increases approved at FPM’s general shareholdermeeting on 20 November 2002 and all other general meetings relating to changes to FPM’s chartercapital. Accordingly, the claimants asked that the court invalidate the decisions taken at FPM’sgeneral shareholder meetings and to restore their status as 40.19% shareholders of FPM as at20 November 2002 and to cancel all share issues that took place after 20 November 2002.

On 22 November 2011, Ferrexpo AG filed a claim against the claimants at the High Court ofJustice in London seeking a confirmation of ownership in FPM shares. The claim was launched inorder to take an active step outside Ukraine to resolve the long-running dispute. By a judgmentdated 3 April 2012, the proceedings in the UK were stayed while the case continues in Ukraine.

On 26 March 2013 the Kyiv City Commercial Court issued an injunction to suspend trading of FPMshares.

On 20 October 2014, Kyiv City Commercial Court rendered a judgment in the case filed on6 October 2011 and dismissed the claims in full. The court concluded amongst other things thatrestitution of the status quo ante of the shareholding position as sought by the claimants is notpossible under Ukrainian law. The court also cancelled the injunction granted on 26 March 2013.This judgment was confirmed by the Kyiv Appeal Commercial Court and the High CommercialCourt of Ukraine on 28 January 2015 and 14 April 2015, respectively.

In both proceedings the claimants have the right of appeal with the Supreme Court of Ukraine.However, after having taken legal advice, the management of the Group believes that risks relatedto these court proceedings are remote. In the light of the unpredictability surrounding the operationand independence of Ukrainian courts, including those associated with the Ukrainian legal systemin general, a risk exists, however remote, that the claimants may ultimately prevail in this disputeand the Group’s ownership of the relevant interest in FPM may be successfully challenged.

Relationship Agreement

In June 2007, our majority shareholder, Fevamotinico, a company owned by The Minco Trust (oneof the beneficiaries of which is Kostyantin Zhevago), Kostyantin Zhevago, The Minco Trust andFerrexpo entered into an agreement (the ‘‘Relationship Agreement’’) which regulates the ongoingrelationship between them to ensure that Ferrexpo is capable of carrying on its businessindependently of Fevamotinico and Kostyantin Zhevago, and to ensure that transactions andrelationships between Fevamotinico, Kostyantin Zhevago, and Ferrexpo are at arm’s length and ona commercial basis. The Relationship Agreement shall continue for so long as (a) the OrdinaryShares of Ferrexpo are listed on the Official List of the Financial Conduct Authority and traded onthe London Stock Exchange and (b) Fevamotinico or Kostyantin Zhevago control directly orindirectly a shareholding of at least 24.9% in the Company. The Relationship Agreement wassubsequently amended in October 2008 at the time of the appointment of Kostyantin Zhevago asCEO, and was further amended in November 2014 to comply with changes to the Listing Rules.

Under the Relationship Agreement, as amended, the Company, Fevamotinico, The Minco Trust andKostyantin Zhevago agree, inter alia:

(i) that Ferrexpo shall have its own management and that it shall operate and make decisionsfor the benefit of all of the Shareholders (including Fevamotinico) as a whole andindependently of Fevamotinico, and Kostyantin Zhevago at all times;

(ii) to ensure that Ferrexpo is capable, at all times, of carrying on its business independently ofFevamotinico, and Kostyantin Zhevago, but not so as to prevent Kostyantin Zhevago fromserving as CEO;

(iii) that all transactions and arrangements between Fevamotinico, Kostyantin Zhevago, The MincoTrust, Alina Zhevago and Oleg Zhevago and/or any of their associates and any member ofthe Group (as the case may be) shall be conducted at arm’s length and on normalcommercial terms;

(iv) that Fevamotinico, Kostyantin Zhevago, The Minco Trust, Alina Zhevago, Oleg Zhevago norany of their associates will: (i) not take any action that would have the effect of preventingFerrexpo from complying with its obligations under the Listing Rules; or (ii) propose orprocure the proposal of a shareholder resolution which is intended or appears to be intendedto circumvent the proper application of the Listing Rules;

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(v) there shall at all times be a majority of Directors independent of Fevamotinico, and KostyantinZhevago (and who are therefore not a director or officer of Fevamotinico or an employee ofeither of them and free from any business or other relationship, association or interest witheither of them) (the Independent Directors) on the Board;

(vi) that the quorum for all Board meetings shall include either Kostyantin Zhevago (while he isCEO) or a Representative Director (being Kostyantin Zhevago or his nominee as arepresentative of Fevamotinico), unless such requirement is waived by Kostyantin Zhevago orthe Representative Director as applicable, and that such quorum, in cases where KostyantinZhevago or the Representative Director is not permitted by law or under the Articles ofAssociation of Ferrexpo to count towards the quorum, shall be three Independent Directors;

(vii) Fevamotinico will vote so that any Independent Director will (insofar as may be necessary toensure that there continues to be a majority of Independent Directors on the Board) bereplaced by a new executive or non-executive director, as the case may be, who is also anIndependent Director;

(viii) unless the Independent Directors agree otherwise, only the Independent Directors shall voteon any resolutions of the Board to approve any aspect of Ferrexpo’s involvement in orenforcement of any arrangements, agreements or transactions with Fevamotinico, andKostyantin Zhevago and/or any of their associates and any of our members (as the case maybe);

(ix) that Fevamotinico undertakes to, and Kostyantin Zhevago undertakes to procure, so far as hehas power to do so (by giving appropriate directions to The Minco Trust or otherwise), thatFevamotinico shall exercise its voting rights or other rights in favour of our being managed inaccordance with the Listing Rules, Prospectus Rules and Disclosure and Transparency Rulesand the principles of good governance set out in the UK Corporate Governance Code;

(x) that Fevamotinico undertakes to, and Kostyantin Zhevago undertakes to procure, so far as hehas power to do so (by giving appropriate directions to The Minco Trust or otherwise), thatFevamotinico shall observe the provisions in the Articles of Association;

(xi) that Fevamotinico shall have the same voting rights as all other Shareholders;

(xii) that Fevamotinico undertakes not to, and Kostyantin Zhevago undertakes to procure, so faras he has power to do so (by giving appropriate directions to The Minco Trust or otherwise),that Fevamotinico shall not exercise its voting or other rights and powers to procure anyamendment to our Articles of Association which would be inconsistent with the terms of theRelationship Agreement;

(xiii) that each party will keep confidential any information which it acquires in connection with theRelationship Agreement and subject to customary exceptions shall not disclose or make useof such information for any purpose whatsoever other than for the purposes of properlyperforming its obligations under the Relationship Agreement;

(xiv) that Kostyantin Zhevago represents and warrants that he does not directly or indirectly(whether through Fevamotinico or otherwise), own or have any form of ownership interest inany company, business, business operation or other entity or enterprise which is involved inthe mining, processing, distributing, selling, supplying or dealing in iron ore and which iscarried on in whole or in substantial part within Ukraine (a ‘‘Ukrainian Iron Ore Company’’)at the date of the Relationship Agreement, other than (i) through Ferrexpo or any othermember of the Group; (ii) through Vostok-Ruda Ltd., or any other enterprise which owns andoperates the Nova iron ore mine and concentrator; or (iii) where iron ore is produced as a by-product or is ancillary but is not the primary, material or substantial part of the relevantbusiness and is therefore agreed by the parties not to be a direct competitor of the Companyor any member of the Group;

(xv) that for a period of two years following listing on the London Stock Exchange in June 2007,Kostyantin Zhevago undertakes that:

(A) he shall not, directly or indirectly, become Ferrexpo’s direct competitor (save as providedfor in paragraph (xiv) above),

(B) he and/or Fevamotinico will give Ferrexpo the first right of refusal to enter into anytransaction with, invest in or acquire any interest in any Ukrainian Iron Ore Company(other than transactions where the production of iron ore is simply a by-product or is

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ancillary but is not the primary, material or substantial part of the business) such that itwould be a direct competitor of the Company or any member of its Group (each a‘‘Competing Transaction’’) in preference to any other party.

Ferrexpo shall be given a period of six months to resolve to proceed with any CompetingTransaction that is offered to it or decline to do so. If Ferrexpo elects not to proceed with aCompeting Transaction, or is unable to complete a Competing Transaction within a period of12 months of the Competing Transaction having been offered to it, each of Fevamotinico andKostyantin Zhevago shall have fulfiled its obligations above (and in the case of KostyantinZhevago, any separate but similar obligations he may have as a director) provided, however,that Kostyantin Zhevago shall remain bound by the undertaking at paragraph (A) above inrelation to such Competing Transaction;

(xvi) that Fevamotinico and Kostyantin Zhevago shall not solicit for employment any of Ferrexpo’ssenior executives, or materially increase the limited amount of time which Ferrexpo haspermitted the Executive Directors to spend on other business interests connected withKostyantin Zhevago and his associates; and

(xvii) that Fevamotinico and Kostyantin Zhevago undertake not to, and each procure so far as theyare properly able that their associates shall not, do, cause or authorise to be done anythingwhich will or may impair, damage, devalue or otherwise be detrimental to the reputation orgoodwill associated with us, any form of intellectual property registered or owned by anymember of the Group and the Ferrexpo brand or bring us or any member of the Group or theFerrexpo brand into disrepute.

Related party transactions

The Issuer is a wholly owned subsidiary of Ferrexpo as of the date of this Prospectus.

During the periods presented the Group entered into arm’s length transactions with entities underthe common control of Kostyantin Zhevago, a director of Ferrexpo and a beneficiary of the ultimatemajority shareholder of Ferrexpo, and with associated companies and with other related parties.Management considers that the Group has appropriate procedures in place to identify and properlydisclose transactions with the related parties.

Entities under common control

All entities controlled by Kostyantin Zhevago are considered to be entities under common control.We purchase materials and services from entities under common control and entered intotransactional banking agreements with a financial institution controlled by Kostyantin Zhevago. See‘‘– Transactional banking agreements’’.

Associated companies and other related parties

We hold a 48.6% interest in TIS-Ruda, a Ukrainian company operating a port located in Odessaon the Black Sea which provides selling and distribution services to the Group.

Other related parties are principally those entities controlled by Anatoly Trefilov.

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All related party transactions entered into by the Group during the periods presented aresummarised in the following tables:


31 March

2012 2013 2014 2014 2015

(US$ millions)Other sales 1.3 1.1 1.2 0.3 0.3

Total related party transactionswithin revenue 1.3 1.1 1.2 0.3 0.3

Materials 6.0 13.9 12.4 3.6 1.5Purchased concentrate and otheritems for resale 22.0 7.1 0.8 — 0.3Spare parts and consumables 7.9 2.8 2.4 0.5 0.2Gas 9.6 33.6 39.3 7.8 7.9Fuel 1.4 — — — —

Total related partiestransactions within cost of sales 46.9 57.4 54.9 11.9 9.9

Selling and distribution expenses 38.2 42.1 41.3 11.3 9.7General and administrationexpenses. 1.7 1.8 1.3 0.3 0.2

Total related partiestransactions within expenses 86.8 101.3 97.5 23.5 19.8

Finance income 0.9 1.7 1.8 0.4 0.6Finance expenses (0.7) (0.2) (0.1) (0.0) (0.0)

Net finance income 0.2 1.5 1.7 0.4 0.6

Material transactions

As at the date of this Prospectus, we have entered into arm’s length transactions with entitiesunder the common control of Kostyantin Zhevago and with other related parties. We believe wehave appropriate procedures in place to identify and properly disclose transactions with relatedparties (see above). A description of the most material transactions which are in aggregate overUS$0.2 million (on an expected annualised basis) in the current or comparative periods is givenbelow.

Other sales

We made sales of power, steam and water and other materials to Kislorod PCC for US$0.0 millionin the three months ended 31 March 2015, compared to US$0.0 million in the same period in2014. Such sales totalled US$0.2 million in the year ended 31 December 2014 compared toUS$0.1 million and US$0.2 million for the years ended 31 December 2013 and 2012, respectively.Additionally, we generated income from premises leased to Kislorod PCC of US$0.0 million in thethree months ended 31 March 2015 and US$0.1 million for the comparative period in 2014,compared to US$0.3 million, US$0.2 million and US$0.2 million for the years ended 31 December2014, 2013 and 2012.

We received US$0.0 million and US$0.0 million for the three months ended 31 March 2015 and2014 from Vorskla Steel for the sale of sand. Receipts for sales of sand amounted to US$0.0million, US$0.0 million and US$0.5 million for the years ended 31 December 2014, 2013 and 2012,respectively.

We made sales of materials and services to Slavutich Ruda Ltd. amounting to US$0.2 million andUS$0.2 million for the three months ended 31 March 2015 and 2014. For the years ended

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31 December 2014, 2013 and 2012 these sales totalled US$0.5 million, US$0.5 million andUS$0.1 million, respectively.

Purchase of material

We purchased compressed air, oxygen and metal scrap from Kislorod PCC totalling US$1.0 millionand US$1.5 million during the three months ended 31 March 2015 and 2014, respectively, andUS$5.3 million during the year ended 31 December 2014 compared to US$6.0 million andUS$5.5 million for the years ended 31 December 2013 and 2012.

We also purchased cast iron balls from AutoKraz Holding Co and OJSC Uzhgorodsky Turbogas.During the three months ended 31 March 2015 such purchases totalled US$0.3 million andUS$0.2 million, respectively, compared to US$1.7 million and US$0.3 million in the comparativeperiod in 2014. Such purchases totalled US$5.5 million and US$1.2 million and US$6.9 million andUS$0.7 million during the years ended 31 December 2014 and 2013 for the two related parties.The purchases from AutoKraz Holding Co. in the year ended 31 December 2012 totalledUS$5.3 million. No such purchases were made in the year ended 31 December 2012 from OJSCUzhgorodsky Turbogas.

Purchase of concentrate and other items for resale

Purchases of concentrate and other items for resale from Vostok Ruda for US$0.3 million and nilfor the periods ended 31 March 2015 and 2014. Purchases of US$0.8 million, US$7.1 million andUS$21.9 million for the periods ended 31 December 2014, 2013 and 2012, respectively. Thepurchased concentrate was used in the production of iron ore pellets during the periods withsurplus pelletising capacities and when market prices allowed to earn reasonable margins on thethird party concentrate business.

Purchase of spare parts and consumables

We purchased spare parts from CJSC Kiev Shipbuilding and Ship Repair Plant (‘‘KSRSSZ’’) in theamount of US$0.0 million during the three months ended 31 March 2015 and US$0.1 million in thecomparative period in 2014. Such purchases totalled US$0.8 million, US$0.9 million andUS$0.8 million in the years ended 31 December 2014, 2013 and 2012, respectively. Further spareparts in the amount of US$0.0 million were procured from Valsa GTV during the three monthsended 31 March 2015 (US$0.3 million in the same period in 2014). The purchases from ValsaGTV for the years ended 31 December 2014, 2013 and 2012 totalled to US$0.7 million,US$1.2 million and US$0.7 million, respectively.

We purchased ferromanganese from Raw and Refined Commodities AG for US$0.1 million andUS$0.1 million during the three months ended 31 March 2015 and 2014. The purchases for theyears ended 31 December 2014, 2013 and 2012 totalled US$0.5 million, US$0.4 million andUS$0.3 million, respectively.

Purchase of natural gas and fuel

Procurement of natural gas from OJSC Ukrzakordongeologia totalled US$7.9 million andUS$7.8 million for the three months ended 31 March 2015 and 2014 and US$39.3 million for theyear ended 31 December 2014 (US$33.6 million and US$9.6 million for the same periods in 2013and 2012). The purchases were made at rates which are competitive to those from Naftogaz.

We purchased fuel from OJSC Ukrzakordongeologia during the year ended 31 December 2012 inthe amount of US$1.4 million. No such purchases were made during the disclosed periods in 2015,2014 and 2013.


We purchase transhipment services, including port charges, handling costs, agent commissions andstorage costs, from TIS-Ruda. The purchased port services totalled US$4.9 million andUS$5.9 million for the three months ended 31 March 2015 and 2014. The total of servicesprovided by TIS Ruda amounted to US$24.1 million, US$22.6 million and US$20.5 million for theyears ended 31 December 2014, 2013 and 2012, respectively. The increase of the purchased portservices is due to higher volumes shipped to China and Japan during these years.

We also purchase logistic management services, mainly related to custom clearance andcoordination of rail transit, from Slavutich-Ruda Ltd., an entity under the control of Anatoly Trefilov.The services purchased in the three months ended 31 March 2015 amounted to US$2.0 million,

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compared to US$2.5 million in the same period in 2014. Slavutich-Ruda Ltd. earned commissionsof US$0.1 million and US$0.2 million. The purchased logistic management services amounted toUS$6.0 million, US$8.3 million and US$8.4 million for the years ended 31 December 2014, 2013and 2012.

We have engaged FC Vorskla for advertisement, marketing and general public relations relatedservices under a contract initially entered into in October 2005 and last re-executed in September2014. We paid US$2.7 million and US$2.9 million to FC Vorskla during the three months ended31 March 2015 and 2014. The purchased services for the years ended 31 December 2014, 2013and 2012 totalled US$11.1 million, US$11.0 million and US$9.3 million.


Insurance premiums of US$0.1 million and US$0.1 million were paid to ASK Omega for workmen’sinsurance and general cover during the three months ended 31 March 2015 and 2014. Thepremiums paid in the years ended 31 December 2014, 2013 and 2012 totalled US$0.6 million,US$0.7 million and US$0.7 million, respectively. We paid fees for bank services in the amount ofUS$0.1 million and US$0.1 million to Bank F&C for bank services during the three months ended31 March 2015 and 2014. Total fees of US$0.4 million were paid for each of the years ended31 December 2014, 2013 and 2012. We further paid fees in the amount of US$0.4 million to F&CLex and Legal Partners for legal services provided during the year ended 31 December 2013.Effective 1 July 2013, both entities were no longer considered to be a related party. During theyear ended 31 December 2012, the legal services provided by F&C Lex and Legal Partnerstotalled US$0.1 million.


We enter into transactional banking arrangements with Bank F&C, which is under the commoncontrol of Kostyantin Zhevago. See ‘‘– Transactional banking arrangements’’ for further information.

We generated interest income on cash and cash equivalent balances with Bank F&C in theamount of US$0.6 million and US$0.1 million during the three months ended 31 March 2015 and2014. The generated interest income for the years ended 31 December 2014, 2013 and 2012totalled US$1.8 million, US$1.7 million and US$0.9 million.

We paid zero bank and interest expenses to Bank F&C during the three months ended 31 March2015 and 2014. The expenses paid in the years ended 31 December 2014, 2013 and 2012 totalledUS$0.0 million, US$0.2 million and US$0.7 million, respectively.

Purchases of property, plant and equipment and investments

The table below details the transactions of a capital nature which were undertaken between Groupcompanies and entities under common control, associated companies and other related partiesduring the periods presented.


31 March

(US$ millions)

2012 2013 2014 2014 2015

Purchases with independent fairand reasonable confirmation 2.7 — 0.5 — —Purchases with shareholderapproval 55.0 18.1 0.9 — —Purchases in the ordinary course ofbusiness 1.0 3.7 2.7 1.2 0.1

Total purchases of property, plantand equipment 58.7 21.8 4.1 1.2 0.1

Effective 1 October 2012, the Listing Rules were amended to provide that an independent, fair andreasonable confirmation would not be required for any transaction in the ordinary course ofbusiness. Previously, the Listing Rules had included an exception to the requirement for an

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independent, fair and reasonable confirmation in relation to ordinary course transactions providedthat the transaction was of a revenue nature. Prior to 1 October 2012, a fair and reasonableconfirmation therefore had to be obtained for all transactions of a capital nature, even if they werein the ordinary course of business.

Three months ended 31 March 2015

During the period ended 31 March 2015, the Group entered into various transactions of a capitalnature with related parties totalling US$0.1 million. These transactions were in the ordinary courseof business. No transaction exceeded the US$0.2 million threshold set for a detailed description.

Subsequent to the reporting period ended 31 March 2015, the Group received an additional 27 railcars totalling US$0.8 million (at the prevailing exchange rate at delivery), which were ordered inFebruary 2014. See below for further information.

Year ended 31 December 2014

During the financial year 2014, the Group entered into various transactions of a capital nature withrelated parties totalling to US$2.7 million. These transactions were in the ordinary course ofbusiness. Individual transactions of a capital nature which exceeded US$0.2 million are listedbelow:

* The Group procured goods and services totalling US$1.8 million from OJSC BerdichevMachine-Building Plant Progress for various ongoing projects and design documentationservices from OJSC DIOS totalling US$0.6 million.

* In February 2014, the Group ordered 300 rail cars from PJSC Stakhanov Railcar Company,of which 233 rail cars amounting to US$12.4 million were under the authority of theshareholder approval obtained on 24 May 2012 under the previous listing rules (see below). Afurther 67 rail cars amounting to US$3.6 million were ordered in the ordinary course ofbusiness. A total prepayment of US$11.9 million (US$4.4 million at the prevailing exchangerate as at 31 December 2014) was made in relation to these rail cars. The rail cars were duefor delivery in the second half of the financial year 2014. However, as a consequence of theongoing conflict in the eastern part of Ukraine, only 25 rail cars totalling US$0.9 million (at theprevailing exchange rate at delivery) were delivered and put into operation during 2014.These purchased rail cars are under the authority of the shareholder approval mentionedabove.

In August 2014, the Group acquired, in two separate transactions, a railway line and an associatedpower line from LLC Vorskla Steel totalling US$0.5 million. An independent confirmation wasobtained and the transaction was announced in accordance with the UK Listing Rules as thetransaction was not considered to be in the ordinary course of business.


During the financial year 2013, the Group entered into various transactions of a capital nature withrelated parties totalling US$3.7 million. These transactions were in the ordinary course of businessand on an arm’s length basis. Individual transactions which exceeded US$0.2 million are listedbelow:

* In January 2013, we procured three railway platforms in the amount of US$0.2 million fromPJSC Stakhanov Railcar Company.

* In April 2013, we entered into a contract with OJSC Uzhgorodsky Turbogas for the productionand supply of deslimers for a new floatation section in the amount of US$0.6 million.

* In June and September 2013, we procured metal works from Berdichev Machine-BuildingPlant Progress (LLC ‘‘Progress Group’’) in the amount of US$1.3 million and US$1.1 million inconnection with the construction of a new crushing section.

We received shareholder approval on 24 May 2012 for an option to purchase up to 500 rail carsfrom PJSC Stakhanov Railcar Company between the date of the approval and 31 December 2014.In February 2013, we exercised the right under this option to order 267 rail cars. These rail cars,amounting to US$18.1 million, were delivered and taken into operation during the financial year2013 and increased the total fleet of rail cars from 1,933 units to 2,225 units as at 31 December2014.

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Effective 1 October 2012, the Listing Rules were amended to provide that an independent, fair andreasonable confirmation would not be required for any transaction in the ordinary course ofbusiness, irrespective of whether the transaction was of a revenue or capital nature.

* During the period from October to December 2012, we entered into various transactions withrelated parties totalling US$0.7 million. These transactions were in the ordinary course ofbusiness and on an arm’s length basis and did not require independent fair and reasonableconfirmations under the amended Listing Rules.

Prior to the amendment of the Listing Rules, we entered into the following transactions withrelated parties that required independent fair and reasonable confirmations in accordance withthe Listing Rules as the transactions were of a capital nature.

* In September 2012, we procured metal works from Berdichev Machine-Building PlantProgress (LLC ‘‘Progress Group’’) in the amount of US$1.0 million in connection with theconstruction of the floatation equipment.

* In July and August 2012, we entered into various smaller transactions with related partiestotalling US$0.4 million. No independent fair and reasonable confirmation was required asthese transactions did not exceed the relevant aggregated threshold at the point of time ofthe transactions.

* In July 2012, we procured design documentation services in the amount of US$0.2 millionfrom OJSC DIOS in relation to replacement of mixers at the pellet plant complex and theconstruction of a dust aspiration system. Deslimer equipment in the amount of US$0.7 millionwas procured from KSRSSZ and Berdichev Machine-Building Plant Progress (LLC ‘‘ProgressGroup’’) for a beneficiation plant.

* In March 2012, project management services in the amount of US$0.1 million were procuredfrom Vorskla Steel Ltd. in connection with the construction of service facilities and technicaldesign documentation amounting to US$0.6 million from OJSC DIOS related to the update ofthe beneficiation plant.

* In February 2012, we procured design documentation from OJSC DIOS in the amount ofUS$0.02 million in relation to the construction of roads and loading facilities.

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Balances with related parties

The outstanding balances, as a result of transactions with related parties, for the periods presentedare shown in the table below:

Year ended 31 December (audited)Three months ended31 March (unaudited)

(US$ millions)

2012 2013 2014 2014 2015

Available-for-sale financial assets 0.5 0.4 0.0 0.3 0.0Other non-current assets 2.1 7.4 4.7 5.5 3.1Prepayments for property, plantand equipment 0.6 1.5 0.6 10.0 4.9

Total non-current assets 3.2 9.3 5.3 15.8 8.0

Trade and other receivables 0.8 1.2 0.8 1.0 0.7Prepayments and other currentassets 1.5 1.5 0.8 2.4 1.0Cash and cash equivalents 139.3 143.0 161.5 138.8 164.7

Total current assets 141.6 145.7 163.1 142.2 166.4

Trade and other payables 1.8 3.4 2.1 1.5 2.3

Current liabilities 1.8 3.4 2.1 1.5 2.3

A description of the most material balances which are over US$0.2 million in the periods presentedis given below:

Available-for-sale financial assets

The balances of our available-for-sale assets in the periods disclosed in the table above comprisedour shareholding in PJSC Stakhanov Railcar Company (1.1%) and Vostok Ruda Ltd. (1.1%). Theultimate beneficial owner of these companies is Kostyantin Zhevago. PJSC Stakhanov RailcarCompany is listed on the Ukrainian stock exchange. The shareholding remained unchanged duringthe periods disclosed and the changes of the values are related to fair value adjustments andimpairments. The fair value of the investment in PJSC Stakhanov Railcar Company was US$0.0mas at 31 March 2015 and US$0.3 million as at the end of the comparative period in 2014. Thecorresponding values were US$0.0 million, US$0.4 million and US$0.5 million as at 31 December2014, 2013 and 2012, respectively. The investment in Vostok Ruda was subject to an impairmentof US$0.4 million recorded during the year ended 31 December 2012. The investment in LLC Atol(9.95%) was fully impaired during a period previous to those disclosed in the table above.

Prepayments for property, plant and equipment

The balance as at 31 March 2015 includes a prepayment of US$4.5 million made to PJSCStakhanov Railcar Company for 300 rail cars (US$9.4 million as at 31 March 2014). As at 31 March2015, the Group received 25 rail cars and another 27 rail cars subsequent to the reporting date.Due to continued uncertainty surrounding the delivery of the remaining number of rail cars orrecovery of the prepayment, the Group recorded an allowance for the full outstanding amount as at31 March 2015 and 31 December 2014. No allowance was recorded as at 31 March 2014. Nosuch prepayment was made as at 31 December 2013 and 2012. Further information in respect ofthe rail cars purchased from PJSC Stakhanov Railcar Company is provided above in the section‘‘Purchases of property, plant and equipment and investments’’.

We further made prepayments to Berdichev Machine-Building Plant Progress (LLC ‘‘ProgressGroup’’) in the amount of US$0.4 million and US$0.4 million as at 31 March 2015 and 2014,respectively, for property, plant and equipment procured. The balance of prepayments made toBerdichev Machine-Building Plant Progress (LLC ‘‘Progress Group’’) amounted to US$0.5 million,US$1.4 million and US$0.3 million as at 31 December 2014, 2013 and 2012, respectively.

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Other non-current assets

Other non-current assets are related to our social loyalty programme started in December 2011.Under this programme, Bank F&C provides mortgages and loans to employees of the Group forthe acquisition, construction and renovation of apartments in Ukraine. FPM and FYM act asguarantors for the mortgages and loans provided by the bank and have deposited US$3.1 millionand US$5.5 million as at 31 March 2015 and 2014. The amounts in the deposit wereUS$4.7 million, US$7.4 million and US$2.1 million as at 31 December 2014, 2013 and 2012,respectively. Detailed information on the social loyalty programme is provided in the ‘‘CorporateSocial Responsibility’’ section of this Prospectus.

Trade and other receivables

As at 31 March 2015 and 2014, trade and other receivables included outstanding amounts ofUS$0.2 million and US$0.3 million from Vorskla Steel Ltd. The amounts outstanding from thisrelated party were US$0.2 million, US$0.4 million and US$0.3 million as at 31 December 2014,2013 and 2012, respectively.

The balance of trade and other receivables as at 31 March 2015 and 2014 also includedoutstanding amounts due from Kislorod PCC in the amount of US$0.3 million and US$0.4 million inrelation to the sale of power, steam and water. The amounts outstanding at 31 December 2014,2013 and 2012 were US$0.3 million, US$0.5 million and US$0.5 million, respectively.

Prepayments and other current assets

We made prepayments in the amount of US$0.0 million and US$1.3 million to TIS Ruda LLC as at31 March 2015 and 2014 for transhipment services. No prepayments were made as at31 December 2014. The prepayments amounted to US$1.2 million and US$1.3 million as at31 December 2013 and 2012.

As at 31 March 2014, prepayments in the amount of US$0.6 million were made to OJSCUkrzakordongeologia for gas supplies. No prepayments were made as at 31 March 2015 as wellas at 31 December 2014, 2013 and 2012, respectively.

As at 31 March 2015 and 2014, prepayments in the amount of US$0.3 million and US$0.2 millionwere made to Slavutich Ruda Ltd. for logistic management services. The prepayment amounts asat 31 December 2014, 2013 and 2012 were US$0.6 million, US$0.2 million and US$0.0 million,respectively.

As at 31 March 2015, prepayments of US$0.6 million were made to Vostok Ruda Ltd. for thepurchase of concentrate. No prepayments were made as at 31 March 2014 or as at 31 December2014, 2013 and 2012.

Trade and other payables

As at 31 March 2015 and 2014, trade and other payables included outstanding amounts ofUS$0.4 million and US$0.5 million, respectively, for compressed air and oxygen purchased fromKislorod PCC. The amounts due to Kislorod PCC as at 31 December 2014, 2013 and 2012 wereUS$0.5 million, US$0.6 million and US$0.6 million, respectively.

The balance as at 31 March 2014 included an amount of US$0.2 million due to AutoKraz HoldingCo. in relation to the purchase of cast iron balls. No amount was due as at 31 March 2015. Theamounts due as at 31 December 2014 and 2013 were US$0.2 and US$0.2 million, respectively.No amounts were due for the year ended 31 December 2012.

No amounts were due to Berdichev Machine-Building Plant Progress (LLC ‘‘Progress Group’’) as at31 March 2015 and 2014 in relation to the purchase of spare parts. US$0.0 million, US$0.3 millionand US$0.0 million were due as at 31 December 2014, 2013 and 2012, respectively.

As at 31 March 2015 and 2014, trade and other payables included outstanding amounts ofUS$0.2 million and US$0.3 million, respectively, for distribution services provided by SlavutichRuda Ltd. The amounts due as at 31 December 2014, 2013 and 2012 were US$0.5 million,US$0.3 million and US$0.1 million, respectively.

As at 31 March 2015 and 2014, US$0.0 million and US$0.2 million were due to Valsa GTV. Theamounts due as at 31 December 2014, 2013 and 2012 were US$0.1 million, US$0.1 million andUS$0.0 million, respectively.

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As at 31 December 2014, US$0.4 million was due to PJSC Stakhanov Railcar Company in relationto rail car purchases. No amounts were due as at 31 March 2015 and 2014 and the years ended31 December 2013 and 2012.

The balance as at 31 March 2015 includes US$1.5 million due to OJSC Ukrzakordongeologia forthe procurement of gas. The balance as at 31 December 2013 and 2012 included US$1.7 millionand US$0.6 million, respectively. No amounts were due as at 31 March 2014 and 31 December2014.

Transactional banking arrangements

Bank F&C is registered with the NBU and is our transactional bank in Ukraine for receiving anddisbursing payments under Group intercompany loans to FPM, FYM and FBM. The bank isbeneficially owned by Kostyantin Zhevago. As at 31 March 2015 and 2014, our balance of cashand cash equivalents with Bank F&C was US$164.7 million and US$138.8 million compared withUS$161.5 million, US$143.0 million and US$139.3 million as at 31 December 2014, 2013 and2012, respectively.

On 25 May 2013, the Group entered into a new uncommitted multicurrency revolving loan facilityagreement and a documentary credit facility agreement with Bank F&C which will expire on 29 May2016. The aggregate maximum limit of these facilities amounts to UAH80 million (31 March 2015:US$3.4 million; 31 March 2014: US$7.3 million; 31 December 2014: US$5.1 million) and fixedassets are pledged. The total value of pledges under the terms of the loan facility agreements wasUS$5.0 million as of the date of the signing of the agreements. The terms and conditions of bothfacilities were the subject of an independent fair and reasonable confirmation. See ‘‘– Descriptionof Other Indebtedness – Finance and Credit multicurrency revolving loan and documentary creditfacilities’’.

Bank F&C provides mortgages and loans to employees of the Group for the acquisition,construction and renovation of apartments in Ukraine. This is part of a social loyalty programmestarted by the Group in December 2011 allowing certain employees of the Group to borrow atpreferential interest rates. FPM and FYM act as guarantors for the bank’s loans to the employeesof the Group and we have deposited US$3.1 million and US$5.5 million at Bank F&C as securityas at 31 March 2015 and 2014. The balances in the deposit as at 31 December 2014, 2013 and2012 were US$4.7 million, US$7.4 million and US$2.1 million, respectively. The interest ratemargin earned by Bank F&C covers the costs of administrating the mortgages and loans. Detailedinformation on the social loyalty programme is provided in the Corporate Social ResponsibilityReview section of the Annual Report and Accounts 2014.

Cash and cash equivalent balances held with Bank F&C are in the normal course of business andare held on call or from time to time on overnight deposit. Interest is paid on balances held. Theinterest rates received by the Group were in line with relevant comparable market rates throughoutthe periods presented.

Chapter 11 class test

As a Group with a premium listing of equity securities, we are required to review and report relatedparty transactions in accordance with Chapter 11 of the Listing Rules. As of the date of thisProspectus, the following transaction was subject to the Chapter 11 class tests during the lasttwelve months:

* A railway line and an associated power lines was purchased in August 2014 from LLCVorskla Steel in the amount of US$0.5 million.

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DESCRIPTION OF OTHER INDEBTEDNESS

The following are summaries of all of the contracts, other than contracts entered into in theordinary course of business, that we have entered into within the two years immediately precedingthe date of this Prospectus or are expected to enter into prior to the Offering and are, or may be,material or that we have entered into at any time and which contain provisions under which wehave an obligation or entitlement that is material as at the date of this Prospectus. The followingsummaries are not complete and are subject to the full text of the documents described below.

Ferrexpo 2016 Notes

On 7 April 2011, the Issuer issued the 2016 Notes. Interest on the 2016 Notes accrues at a rateof 7.875% per annum and is payable semi-annually in arrear on 7 October and 7 April. In anExchange Offer Memorandum dated 19 January 2015 (as amended by the announcements madeby the Issuer dated 4 February 2015 and 6 February 2015), the Issuer invited holders of its 2016Notes that were outstanding to offer such notes for exchange in consideration, inter alia, for theissue to such holders of Notes. As of the date of this Prospectus, the outstanding principal amountof the 2016 Notes is US$285.7 million.

The 2016 Notes are obligations of the Issuer and are guaranteed by Ferrexpo and Ferrexpo AGand issued with the benefit of a surety agreement from FPM. By a Deed of Accession dated17 August 2011, Ferrexpo Middle East became an Additional Note Guarantor within the terms ofthe 2016 Notes. The 2016 Notes are not secured by any of the assets of the Issuer. Therefore,the 2016 Notes are effectively subordinated to secured indebtedness of the Issuer, Ferrexpo,Ferrexpo AG, Ferrexpo Middle East and FPM.

The 2016 Notes may not be redeemed, in whole or in part, at any time prior to 7 April 2016, savefor in the event of certain tax developments and a change of control. If there is a change ofcontrol (as defined in the terms and conditions of the 2016 Notes), holders of 2016 Notes shallhave the right to require the Issuer to repurchase all or any part of the 2016 Notes at a purchaseprice equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the date ofpurchase.

The terms and conditions of the 2016 Notes contain covenants which are similar to the Notesoffered hereby and which limit Ferrexpo’s and certain of its subsidiaries’ ability to, among otherthings: incur or guarantee additional indebtedness, pay dividends or make other payments, createor permit to exist certain liens, transfer, lease or sell certain assets including subsidiary stock,engage in transactions with affiliates, and consolidate, merge or sell all or substantially all of itsassets.

Ferrexpo 2019 Notes

On 24 February 2015, the Issuer issued an aggregate principal amount of US$160,724,00010.375% Guaranteed Amortising Notes due 2019, guaranteed by the Company, FME and FerrexpoAG and with the benefit of a suretyship provided by FPM.

The 2019 Notes bear interest at the rate of 10.375% per annum, payable semi-annually in arrear,on 7 April and 7 October in each year. Unless previously redeemed or purchased and cancelled,the 2019 Notes will be redeemed in two instalments of US$80,362,000 on 7 April 2018 andUS$80,362,000 on 7 April 2019. In all other respect the terms of the 2019 Notes are substantiallysimilar to the 2016 Notes as described above.

Pre-export financing facilities

On 1 September 2011, the Issuer and Ferrexpo AG entered into a committed US$420 million preexport finance facility agreement with ING Bank N.V., UniCredit Bank AG, and Societe Generale asCoordinating Mandated Lead Arrangers. The agreement provided for a US$420 million revolvingloan facility and was fully drawn down on 7 October 2011. Amounts advanced under this facilitybears interest at a floating rate of 2.25% per annum over LIBOR (plus any mandatory costsassociated with syndication in the European markets). The revolving loan facility is guaranteed andsecured. In particular:

* FPM and FYM have provided an unlimited financial and performance suretyship covering allof Ferrexpo AG and the Issuer’s obligations under the pre-export finance facility agreement(and related financing documents);

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* Ferrexpo has provided a parent company guarantee;

* Ferrexpo AG and Ferrexpo Middle East have pledged its bank accounts held with ING BankN.V. and ICBC (London) plc into which all proceeds from the sale of iron ore pellets undercertain contracts are required to be paid;

* FPM and Ferrexpo AG, FPM and Ferrexpo Middle East have pledged all of their rights undercertain contracts for the export of iron ore pellets;

* Ferrexpo AG and Ferrexpo Middle East has pledged all its rights under certain contacts forthe sale of iron ore pellets and its rights under certain related credit support documents; and

The full loan facility is available until 31 August 2014, thereafter reducing monthly in twenty fourequal amounts of approximately US$17.5 million each. As at 31 March 2015, there was anoutstanding amount under this facility of US$277.5 million.

On 2 September 2013, the Issuer, Ferrexpo Middle East and Ferrexpo AG entered into acommitted pre export finance facility agreement with Deutsche Bank AG, Amsterdam Branch, asCoordinating Mandated Lead Arranger for an amount up to US$500.0 million (the ‘‘2013 PXF’’).The agreement provided for a US$350 million revolving loan facility from the effective start datewhich was declared on 8 August 2014. The 2013 PXF remains open for additional bankcommitments by way of an accession to the facility up to its maximum size of US$500.0 million.The available bank commitments at the effective date of US$350 million were fully drawn down on29 August 2014. Amounts advanced under this facility bears interest at a floating rate of 3.25% perannum over LIBOR (plus any mandatory costs associated with syndication in the Europeanmarkets). The revolving loan facility is guaranteed and secured. In particular:

* FPM and FYM have provided an unlimited financial and performance suretyship covering allof Ferrexpo AG, Ferrexpo Middle East, and the Issuer’s obligations under the pre-exportfinance facility agreement (and related financing documents);

* Ferrexpo has provided a parent company guarantee;

* Ferrexpo AG and Ferrexpo Middle East have pledged its bank accounts held with DeutscheBank AG and ICBC (London) plc into which all proceeds from the sale of iron ore pelletsunder certain contracts are required to be paid;

* FPM and Ferrexpo AG, FPM and Ferrexpo Middle East have pledged all of their rights undercertain contracts for the export of iron ore pellets;

* Ferrexpo AG and Ferrexpo Middle East has pledged all its rights under certain contacts forthe sale of iron ore pellets and its rights under certain related credit support documents; and

The full loan facility is available until 8 August 2016, thereafter reducing quarterly in eight equalamounts of approximately US$44 million each.

Credit Suisse trade financing facility

On 26 October 2009, Ferrexpo AG entered into an uncommitted credit facility with Credit Suisse(the ‘‘CS Credit Facility Agreement’’) for the financing of short-term trade related self liquidatingcommercial transactions. The CS Credit Facility Agreement provides for a US dollar denominatedloan facility in an aggregate amount not exceeding US$40 million. The amount advanced under theCS Credit Facility Agreement bears interest at the rate of LIBOR plus 1.5% to LIBOR plus 2.5%,depending on the type of financing being provided. As at 31 March 2015, there was no outstandingamount under this facility. Ferrexpo AG’s obligations under the CS Credit Facility Agreement areinter alia secured as follows:

* Ferrexpo AG has pledged its cash deposits and/or fiduciary investments and/or all assets insafekeeping accounts;

* Ferrexpo AG has pledged goods which, either at present or in the future, are held by CreditSuisse or are held at Credit Suisse’s disposal; and

* Ferrexpo AG has assigned all of its rights over the proceeds of the receivables related totransactions financed by Credit Suisse under the CS Credit Facility Agreement.

Finance and Credit multicurrency revolving loan and documentary credit facilities

On 29 May 2013, FPM entered into a multicurrency revolving loan facility agreement (the ‘‘2013Finance and Credit Multicurrency Facility Agreement’’) and an agreement on the issuance of

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guarantees and/or documentary letters of credit (the ‘‘2013 Finance and Credit DocumentaryCredit Facility Agreement’’) with the Bank F&C. The 2013 Finance and Credit MulticurrencyFacility Agreement provides for a Ukrainian hryvnia, US dollar, euro, and Russian roubledenominated revolving loan facility in an aggregate amount not exceeding UAH80 million. The finalrepayment date is 29 May 2016. The loan facility was granted for working capital purposes. Theamounts advanced in Ukrainian hryvnia under the 2013 Finance and Credit Multicurrency FacilityAgreement bears interest at the rate of 18% per annum and amounts advanced in US dollar, euroand Russian rouble bears interest at the rate of 9.5%, 9.0% and 10.5% per annum respectively.Under the 2013 Finance and Credit Multicurrency Facility Agreement, Bank F&C has the right toaccelerate the loan in the event of a breach by FPM of the terms specified therein, including failureto notify changes in its constituent documents or a change of owners of FPM, upon giving threeday’s notice.

The 2013 Finance and Credit Documentary Credit Facility Agreement provides for the issuance ofbank guarantees and/or documentary letters of credit either in foreign currency or Ukrainian hryvniain an aggregate amount not exceeding UAH80 million. The documentary credit facility is availableuntil 29 May 2015 and is automatically extended to 29 May 2016 if not terminated by one party toanother in writing. The facility can be used for the issue or opening of payment guarantees, tenderguarantees, advance payment guarantees, performance guarantees, repayment guarantees,counter-guarantees, irrevocable letters of credit, and other types of guarantees agreed by theparties. The facility provides for the issuance or opening of each instrument with duration of up totwenty-four (24) months.

The 2013 Finance and Credit Multicurrency Facility Agreement and the 2013 Finance and CreditDocumentary Credit Facility Agreement are both secured by a pledge of equipment and inaggregate the outstanding facility amount of both agreements is not to exceed UAH80 million(US$3.4 million at the rate of exchange on 31 March 2015). As at 31 March 2015, there wasneither an amount outstanding under the 2013 Finance and Credit Multicurrency Facility Agreementnor bank guarantees and/or documentary letters of credit issued and outstanding under the 2013Finance and Credit Documentary Credit Facility Agreement.

OTP Ukraine

On 14 December 2010, FPM entered into a committed facility agreement on provision of bankingservices such as loans, guarantees, letters of credit, for an aggregate amount not exceedingUS$50 million with OTP Bank (the ‘‘General Facility Agreement’’). The General FacilityAgreement was amended on 21 August 2014 to exclude loans and to reduce the aggregateamount available under the banking services to US$43.12 million and is effective until 13 December2016 for the provision of documentary credit services such as guarantees and letters of credit.Guarantees and letters of credit granted under the General Facility Agreement bear interest of2.75% per annum or in the event of FPM’s failure to fulfil certain obligations under the GeneralFacility Agreement, 4.75% per annum. FPM’s obligations under the General Facility Agreement aresecured by a pledge over movable property of FPM, and a corporate guarantee granted byFerrexpo AG. As at 31 March 2015, the documentary credit services utilised by FPM under theGeneral Facility Agreement amounted to approximately US$33 million.

BNPP/U.S. Ex-Im Bank Credit Agreements

On 1 April 2010, Ferrexpo AG entered into an export financing credit agreement with BNP Paribas,New York Branch, as lender, Export-Import Bank of the United States as guarantor and FPM andFYM as obligors (the ‘‘April Credit Agreement’’). The April Credit Agreement provides for a USdollar denominated term loan facility in an aggregate amount of around US$18 million. The loanfacility was granted for the purpose of financing in part the purchase of US mining equipment andservices related thereto. All amounts disbursed under the April Credit Agreement are to be repaidin thirteen approximately equal, successive semi-annual instalments, with each such instalment tobe payable on 5 January and 5 July of each year, beginning on 5 July 2010. The final maturitydate is 5 July 2016. The amount advanced bears interest at the rate of LIBOR plus 1.7% perannum. Ferrexpo AG’s obligations are secured inter alia by a guarantee from Export-Import Bankof the United States, sureties from FPM and FYM, and a pledge of equipment owned by FYM.

On 17 August 2010, Ferrexpo AG entered into an export financing credit agreement with BNPParibas, New York Branch, as lender, Export-Import Bank of the United States as guarantor andFPM and FYM as obligors (the ‘‘August Credit Agreement’’). The August Credit Agreement

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provides for a US dollar denominated term loan facility in an aggregate amount of aroundUS$18 million. The loan facility was granted for the purpose of financing in part the purchase ofUS mining equipment. All amounts disbursed under the August Credit Agreement are to be repaidin fourteen approximately equal, successive semi-annual instalments, with each such instalment tobe payable on 5 June and 5 December of each year, beginning on 5 December 2010. The finalmaturity date is 5 June 2017. The amount advanced bears interest at the rate of LIBOR plus 1.7%per annum. Ferrexpo AG’s obligations are secured inter alia by a guarantee from Export-ImportBank of the United States, sureties from FPM and FYM, and a pledge of equipment owned byFYM.

PEFCO/U.S. Ex-Im Bank Credit Agreements

On 15 September 2011, FPM entered into an export financing credit agreement with BNP Paribas,New York Branch, as servicer, BNP Paribas Leasing Corporation as lender, Export-Import Bank ofthe United States as guarantor and Ferrexpo AG as guarantor (the ‘‘September 2011 CreditAgreement’’). The September 2011 Credit Agreement provides for a US dollar denominated termloan facility in an aggregate amount of around US$19 million. The loan facility was granted for thepurpose of financing in part the purchase of US mining equipment and services related thereto. Allamounts disbursed under the September 2011 Credit Agreement are to be repaid in thirteenapproximately equal, successive semi annual instalments, with each such instalment to be payableon 1 February and 1 August of each year, beginning on 1 February 2012. The final maturity dateis 1 February 2018. The amount advanced bears interest at the rate of LIBOR plus 1.7% perannum. FPM’s obligations are secured inter alia by a guarantee from Export-Import Bank of theUnited States, guarantee from Ferrexpo AG, and a pledge of equipment financed. By anassignment agreement dated 25 May 2012 the September 2011 Credit Agreement was assignedby BNP Paribas Leasing Corporation to Private Export Funding Corporation (‘‘PEFCO’’), New Yorkas lender. All other terms of the September 2011 Credit Agreement remained unchanged.

On 21 June 2012, FPM entered into an export financing credit agreement with PEFCO, New York,as lender, Export-Import Bank of the United States as guarantor and Ferrexpo AG as guarantor(the ‘‘June 2012 Credit Agreement’’). The June 2012 Credit Agreement provides for a US dollardenominated term loan facility in an aggregate amount of around US$22 million. The loan facilitywas granted for the purpose of financing in part the purchase of US mining equipment. Allamounts disbursed under the June 2012 Credit Agreement are to be repaid in fourteenapproximately equal, successive semi-annual instalments, with each such instalment to be payableon 15 March and 15 September of each year, beginning on 15 September 2012. The final maturitydate is 15 March 2019. The amount advanced bears interest at the fixed rate of 2.596% perannum. FPM’s obligations are secured inter alia by a guarantee from Export-Import Bank of theUnited States, guarantee from Ferrexpo AG, and a pledge over equipment financed.

On 17 September 2012, FYM entered into an export financing credit agreement with PEFCO, NewYork, as lender, Export-Import Bank of the United States and Ferrexpo AG as guarantors and FPMas obligor (the ‘‘September 2012 Credit Agreement’’). The September 2012 Credit Agreementprovides for a US dollar denominated term loan facility in an aggregate amount of aroundUS$22 million. The loan facility was granted for the purpose of financing in part the purchase ofUS mining equipment and services related thereto. All amounts disbursed under the September2012 Credit Agreement are to be repaid in thirteen approximately equal, successive semi annualinstalments, with each such instalment to be payable on 15 March and 15 September of eachyear, beginning on 15 March 2013. The final maturity date is 15 March 2019. The amountadvanced bears interest at the fixed rate of 2.508% per annum. FYM’s obligations are securedinter alia by a guarantee from Export Import Bank of the United States, a guarantee from FerrexpoAG and a surety from FPM, and a pledge of equipment financed.

On 31 January 2014, FYM entered into an export financing credit agreement with PEFCO, NewYork, as lender, Export-Import Bank of the United States, as guarantor, and Ferrexpo, FerrexpoAG and FME, as guarantors (the ‘‘January 2014 Credit Agreement’’). The January 2014 CreditAgreement provides for a US dollar denominated term loan facility in an aggregate amount ofaround US$14 million. The loan facility was granted for the purpose of financing in part thepurchase of US mining equipment and services related thereto. All amounts disbursed under theJanuary 2014 Credit Agreement are to be repaid in eleven approximately equal, successive semiannual instalments, with each such instalment to be payable on 27 May and 27 November of eachyear, beginning on 27 May 2014. The final maturity date is 27 May 2019. The amount advanced

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bears interest at the fixed rate of 2.822% per annum. FYM’s obligations are secured inter alia by aguarantee from Export Import Bank of the United States, a guarantee from Ferrexpo, Ferrexpo AGand FME, and a surety from FPM, and a pledge of equipment financed.

On 19 March 2014, FBM entered into an export financing credit agreement with PEFCO, NewYork, as lender, Export-Import Bank of the United States, as guarantor, and Ferrexpo, FerrexpoAG and FME, as guarantors (the ‘‘March 2014 Credit Agreement’’). The March 2014 CreditAgreement provides for a US dollar denominated term loan facility in an aggregate amount ofaround US$15 million. The loan facility was granted for the purpose of financing in part thepurchase of US mining equipment and services related thereto. All amounts disbursed under theMarch 2014 Credit Agreement are to be repaid in eleven approximately equal, successive semiannual instalments, with each such instalment to be payable on 30 June and 30 December of eachyear, beginning on 30 June 2014. The final maturity date is 30 June 2019. The amount advancedbears interest at the fixed rate of 2.904% per annum. FBM’s obligations are secured inter alia by aguarantee from Export Import Bank of the United States, a guarantee from Ferrexpo, Ferrexpo AGand FME, and a surety from FPM, and a pledge of equipment financed.

Citibank N.A./U.S. Ex-Im Bank Credit Agreement

On 30 April 2013, FPM entered into an export financing credit agreement with Citibank N.A., NewYork, as lender, Export-Import Bank of the United States as guarantor and Ferrexpo AG and FMEas guarantors (the ‘‘April 2013 Credit Agreement’’). The April 2013 Credit Agreement provides fora US dollar denominated term loan facility in an aggregate amount of around US$24 million. Theloan facility was granted for the purpose of financing in part the purchase of US mining equipment.All amounts disbursed under the April 2013 Credit Agreement are to be repaid in twelveapproximately equal, successive semi-annual instalments, with each such instalment to be payableon 10 April and 10 October of each year, beginning on 10 April 2014. The final maturity date is10 October 2019. The amount advanced bears interest at the rate of LIBOR plus 1.2% per annum.FME’s obligations are secured inter alia by a guarantee from Export-Import Bank of the UnitedStates, guarantees from Ferrexpo AG and FME, and a pledge over equipment financed.

AB Svensk Exportkredit (publ) (Swedish Export Credit Corporation)/Exportkreditnamnden(Swedish Exports Credits Guarantee Board) Credit Agreement

On 26 May 2014, FPM entered into an export financing credit agreement with BNP Paribas FortisS.A/N.V., Brussels as arranger and facility agent, AB Svensk Exportkredit (publ), as lender,Exportkreditnamnden, as guarantor and Ferrexpo AG as guarantor (the ‘‘May 2014 CreditAgreement’’). The May 2014 Credit Agreement provides for a US dollar denominated term loanfacility in an aggregate amount of around US$11 million. The loan facility was granted for thepurpose of financing in part the purchase of Swedish mining equipment. All amounts disbursedunder the May 2014 Credit Agreement are to be repaid in fourteen approximately equal,successive semi-annual instalments, with each such instalment to be payable on 31 January and31 July of each year, beginning on 31 July 2014. The final maturity date is 31 January 2021. Theamount advanced bears interest at the rate of LIBOR plus 1.05% per annum. FPM’s obligationsare secured inter alia by a guarantee from Exportkreditnamnden, and a guarantee from FerrexpoAG.

Raiffeisen Bank International AG Credit Agreement

On 9 February 2011, FYM entered into an export financing credit agreement with Raiffeisen BankInternational AG, Vienna, as lender (the ‘‘February 2011 Credit Agreement’’). The February 2011Credit Agreement provides for a EURO denominated term loan facility in an aggregate amount ofaround EUR5 million. The loan facility was granted for the purpose of financing in part thepurchase of German mining equipment and services related thereto. All amounts disbursed underthe February 2011 Credit Agreement are to be repaid in fourteen approximately equal, successivesemi-annual instalments, with each such instalment to be payable on 30 April and 31 October ofeach year, beginning on 31 October 2011. The final maturity date is 30 April 2018. The amountadvanced bears interest at the rate of 6-month EURIBOR plus 2.0%, divided by 0.98, per annum.FYM’s obligations are secured inter alia by a guarantee from Euler Hermes, guarantee fromFerrexpo AG, and a pledge of equipment financed.

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OTP Leasing

On 30 November 2010, FPM entered into two financial leasing agreements with OTP LeasingLimited Liability Company (the ‘‘OTP Leasing Agreements’’). The OTP Leasing Agreementsprovide for two US dollar denominated lease facilities in aggregate amounts of aroundUS$6.8 million and US$3.1 million, respectively (the ‘‘OTP Facilities Amounts’’), whereof 73% and70%, respectively, were financed by OTP Leasing Limited Liability Company and the remaining27% and 30%, respectively, were settled by a down payment made by FPM. The lease facilitieswere granted for a term of five years and for the purpose of financing in part the purchase of railcars as a strategic imperative to ensure pellet dispatches from FPM. As at 31 March 2015, FPMhad financing of around US$0.3 million outstanding under these facilities. The OTP LeasingAgreements provide for principal repayments of 100% of the OTP Facilities Amounts paid in equalmonthly instalments, starting on 25 December 2010. FPM’s obligations are secured inter alia by aguarantee from Ferrexpo AG. OTP Leasing Limited Liability Company remains the sole andunrestricted legal owner of the rail cars leased to FPM.

Caterpillar Financial Leasing

On 27 July 2012, FYM entered into a financial leasing agreement with LLC Caterpillar FinancialUkraine (the ‘‘July Leasing Agreement’’). The July Leasing Agreement provides for a US dollardenominated lease facility in aggregate amount of around US$10 million, whereof 84% wasfinanced by LLC Caterpillar Financial Ukraine and the remaining 16% was settled by a downpayment made by FYM. The lease facility was granted for a term of seven years and for thepurpose of financing in part the purchase of mining equipment and services related thereto. As at31 March 2015, around US$6.7 million was outstanding under this facility. The July LeasingAgreement provides for principal repayments of 100% of the July Leasing Agreement amounts paidin equal monthly instalments, starting on 31 August 2012. FYM’s obligations are secured inter aliaby a guarantee from Ferrexpo AG. LLC Caterpillar Financial Ukraine remains the sole andunrestricted legal owner of the mining equipment leased to FYM.

On 7 August 2012, FBM entered into a financial leasing agreement with LLC Caterpillar FinancialUkraine (the ‘‘August Leasing Agreement’’). The August Leasing Agreement provides for a USdollar denominated lease facility in aggregate amount of around US$10 million, whereof 84% wasfinanced by LLC Caterpillar Financial Ukraine and the remaining 16% was settled by a downpayment made by FBM. The lease facility was granted for a term of seven years and for thepurpose of financing in part the purchase of mining equipment and services related thereto. As at31 March 2015, around US$6.7 million was outstanding under this facility. The August LeasingAgreement provides for principal repayments of 100% of the August Leasing Agreement amountspaid in equal monthly instalments, starting on 31 August 2012. FBM’s obligations are secured interalia by a guarantee from Ferrexpo AG. LLC Caterpillar Financial Ukraine remains the sole andunrestricted legal owner of the mining equipment leased to FBM.

On 5 December 2013, FYM entered into five financial leasing agreements with LLC CaterpillarFinancial Ukraine (the ‘‘December Leasing Agreements’’). The December Leasing Agreementsprovide for a US dollar denominated lease facility in aggregate amount of around US$3 million,whereof 84% was financed by LLC Caterpillar Financial Ukraine and the remaining 16% wassettled by a down payment made by FYM. The lease facility was granted for a term of five yearsand for the purpose of financing in part the purchase of mining equipment and services relatedthereto. As at 31 March 2015, around US$2.1 million was outstanding under this facility. TheDecember Leasing Agreements provide for principal repayments of 100% of the December LeasingAgreements amounts paid in equal monthly instalments, starting on 1 February 2014. FYM’sobligations are secured inter alia by a guarantee from Ferrexpo AG. LLC Caterpillar FinancialUkraine remains the sole and unrestricted legal owner of the mining equipment leased to FYM.

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TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions of the notes which, subject to amendment andexcept for the provisions in italics, will be endorsed on each Individual Certificate (as definedbelow) and will be attached and (subject to the provisions thereof) apply to the Global NoteCertificates.

The issue of the US$185,664,000 10.375% Guaranteed Amortising Notes due 2019 (the ‘‘Notes’’,which expression shall include any further Notes issued pursuant to Condition 15 and consolidatedand forming a single series therewith) was authorised by a resolution of the Board of Directors ofFerrexpo Finance plc (the ‘‘Issuer’’) on 13 May 2015. The Note Guarantee (as defined inCondition 19) was authorised by a resolution of the Board of Directors of Ferrexpo plc (the‘‘Parent’’) on 13 May 2015, a written resolution of the Board of Directors of Ferrexpo AG (‘‘AG’’)on 27 May 2015, and a written resolution of the Board of Directors of Ferrexpo Middle East FZE(‘‘FME’’) on 13 May 2015. The Note Suretyship (as defined in Condition 19) was authorised by aresolution of the General Meeting of shareholders of Ferrexpo Poltava Mining (‘‘FPM’’) on 11 June2015.

The Notes are constituted by a Trust Deed (the ‘‘Trust Deed’’) dated 6 July 2015 between theIssuer, the Initial Guarantors (as defined in Condition 19) and BNY Mellon Corporate TrusteeServices Limited (the ‘‘Trustee’’, which expression shall include all Persons (as defined inCondition 19) for the time being the trustee or trustees under the Trust Deed) as trustee for theholders of the Notes and are the subject of a paying and transfer agency agreement dated 6 July2015 (the ‘‘Agency Agreement’’) between the Issuer, the Initial Guarantors, The Bank of NewYork Mellon (Luxembourg) S.A. as registrar (the ‘‘Registrar’’, which expression includes anysuccessor registrar appointed from time to time in connection with the Notes), The Bank of NewYork Mellon, London Branch as principal paying agent (the ‘‘Principal Paying Agent’’ whichexpression includes any successor principal paying agent appointed from time to time in connectionwith the Notes) and as a transfer agent (a ‘‘Transfer Agent’’), which expression includes anysuccessor transfer agents appointed from time to time in connection with the Notes, and The Bankof New York Mellon, New York Branch as a Transfer Agent and US paying agent (the ‘‘U.S.Paying Agent’’ and, together with the Principal Paying Agent, the ‘‘Paying Agents’’, whichexpression includes any successor or additional paying agents appointed from time to time inconnection with the Notes) and the Trustee.

The Notes are unconditionally and irrevocably guaranteed by the Parent, AG and FME under theTrust Deed and payments in relation to the Notes and the Trust Deed have the benefit of anunconditional and irrevocable surety by FPM under the Surety Agreement (as defined inCondition 19), in each case, to the maximum extent permitted by law.

References herein to the ‘‘Agents’’ are to the Registrar, the Principal Paying Agent, the U.S.Paying Agent and the Transfer Agents and any reference to an ‘‘Agent’’ is to any one of them.Unless a contrary indication appears, any reference in these Conditions to the ‘‘Issuer’’, the‘‘Guarantors’’, the ‘‘Trustee’’ and any ‘‘Agent’’ shall be construed so as to include its successorsin title, permitted assigns and permitted transferees.

Copies of the Trust Deed, the Agency Agreement and the Surety Agreement are available forinspection during usual business hours at the principal office of the Trustee (presently at OneCanada Square, London E14 5AL) and at the Specified Offices (as defined in the AgencyAgreement) of each of the Agents, the initial Specified Offices of which are set out below.

The Noteholders (as defined in Condition 1(b)) are entitled to the benefit of, are bound by, and aredeemed to have notice of, all the provisions of the Trust Deed and the Surety Agreement and aredeemed to have notice of those provisions of the Agency Agreement applicable to them.

1. FORM, DENOMINATION, REGISTER, TITLE AND TRANSFER

(a) Form and denomination

The Notes are in registered form, without interest coupons attached, in the denomination ofUS$120,000 and integral multiples of US$1,000 in excess thereof. An individual notecertificate (each, an ‘‘Individual Certificate’’) will be issued to each Noteholder in respect ofits registered holding of Notes. Each Note and each Individual Certificate will have anidentifying number which will be recorded on the relevant Individual Certificate and in theRegister (as defined in Condition 1(b)).

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Individual Certificates issued with respect to Rule 144A Notes (‘‘Rule 144A Certificates’’) willbear the Rule 144A Legend (as defined in the Trust Deed), unless determined otherwise inaccordance with the provisions of the Agency Agreement by reference to applicable law.Individual Certificates issued with respect to the Regulation S Notes (‘‘Regulation SCertificates’’) will not bear the Rule 144A Legend.

Upon issue, the Rule 144A Notes will be represented by a restricted global note certificate(the ‘‘Rule 144A Global Note Certificate’’) and the Regulation S Notes will be representedby the unrestricted global note certificate (the ‘‘Regulation S Global Note Certificate’’ and,together with the Rule 144A Global Note Certificate, the ‘‘Global Note Certificates’’). TheRule 144A Global Note Certificate will be deposited with a custodian for, and registered in thename of Cede & Co, as nominee of The Depository Trust Company (‘‘DTC’’) and theRegulation S Global Note Certificate will be registered in the name of, and deposited with TheBank of New York Depository (Nominees) Limited as nominee of the common depositary forEuroclear Bank SA/NV (‘‘Euroclear’’) and Clearstream Banking, societe anonyme(‘‘Clearstream, Luxembourg’’).

The Conditions are modified by certain provisions contained in the Global Note Certificates.See ‘‘Summary of Provisions Relating to the Notes while in Global Form’’.

Except in the limited circumstances described in the Global Note Certificates, owners ofinterests in Notes represented by the Global Note Certificates will not be entitled to receivephysical Individual Certificates in definitive form in respect of their individual holdings of Notes.The Notes are not issuable in bearer form.

(b) Register

The Registrar will maintain outside the United Kingdom a register (the ‘‘Register’’) in respectof the Notes in accordance with the provisions of the Agency Agreement. In these Conditions,the ‘‘Holder’’ of a Note means the Person in whose name such Note is for the time beingregistered in the Register (or, in the case of a joint holding, the first named thereof) and‘‘Noteholder’’ shall be construed accordingly.

(c) Title

Title to the Notes passes only by transfer and registration in the Register. The Holder of eachNote shall (except as otherwise required by a court of competent jurisdiction or applicablelaw) be treated as the absolute owner of such Note for all purposes (whether or not it isoverdue and regardless of any notice of ownership, trust or any other interest therein, anywriting on the Individual Certificate relating thereto (other than the endorsed form of transfer)or any notice of any previous loss or theft of such Individual Certificate) and no Person shallbe liable for so treating such Holder. No Person shall have any right to enforce any term orcondition of the Notes under the Contracts (Rights of Third Parties) Act 1999.

(d) Transfers

Subject to the terms of the Agency Agreement and Condition 1(g) and Condition 1(h), a Notemay be transferred by delivering the Individual Certificate in respect of it, with the endorsedform of transfer duly completed and signed, at the Specified Office of the Registrar or anyTransfer Agent. No transfer of a Note will be valid unless and until entered on the Register.

Transfers of interests in the Notes evidenced by the Global Note Certificates will be effectedin accordance with the rules of the relevant clearing system.

Upon the transfer, exchange or replacement of a Rule 144A Note, a Transfer Agent will onlydeliver Individual Certificates with respect to Rule 144A Notes that do not bear the Rule 144ALegend if there is delivered to such Transfer Agent such satisfactory evidence as may bereasonably required by the Issuer, that neither the Rule 144A Legend nor the restrictions ontransfer set forth therein are required to ensure compliance with the provisions of the U.S.Securities Act of 1933 (the ‘‘Securities Act’’).

An interest in Notes represented by the Regulation S Global Note Certificate may betransferred to a person within the United States subject to any applicable transfer restrictionsunder the Securities Act. Interests in Notes represented by the Rule 144A Global NoteCertificate may be transferred to a person who wishes to take delivery of any such interest inthe form of an interest in Notes represented by the Regulation S Global Note Certificate only

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if a Transfer Agent receives a written certificate (in the form provided in the AgencyAgreement) to the effect that such transfer is being made in accordance with Rule 903 or 904of Regulation S.

Transfers of Notes are also subject to the restrictions described under ‘‘Selling and TransferRestrictions’’.

(e) Registration and delivery of Individual Certificates

Within five business days of the surrender of an Individual Certificate in accordance withCondition 1(d), the Registrar will register the transfer in question and deliver a new IndividualCertificate of a like principal amount to the Notes transferred to each relevant Holder at itsSpecified Office or (as the case may be) the Specified Office of any Transfer Agent or (at therequest and risk of any such relevant Holder) by uninsured first-class mail (airmail ifoverseas) to the address specified for the purpose by such relevant Holder.

In this paragraph, ‘‘business day’’ means a day on which banks are open for generalbusiness (including dealings in foreign currencies) in the city where the Registrar or (as thecase may be) the relevant Transfer Agent has its Specified Office.

Except in the limited circumstances described in ‘‘Summary of Provisions Relating to theNotes while in Global Form’’, owners of interests in Notes represented by the Global NoteCertificates will not be entitled to receive physical delivery of Individual Certificates. Issues ofIndividual Certificates upon transfers of Notes are subject to compliance by the transferor andtransferee with the certification procedures described above and in the Agency Agreementand, in the case of the Rule 144A Notes, compliance with the Rule 144A Legend.

(f) No charge

The transfer of a Note will be effected without charge by or on behalf of the Issuer, theRegistrar or any Transfer Agent but against such indemnity as the Registrar or (as the casemay be) such Transfer Agent may require in respect of any tax or other duty of whatsoevernature which may be levied or imposed in connection with such transfer.

(g) Closed periods

Noteholders may not require transfers to be registered during the period of 15 days ending onthe due date for any payment of principal or interest in respect of the Notes.

(h) Regulations concerning transfers and registration

All transfers of Notes and entries on the Register are subject to the detailed regulationsconcerning the transfer of Notes scheduled to the Agency Agreement. The regulations maybe changed by the Issuer with the prior written approval of the Trustee and the Registrar. Acopy of the current regulations will be mailed (free of charge) by the Registrar and/or anyTransfer Agent to any Noteholder who requests in writing a copy of such regulations.

2. GUARANTEES, SURETYSHIP AND STATUS

(a) Note Guarantees and Note Suretyship

The Parent, AG and FME have, pursuant to the guarantee contained in the Trust Deed,unconditionally and irrevocably guaranteed, to the maximum extent permitted by law, the duepayment of all moneys payable by the Issuer under the Notes and the Trust Deed or by FPMunder the Surety Agreement (the ‘‘Note Guarantee’’). The Note Guarantee will constitute aguarantee for the purposes of English law.

FPM has provided an unconditional and irrevocable suretyship, pursuant to the SuretyAgreement, to the maximum extent permitted by law, in relation to the due payment of allmoneys payable by the Issuer, the Parent, AG and FME under the Notes and the Trust Deed(the ‘‘Note Suretyship’’). The Note Suretyship constitutes a suretyship (in Ukrainian: Poruka)for the purposes of Ukrainian law.

The obligations of FPM under the Surety Agreement create a secondary liability of FPM inrelation to the underlying obligations of the Notes and therefore, if those obligations areinvalid, the suretyship under the Surety Agreement will also be invalid. The Surety Agreementshall not constitute a guarantee obligation (in Ukrainian: garantiya) as that term is interpretedunder Ukrainian law.

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(b) Addition and Release of Guarantors

The Issuer will cause each Additional Note Guarantor to execute and deliver to the Trustee adeed of accession to the Trust Deed, pursuant to which such Additional Note Guarantor willunconditionally and irrevocably guarantee, to the maximum extent permitted by law, the duepayment of all moneys payable by the Issuer, the Parent, AG and FME under the Notes andthe Trust Deed or by FPM under the Surety Agreement.

The Issuer will cause each Additional Note Surety to execute and deliver to the Trustee adeed of accession to the Surety Agreement, pursuant to which such Additional Note Suretywill unconditionally and irrevocably ensure, to the maximum extent permitted by law, the duepayment of all moneys payable by the Issuer, the Parent, AG and FME under the Notes andthe Trust Deed.

The Issuer shall give not less than 30 days’ notice to the Trustee and the Noteholders inaccordance with Condition 16 of the accession of each Additional Note Guarantor to the TrustDeed or each Additional Note Surety to the Surety Agreement, as the case may be. Theaccession of the Additional Note Guarantors or the Additional Note Sureties pursuant to thisCondition 2(b) shall be conditional upon receipt by the Trustee of (x) an Opinion of Counselas to the enforceability of the Note Guarantee or the Note Suretyship, as the case may be,from such Additional Note Guarantors or Additional Note Sureties, as the case may be, (y) anOfficers’ Certificate certifying compliance with Condition 3 and (z) such other documents orcertificates as the Trustee may reasonably require. The Trustee shall be entitled to accept thelegal opinion referred to in sub-paragraph (x) and the certificate referred to in sub paragraph(y) above without further enquiry or liability to any Person as sufficient evidence of thematters certified therein.

The Note Guarantee of an Additional Note Guarantor or the Note Surety of an AdditionalNote Surety, as the case may be, will be released:

(1) in connection with any sale, assignment, transfer, conveyance or other disposition of allor substantially all of the assets of that Additional Note Guarantor or Additional NoteSurety (including by way of merger, consolidation, amalgamation or combination) to aPerson that is not (either before or after giving effect to such transaction) the Issuer, anInitial Guarantor or any of their Subsidiaries, provided that the sale or other dispositiondoes not breach Condition 3.4;

(2) in connection with any sale or other disposition of Capital Stock of that Additional NoteGuarantor or Additional Note Surety to a Person that is not (either before or after givingeffect to such transaction) the Issuer, an Initial Guarantor or any of their respectiveSubsidiaries, provided that the sale or other disposition does not breach Condition 3.4;or

(3) upon repayment in full of the Notes.

The Issuer shall promptly notify the Trustee and the Noteholders in accordance withCondition 16 of the release of any Additional Note Guarantee or Additional Note Surety, asthe case may be.

The Note Guarantee of the Parent, AG and FME will only be released upon repayment in fullof the Notes. The Note Suretyship of FPM will only be released upon repayment in full of theNotes.

The obligations of each Additional Note Guarantor or Additional Note Surety will be limitedunder relevant laws applicable to such Additional Note Guarantor or Additional Note Surety tothe extent that the granting of the relevant Note Guarantee or Note Suretyship, as the casemay be, would:

(i) not be consistent with corporate benefit, capital preservation, financial assistance orfraudulent conveyance rules or any other general statutory laws or regulations (oranalogous restrictions) of any applicable jurisdiction; or

(ii) cause the directors of an Additional Note Guarantor or Additional Note Surety, as thecase may be, to contravene their fiduciary duties, to incur civil or criminal liability or tocontravene any legal prohibition.

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(c) Status

The Notes constitute senior, direct, unsecured, unsubordinated and unconditional obligationsof the Issuer and shall at all times rank pari passu and without any preference amongthemselves, with all outstanding unsecured and unsubordinated obligations of the Issuer,present and future.

The Note Guarantee and the Note Suretyship constitute direct, unsecured, unsubordinatedand unconditional obligations of the Parent, AG and FME in relation to the Note Guaranteeand FPM in relation to the Note Surety, and shall at all times rank pari passu and withoutany preference among themselves, with all outstanding unsecured and unsubordinatedobligations of the Parent, AG, FME and FPM, as the case may be, present and future.

3. COVENANTS

3.1 Limitation on Liens

The Issuer and each Guarantor (as defined in Condition 19) will not, and will not permit anyof their respective Subsidiaries to, directly or indirectly, create, Incur, assume or suffer to existany Lien, other than a Permitted Lien, on any of its assets, now owned or hereafter acquired,or any income or profits therefrom, securing any Indebtedness unless, at the same time orprior thereto, the Notes or the relevant Note Guarantee or Note Suretyship, as the case maybe, (a) is secured equally and rateably therewith to the satisfaction of the Trustee or (b) hasthe benefit of other security or other arrangements as the Trustee in its absolute discretionshall deem to be not materially less beneficial to the Noteholders or as shall be approved byan Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders, (the ‘‘InitialLien’’).

Any Lien created for the benefit of the Trustee and the holders of the Notes pursuant to thepreceding sentence shall provide by its terms that such Lien shall be automatically andunconditionally released and discharged upon (a) the release and discharge of the Initial Lien,(b) the sale or other disposition of the assets subject to such Initial Lien (or the sale or otherdisposition of the Person that owns such assets) in compliance with the Conditions, or (c) thefull and final payment of all amounts payable by the Issuer and the Guarantors under theNotes, the Trust Deed, the Note Guarantee and the Note Suretyship (as applicable).

3.2 Incurrence of Indebtedness

(a) The Issuer and each Guarantor will not, and will not permit any of their respectiveSubsidiaries to, Incur, directly or indirectly, any Indebtedness except that if, on the dateof such Incurrence and after giving effect thereto on a pro forma basis, the ConsolidatedLeverage Ratio would be 2.5 to 1.0 or lower, then the Issuer and/or a Guarantor and/orany of their respective Subsidiaries may Incur Indebtedness.

(b) Notwithstanding the foregoing Condition 3.2(a), the Issuer, a Guarantor and/or any oftheir respective Subsidiaries may incur any or all of the Permitted Indebtedness.

(c) For purposes of determining compliance with any US dollar denominated restriction onthe Incurrence of Indebtedness where the Indebtedness Incurred is denominated in adifferent currency, the amount of such Indebtedness will be the US dollar Equivalentdetermined on the date of the Incurrence of such Indebtedness; provided, however, thatif any such Indebtedness denominated in a different currency is subject to a CurrencyAgreement with respect to US dollars covering all principal, premium, if any, and interestpayable on such Indebtedness, the amount of such Indebtedness expressed in USdollars will be as provided in such Currency Agreement. Notwithstanding any otherprovision of this Condition 3.2, the maximum amount that the Issuer, a Guarantor, orany of their respective Subsidiaries may Incur pursuant to this Condition 3.2 shall not bedeemed to be exceeded with respect to any outstanding Indebtedness due solely to theresult of fluctuations in the exchange rates of currencies.

(d) For purposes of determining compliance with this Condition 3.2:

(i) the outstanding principal amount of any particular Indebtedness shall be countedonly once and any obligations arising under any Guarantee, Lien, letter of credit orsimilar instrument supporting such Indebtedness shall not be double counted;

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(ii) Indebtedness permitted by this Condition 3.2 need not be permitted solely byreference to this Condition 3.2 or one provision of the definition of PermittedIndebtedness in Condition 19 permitting such Indebtedness but may be permitted inpart by one such provision and in part by one or more other provisions ofCondition 3.2 and the definition of Permitted Indebtedness; and

(iii) in the event that any item of Indebtedness meets the criteria of more than one ofthe types of Indebtedness described in this Condition 3.2 or one of the provisionsof the definition of Permitted Indebtedness in Condition 19 permitting suchIndebtedness, the Parent will be permitted, in its sole discretion, to divide, classifyor reclassify all or a portion of such item of Indebtedness in any manner thatcomplies with this Condition 3.2.

3.3 Transactions with Affiliates

The Issuer and each Guarantor will not, and will not permit any of their respectiveSubsidiaries to, enter into or permit to exist any transaction or a series of related transactions(including the purchase, sale, lease or exchange of any property, employee compensationarrangements or the rendering of any service) with, or for the benefit of, any Affiliate of theIssuer, a Guarantor or any of their respective Subsidiaries (an Affiliate Transaction) unless:

(a) the terms of the Affiliate Transaction are no less favourable to the Issuer, the relevantGuarantor or such Subsidiary than those that could be obtained at the time of theAffiliate Transaction in arm’s length dealings with a Person who is not an Affiliate; and

(b) with respect to any transaction or series of related transactions involving an aggregatevalue in excess of US$10 million or its US$ Dollar Equivalent, such transaction or seriesof related transactions has been approved by a majority of the Disinterested Directors ofthe Parent or, in the event there is only one Disinterested Director, by suchDisinterested Director provided, however, that the Issuer, any Guarantor, or any of theirSubsidiaries will not be required to comply with this paragraph (b) with respect to anytransaction that complies with, or is exempt from, the requirements contained in Chapter11 of the Listing Rules of the UK Financial Services Authority (the ‘‘Listing Rules’’) orany successor rules thereto for so long as the Parent has any class of its equitysecurities (as such term is defined in the Listing Rules) listed on the main market of theLondon Stock Exchange plc.

provided, however, that this provision shall not apply to:

(i) any employment agreement, collective bargaining agreement or employee benefitarrangements with any officer or director of the Issuer, the relevant Guarantor or therelevant Subsidiary, including under any stock option or stock incentive plans, enteredinto in the ordinary course of business;

(ii) payment of reasonable fees and compensation to employees, officers, directors,consultants or agents (including D&O insurance premiums) in the ordinary course ofbusiness;

(iii) transactions between the Issuer, a Guarantor and any of their respective Subsidiaries orbetween their respective Subsidiaries;

(iv) the issuance or sales of Capital Stock (other than Disqualified Stock) of the Issuer or aGuarantor;

(v) the issuance of securities or other payments, award or grants in cash, securities orsimilar transfers pursuant to, or for the purpose of funding, employment arrangementsand deferred compensation, retirement, savings, stock options, stock ownership andinsurance plans, provided that the terms thereof are or have been previously approvedby the Parent’s Board of Directors;

(vi) any payments or other transactions pursuant to a tax-sharing agreement or arrangementamong the Issuer, the Guarantors and any of their respective Subsidiaries or otherPersons with whom the Issuer, the Guarantors and any of their respective Subsidiariesfiles a consolidated tax return or with which the Issuer, the Guarantors and any of theirrespective Subsidiaries is or could be part of a group for tax purposes or any taxadvantageous group contribution made pursuant to applicable legislation; provided,however, that any such tax-sharing agreement or arrangement and any payment

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pursuant thereto does not permit or require payments in excess of the amounts of taxthat would be payable by the Issuer, the Guarantors and any of their respectiveSubsidiaries on a stand-alone basis;

(vii) transactions with customers, clients, suppliers, contractors, joint venture partners orpurchasers or sellers of goods (including raw materials) and services, in each caseentered into in the ordinary course of business and otherwise in compliance with theConditions, which are fair to the Issuer and the Guarantors and any of their relevantSubsidiaries in the reasonable determination of the Parent’s Board of Directors orOfficers or are on terms not materially less favourable to the relevant Person than thosethat would have been obtained in a comparable transaction by such Person with anunrelated Person;

(viii) transactions with Affiliates solely in their capacity as holders of Indebtedness or CapitalStock of the Issuer, the Guarantors or any of their respective Subsidiaries where suchAffiliates are treated not materially more favourably than holders of Indebtedness orCapital Stock of the relevant Person that are not Affiliates;

(ix) any agreement as in effect on the Issue Date, including pursuant to any amendment,modification, supplement, extension, renewal or refinancing thereto, in any replacementagreement or arrangement thereto so long as any such amendment, modification,supplement, extension, renewal, refinancing or replacement agreement or arrangement isnot more disadvantageous to the Issuer and/or the Guarantors or any of their respectiveSubsidiaries, as the case may be, in any material respect than the original agreement asin effect on the Issue Date;

(x) transactions with a Person that is an Affiliate of the Issuer or a Guarantor solelybecause the Issuer or the relevant Guarantor owns shares of Capital Stock in, orcontrols, such Person;

(xi) any consolidation, merger, conveyance, transfer or lease permitted pursuant toCondition 3.5; and

(xii) loans or advances to officers, directors and employees of the Issuer, the Guarantors ortheir respective Subsidiaries in the ordinary course of business but in any event not toexceed US$5 million (or its US$ Dollar Equivalent) outstanding at any time.

3.4 Asset Sales

The Issuer and each Guarantor will not, and will not permit any of their respectiveSubsidiaries to, directly or indirectly, consummate:

(1) any Prohibited Asset Sale; or

(2) any Asset Sale, unless in respect of an Asset Sale only (i) the consideration received bythe Issuer, the relevant Guarantor or the relevant Subsidiary, as the case may be, is atleast equal to the Fair Market Value of the assets subject to such Asset Sale and (ii) atleast 75% of the consideration for the Asset Sale are in cash or Cash Equivalentsprovided, that, for purposes of this provision, each of the following will be deemed to becash: (1) any liabilities, as shown on the Issuer’s, such Guarantor’s or any of theirrespective Subsidiaries most recent internal balance sheet (other than contingentliabilities, liabilities that are by their terms subordinated to the Notes and liabilities to theextent owned by the Issuer or any Guarantor), that are assumed by the transferee ofany such assets (or a third party on behalf of the transferee), (2) any securities, notesor other obligations or assets received by the Issuer, such Guarantor, or any of theirrespective Subsidiaries from such transferee that are converted by the Issuer, suchGuarantor or Subsidiary into cash or Cash Equivalents, to the extent of the cash orCash Equivalents received in that conversion, within 120 days following the closing ofthe Asset Sale, and (3) any asset or stock of the kind referred to in paragraph (b) or (e)below and (iii) an amount equal to the Disposal Proceeds is:

(a) applied to repay permanently any Indebtedness of the Group (other thanDisqualified Stock and Subordinated Obligations);

(b) invested in assets of a nature or type that is used or usable in the ordinary courseof a Core or Related Business;

(c) retained as cash deposited with a bank or invested in Cash Equivalents;

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(d) used by the Issuer to purchase the Notes, in whole but not in part, at theirprincipal amount; and/or

(e) applied to finance an acquisition of the Capital Stock of a Person that becomes aSubsidiary as a result of the acquisition of such Capital Stock by a member of theGroup; provided that such member is primarily engaged in a Core or RelatedBusiness,

in each case within 365 days of the date when such Disposal Proceeds are received (it beingunderstood that receipt by a member of the Group of Capital Stock of any Person who,following the consummation of such Asset Sale is to become a member of the Group and isprimarily engaged in a Core or Related Business, as consideration for such Asset Sale shallbe deemed to satisfy the financing of the acquisition of Capital Stock requirement set outabove).

Any remaining Disposal Proceeds from an Asset Sale not applied in accordance withparagraph (2) above within 365 days from the date of the receipt of such Disposal Proceedsshall constitute Excess Proceeds (‘‘Excess Proceeds’’).

(a) When the aggregate amount of Excess Proceeds exceeds US$15 million or its US dollarEquivalent, the Issuer will be required to make an offer to purchase (the PrepaymentOffer) either any Indebtedness senior to the Notes or the Notes and any pari passuIndebtedness which offer shall be in the amount of the Excess Proceeds, in each case,on a pro rata basis according to principal amount, at a purchase price equal to 100% ofthe principal amount thereof, plus accrued and unpaid interest, if any, to the purchasedate (subject to the right of holders of record on the relevant record date to receiveinterest due on the relevant interest payment date), in accordance with the procedures(including prorating in the event of oversubscription) set forth in the Agency Agreement.To the extent that any portion of the amount of the Disposal Proceeds remains aftercompliance with the preceding sentence and provided that all holders of Notes havebeen given the opportunity to tender their Notes for purchase in accordance with theAgency Agreement, the Issuer, Guarantor or such Subsidiary may use such remainingamount for any purpose not prohibited by the Trust Deed and the amount of ExcessProceeds will be reset to zero.

(b) Within 10 Business Days after the Issuer is obliged to make a Prepayment Offer asdescribed in paragraph (a) above, the Issuer shall send a notice to the Trustee and theholders of Notes in accordance with Condition 16, to inform the Trustee and the holderof the Notes of the Prepayment Offer.

(c) The Issuer and the Guarantors will comply, to the extent applicable, with therequirements of applicable securities laws or regulations in connection with therepurchase of Notes pursuant to this Condition 3.4. To the extent that the provisions ofany securities laws or regulations conflict with provisions of this Condition 3.4, the Issuerand the Guarantors will comply with the applicable securities laws and regulations andwill not be deemed to have breached its obligations under the covenant describedhereunder by virtue thereof,

provided that pending the final application of the Disposal Proceeds, the Issuer, theGuarantors or their respective Subsidiaries may temporarily reduce revolving credit facilities orborrowings or otherwise invest any portion of the Disposal Proceeds in any manner that is notprohibited by the Trust Deed.

Notwithstanding the above, any Asset Sale in relation to Ferrexpo Belanovo Mining orFerrexpo Yeristovo or the sale of Capital Stock of Ferrexpo Belanovo Mining or FerrexpoYeristovo (i) will not be subject to the provisions of this Condition 3.4 (except for theprovisions of Condition 3.4(2) (i), which shall apply to any such Asset Sale) and (ii) shall notbe included in making the 10% of total Production Assets calculation contained in thedefinition of Asset Sale.

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3.5 Mergers and Similar Transactions

(a) The Issuer and Initial Guarantors

Neither the Issuer nor an Initial Guarantor will consolidate with or merge with or into, orconvey, transfer or lease, in one transaction or a series of transactions, directly orindirectly, all or substantially all its assets to, any Person, unless:

(i) either (A) the Issuer or the relevant Initial Guarantor, as the case may be, will bethe surviving or continuing corporation or (B) the resulting, surviving or transfereePerson, if not an Issuer or the relevant Initial Guarantor, as the case may be, (the‘‘Successor Company’’), shall be a Person organised and existing under the lawsof England & Wales or Ukraine or the United Arab Emirates or Switzerland or anystate or province which is a member of the European Union, Canada, the UnitedStates, any state thereof or the District of Columbia and the Successor Company(if not the Issuer or the relevant Initial Guarantor, as the case may be) shallexpressly assume, by a trust deed or surety agreement, as the case may be,supplemental thereto, executed and delivered to the Trustee, in form and contentsatisfactory to the Trustee, all the obligations of the Issuer or the relevant InitialGuarantor, as the case may be, under the Notes, the Trust Deed or the SuretyAgreement, as the case may be;

(ii) immediately after giving pro forma effect to such transaction (and treating anyIndebtedness which becomes an obligation of the Issuer, the relevant InitialGuarantor or the Successor Company or any of their respective Subsidiaries as aresult of such transaction as having been Incurred by the Issuer, the relevant InitialGuarantor, such Successor Company or such Subsidiary at the time of suchtransaction), no Potential Event of Default or Event of Default shall have occurredand be continuing;

(iii) immediately after giving pro forma effect to such transaction (1), the Issuer or anInitial Guarantor or the Successor Company, as the case may be, would be able toIncur an additional US$1.00 or its US$ Dollar Equivalent of Indebtedness pursuantto Condition 3.2(a) or (2) the Consolidated Leverage Ratio would not be greaterthan it was immediately prior to giving pro forma effect to such transaction;

(iv) the Issuer or the relevant Initial Guarantor, as the case may be, shall havedelivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, eachstating that such consolidation, merger or transfer and such supplemental trustdeed (if any) comply with the Trust Deed; and

(v) the Issuer, or the relevant Initial Guarantor, as the case may be, shall havedelivered to the Trustee an Opinion of Counsel to the effect that the Noteholderswill not recognise income, gain or loss for U.S. Federal, Swiss, United Kingdom,Ukraine and United Arab Emirates income tax purposes as a result of suchtransaction and will be subject to income tax on the same amounts, in the samemanner and at the same times as would have been the case if such transactionhad not occurred,

(b) Additional Guarantors

No Guarantor (other than the Initial Guarantors) will consolidate with or merge with orinto, or convey, transfer or lease, in one transaction or a series of related transactions,directly or indirectly, all or substantially all its and its respective Subsidiaries’ assets to,any Person (other than the Issuer or the Guarantors), unless:

(i) either (A) the relevant Guarantor, as the case may be, will be the surviving orcontinuing corporation or (B) the resulting, surviving or transferee Person, if not therelevant Guarantor, as the case may be, (the Successor Guarantor), shall be aPerson organised and existing under the laws of England & Wales or Ukraine orthe United Arab Emirates or Switzerland or any state or province which is amember of the European Union, Canada, the United States, any state thereof orthe District of Columbia and the Successor Guarantor (if not the Issuer or therelevant Guarantor, as the case may be) shall expressly assume, by a trust deedor surety agreement, as the case may be, supplemental thereto, executed and

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delivered to the Trustee, in form and content satisfactory to the Trustee, all theobligations of the Issuer or relevant Guarantor, as the case may be, under theNotes, the Trust Deed or the Surety Agreement, as the case may be;

(ii) immediately after giving pro forma effect to such transaction (and treating anyIndebtedness which becomes an obligation of the Issuer, the relevant Guarantor orthe Successor Guarantor or any of their respective Subsidiaries as a result of suchtransaction as having been Incurred by the Issuer, the relevant Guarantor, suchSuccessor Guarantor or such Subsidiary at the time of such transaction), noPotential Event of Default or Event of Default shall exist;

(iii) immediately after giving pro forma effect to such transaction (1), the Issuer or anInitial Guarantor, as the case may be, would be able to Incur an additionalUS$1.00 or its US dollar Equivalent. of Indebtedness pursuant to Condition 3.2(a)or (2) the Consolidated Leverage Ratio would not be greater than it wasimmediately prior to giving pro forma effect to such transaction;

(iv) the Issuer or the relevant Guarantor, as the case may be, shall have delivered tothe Trustee an Officers’ Certificate and an Opinion of Counsel, each stating thatsuch consolidation, merger or transfer and such supplemental trust deed orsupplemental surety agreement (if any) comply with the Trust Deed; and

(v) the Issuer or the relevant Guarantor, as the case may be, shall have delivered tothe Trustee an Opinion of Counsel to the effect that the Noteholders will notrecognise income, gain or loss for U.S. Federal, Swiss, United Kingdom, Ukraineand United Arab Emirates tax purposes as a result of such transaction and will besubject to tax on the same amounts, in the same manner and at the same timesas would have been the case if such transaction had not occurred,

provided that this paragraph (b) shall not apply to any such transaction that complieswith Condition 3.4 or any Guarantor whose Note Guarantee or Note Surety, as the casemay be, is unconditionally released in accordance with the provisions described underCondition 2(b).

The Successor Company will be the successor to the Issuer or the relevant Guarantor andshall succeed to, and be substituted for, and may exercise every right and power of, theIssuer, or the relevant Guarantor, as the case may be, under the Trust Deed, and thepredecessor Issuer or the relevant predecessor Guarantor in relation to the Notes, the TrustDeed and the Surety Agreement.

This Condition 3.5 will not apply to any merger, assignment, sale of assets, amalgamation,consolidation or similar transaction (a) of any Subsidiary that is not a Guarantor into theIssuer, or a Guarantor or (b) among Guarantors or among a Guarantor and the Issuer.

Paragraphs (ii) and (iii) of Condition 3.5(a) and paragraphs (ii) and (iii) of Condition 3.5(b) willnot apply to any merger or similar transaction of the Issuer or any Guarantor with or into, orany sale, assignment, transfer, conveyance, lease or other disposition of assets by the Issueror any Guarantor to an Affiliate solely for the purpose of reincorporating the Issuer or suchGuarantor.

3.6 Claims Pari Passu

The Issuer and the Guarantors shall ensure that at all times the claims of the Noteholdersand the Trustee against the Issuer under the Trust Deed and the Guarantors under the TrustDeed or the Surety Agreement, as the case may be, rank at least pari passu with the claimsof all its other present and future senior, unsubordinated, unsecured creditors, save for thoseclaims that are preferred by any bankruptcy, insolvency, liquidation or similar laws of generalapplication or any other mandatory provisions of applicable law.

3.7 Limitations on Restrictions on Distributions from Subsidiaries

The Issuer and the Guarantors will not, and will not permit any of their respective Subsidiariesto, create or otherwise cause or permit to exist or become effective any consensualencumbrance or restriction on the ability of any Subsidiary to (A) pay dividends or make anyother distributions on its Capital Stock to the Issuer, a Guarantor or any of their respectiveSubsidiaries or pay any Indebtedness owed to the Issuer, a Guarantor or any of their

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respective Subsidiaries, (B) make any loans or advances to the Issuer, a Guarantor or any oftheir respective subsidiaries or (C) transfer any of its property or assets to the Issuer, aGuarantor or any of their respective subsidiaries, except:

(a) with respect to (A), (B) and (C) above:

(i) any encumbrance or restriction pursuant to the Notes, the Trust Deed, the NoteGuarantee, the Note Suretyship or in an agreement in effect at the Issue Date;

(ii) any encumbrance or restriction with respect to a Subsidiary pursuant to anagreement relating to any Indebtedness Incurred by such Subsidiary on or prior tothe date on which such Subsidiary was acquired by the Issuer or a Guarantor(other than Indebtedness Incurred as consideration in, or to provide all or anyportion of the funds or credit support utilised to consummate, the transaction orseries of related transactions pursuant to which such Subsidiary became aSubsidiary or was acquired by the Issuer or a Guarantor) and outstanding on suchdate;

(iii) any encumbrance or restriction pursuant to an agreement effecting a Refinancing ofIndebtedness; provided, however, that the encumbrances and restrictions withrespect to such Subsidiary contained in any such refinancing agreement oramendment, supplement, extension, refinancing, renewal or replacement are, takenas a whole, no less favourable to the Noteholders in any material respect thanencumbrances and restrictions with respect to such Subsidiary contained in suchpredecessor agreements;

(iv) any encumbrance or restriction with respect to a Subsidiary imposed pursuant toan agreement entered into for the sale or disposition of all or substantially all theCapital Stock or assets of such Subsidiary pending the closing of such sale ordisposition;

(v) any encumbrance or restriction on cash or other deposits or net worth imposed byleases or other agreements entered into by a Subsidiary in the ordinary course ofbusiness;

(vi) any encumbrance or restriction existing under or by reason of applicable law, rule,regulation, decree or order of any governmental, local or regulatory authority;

(vii) customary limitations on the distribution of assets or property of a Subsidiary injoint venture agreements entered into by a subsidiary in the ordinary course ofbusiness and in good faith; provided that (x) the encumbrance or restriction is notmaterially more disadvantageous to Noteholders than is customary in comparableagreements; and (y) such encumbrance or restriction will not materially affect theability of the Issuer or a Guarantor to make any anticipated principal or interestpayments on the Notes and any other Indebtedness for borrowed money that is anobligation of the Issuer or a Guarantor;

(viii) any encumbrances or restrictions existing with respect to any Person or theProperty or assets of such Person acquired by the Parent, the Guarantors or anyof their respective Subsidiaries, existing at the time of such acquisition and notincurred in contemplation thereof, which encumbrances or restrictions are notapplicable to any Person or the Property or assets of any Person other than suchPerson or the Property or assets of such Person so acquired, and anyamendments, supplements, extensions, refinancing, renewals or replacementsthereof, provided that the encumbrances and restrictions in any such amendment,supplement, extension, refinancing, renewal or replacement, taken as a whole, areno less favourable to the holders of the Notes than the encumbrances orrestrictions that are then in effect and that are being amended, supplemented,extended, refinanced, renewed or replaced;

(ix) any encumbrance or restriction existing by reason of Liens permitted to be incurredunder the provisions of Condition 3.1 that limit the right of the debtor to dispose ofthe assets subject to such Liens;

(x) any encumbrance or restriction contained in agreements or instruments relating toIndebtedness that is permitted to be Incurred pursuant to Condition 3.2 and anyamendments, supplements, extensions, refinancing, renewals or replacements of

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any of the foregoing agreements or instruments, provided that the encumbrances orrestrictions are, at the time agreed to, not materially less favourable to the holdersof the Notes than is customary in comparable financings and would not beexpected to materially and adversely affect the ability of the Guarantors or theIssuer to make payments under the Note Guarantee, Note Suretyship or the Notes,as the case may be (in each case as determined in good faith by the Parent); and

(xi) any encumbrance or restriction consisting of customary non-assignment provisionsin leases, contracts and licences entered into in the ordinary course of business;

(b) with respect to (C) above only:

(i) any encumbrance or restriction contained in security agreements or mortgagessecuring Indebtedness of a Subsidiary to the extent such encumbrance orrestriction restricts the transfer of the property subject to such security agreementsor mortgages;

(ii) customary encumbrances or restrictions in connection with Indebtedness forproperty acquired in the ordinary course of business; and

(iii) encumbrances or restrictions existing by reason of a Lien permitted in Condition 3.1.

3.8 Limitation on Issuance and Transfer of Capital Stock

The Issuer and each Guarantor:

(1) will not, and will not permit any of their respective Subsidiaries to, sell, lease, transfer orotherwise dispose of any Capital Stock of any of their respective Subsidiaries to anyPerson (other than to the Issuer or an Initial Guarantor); and

(2) will not permit any of their respective Subsidiaries to, issue any Capital Stock (otherthan, if necessary, shares of Capital Stock constituting directors’ or other legally requiredqualifying shares of the Issuer of an Initial Guarantor) to any Person (other than to theIssuer or a Guarantor),

unless, in relation to Capital Stock of an entity that is not the Issuer or an Initial Guarantoronly, such sale, lease, transfer, issuance or other disposition complies with the restrictionscontained in Condition 3.4 provided that nothing in this Condition 3.8 shall prohibit the Issuerand the Initial Guarantors from offering Capital Stock to their shareholders on a pro-rata basisand further provided that any shareholder who is not a member of the Group need not takeup any such offer of Capital Stock.

3.9 Limitation on Sale/Leaseback Transactions

The Issuer and each Guarantor will not, and will not permit any of their respectiveSubsidiaries to, enter into any Sale/Leaseback Transaction with respect to any property with aPerson other than the Issuer or a Guarantor unless:

(1) the Issuer and each Guarantor or any of their respective Subsidiaries would be entitledto (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect tosuch Sale/Leaseback Transaction pursuant to Condition 3.2 and (B) create a Lien onsuch property securing such Attributable Debt pursuant to Condition 3.1;

(2) the net proceeds received by the Issuer or a Guarantor or any of their respectiveSubsidiaries in connection with such Sale/Leaseback Transaction are at least equal tothe Fair Market Value of such property, minus the reasonable fees, expenses andcommissions incurred by the Issuer or a Guarantor or any of their respectiveSubsidiaries in connection with such Sale/Leaseback Transaction; and

(3) the Issuer and each Guarantor and their respective Subsidiaries applies the proceeds ofsuch transaction in compliance with Condition 3.4 provided that, in the event that theIssuer or the relevant Guarantor or the relevant Subsidiary has, prior to theconsummation of a Sale and Leaseback Transaction, paid an amount in relation to theacquisition of the property the subject matter of such transaction, an amount of theproceeds of the relevant Sale and Leaseback Transaction as is equal to the amount sopaid shall not be subject to this Condition 3.9(3),

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except that a Subsidiary which is not a Guarantor may enter into a Sale/LeasebackTransaction with a Person which is a member of the Group without complying with therequirements of this Condition 3.9.

3.10 Change of Business

Neither the Issuer, nor any Guarantor, nor any of their respective Subsidiaries, shall engagein any business other than the Core or Related Business, except to such extent as would notbe material to the Issuer, the respective Guarantor and their Subsidiaries taken as a whole.

3.11 Additional Note Guarantors or Additional Note Sureties

(a) In the event that a Subsidiary of the Parent that is not a Guarantor becomes a MaterialSubsidiary the Parent will, within 15 days of the date of the relevant determination,cause such Material Subsidiary to become a Guarantor and execute and deliver to theTrustee a deed of accession to the Trust Deed or the Surety Agreement, as the casemay be, and such other documents as may be required by the Trust Deed or the SuretyAgreement or the Trustee in accordance with Condition 2(b).

(b) The Issuer and the Guarantors will not permit any Subsidiary which is not at the relevanttime a Guarantor, directly or indirectly, to guarantee any capital markets Indebtedness ofthe Issuer, a Guarantor, or any of their respective Subsidiaries (‘‘GuaranteedIndebtedness’’), unless such Subsidiary becomes a Guarantor and executes anddelivers to the Trustee a deed of accession to the Trust Deed or the Surety Agreement,as the case may be, and such other documents as may be required by the Trust Deed,the Surety Agreement, or the Trustee in accordance with Condition 2(b) whichGuarantee shall be senior to or pari passu with such Subsidiary’s Guarantee of suchother Indebtedness.

(c) The Issuer will promptly and in any event within 30 days of any accession asaforementioned give notice in writing to the Trustee (in accordance with the Trust Deed)and the Noteholders of any Subsidiary becoming an Additional Note Guarantor or anAdditional Note Surety (in accordance with Condition 16).

3.12 Listing Information

The Issuer undertakes to deliver to the Trustee, at the time it delivers to the relevant stockexchange, such information and at such times as the Irish Stock Exchange (or any other orfurther stock exchange or stock exchanges or any relevant authority or authorities on whichthe Notes may, from time to time, be listed or admitted to trading) may require as necessaryin connection with the listing or admission to trading or the maintenance of such listing oradmission to trading on such stock exchange or relevant authority of such instruments. In theevent that the Notes are not so listed at any time, the Issuer undertakes to deliver to theTrustee such information and at such times as it was required to deliver by the relevant stockexchange immediately prior to the de-listing of the Notes.

3.13 Amendments

Except as provided in the Trust Deed, so long as any of the Notes remain outstanding (asdefined in the Trust Deed), the Issuer and each Guarantor shall not agree to any amendmentto or any modification or waiver of, or authorise any breach or proposed breach of, the termsof the Trust Deed, the Note Guarantee, Surety Agreement or of the Note Suretyship, asapplicable. Any amendment, modification, waiver or authorisation made with the consent ofthe Trustee in accordance with the Trust Deed shall be binding on the Noteholders and,unless the Trustee agrees otherwise, any such amendment, waiver or modification shall benotified to the Noteholders in accordance with Condition 16 (Notices).

3.14 Limitation on Restricted Distributions

(a) The Issuer and each Guarantor will not, and will not permit any of their respectiveSubsidiaries, directly or indirectly, to, make a Restricted Distribution if at the time theIssuer, such Guarantor or such Subsidiary makes such Restricted Distribution:

(i) an Event of Default shall have occurred and be continuing (or would resulttherefrom);

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(ii) the Issuer is not entitled to Incur an additional US$1.00 of Indebtedness pursuantto Condition 3.2(a);

(iii) the aggregate amount of such Restricted Distribution and all other RestrictedDistributions since the Issue Date would exceed the sum of (without duplication):

(a) 50% of the Consolidated Net Income accrued during the period (treated asone accounting period) from 1 January 2010 to the end of the most recentfiscal six month period for which financial statements exist prior to the date ofsuch Restricted Distribution (or, in case such Consolidated Net Income shallbe a deficit, minus 100% of such deficit); plus

(b) 100% of the aggregate net cash proceeds received by the Parent since theIssue Date as a contribution to its common equity capital or from the issue orsale of Capital Stock of the Parent (other than Disqualified Stock) or theamount by which Indebtedness of the Group is reduced on the Group’sbalance sheet upon the conversion or exchange subsequent to the Issue Dateof any Indebtedness of the Group convertible or exchangeable for CapitalStock (other than Disqualified Stock) of the Parent ((plus any cash proceedsreceived in connection with any such conversion or exchange) less theamount of any cash, or the fair value of any other property, distributed by theParent upon such conversion or exchange); provided, however, that theforegoing amount shall not exceed the Net Cash Proceeds received by theParent or any Subsidiary of the Parent from such conversion or exchange(excluding Net Cash Proceeds from sales to a Subsidiary of the Parent or toan employee stock ownership plan or a trust established by the Parent or anyof its Subsidiaries for the benefit of their employees); or

(iv) the Dividend Threshold Amount shall, immediately following the payment of anyRestricted Distribution, be exceeded.

(b) The preceding provisions will not prohibit:

(i) the making of any Restricted Distribution in exchange for, or out of or with the netcash proceeds of the substantially concurrent sale (other than to a Subsidiary ofthe Parent) of, Capital Stock of the Parent (other than Disqualified Stock) or fromthe substantially concurrent contribution of common equity capital to the Parent;provided, however, that such Restricted Distributions shall be excluded in thecalculation of the amount of Restricted Distributions;

(ii) any purchase, repurchase, redemption, defeasance or other acquisition orretirement for value of Subordinated Obligations of the Issuer or a Guarantor madeby exchange for, or out of the proceeds of a substantially concurrent Incurrence of,Indebtedness of such Person which is permitted to be Incurred pursuant toCondition 3.2; provided, however, that such purchase, repurchase, redemption,defeasance or other acquisition or retirement for value shall be excluded in thecalculation of the amount of Restricted Distributions;

(iii) dividends paid after the date of declaration thereof if at such date of declarationsuch dividend would have complied with this covenant; provided, however, that atthe time of payment of such dividend, no Event of Default shall have occurred andbe continuing (or result therefrom); provided further, however, that such dividendshall be included in the calculation of the amount of Restricted Distributions;

(iv) so long as no Event of Default has occurred and is continuing, the purchase,redemption or other acquisition of shares of Capital Stock of the Parent or any ofits Subsidiaries from employees, former employees, directors or former directors ofthe Parent or any of its Subsidiaries (or permitted transferees of such employees,former employees, directors or former directors), pursuant to the terms of theagreements (including employment agreements) or plans (or amendments thereto)approved by the Board of Directors under which such individuals purchase or sellor are granted the option to purchase or sell, shares of such Capital Stock;provided, however, that the aggregate amount of such Restricted Distributions(excluding amounts representing cancellation of Indebtedness) shall not exceed

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US$3 million (or its US dollar Equivalent) in any calendar year; provided further,however, that such Restricted Distributions shall be excluded in the calculation ofthe amount of Restricted Distributions;

(v) the declaration and payments of dividends on Disqualified Stock issued pursuant toCondition 3.2; provided, however, that, at the time of payment of such dividend, noEvent of Default shall have occurred and be continuing (or result therefrom);provided further, however, that such dividends shall be excluded in the calculationof the amount of Restricted Distributions;

(vi) repurchases of Capital Stock deemed to occur upon exercise of stock options ifsuch Capital Stock represents a portion of the exercise price of such options;provided, however, that such repurchases shall be excluded in the calculation ofthe amount of Restricted Distributions;

(vii) cash payments in lieu of the issuance of fractional shares in connection with theexercise of warrants, options or other securities convertible into or exchangeablefor Capital Stock of the Parent; provided, however, that any such cash paymentshall not be for the purpose of evading the limitation of the covenant describedunder this subheading (as determined in good faith by the Parent’s Board ofDirectors); provided further, however, that such payments shall be excluded in thecalculation of the amount of Restricted Distributions;

(viii) in the event of a Change of Control (as defined in Condition 5.3), and if no Eventof Default shall have occurred and be continuing, the payment, purchase,redemption, defeasance or other acquisition or retirement of SubordinatedObligations of the Issuer or any Guarantor, in each case, at a purchase price notgreater than 101% of the principal amount of such Subordinated Obligations, plusany accrued and unpaid interest thereon; provided, however, that prior to suchpayment, purchase, redemption, defeasance or other acquisition or retirement, theIssuer (or a permitted third party) has made a Change of Control Offer (as definedin Condition 5.3) with respect to the Notes as a result of such Change of Controland has repurchased the Notes to the extent validly tendered and not withdrawn inconnection with such Change of Control Offer; provided further, however, that suchpayments, purchases, redemptions, defeasances or other acquisitions orretirements shall be included in the calculation of the amount of RestrictedDistributions; and

(ix) the declaration and payment of dividends in respect of ordinary shares of theParent in an aggregate amount not to exceed US$60 million or its US dollarEquivalent per year (measured on the date of declaration); provided, in each case,that no Event of Default shall have occurred and be continuing (or result therefrom)and that such payments shall be included in the calculation of the amount ofRestricted Distributions.

In this Condition 3.14:

‘‘Dividend Threshold Amount’’ means, in respect of the declaration and payment of anydividends in respect of ordinary shares of the Parent, an amount which equates to a yield of10% on the ordinary shares of the Parent per year (as determined by the Parent in goodfaith).

4. INTEREST

The Notes bear interest from (and including) the Issue Date at the rate of 10.375% perannum, payable semi-annually in arrear on 7 April and 7 October in each year (each an‘‘Interest Payment Date’’), except that the first payment of interest, to be made on 7 October2015, will be in respect of the period from (and including) the Issue Date to (but excluding)7 October 2015, and the amount of interest payable for the first Interest Period (as definedbelow) will amount to US$26.23 per denomination of US$1,000 of Notes. Each Note willcease to bear interest from the due date for redemption, unless, upon due presentation,payment of principal is improperly withheld or refused. In such event, it shall continue to bearinterest at such rate (both before and after judgment) until whichever is the earlier of (a) theday on which all sums due in respect of such Note up to that day are received by or onbehalf of the relevant Holder and (b) the day seven days after the Trustee or the Principal

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Paying Agent has notified the Noteholders of receipt of all sums due in respect of all theNotes up to that seventh day (except to the extent that there is failure in the subsequentpayment to the relevant holders under these Conditions).

If interest is required to be calculated for a period of less than a complete Interest Period (asdefined below), the relevant day-count fraction will be determined on the basis of a 360-dayyear consisting of 12 months of 30 days each and, in the case of an incomplete month, thenumber of days elapsed. The period beginning on (and including) the Issue Date and endingon (but excluding) the first Interest Payment Date and each successive period beginning on(and including) an Interest Payment Date and ending on (but excluding) the next succeedingInterest Payment Date is called an ‘‘Interest Period’’.

5. REDEMPTION AND PURCHASE

5.1 Redemption by Amortisation and Final Redemption

Unless previously redeemed or purchased and cancelled, the Notes will be redeemed in twoinstalments on each amortisation date specified in column A below (each an ‘‘AmortisationDate’’) at the related amortisation amount specified in column B below (each an‘‘Amortisation Amount’’) payable as provided in Condition 6. The outstanding principalamount of the Notes shall be reduced by the Amortisation Amount for all purposes with effectfrom the relevant Amortisation Date such that the outstanding aggregate principal amount ofthe Notes following such reduction shall be as specified in column C below, unless thepayment of the relevant Amortisation Amount is improperly withheld or refused. In such acase, the relevant principal amount will remain outstanding until whichever is the earlier of (a)the day on which all sums due in respect of such Notes up to that day are received by or onbehalf of the relevant Holders and (b) seven days after the Trustee or the Principal PayingAgent has notified the Noteholders of receipt of all sums due in respect of all the Notes up tothat seventh day (except to the extent that there is a failure in the subsequent payment to therelevant holders under these Conditions). The Notes shall be finally redeemed on 7 April 2019(the ‘‘Maturity Date’’), at their final Amortisation Amount payable as provided underCondition 6.

Amortisation Date(A)

Amortisation Amount(B)

Outstanding AggregatePrincipal Amount of the

Notes(C)

7 April 2018 US$92,832,000 US$92,832,0007 April 2019 US$92,832,000 US$0

In these Conditions, references to ‘‘principal’’ shall, unless the context requires otherwise, bedeemed to include any Amortisation Amount and references to the ‘‘due date’’ for paymentshall, unless the context requires otherwise, be deemed to include any Amortisation Date.

5.2 Redemption for Taxation Reasons

The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time,on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which noticeshall be irrevocable), at their principal amount (together with interest accrued but unpaid to(but excluding) the date fixed for redemption) if (i) the Issuer satisfies the Trustee immediatelyprior to the giving of such notice that it (or, if the Note Guarantee or Note Suretyship werecalled, the relevant Guarantor) has or will become obliged to pay additional amounts asprovided or referred to in Condition 7 as a result of any change in, or amendment to, thelaws or regulations of the United Kingdom, Ukraine, the United Arab Emirates or Switzerlandor any political or governmental subdivision or any authority thereof or therein having power totax, or any change in the application or official interpretation of such laws or regulations,which change or amendment becomes effective on or after 24 February 2015, and (ii) suchobligation cannot be avoided by the Issuer (or the relevant Guarantor(s), as the case may be)taking reasonable measures available to it, provided that no such notice of redemption shallbe given earlier than 90 days prior to the earliest date on which the Issuer (or the relevantGuarantor(s), as the case may be) would be obliged to pay such additional amounts were apayment in respect of the Notes (or the Note Guarantee or Note Suretyship, as the case may

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be) then due. Prior to the publication of any notice of redemption pursuant to thisCondition 5.2, the Issuer shall deliver to the Trustee (A) an Opinion of Counsel that therequirement in (i) above will apply on the next Interest Payment Date and (B) a certificatesigned by two directors of the Issuer (or the relevant Guarantor(s), as the case may be)stating that the obligation referred to in (i) above cannot be avoided by the Issuer (or therelevant Guarantor(s), as the case may be) taking reasonable measures available to it andthe Trustee shall be entitled to accept and/or rely on such opinion and certificate as sufficientevidence of the satisfaction of the conditions precedent set out in (i) and (ii) above, in whichevent it shall be conclusive and binding on the Noteholders.

5.3 Redemption at the Option of the Holders Upon a Change of Control

(a) Upon the occurrence of any of the following events (each a ‘‘Change of Control’’), eachNoteholder shall have the right to require that the Issuer repurchase such Noteholder’sNotes at a purchase price in cash equal to 101% of the principal amount thereof on thedate of purchase plus accrued and unpaid interest, if any, to the date of purchase(subject to the right of holders of record on the relevant record date to receive interestdue on the relevant interest payment date):

(i) any person or any persons acting in concert (other than Permitted Holders orRelated Persons) shall become the beneficial owners (as defined in Rule 13d-3 and13d-5 of the Exchange Act) of shares in the capital of the Parent carrying morethan 50% of the voting rights normally exercisable at a general meeting of theParent; or

(ii) the allotted share capital of the Parent ceases to be listed on an Approved Market;or

(iii) the Permitted Holders or Related Persons cease to own directly or indirectly atleast 30% of the issued and allotted share capital of the Parent.

(b) Within 30 days following any Change of Control, the Issuer will notify each Noteholder(with a copy to the Trustee and the Principal Paying Agent) in accordance withCondition 16 (the ‘‘Change of Control Offer’’) stating:

(i) that a Change of Control has occurred and that such Noteholder has the right torequire the Issuer to purchase such Noteholder’s Notes at a purchase price in cashequal to 101% of the principal amount thereof on the date of purchase, plusaccrued and unpaid interest, if any, to the date of purchase (subject to the right ofNoteholders of record on the relevant record date to receive interest on therelevant interest payment date);

(ii) the circumstances and relevant facts regarding such Change of Control;

(iii) the purchase date (which shall be no earlier than 30 days nor later than 60 daysfrom the date such notice is mailed); and

(iv) the procedure determined by the Issuer but in accordance with the terms of theAgency Agreement that a Noteholder must follow in order to have its Notespurchased.

(c) The Issuer will comply, to the extent applicable, with the requirements of Section 14(e)of the Exchange Act and any other securities laws or regulations in connection with therepurchase of Notes as a result of a Change of Control. To the extent that theprovisions of any securities laws or regulations conflict with the provisions of thisCondition 5.3 or the related provisions of the Agency Agreement, the Issuer will complywith the applicable securities laws and regulations and shall not be deemed to havebreached its obligations under this Condition 5.3 by virtue of compliance with suchsecurities laws or regulations.

(d) The Issuer will not be required to make a Change of Control Offer following a Change ofControl if a third party makes the Change of Control Offer in the manner, at the timesand otherwise in compliance with the requirements of these Conditions and the TrustDeed applicable to a Change of Control Offer made by the Issuer and purchases allNotes validly tendered and not withdrawn under such Change of Control Offer.

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5.4 Purchases

The Issuer, the Guarantors or any of their respective Subsidiaries may at any time purchaseNotes in any manner and at any price. The Notes so purchased, while held by or on behalfof any of them pending cancellation pursuant to Condition 5.5, shall not entitle them to voteat any meetings of the Noteholders and shall not be deemed to be outstanding for thepurposes of calculating quorums at meetings of the Noteholders or for the purposes ofConditions 8, 11(a) and 13.

5.5 Cancellations

All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer, theGuarantors or any of their respective Subsidiaries will forthwith be cancelled and accordinglymay not be held, reissued or resold.

6. PAYMENTS

(a) Method of Payment

Payments of principal, premium and interest shall be made by US dollar cheque drawn on,or, upon application by a Holder of a Note to the Specified Office of the Principal PayingAgent not later than the fifteenth day before the due date for any such payment, by transferto a US dollar account (or any account to which US dollars may be credited or transferred)maintained by the payee and, in the case of payments of principal and premium in respect ofthe Notes and accrued interest payable on a redemption of the Notes otherwise than on anInterest Payment Date, shall only be made upon surrender (or, in the case of part paymentonly, endorsement) of the relevant Individual Certificates at the Specified Office of any PayingAgent.

(b) Payments subject to laws

All payments in respect of the Notes are subject in all cases to any applicable fiscal or otherlaws and regulations in the place of payment, but without prejudice to the provisions ofCondition 7. No commissions or expenses shall be charged to the Noteholders in respect ofsuch payments.

(c) Payments on business days

Where payment is to be made by transfer to a US dollar account, payment instructions (forvalue the due date, or, if the due date is not a business day, for value the next succeedingbusiness day) will be initiated and, where payment is to be made by US dollar cheque, thecheque will be mailed (i) (in the case of payments of principal, premium and interest payableon redemption or, as the case may be, purchase pursuant to Condition 5.4) on the later ofthe due date for payment and the day on which the relevant Individual Certificate issurrendered (or, in the case of part payment only, endorsed) at the Specified Office of anyPaying Agent and (ii) (in the case of payments of interest payable other than on redemptionor, as the case may be, purchase pursuant to Condition 5.4) on the due date for payment. AHolder of a Note shall not be entitled to any interest or other payment in respect of any delayin payment resulting from (A) the due date for a payment not being a business day or (B) acheque mailed in accordance with this Condition 6 arriving after the due date for payment orbeing lost in the mail. In this paragraph (c), business day means any day on which banksare open for general business (including dealings in foreign currencies) in London and NewYork City and, in the case of surrender (or, in the case of part payment only, endorsement)of an Individual Certificate, in the place in which the Individual Certificate is surrendered (or,as the case may be, endorsed).

(d) Partial payments

If a Paying Agent makes a partial payment in respect of any Note, the Issuer shall procurethat the amount and date of such payment are noted on the Register and, in the case ofpartial payment upon presentation of an Individual Certificate, that a statement indicating theamount and the date of such payment is endorsed on the relevant Individual Certificate.

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(e) Record date

Each payment in respect of a Note will be made to the Person shown as the Holder in theRegister at the close of business in the place of the Registrar’s Specified Office on thebusiness day before the due date for such payment (the ‘‘Record Date’’). Where payment inrespect of a Note is to be made by cheque, the cheque will be mailed to the address shownas the address of the Holder in the Register at the opening of business on the relevantRecord Date.

(f) Agents

The initial Agents and their initial specified offices are listed below. The Issuer and theGuarantors reserve the right at any time with the written approval of the Trustee to vary orterminate the appointment of any Agent and appoint additional or other Agents, provided thatthey will maintain (i) a Principal Paying Agent, (ii) a Registrar, (iii) a Transfer Agent, (iv)Paying Agents having specified offices in at least two major European cities approved by theTrustee and (v) a Paying Agent with a specified office in (A) a European Union member statethat will not be obliged to withhold or deduct tax pursuant to European Council Directive2003/48/EC or any other European Union Directive implementing the conclusions of theECOFIN Council meeting of 26-27 November 2000 or any law implementing or complying withor introduced in order to conform to any such Directive and (B) a jurisdiction within Europeother than Switzerland that will not be required to withhold or deduct tax pursuant to lawsenacted in Switzerland providing for the taxation of payments according to principles similar tothose laid down in the draft legislation proposed by the Swiss Federal Council on 24 August2011, in particular the principle to have a person other than the Issuer or the Guarantorswithhold or deduct the tax, including, without limitation, any paying agent. In addition, theIssuer and the Guarantors shall forthwith appoint a U.S. Paying Agent and Transfer Agent inNew York City and shall maintain such a Paying Agent and Transfer Agent.

Notice of any change in the Agents or their specified offices will promptly be given to theNoteholders.

7. TAXATION

All payments of principal, premium and interest by or on behalf of the Issuer or theGuarantors in respect of the Notes or under the Note Guarantee or the Note Suretyship shallbe made free and clear of, and without withholding or deduction for, any taxes, duties,assessments or governmental charges of whatever nature imposed, levied, collected, withheldor assessed by or within the United Kingdom, Ukraine, the United Arab Emirates orSwitzerland or any authority therein or thereof, or any other jurisdiction or political subdivisionor authority thereof having power to tax (‘‘Taxes’’), unless such withholding or deduction isrequired by law. In that event and in the event that any payment under the Note Guaranteeor the Note Suretyship is subject to any such Taxes, the Issuer or the Guarantors shall paysuch additional amounts as will result in receipt by the Noteholders of such amounts as wouldhave been received by them had no such withholding or deduction been required, except thatno such additional amounts shall be payable in respect of any Note presented for payment:

(a) Other connection: by or on behalf of a Holder who is liable to such taxes, duties,assessments or governmental charges in respect of such Note by reason of his havingsome connection with Ukraine or the United Kingdom or the United Arab Emirates orSwitzerland other than the mere receipt of such payment or the ownership or holding ofthe Note; or

(b) Presentation more than 30 days after the Relevant Date: more than 30 days after theRelevant Date, except to the extent that the Holder of it would have been entitled tosuch additional amounts on presenting such Note for payment on the last day of suchperiod of 30 days; or

(c) Deductions by persons other than the Issuer or the Guarantors: where suchwithholding or deduction (i) is imposed on a payment to an individual or residual entityand is required to be made pursuant to European Council Directive 2003/48/EC or anyother European Union Directive implementing the conclusions of the ECOFIN Councilmeeting of 26-27 November 2000 (EU Savings Tax Directive) or the Agreement betweenthe European Community and the Swiss Confederation dated October 26, 2004providing for measures equivalent to those laid down in the European Council Directive

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2003/48/EC (the ‘‘Swiss Agreement’’) or any law implementing or complying with orintroduced in order to conform to any such Directive or the Swiss Agreement or (ii) isimposed on a payment and is required to be made pursuant to laws enacted bySwitzerland providing for the taxation of payments according to principles similar tothose laid down in the draft legislation proposed by the Swiss Federal Council on24 August 2011, in particular the principle to have a person other than the Issuer orGuarantor withhold or deduct the tax, such as, without limitation, any paying agent or (iii)is required to be made pursuant to an agreement between Switzerland and othercountries on final withholding taxes levied by Swiss paying agents in respect of personsresident in the other country on income of such person on Notes booked or depositedwith a Swiss paying agent;

(d) Payment by another Paying Agent: by or on behalf of a Noteholder who would havebeen able to avoid such withholding or deduction by presenting the relevant Note toanother Paying Agent in a Member State of the European Union.

‘‘Relevant Date’’ means whichever is the later of (i) the date on which such payment firstbecomes due and (ii) if the full amount payable has not been received by the PrincipalPaying Agent or the Trustee on or prior to such due date, the date on which, the full amounthaving been so received, notice to that effect shall have been given to the Noteholders. Anyreference in these Conditions to principal, premium and/or interest shall be deemed toinclude, without duplication, any additional amounts in respect of principal, premium or interest(as the case may be) which may be payable under this Condition 7 or any undertaking givenin addition to or substitution for it under the Trust Deed.

8. EVENTS OF DEFAULT

If any of the following events (an ‘‘Event of Default’’) occurs, the Trustee at its discretionmay, and if so requested by holders of at least 25% in principal amount of the Notes thenoutstanding or if so directed by an Extraordinary Resolution (as defined in the Trust Deed)shall, subject in each case to being indemnified and/or pre-funded and/or secured to itssatisfaction, give written notice to the Issuer that the Notes are, and they shall immediatelybecome, due and payable at their principal amount, together with accrued interest:

(a) Non-Payment: default is made in the payment of principal, premium or interest on anyof the Notes when due and, in the case of interest, such failure continues for a period of30 days; or

(b) Breach of Other Obligations: the Issuer or any of the Guarantors does not perform orcomply with any of their respective obligations under Condition 3 or any one or more ofits other obligations (other than a failure that is subject to paragraph (a) above) underthe Notes, the Trust Deed or the Surety Agreement, which, in each case, is notremedied within 60 days after written notice of such default shall have been given to theIssuer or the relevant Guarantor(s) by the Trustee; or

(c) Cross-Payment Default and Cross-Acceleration: a default under any Indebtedness bythe Issuer or a Guarantor that results in acceleration of the maturity of suchIndebtedness, or failure to pay principal of, or interest or premium, if any, on any suchIndebtedness when due, in each case after the expiration of any originally applicablegrace period, in an aggregate amount greater than US$25 million or its US dollarEquivalent at the time; or

(d) Enforcement Proceedings: a distress, attachment, execution or other legal process islevied, enforced or sued out on or against any, in the opinion of the Trustee, materialpart of the property, assets or revenues of the Issuer or any Guarantor or any MaterialSubsidiary and is not discharged or stayed within 60 days; or

(e) Security Enforced: any step (including the taking of possession or the appointment of areceiver, administrative receiver, administrator, manager or other similar Person) is takento enforce any mortgage, charge, pledge, lien or other encumbrance, present or future,created or assumed by the Issuer or any Guarantor or any Material Subsidiary over or inrelation to a, in the opinion of the Trustee, material part of the property, assets orrevenues of the Issuer, a Guarantor or a Material Subsidiary as the case may be (orsuch encumbrance becomes enforceable); or

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(f) Judgment Default: any one or more judgments or orders is made against the Issuer orany Guarantor or any of their respective Subsidiaries involving an aggregate liability notpaid or only with respect to that portion not covered by insurance in respect of a matter(or a series of related matters) greater than US$25 million (or its US dollar Equivalent),unless all those judgments and orders (i) are discharged within 30 days of their beingmade or (ii) are being appealed in good faith and on reasonable grounds and the Issuer,the relevant Guarantor or Subsidiary, as the case may be, is maintaining adequatereserves for the amount of such judgment or order (as determined in accordance withAccounting Standards); or

(g) Insolvency

(i) (A) the Issuer, a Guarantor or any Material Subsidiary seeking, consenting oracquiescing in the introduction of proceedings for its liquidation or bankruptcy orthe appointment to it of a liquidator or a similar officer; (B) the presentation or filingof a petition in respect of the Issuer, a Guarantor or any Material Subsidiary in anycourt, arbitration court or before any agency for its bankruptcy, insolvency,dissolution or liquidation which, in the case of a petition presented or filed by aPerson other than the Issuer, a Guarantor or such Material Subsidiary, as the casemay be, is not dismissed within 60 days; (C) the institution of supervision, externalmanagement or bankruptcy management to the Issuer, a Guarantor or any MaterialSubsidiary; (D) the convening of a meeting of creditors generally of the Issuer, aGuarantor or any Material Subsidiary for the purposes of considering an amicablesettlement with its creditors generally; (E) a moratorium is agreed or declared orcomes into effect in respect of or affecting all or any part of (or of a particular typeof) the debts of the Issuer, a Guarantor or any Material Subsidiary; and/or (F) anyextra-judicial liquidation or analogous act in respect of the Issuer, a Guarantor orany Material Subsidiary by any governmental agency in or of the United Kingdomor Ukraine or Switzerland or the United Arab Emirates; or

(ii) the Issuer, a Guarantor or any Material Subsidiary: (A) fails or is unable to pay itsdebts generally as they become due; (B) proposes or makes a general assignmentor an arrangement or composition with or for the benefit of the relevant creditors inrespect of any of such debts; (C) consents by answer or otherwise to thecommencement against it of an involuntary case in bankruptcy or to theappointment of a custodian of it or of a substantial part of its property; or (D) acourt of competent jurisdiction enters an order for relief or a decree in aninvoluntary case in bankruptcy or for the appointment of a custodian in respect ofthe Issuer, a Guarantor or any Material Subsidiary or any part of their respectiveproperty and such order or decree remains undischarged for a period of 60 days;or

(iii) the shareholders of the Issuer or a Guarantor approve any plan for the liquidationor dissolution of the Issuer or the relevant Guarantor; or

(h) Winding-up: an administrator is appointed, an order is made or an effective resolutionpassed for the winding-up or dissolution or administration of the Issuer or any Guarantoror any Material Subsidiary, or the Issuer or any of the Guarantors or any MaterialSubsidiary ceases or threatens to cease to carry on all or, in the opinion of the Trustee,substantially all of its business or operations, except for the purpose of and followed bya reconstruction, amalgamation, reorganisation, merger or consolidation (i) on termsapproved by the Trustee or by an Extraordinary Resolution of the Noteholders, or (ii) inthe case of a Material Subsidiary, whereby the undertaking and assets of the relevantMaterial Subsidiary are transferred to or otherwise vested in the Issuer, any Guarantors(as the case may be) or any of their respective Subsidiaries; or

(i) Nationalisation: all or, in the opinion of the Trustee, a significant part of the assets ofthe Issuer or a Guarantor are seized, compulsory acquired, expropriated or nationalisedby any person or any step is taken by any person with a view to the seizure,compulsory acquisition, expropriation or nationalisation thereof; or

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(j) Illegality: it is or will become unlawful for the Issuer or any of the Guarantors to performor comply with any one or more of its obligations under any of the Notes, the TrustDeed, the Note Guarantee, the Surety Agreement or the Note Suretyship, as applicable;or

(k) Note Guarantee or Note Suretyship: the Note Guarantee or Note Suretyship are not(or are claimed by the relevant Guarantor not to be) in full force and effect; or

(l) Analogous Events: any event occurs which under the laws of any relevant jurisdictionhas an analogous effect to any of the events referred to in any of the paragraphsabove.

9. PRESCRIPTION

Claims in respect of principal, premium and interest will become void, unless presentation forpayment is made as required by Condition 6 within a period of 10 years, in the case ofprincipal and premium, and five years, in the case of interest, from the appropriate RelevantDate.

10. REPLACEMENT OF INDIVIDUAL CERTIFICATES

If any Individual Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replacedat the Specified Office of the Registrar, or a Transfer Agent, subject to all applicable laws andstock exchange requirements, upon payment by the claimant of the expenses incurred inconnection with such replacement and on such terms as to evidence, security, indemnity andotherwise as the Issuer may reasonably require. Mutilated or defaced Individual Certificatesmust be surrendered before replacements will be issued.

11. MEETINGS OF NOTEHOLDERS; MODIFICATION, WAIVER AND SUBSTITUTION

(a) Meetings of Noteholders

The Trust Deed contains provisions for convening meetings of Noteholders to considermatters affecting their interests, including the sanctioning by Extraordinary Resolution (asdefined in the Trust Deed) of a modification of any of these Conditions or any provisions ofthe Trust Deed. Such a meeting may be convened by Noteholders holding not less than 10%in principal amount of the Notes for the time being outstanding. The quorum for any meetingconvened to consider an Extraordinary Resolution will be two or more Persons holding orrepresenting a clear majority in principal amount of the Notes for the time being outstanding,or at any adjourned meeting two or more Persons being or representing Noteholderswhatever the principal amount of the Notes held or represented, unless the business of suchmeeting includes consideration of proposals, inter alia, (i) to modify the maturity of the Notesor the dates on which premium or interest is payable in respect of the Notes, (ii) to reduce orcancel the principal amount of, any premium payable on redemption of, or interest on, theNotes, (iii) to change the currency of payment of the Notes, (iv) to modify the provisionsconcerning the quorum required at any meeting of Noteholders or the majority required topass an Extraordinary Resolution or (v) to modify or cancel the Note Guarantee or the NoteSuretyship (other than a modification pursuant to Condition 2(b)), in which case the necessaryquorum will be two or more Persons holding or representing not less than 75%, or at anyadjourned meeting not less than 25%, in principal amount of the Notes for the time beingoutstanding. Any Extraordinary Resolution duly passed shall be binding on Noteholders(whether or not they were present at the meeting at which such resolution was passed). TheTrust Deed provides that a resolution in writing signed by or on behalf of holders of not lessthan 75% of the aggregate principal amount of Notes outstanding shall for all purposes be asvalid and effective as an Extraordinary Resolution passed at a meeting of Noteholders dulyconvened and held. Such a resolution in writing may be contained in one document orseveral documents in the same form, each signed by or on behalf of one or moreNoteholders.

(b) Modification and Waiver

The Trustee may agree, without the consent of the Noteholders, to (i) any modification of anyof the provisions of the Trust Deed, the Surety Agreement or these Conditions which is in itsopinion of a formal, minor or technical nature or is made to correct a manifest error and (ii)any other modification (except as mentioned in the Trust Deed), and any waiver or

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authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed,the Surety Agreement or these Conditions or determine that an Event of Default or PotentialEvent of Default shall not be treated as such, if in the opinion of the Trustee the interests ofthe Noteholders will not be materially prejudiced thereby. Any such modification, authorisationor waiver shall be binding on the Noteholders and, if the Trustee so requires, suchmodification shall be notified to the Noteholders as soon as practicable.

(c) Substitution

The Trust Deed contains provisions permitting the Trustee to agree, subject to suchamendment of the Trust Deed, the Surety Agreement, the Agency Agreement and theseConditions and such other conditions as the Trustee may require, but without the consent ofthe Noteholders, to the substitution of certain other entities in place of the Issuer or any ofthe Guarantors, or of any previous substituted company, as principal debtor or guarantorunder the Trust Deed, the Surety Agreement and the Notes. In the case of such asubstitution, the Trustee may agree, without the consent of the Noteholders, to a change ofthe law governing the Notes and/or the Trust Deed and/or the Surety Agreement, providedthat such change would not in the opinion of the Trustee be materially prejudicial to theinterests of the Noteholders.

(d) Entitlement of the Trustee

In connection with the exercise of its functions (including but not limited to those referred to inthis Condition 11), the Trustee shall have regard to the interests of the Noteholders as aclass and shall not have regard to the consequences of such exercise for individualNoteholders and the Trustee shall not be entitled to require, nor shall any Noteholder beentitled to claim, from the Issuer or any of the Guarantors any indemnification or payment inrespect of any tax consequence of any such exercise upon individual Noteholders.

12. TRUSTEE RELIANCE

The Issuer and the Guarantors have undertaken in the Trust Deed to deliver to the Trusteeannually a certificate of the Issuer and the Guarantors signed by any two directors of theParent as to there not having occurred an Event of Default, Potential Event of Default orChange of Control since the date of the last such certificate or, if such event has occurred,as to the details of such event. The Trustee shall be entitled to rely without liability to anyperson on any such certificate and shall not be obliged to monitor independently complianceby the Issuer or the Guarantors with the covenants set forth in Condition 3, nor shall it beliable to any person for not so doing and the Trustee need not enquire further as regards tocircumstances existing on the date of such certificate. Until it has actual knowledge orexpress notice in writing to the contrary, the Trustee shall be entitled to assume withoutliability that no such event as aforesaid has occurred or may occur and that the Issuer andthe Guarantors are complying with all their respective obligations under Condition 3, the TrustDeed and the other documents to which they are party.

13. ENFORCEMENT

At any time after the Notes become due and payable, the Trustee may, at its discretion andwithout further notice, institute such steps, actions or proceedings against the Issuer, theGuarantors or any of their respective Subsidiaries as it may think fit to enforce the terms ofthe Trust Deed, the Surety Agreement and the Notes, but it need not take any such steps,actions or proceedings, unless (a) it shall have been so directed by an ExtraordinaryResolution or so requested in writing by Noteholders holding at least 25% in principal amountof the Notes outstanding and (b) it shall have been indemnified and/or pre-funded and/orsecured to its satisfaction. No Noteholder may proceed directly against the Issuer, theGuarantors or any of their respective Subsidiaries, unless the Trustee, having become boundso to proceed, fails to do so within a reasonable time and such failure is continuing.

14. INDEMNIFICATION OF THE TRUSTEE

The Trust Deed contains provisions for the indemnification of the Trustee and for its relieffrom responsibility. The Trustee is entitled to enter into business transactions with the Issuer,the Guarantors and any entity related to the Issuer or the Guarantors without accounting forany profit.

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The Trustee may rely without liability to the Noteholders on any report, confirmation orcertificate or any advice of any accountants, financial advisers, financial institution or anyother expert, whether or not addressed to it and whether their liability in relation thereto islimited (by its terms or by any engagement letter relating thereto entered into by the Trusteeor in any other manner) by reference to a monetary cap, methodology or otherwise. TheTrustee may accept and shall be entitled to act and/or rely on any such report, confirmationor certificate or advice and such report, confirmation or certificate or advice shall be bindingon the Issuer, the Trustee and the Noteholders.

15. FURTHER ISSUES

The Issuer may from time to time without the consent of the Noteholders create and issuefurther securities either having the same terms and conditions as the Notes in all respects (orin all respects except for the first payment of interest on them) and so that such further issueshall be consolidated and form a single series with the outstanding securities of any series(including the Notes) or upon such terms as the Issuer may determine at the time of theirissue. Provided, however, that any such further issue, for purposes of U.S. federal incometaxation (regardless of whether any Noteholders are subject to U.S. federal income tax laws)are either (i) not issued with original issue discount, (ii) issued with less than a de minimisamount of original issue discount, or (iii) issued in a ‘‘qualified reopening’’ for U.S. federalincome tax purposes. References in these Conditions to the Notes include (unless the contextrequires otherwise) any other securities issued pursuant to this Condition 15 and forming asingle series with the Notes. Any further securities forming a single series with theoutstanding securities of any series (including the Notes) constituted by the Trust Deed or anydeed supplemental to it shall, and any other securities may (with the consent of the Trustee),be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisionsfor convening a single meeting of the Noteholders and the holders of securities of otherseries where the Trustee so decides.

16. NOTICES

Notices to the Noteholders will be sent to them by first-class mail (or its equivalent) or (ifposted to an overseas address) by airmail at their respective addresses on the Register. Anysuch notice shall be deemed to have been given on the fourth day after the date of mailing,provided that, so long as the Notes are admitted to trading on the Irish Stock Exchange andthe rules of such stock exchange so require, all notices to Noteholders shall be deemed to beduly given if they are filed with the Companies Announcements Office of the Irish StockExchange.

17. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No Person shall have any right to enforce any term or condition of the Notes under theContracts (Rights of Third Parties) Act 1999.

18. GOVERNING LAW

(a) Governing Law

The Trust Deed, the Surety Agreement, the Notes, the Note Guarantee and the NoteSuretyship, and any non-contractual obligations arising out of or in connection with them, aregoverned by, and shall be construed in accordance with, English law.

(b) Arbitration

Any dispute or difference of whatever nature howsoever arising from or in connection with theTrust Deed, the Notes, the Note Guarantee, the Surety Agreement or the Note Suretyship(each a ‘‘Dispute’’) (including any dispute as to their existence, validity or termination or anynon-contractual obligation arising out of or in connection with them or with this Condition 18),shall be resolved by arbitration in accordance with the rules set down by the LCIA (the ‘‘LCIARules’’) which are deemed to be incorporated by reference into this paragraph (b), save thatArticle 5.6 of the LCIA Rules shall be amended as follows: ‘‘unless the parties agreeotherwise, the third arbitrator, who shall act as chairman of the tribunal, shall be nominatedby the two arbitrators nominated by or on behalf of the parties. If he is not so nominatedwithin 30 days of the date of nomination of the later of the two party-nominated arbitrators to

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be nominated, he shall be chosen by the LCIA’’. The seat of arbitration shall be London,England and the language of the arbitration shall be English. The parties agree to exclude thejurisdiction of the English court under section 45 and 69 of the Arbitration Act 1996.

(c) Agent for Service of Process

Each of AG, FME and FPM has irrevocably appointed an agent in England to receive serviceof process in England in respect of any disputes which may arise out of, or in connectionwith, the Trust Deed, the Surety Agreement (if applicable), the Notes, the Note Guarantee orthe Note Suretyship and, accordingly, any legal action or proceedings arising out of, or inconnection with, the Trust Deed, the Surety Agreement (if applicable), the Notes, the NoteGuarantee or the Note Suretyship.

19. DEFINITIONS

In these Conditions, the following terms have the meanings given to them in this Condition 19.

‘‘2016 Notes’’ means the US$500 million 7.875% guaranteed notes due 2016.

‘‘2019 Notes’’ means the US$160,724,000 10.375% guaranteed amortising notes due 2019.

‘‘Accounting Standards’’ means IFRS or any other internationally recognised set ofaccounting standards deemed equivalent to IFRS by the Committee of European SecuritiesRegulators from time to time; provided however, that where such term is used with respect tothe financial statements of FPM, it shall, where financial statements prepared in accordancewith IFRS are not available, be deemed to include Ukrainian GAAP.

‘‘Additional Note Guarantors’’ means Persons who become guarantors for any reason.

‘‘Additional Note Sureties’’ means Persons who become sureties for any reason.

‘‘Affiliate’’ of any specified Person means any other Person, directly or indirectly controlling,controlled by, or under direct or indirect common control with, such specified Person. Forpurposes of this definition, ‘‘control’’ (including, with correlative meanings, the terms‘‘controlling’’, ‘‘controlled by’’ and ‘‘under common control with’’), as applied to anyPerson, means the possession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of such Person, whether through the ownership ofvoting securities, by contract or otherwise.

‘‘Agency’’ means any agency, authority, central bank, department, committee, government,legislature, minister, ministry, official or public or statutory person (whether autonomous ornot).

‘‘Approved Jurisdiction’’ means England & Wales, Switzerland, the United States ofAmerica, Ukraine, United Arab Emirates and any member nation of the European Union asconstituted on the Issue Date.

‘‘Approved Market’’ means any of: (i) the regulated market of the London Stock Exchange,(ii) an EEA Regulated Market, (iii) the New York Stock Exchange, (iv) the American StockExchange, (v) the Toronto Stock Exchange, (vi) NASDAQ, (vii) the Australian Stock Exchangeor (viii) the Irish Stock Exchange, or any successor of any of the foregoing.

‘‘Asset Acquisition’’ means (i) an Investment by the Issuer, a Guarantor or any of theirrespective Subsidiaries in any other Person pursuant to which such Person shall become aSubsidiary of the Issuer or a Guarantor or any of their respective Subsidiaries or shall beconsolidated or merged with the Issuer or a Guarantor or any of their respective Subsidiariesor (ii) the acquisition by the Issuer or a Guarantor or any of their respective Subsidiaries ofassets of any Person which constitute all or substantially all of the assets of such Person orwhich comprise a division or line of business of such Person.

‘‘Asset Sale’’ means any direct or indirect lease, sale, sale and lease-back, transfer or otherdisposition either in one transaction or in a series of related transactions, by the Issuer, aGuarantor or any of their respective Subsidiaries to a Person that is not part of the Group,including any disposition by means of a merger, consolidation or similar transaction, of any ofits assets (including any shares of Capital Stock of a member of the Group (other thandirectors’ qualifying shares or shares required by applicable law to be held by a Person otherthan the Issuer, a Guarantor or any of their respective Subsidiaries)) or properties, the value

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of which exceeds 10% of total Production Assets as shown on the latest available annual orsemi-annual consolidated balance sheet of the Group prepared in accordance with AccountingStandards in any twelve month period, other than:

(a) the creation of a Lien (but not the sale or other disposition of the property subject tosuch Lien) in compliance with Condition 3.1;

(b) the licencing or sublicencing of rights to intellectual property or other intangibles in theordinary course of business;

(c) the sale, lease or other disposition of damaged, obsolete, worn out, negligible, surplus oroutdated equipment or machinery or raw materials or inventory, in each case which isno longer used or usable, in the ordinary course of business;

(d) the lease, assignment or sublease of any property in the ordinary course of business;

(e) sales or other dispositions of assets or property received by the Issuer, a Guarantor orany of their respective Subsidiaries upon the foreclosure on a Lien granted in favour ofthe Issuer, a Guarantor or any of their respective Subsidiaries or any other transfer oftitle with respect to any ordinary course secured investment in default;

(f) the surrender or waiver of contract rights or the settlement, release, or surrender ofcontract, tort or other claims, in the ordinary course of business;

(g) sales and other dispositions of inventory in the ordinary course of business;

(h) sales and dispositions of cash and Cash Equivalents in the ordinary course of business;

(i) the exchange of assets provided that (i) the assets received will immediately constitute,be part of, or be used or useful in a Core or Related Business, (ii) the assets receivedare of a comparable Fair Market Value to the assets exchanged and (iii) any cash orCash Equivalents received from the exchange must be applied in accordance withCondition 3.4;

(j) the disposition of receivables in connection with the compromise, settlement or collectionthereof in the ordinary course of business or in bankruptcy or similar proceeds of anycustomers or vendors of the Issuer, a Guarantor or any of their respective Subsidiaries;

(k) the sale or transfer of value added tax receivables by FPM at Fair Market Value or thesale or transfer of any Investment received in exchange therefor;

(l) any royalty or similar arrangement in connection with a Core or Related Business to theextent that such royalty or similar arrangement is included in the definition ofIndebtedness; and

(m) any sale or other disposition that complies with Condition 3.5.

‘‘Attributable Debt’’ in respect of a Sale/Leaseback Transaction means, as at the time ofdetermination, the present value (discounted at the interest rate borne by the Notes,compounded annually) of the total obligations of the lessee for rental payments during theremaining term of the lease included in such Sale/Leaseback Transaction (including anyperiod for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtednessrepresented thereby will be determined in accordance with the definition of ‘‘Capital LeaseObligation’’.

‘‘Board of Directors’’ means, as to any Person, the board of directors or other equivalentexecutive body of such Person or any duly authorised committee thereof.

‘‘Business Day’’ means a day which is a day on which commercial banks and foreignexchange markets settle payments and are open for general business (including dealings inforeign exchange and foreign currency deposits) in Kyiv, London and New York City.

‘‘Capital Stock’’ means, with respect to any Person, any and all shares, interests (includingpartnership interests), rights to purchase, warrants, options, participations or other equivalents(however designated, whether voting or non-voting) of such Person’s equity, including anyPreferred Stock of such Person, whether now outstanding or issued after the Issue Date,including without limitation, all series and classes of such Capital Stock but excluding anydebt securities convertible into or exchangeable for such Capital Stock.

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‘‘Capital Lease Obligation’’ means an obligation that is required to be classified andaccounted for as a capital lease for financial reporting purposes in accordance withAccounting Standards, and the amount of Indebtedness represented by such obligation shallbe the capitalised amount of such obligation determined in accordance with AccountingStandards; and the Stated Maturity thereof shall be the date of the last payment of rent orany other amount due under such lease prior to the first date upon which such lease may beterminated by the lessee without payment of a penalty. For purposes of Condition 3.2, aCapital Lease Obligation will be deemed to be secured by a Lien on the property beingleased.

‘‘Cash Equivalents’’ means:

(a) any evidence of Indebtedness with a maturity of one year or less issued or directly andfully guaranteed or insured by a corporation organised under the laws of an ApprovedJurisdiction or any Agency or instrumentality thereof; provided that the full faith andcredit of an Approved Jurisdiction (or similar concept under the laws of the relevantApproved Jurisdiction) is pledged in support thereof;

(b) commercial paper with a maturity of one year or less issued by a corporation organisedunder the laws of an Approved Jurisdiction and rated at all times at least the samerating as that of the unsecured, unsubordinated debt obligations of the Issuer byStandard & Poor’s Ratings Services, a division of McGraw-Hill Companies, Inc., Moody’sInvestors Services Limited or Fitch Ratings Ltd. to the extent that the aggregate amountof Cash Equivalents (as defined in this paragraph (b)) invested by application ofDisposal Proceeds do not exceed at any time US$250 million or its US dollarEquivalent;

(c) commercial paper with a maturity of one year or less, issued by a corporation organisedunder the laws of an Approved Jurisdiction, and at all times listed or traded on theLondon Interbank Currency Exchange to the extent that the aggregate amount of CashEquivalents (as defined in this paragraph (c)) invested by application of DisposalProceeds do not exceed at any time US$250 million or its US dollar Equivalent;

(d) current account balances, deposits, certificates of deposit, promissory notes,acceptances or money market deposits with a maturity of one year or less of (i) anyinstitution organised in an Approved Jurisdiction having combined, consolidated, capitaland surplus and undivided profits (or any similar concept) of not less than US$250million (or the equivalent in another currency) determined in conformity with AccountingStandards and as set forth in the most recent publicly available financial reportspublished by such institution or (ii) the Ukrainian branch or Subsidiary of an institutionreferred to in (i) above or (iii) Bank Finance and Credit;

(e) repurchase agreements and reverse repurchase agreements relating to marketable directobligations issued or unconditionally guaranteed by the government of an ApprovedJurisdiction, which obligations mature within 30 days from the date of acquisition; and/or

(f) interests in any money market funds at least 95% of the assets of which consist ofCash Equivalents of the type referred to in paragraphs (a) to (e) above.

‘‘Consolidated Depreciation and Amortisation’’ means, in respect of any period, theconsolidated depreciation and amortisation expense of the Group as shown on the financialstatements of the Group prepared in accordance with Accounting Standards (excludingamortisation expense attributable to a prepaid item that was paid in cash in a prior period).

‘‘Consolidated EBITDA’’ for any period means the sum of Consolidated Net Income, plus thefollowing to the extent deducted in calculating such Consolidated Net Income:

(a) Consolidated Net Interest Expense;

(b) Consolidated Income Tax Expense;

(c) Consolidated Depreciation and Amortisation; and

(d) all other non-cash charges of the Issuer, the Guarantors and any of their respectiveSubsidiaries (excluding any such non-cash charge to the extent that it represents anaccrual of or reserve for cash expenditures in any future period) less all non-cash items

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of income of the Issuer, the Guarantors and any of their respective Subsidiaries (otherthan accruals of revenue by the Issuer, the Guarantors and any of their respectiveSubsidiaries in the ordinary course of business);

in each case for such period.

‘‘Consolidated Income Tax Expense’’ means, in respect of any period, the consolidatedexpenses of the Group in respect of income taxes as shown on the financial statements ofthe Group prepared in accordance with Accounting Standards.

‘‘Consolidated Indebtedness’’ means at any date of determination (and without duplication)all consolidated Indebtedness of the Group as shown on the financial statements of theGroup prepared in accordance with Accounting Standards.

‘‘Consolidated Leverage Ratio’’ as of any date of determination means the ratio of (x) theConsolidated Indebtedness of the Group as of such date of determination to (y) ConsolidatedEBITDA for the most recent two fiscal six-month consecutive periods for which financialstatements exist (the ‘‘Reference Period’’) after giving effect on a pro forma basis to:

(a) the Incurrence of any Indebtedness the permissibility of which is then being measuredas well as the incurrence, repayment, repurchase or other discharge of any otherIndebtedness, in each case, during the Reference Period and the receipt and applicationof the proceeds therefrom as well as the funds for such repurchase, repayment or otherdischarge as if any such transaction occurred on the date of determination with respectto (x) above and on the first date of the Reference Period with respect to (y) above; and

(b) the exclusion of Consolidated EBITDA directly attributable to any Asset Sale or theinclusion of Consolidated EBITDA directly attributable to any Asset Acquisition (including,without limitation, any Asset Acquisition giving rise to the need to make such calculationas a result of the incurrence or assumption of Indebtedness) occurring during theReference Period as if any such transaction occurred on the first day of the ReferencePeriod; and

(c) Investments or Asset Acquisitions that have been made by the specified Person or anyof its Subsidiaries, including through mergers or consolidations, or any Person or any ofits Subsidiaries acquired by the specified Person or any of its Subsidiaries, and includingail related financing, transactions and including increases in ownership of Subsidiaries,during the Reference Period or subsequent to such Reference Period and on or prior tothe date of determination, or that are to be made on the date of determination, will begiven pro forma effect (as determined in good faith by the Parent’s chief financial officeror group treasurer (or officer holding equivalent position) and may include anticipatedexpense and cost reduction synergies) as if they had occurred on the first day of theReference Period.

If any Indebtedness bears a floating rate of interest and is being given pro forma effect, theinterest on such Indebtedness shall be calculated as if the rate in effect on the date ofdetermination had been the applicable rate for the entire period (taking into account anyInterest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement hasa remaining term in excess of 12 months). If any Indebtedness is incurred under a revolvingcredit facility and is being given pro forma effect, the interest on such Indebtedness shall becalculated based on the average daily balance of such Indebtedness for the two fiscal six-month consecutive periods subject to the pro forma calculation to the extent suchIndebtedness was incurred solely for working capital purposes.

‘‘Consolidated Net Income’’ means, for any period, the consolidated net income of theGroup; provided, however, that there shall not be included in such Consolidated Net Income:

(a) any net income of any Person (other than the Issuer or a Guarantor) if such Person isnot a Subsidiary, except that:

(i) subject to the exclusion contained in paragraph (b) below, the Issuer’s or aGuarantor’s equity in the net income of any such Person for such period shall beincluded in such Consolidated Net Income up to the aggregate amount of cashactually distributed by such Person during such period to the Issuer, a Guarantor orany of their respective Subsidiaries as a dividend or other distribution; and

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(ii) the Issuer’s or any Guarantor’s equity in a net loss of any such Person for suchperiod shall be included in determining such Consolidated Net Income but only tothe extent that such loss has been funded by cash by the Issuer, any Guarantor orany of their respective Subsidiaries;

(b) any gain (or loss) realised upon the sale or other disposition of any assets of the Issuer,a Guarantor or their respective Subsidiaries which are not sold or otherwise disposed ofin the ordinary course of business and any gain (or loss) realised upon the sale or otherdisposition of any Capital Stock of any Person;

(c) any exceptional or extraordinary net-of-tax gains or losses and any loss or gainassociated with an impairment of assets;

(d) non operating foreign exchange gains and losses; and

(e) the cumulative effect of a change in accounting principles.

in each case, for such period.

‘‘Consolidated Net Interest Expense’’ means, for any period, the consolidated interestexpense (net of interest income) of the Group including bank charges, amortisation of financecosts, net of finance income as shown on the financial statements of the Group prepared inaccordance with Accounting Standards.

‘‘Core or Related Business’’ means any and all principal and ancillary activities of the Groupin the mining and metals industry, including, but not limited to, (i) all activities that the Groupengages in on the Issue Date, (ii) the mining of iron ore and the production and sale of ironore pellets, hot briquetted iron, pig iron and steel, (iii) the procurement, running and/or owningof all transport and logistics infrastructure related to the Core or Related Business, (iv) theprocurement, running and/or owning of all infrastructure and logistics supply services relatedto the Core or Related Business (including power, gas, grinding bodies, and explosives), and(v) and any other activity reasonably related or complementary to any of the foregoing.

‘‘Currency Agreement’’ means any foreign exchange contract, currency swap agreement orother similar agreement with respect to currency values.

‘‘Disinterested Directors’’ means, with respect to any transaction or series of relatedtransactions, a member of the Board of Directors of the Issuer, a Guarantor or its relevantSubsidiary who does not have any material direct or indirect financial interest in or withrespect to such transaction or series of related transactions. A Person shall not be ineligibleto constitute a Disinterested Director solely as a result of such Person owning any equityinterests of the Issuer, a Guarantor or any of their respective Subsidiaries or acting as anofficer, director or employee of the Issuer, a Guarantor or any of their respective Subsidiaries.

‘‘Disposal Proceeds’’ from an Asset Sale means the proceeds thereof in the form of cash orCash Equivalents, including payments in respect of deferred payment obligations whenreceived in the form of cash or Cash Equivalents (except to the extent such obligations arefinanced or sold with recourse to the Issuer, a Guarantor or any of their respectiveSubsidiaries) and proceeds from the conversion of other property received when converted tocash or Cash Equivalents, net of:

(a) brokerage commissions and other fees and expenses (including fees and expenses ofaccounting and/or legal advisers and/or investment bankers), title and recording taxexpenses, commissions and other fees and expenses relating to such Asset Sale;

(b) provision for all taxes required to be paid or payable, or required to be accrued as aliability determined in conformity with Accounting Standards as a result of such AssetSale;

(c) payments made to repay Indebtedness or any other obligation outstanding at the time ofsuch Asset Sale that either is secured by a Lien on the property or assets sold, or isrequired to be paid as a result of such sale;

(d) all distribution and other payments required to be made to minority interest holders inSubsidiaries as a result of such Asset Sale;

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(e) any portion of the purchase price from an Asset Sale placed in escrow, whether as areserve for adjustment of the purchase price, for satisfaction of indemnities in respect ofsuch Asset Sale or otherwise in connection with that Asset Sale; provided, however, thatupon the termination of that escrow, Net Cash Proceeds will be increased by any portionof funds in the escrow that are released to the Issuer or any Subsidiary; and

(f) appropriate amounts to be provided by the Issuer or any of its Subsidiaries as a reserveagainst any liabilities associated with such Asset Sale, including, without limitation,pension and other post-employment benefit liabilities, liabilities related to environmentalmatters and liabilities under any indemnification obligation associated with such AssetSale, all as determined in conformity with Accounting Standards.

‘‘Disqualified Stock’’ means, with respect to any Person, any Capital Stock which by itsterms (or by the terms of any security into which it is convertible or for which it isexchangeable at the option of the holder) or upon the happening of any event:

(a) matures or is mandatorily redeemable (other than redeemable only for Capital Stock ofsuch Person which is not itself Disqualified Stock) pursuant to a sinking fund obligationor otherwise;

(b) is convertible or exchangeable at the option of the holder for Indebtedness orDisqualified Stock; or

(c) is mandatorily redeemable or must be purchased upon the occurrence of certain eventsor otherwise, in whole or in part;

in each case on or prior to the first anniversary of the Stated Maturity of the Notes; provided,however, that any Capital Stock that would not constitute Disqualified Stock but for provisionsthereof giving holders thereof the right to require such Person to purchase or redeem suchCapital Stock upon the occurrence of an asset sale or change of control occurring prior tothe first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stockif (i) the change of control provisions applicable to such Capital Stock are not morefavourable to the holders of such Capital Stock than the terms applicable to the Notes andset forth in Condition 5.3, (ii) the ‘‘asset sale’’ provisions are not inconsistent with theprovisions of Condition 3.4 and (iii) any such requirement only becomes operative aftercompliance with such terms applicable to the Notes.

The amount of any Disqualified Stock that does not have a fixed redemption, repayment orrepurchase price will be calculated in accordance with the terms of such Disqualified Stock asif such Disqualified Stock were redeemed, repaid or repurchased on any date on which theamount of such Disqualified Stock is to be determined pursuant to the Trust Deed; provided,however, that if such Disqualified Stock could not be required to be redeemed, repaid orrepurchased at the time of such determination, the redemption, repayment or repurchaseprice will be the book value of such Disqualified Stock as reflected in the most recentfinancial statements of such Person.

‘‘Dividend Threshold Amount’’ means, in respect of the declaration and payment of anydividends in respect of ordinary shares of the Parent, an amount which equates to a yield of10% on the ordinary shares of the Parent per year (as determined by the Parent in goodfaith);

‘‘EEA Regulated Market’’ means a market as defined by Article 4.1 (14) of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments.

‘‘Event of Default’’ has the meaning set forth in Condition 8.

‘‘Exchange Act’’ means the U.S. Securities Exchange Act of 1934, as amended.

‘‘Fair Market Value’’ means the price that would be paid in an arm’s-length transactionbetween an informed and willing seller under no compulsion to sell and an informed andwilling buyer under no compulsion to buy, as determined in good faith by the Parent or, withrespect to any transaction or series of related transactions involving an aggregate value inexcess of US$50 million (or its US dollar Equivalent), the price as determined by anIndependent Appraiser.

‘‘FPM Mining Facility’’ means the property, plant and equipment of FPM (as determined inaccordance with Accounting Standards) but excluding the Non-GPL Licences.

‘‘Group’’ means the Parent and its consolidated Subsidiaries.

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‘‘Guarantee’’ means any obligation, contingent or otherwise, of any Person directly orindirectly guaranteeing any Indebtedness of any other Person and any obligation, direct orindirect, contingent or otherwise, of such Person:

(a) to purchase or pay (or advance or supply funds for the purchase or payment of) suchIndebtedness of such other Person (whether arising by virtue of partnershiparrangements, or by agreement to keep-well, to purchase assets, goods, securities orservices, to take-or-pay, or to maintain financial statement conditions or otherwise); or

(b) entered into for purposes of assuring in any other manner the obligee of suchIndebtedness of the payment thereof or to protect such obligee against loss in respectthereof (in whole or in part),

provided, that Guarantee shall not include endorsements for collection or deposit in theordinary course of business. Guarantee used as a verb has a corresponding meaning.

‘‘Guarantors’’ means the Initial Guarantors together with the Additional Note Guarantors andAdditional Note Sureties and ‘‘Guarantor’’ means any of them.

‘‘Hedging Obligations’’ of any Person means the obligations of such Person pursuant to anyInterest Rate Agreement or Currency Agreement or other agreement or arrangement designedto protect such Person against fluctuations in currency, exchange rates, interest rates orcommodity prices.

‘‘IFRS’’ means International Financial Reporting Standards.

‘‘Incur’’ means, with respect to any Indebtedness or other obligation of any Person, to create,issue, incur (including by conversion, exchange or otherwise), assume, guarantee or otherwisebecome liable in respect of such Indebtedness or other obligation of such Person (and‘‘Incurrence’’, ‘‘Incurred’’ and ‘‘Incurring’’ shall have meanings correlative to the preceding).Indebtedness of any acquired Person or any of its Subsidiaries existing at the time suchacquired Person becomes a Subsidiary of the Issuer, a Guarantor or any of their respectiveSubsidiaries (or is merged into or consolidated with the Issuer, a Guarantor or any of theirrespective Subsidiaries), whether or not such Indebtedness was Incurred in connection with,as a result of, or in contemplation of, such acquired Person becoming a Subsidiary of theIssuer, a Guarantor or any of their respective Subsidiaries (or being merged into orconsolidated with the Issuer, a Guarantor or any of their respective Subsidiaries), shall bedeemed Incurred at the time any such acquired Person becomes a Subsidiary of the Issuer, aGuarantor or any of their respective Subsidiaries (or merges into or consolidates with theIssuer, a Guarantor or any of their respective Subsidiaries) provided that the following will notbe deemed to be an Incurrence:

(a) the accrual of interest or the accretion of original issue discount;

(b) the amortisation of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security;

(c) the payment of regularly scheduled interest in the form of additional Indebtedness of thesame instrument or the payment of regularly scheduled dividends on Capital Stock in theform of additional Capital Stock of the same class and with the same terms; and

(d) the obligation to pay a premium in respect of Indebtedness arising in connection with theissuance of the notice of redemption or the making of a mandatory offer to purchasesuch Indebtedness.

‘‘Indebtedness’’ means, with respect to any Person at any date of determination (withoutduplication):

(a) the principal in respect of (A) indebtedness of such Person for money borrowed and (B)indebtedness raised under any note purchase facility or evidenced by notes, debentures,bonds or other similar instruments for the payment of which such Person is responsibleor liable, including, in each case, any premium on such indebtedness to the extent suchpremium has become due and payable;

(b) all Capital Lease Obligations, exceeding US$10 million or its US$ Dollar Equivalent atany time, of such Person and all Attributable Debt in respect of Sale/LeasebackTransactions entered into by such Person;

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(c) all obligations of such Person issued or assumed as the deferred purchase price ofproperty or services (except where the purchase price is due no more than six monthsafter the earlier of the placing of such property into service, the taking of delivery andtitle thereto or the date of performance of such service, as the case may be), allconditional sale obligations of such Person and all obligations of such Person under anytitle retention agreement (but excluding any accounts payable or other liability to tradecreditors arising in the ordinary course of business);

(d) the amount of all obligations of such Person with respect to the redemption, repaymentor other repurchase of any Disqualified Stock of such Person or, with respect to anyPreferred Stock of any Subsidiary of such Person, the principal amount of suchPreferred Stock to be determined in accordance with the Trust Deed (but excluding, ineach case, any accrued dividends),

to the extent any of the preceding items (other than Attributable Debt) would appear as aliability upon a balance sheet of the specified Person prepared in accordance with AccountingStandards.

In addition, the term Indebtedness includes all Indebtedness of others secured by a Lien onany asset of the specified Person (whether or not such Indebtedness is assumed by thespecified Person) and, to the extent not otherwise included, the Guarantee by the specifiedPerson of any Indebtedness of any other Person.

In addition, for the purpose of avoiding duplication in calculating the outstanding principalamount of Indebtedness for purposes of Condition 3.2. Indebtedness arising solely by reasonsof the existence of a Lien to secure other Indebtedness permitted to be incurred underCondition 3.2 will not be considered incremental Indebtedness.

‘‘Independent Appraiser’’ means any of PricewaterhouseCoopers LLP, KPMG LLP, Deloitte& Touche LLP, Ernst & Young LLP or such investment banking, accountancy or appraisal firmof international standing selected by the competent management body of the Issuer or therelevant Subsidiary (with the prior written consent of the Trustee, which consent shall not beunreasonably withheld), provided it is not an Affiliate of the Issuer, or any Subsidiary.

‘‘Initial Guarantors’’ means the Parent, AG, FME and FPM and ‘‘Initial Guarantor’’ meansany one of them.

‘‘Interest Rate Agreement’’ means any interest rate swap agreement, interest rate capagreement or other financial agreement or arrangement with respect to exposure to interestrates.

‘‘Investment’’ in any Person means any direct or indirect advance, loan (other than advancesto customers in the ordinary course of business that are recorded as accounts receivable onthe balance sheet of the lender) or other extensions of credit (including by way of guaranteeor similar arrangement but excluding amounts represented by deposits with a bank or otherfinancial institution) or capital contribution to (by means of any transfer of cash or otherproperty to others or any payment for property or services for the account or use of others),or any purchase or acquisition of Capital Stock, Indebtedness or other similar instrumentsissued by such Person, provided that each of the following shall not be deemed to be anInvestment:

(a) Hedging Obligations entered into in the ordinary course of business and in compliancewith the Trust Deed; and

(b) endorsements of negotiable instruments and documents in the ordinary course ofbusiness.

If the Issuer or a Guarantor or any of their respective Subsidiaries issues, sells or otherwisedisposes of any Capital Stock of a Person that is a Subsidiary such that, after giving effectthereto, such Person is no longer a Subsidiary, any Investment by the Issuer or a Guarantoror any of their respective Subsidiaries in such Person remaining after giving effect thereto willbe deemed to be a new Investment at such time. The acquisition by the Issuer or aGuarantor or any of their respective Subsidiaries of a Person that holds an Investment in athird Person will be deemed to be an Investment by the Issuer or a Guarantor or any of theirrespective Subsidiaries in such third Person at such time. Except as otherwise provided forherein, the amount of an Investment shall be its fair market value at the time the Investmentis made and without giving effect to subsequent changes in value.

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‘‘Issue Date’’ means 24 February 2015.

‘‘Issuer’’ means the party named as such above until a successor replaces it in accordancewith Condition 3.5 and thereafter means such successor.

‘‘Lien’’ means any mortgage, pledge, security interest, encumbrance, lien or charge of anykind (including, without limitation, any conditional sale or other title retention agreement orlease in the nature thereof, any sale with recourse against the seller or any Affiliate of theseller, or any agreement to give any security interest) securing any obligation of any Person.

‘‘Material Subsidiary’’ means at any relevant time a Subsidiary of the Parent:

(a) whose total consolidated assets (excluding intercompany loans, intercompany payables,intercompany receivables and intercompany unrealised gains and losses in inventories)represent not less than 10% of the total consolidated assets of the Group, or whosegross consolidated revenues (excluding intercompany revenues) or operating incomerepresent not less than 10% of the gross consolidated revenues or operating income ofthe Group, (determined by reference to the most recent publicly available annual orinterim financial statements of the Group prepared in accordance with AccountingStandards and the latest financial statements of the Subsidiary determined inaccordance with Accounting Standards); or

(b) to which is transferred all or substantially all the assets and undertakings of a Subsidiarywhich immediately prior to such transfer is a Material Subsidiary,

save that FPM and the Issuer shall at all times be deemed to be a Material Subsidiary andprovided always that Ferrexpo Belanovo Mining and Ferrexpo Yeristovo will not be includedwithin this definition.

‘‘Moody’s’’ means Moody’s Investors Services, Ltd. and any successor to its rating agencybusiness.

‘‘Net Cash Proceeds’’, with respect to any issuance or sale of Capital Stock or Indebtedness,means the cash proceeds of such issuance or sale net of legal fees, accountants’ fees,underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultantand other fees actually incurred in connection with such issuance or sale and net of taxespaid or payable as a result thereof.

‘‘Non-GPL Licences’’ means those licences held in the name of FPM other than theproduction licences relating to the Gorishnye-Plavninskoe field and the Lavrikovskoe fielddated 29 July 1997 and as the same may be renewed, amended or extended from time totime.

‘‘Noteholder’’ means the person in whose name the Note is registered in the register of thenoteholders (or in the case of joint holders, the first named holder thereof).

‘‘Notes’’ means the US$160,724,000 10.375% Guaranteed Amortising Notes due 2019proposed to be issued by the Issuer pursuant to the Trust Deed.

‘‘Note Guarantee’’ means the guarantee of the Parent, AG, FME and any Additional NoteGuarantors, as set out in the Trust Deed.

‘‘Note Suretyship’’ means the surety of FPM and any Additional Note Sureties, as set out inthe Surety Agreement.

‘‘Officer’’ means, with respect to a Person, the Chairman of the Board of Directors, theGeneral Director, the Chief Executive Officer, the President, or Vice-President, the ChiefFinancial Officer, the Controller, the Treasurer or the General Counsel of such Person as anindividual occupying an equivalent position.

‘‘Officers’ Certificate’’ means a certificate signed by two Officers of the Issuer or aGuarantor, as the case may be.

‘‘Opinion of Counsel’’ means a written opinion obtained at the Issuer’s expense from legalcounsel who is acceptable to the Trustee in form and content satisfactory to the Trustee. Thecounsel may be an employee of or counsel to the Issuer, the Guarantors or the Trustee.

‘‘Permitted Holder means Kostyantin Zhevago.

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‘‘Permitted Indebtedness’’ means

(a) Indebtedness incurred to finance or facilitate the performance of Core or RelatedBusiness provided that the aggregate principal amount of such Indebtedness incurred inthis paragraph does not exceed US$700 million or its US dollar Equivalent at any time;

(b) Intercompany and intra-Group Indebtedness owed to and held by the Issuer, aGuarantor, or any of their respective Subsidiaries; provided, however, that (i) anysubsequent disposition, pledge or transfer of such Indebtedness (other than to theIssuer, a Guarantor, or any of their respective Subsidiaries) shall be deemed, in eachcase, to constitute the Incurrence of such Indebtedness by the obligor thereon and (ii) ifa Guarantor is the obligor on such Indebtedness, such Indebtedness is unsecured and,if such Indebtedness is owed to a Subsidiary of the Parent that is not a Guarantor, isexpressly subordinated to the prior payment in full in cash of all obligations of aGuarantor in the Note Guarantee or Note Suretyship (as applicable);

(c) Indebtedness represented by the Notes and the Note Guarantee and the NoteSuretyship and Indebtedness represented by the 2016 Notes and any Guarantees orsuretyships in respect of the 2016 Notes and the 2019 Notes and any Guarantees orsuretyships in repeat of the 2019 Notes;

(d) Indebtedness of Issuer, a Guarantor, or any of their respective Subsidiaries Incurred andoutstanding on or prior to the date on which such Subsidiary became a Subsidiary of theIssuer or a Guarantor or is merged, consolidated, amalgamated or otherwise combinedwith (including pursuant to any acquisition of assets and assumption of related liabilities)the Parent or any of its Subsidiaries (other than Indebtedness Incurred in connectionwith, or to provide all or any portion of the funds or credit support utilised toconsummate, the transaction or series of related transactions pursuant to which suchSubsidiary became a Subsidiary of the Issuer or a Guarantor); provided, however, that,on the date of such acquisition and after giving pro forma effect thereto, of the Issuer, orthe relevant Guarantor would have been entitled to Incur at least US$1.00 or its USdollar Equivalent of additional Indebtedness pursuant to Condition 3.2(a) or theConsolidated Leverage Ratio would not be greater than it was immediately prior to givingpro forma effect to the incurrence of such Indebtedness pursuant to this paragraph (d);

(e) Refinancing Indebtedness Incurred by the Issuer, a Guarantor, or any of their respectiveSubsidiaries in respect of Indebtedness Incurred by the Issuer, a Guarantor, or any oftheir respective Subsidiaries pursuant to Condition 3.2(a) or (b) and paragraphs (c), (d)or (e) in this definition of Permitted Indebtedness;

(f) Hedging Obligations of Issuer, a Guarantor, or any of their respective Subsidiaries;provided, however, that each Interest Rate Agreement is entered into for the purpose oflimiting interest rate risk and all such Hedging Obligations are not entered into forspeculative purposes;

(g) Obligations in respect of performance, bid and surety bonds, completion guarantees,letters of credit, veksels (Ukrainian hryvnia-denominated short-term promissory notes) orsimilar obligations provided by the Issuer, a Guarantor, or any of their respectiveSubsidiaries in the ordinary course of business, provided, however, that, in relation toveksels only upon demand being made under such obligations, such obligations arereimbursed or the Indebtedness thereunder repaid within 30 days following such drawingor occurrence;

(h) Indebtedness arising from the honouring by a bank or other financial institution of acheque, draft or similar instrument inadvertently drawn against insufficient funds in theordinary course of business; provided, however, that such Indebtedness is extinguishedwithin five Business Days of its Incurrence;

(i) Indebtedness arising from agreements of the Issuer, a Guarantor, or any of theirrespective Subsidiaries providing for indemnification, adjustment of purchase pricedeferred or contingent purchase price or similar obligations, in each case, incurred orassumed in connection with the acquisition or disposition of any business, assets orCapital Stock of the Issuer, a Guarantor, or any of their respective Subsidiaries;provided, however, that (A) the maximum aggregate liability in respect of all suchIndebtedness shall at no time exceed the net proceeds (including the Fair Market Value

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of non-cash consideration) actually received by (or held in escrow as a collateral forsuch Indebtedness for later release to) the Issuer, a Guarantor, or any of theirrespective Subsidiaries in connection with such disposition (without giving effect to anysubsequent changes in value) and (B) such Indebtedness is not reflected on the balancesheet of the Issuer, a Guarantor, or any of their respective Subsidiaries (contingentobligations referred to in a footnote to financial statements and not otherwise reflectedon the balance sheet shall not be deemed to be reflected on such balance sheet forpurposes of (B) above);

(j) Indebtedness in respect of workers’ compensation claims or claims arising under similarlegislation, or pursuant to self-insurance obligations and not in connection with theborrowing of money or the obtaining of advances or credit;

(k) Customer deposits and advance payments received from customers in the ordinarycourse of business; and

(l) any Guarantee of Indebtedness permitted to be incurred under Condition 3.2.

Indebtedness outstanding on the Issue Date (other than Indebtedness that would be permittedto be incurred under paragraphs (b) to (l) of the definition of Permitted Indebtedness) will bedeemed to have been incurred on such date in reliance on the exception provided byparagraph (a) of the definition of Permitted Indebtedness.

‘‘Permitted Liens’’ means

(a) Liens granted by: (i) a Subsidiary of the Issuer or a Guarantor in favour of the Issuer ora Guarantor, or (ii) a Subsidiary of the Issuer or a Guarantor in favour of anotherSubsidiary of the Issuer or a Guarantor, or (iii) by the Issuer in favour of a Guarantor, ineach case with respect to the property or assets, or any income or profits therefrom, ofthe Issuer or a Guarantor or such Subsidiary of the Issuer or either Guarantor, as thecase may be;

(b) any Lien existing on the Issue Date and any amendments, restatements, modifications,renewals, supplements, refundings, replacements or refinancings of those Liens;provided that the amendments, restatements, modifications, renewals, supplements,refundings, replacements or refinancings are no more restrictive, taken as a whole, withrespect to such dividend and other payment restrictions than those contained in thoseagreements on the Issue Date;

(c) Liens imposed by law, including but without limitation, Liens of landlords and carriers,warehousemen, mechanics, suppliers, material men, repairmen or other similar Liensarising in the ordinary course of business;

(d) Liens on property or shares of Capital Stock of another Person at the time such otherPerson becomes a Subsidiary of the Issuer or a Guarantor or any of their respectiveSubsidiaries; provided, however, that the Liens may not extend to any other propertyowned by the Issuer or a Guarantor or any of their respective Subsidiaries (other thanassets and property affixed or appurtenant thereto);

(e) Liens on property at the time the Issuer or a Guarantor or any of their respectiveSubsidiaries acquires the property, including any acquisition by means of a merger orconsolidation with or into the Issuer or a Guarantor or any of their respectiveSubsidiaries; provided, however, that the Liens may not extend to any other propertyowned by the Issuer or a Guarantor or any of their respective Subsidiaries (other thanassets and property affixed or appurtenant thereto);

(f) any Lien securing the Notes and the Note Guarantee or Note Suretyship;

(g) any Lien incurred, or pledges or deposits in connection with workers’ compensation,unemployment insurance and other social security benefits and other obligations of likenature in the ordinary course of business;

(h) any deposits or other Liens to secure the performance of bids, trade contacts,government contracts, leases, statutory obligations, customs duties, surety and appealbonds, performance or return-of-money bonds or liabilities to insurance carriers underinsurance or self-insurance arrangements and other obligations of like nature, in eachcase so long as, such Liens do not secure obligations constituting Indebtedness forborrowed money and are incurred in the ordinary course of business;

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(i) easements, rights of way, restrictions (including zoning restrictions), reservations,permits, servitudes, utility lines, survey exceptions, leases or reservations of mineral orwater rights, defects or irregularities in title and other similar charges and encumbrances,and Liens arising under leases or subleases granted to others, in each case notinterfering in any material respect with the business of the Issuer or any MaterialSubsidiary and existing, arising or incurred in the ordinary course of business;

(j) any Lien securing reimbursement obligations of the Issuer or a Guarantor or any of theirrespective Subsidiaries with respect to letters of credit encumbering only documents andother property relating to such letters of credit and other property relating to such lettersof credit and the products or proceeds thereof in the ordinary course of business;provided that such letters of credit do not constitute Indebtedness;

(k) any Lien upon any iron ore export contracts (including contracts for sale, transportationor exchange) or other conditional sale, title retention, consignment or similar contractsentered into in the ordinary course of business of the Issuer or a Guarantor and itsSubsidiaries in a form that is customary in the iron ore mining industry, Core or RelatedBusiness, as applicable;

(l) any Lien in respect of Hedging Obligations so long as any related Indebtedness ispermitted to be incurred under the terms of the Trust Deed and such HedgingObligations are not speculative;

(m) a right of set-off, right to combine accounts or any analogous right which any bank orother financial institution may have relating to any credit balance of any member of theGroup; provided, however, that (i) such deposit account is not a dedicated cashcollateral account and is not subject to restrictions against access by the Issuer or aGuarantor or any of their respective Subsidiaries and (ii) such deposit account is notintended by the Issuer or any Subsidiary to provide collateral to the depositoryinstitution;

(n) any Lien for taxes or assessments, customs charges, government charges and similarcharges, including VAT, which either are not delinquent or are being contested in goodfaith by appropriate proceedings for which the Issuer or a Guarantor or relevantSubsidiary has set aside in its accounts reserves or other provisions to the extentrequired by Accounting Standards;

(o) Liens securing Indebtedness incurred pursuant to Condition 3.2(b) that falls underparagraph (d) in the definition of Permitted Indebtedness and any amendments,restatements, modifications, renewals, supplements, refundings, replacements orrefinancings in relation to those Liens;

(p) Liens, deposits or pledges to secure public or statutory obligations, surety, stay, appeal,indemnity, performance or other similar bonds or obligations; and Liens, deposits orpledges in lieu of such bonds or obligations, or to secure such bonds or obligations, orto secure letters of credit in lieu of or supporting the payment of such bonds orobligations;

(q) any interest or title of a lessor, licencor or sublicencor in the property subject to anylease, licence or sublicence (other than any property that is the subject of a Sale andLeaseback Transaction);

(r) judgment and attachment Liens not giving rise to an Event of Default and notices of uispendens and associated rights related to litigation being contested in good faith byappropriate proceedings and for which adequate reserves or other appropriate provisionhave been made;

(s) Liens resulting from escrow arrangements entered into in connection with the dispositionof assets;

(t) any right of refusal, right of first offer, option or other agreement to sell or otherwisedispose of an asset or any other option, contract or other agreement to sell an asset;provided such sale is not otherwise prohibited under the Trust Deed; and

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(u) Liens securing the higher of (X): Indebtedness Incurred pursuant to Condition 3.2(b) thatfalls under paragraph (a) in the definition of Permitted Indebtedness and (Y)Indebtedness in an aggregate principal amount not exceeding a Consolidated LeverageRatio of 1.00 to 1.00.

‘‘Person’’ means any individual, corporation, partnership, joint venture, trust, unincorporatedorganisation or government or any Agency or political subdivision thereof.

‘‘Potential Event of Default’’ means any condition, event or act which, with the lapse of timeand/or the issue, making or giving of any notice, certification, declaration, demand,determination and/or request and/or the taking of any similar action and/or the fulfilment ofany similar condition, could constitute an Event of Default.

‘‘Preferred Stock’’, as applied to the Capital Stock of any Person, means Capital Stock ofany class or classes (however designated) which is preferred as to the payment of dividendsor distributions, or as to the distribution of assets upon any voluntary or involuntary liquidationor dissolution of such Person, over shares of Capital Stock of any other class of suchPerson.

‘‘Production Assets’’ means property, plant and equipment of the Group determined inaccordance with Accounting Standards.

‘‘Prohibited Asset Sale’’ means any direct or indirect lease, sale, sale and lease-back,transfer or other disposition either in one transaction or in a series of transactions, by FPM(or the Issuer or an Initial Guarantor if relevant) to a Person that is not the Issuer or aGuarantor, in respect of:

(a) all and any licences to own and operate the FPM Mining Facility;

(b) all and any assets constituting the FPM Mining Facility; and

(c) all and any other assets (excluding (A) goods for sale, (B) transfers of cash and CashEquivalents in the ordinary course of business and (C) dispositions of receivables inconnection with the compromise, settlement or collection thereof in the ordinary courseof business) that are material to the operation and performance of the FPM MiningFacility in the good faith determination of the Parent.

provided that FPM may sell, transfer or otherwise dispose of assets otherwise prohibited bythis definition in an aggregate amount of up to US$10,000,000 (or its US dollar Equivalent) inany twelve month period.

‘‘Refinance’’ means, in respect of any security or Indebtedness, to refinance, extend, renew,refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness inexchange or replacement for, such security or Indebtedness in whole or in part. Refinancedand Refinancing shall have correlative meanings.

‘‘Related Person’’ with respect to any Permitted Holder means:

(a) in the case of any individual, any spouse, family member or relative of such individual,any trust or partnership for the benefit of one or more of such individual and any suchspouse, family member or relative, or the estate, executor, administrator, committee orbeneficiaries of any thereof;

(b) any trust, corporation, partnership or other Person for which one or more of thePermitted Holders and other Related Persons of any thereof, directly or indirectlyconstitute the whole or entire stockholders, beneficiaries, partners or owners thereof, orpersons beneficially holding in the aggregate the whole or entire controlling interesttherein; or

(c) any investment fund or vehicle managed, sponsored or advised by such PermittedHolder on their behalf or any successor thereto or by any Affiliate of such PermittedHolder or on their behalf any such successor.

‘‘Restricted Distribution’’, with respect to any Person, means:

(a) the declaration or payment of any dividends or any other distributions of any sort inrespect of its Capital Stock (including any payment in connection with any merger orconsolidation involving such Person) or similar payment to the direct or indirect holdersof its Capital Stock (other than (A) dividends or distributions payable solely in its CapitalStock (other than Disqualified Stock) or in options, warrants or other rights to purchase

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such stock, (B) dividends or distributions payable solely to the Parent or a Subsidiaryand (C) pro rata dividends or other distributions made by a Subsidiary that is not awholly owned Subsidiary to minority stockholders (or owners of an equivalent interest inthe case of a Subsidiary that is an entity other than a corporation));

(b) the purchase, repurchase, redemption, defeasance or other acquisition or retirement forvalue of any Capital Stock of the Parent held by any Person (other than by aSubsidiary), including in connection with any merger or consolidation and including theexercise of any option to exchange any Capital Stock (other than into Capital Stock ofthe Parent that is not Disqualified Stock); or

(c) the purchase, repurchase, redemption, defeasance or other acquisition or retirement forvalue, prior to scheduled maturity, scheduled repayment or scheduled sinking fundpayment of any Subordinated Obligations of the Issuer or any Guarantor (other than (A)from or by the Parent or a Subsidiary or (B) the purchase, repurchase, redemption,defeasance or other acquisition or retirement of Subordinated Obligations purchased inanticipation of satisfying a sinking fund obligation, principal instalment or final maturity, ineach case due within one year of the date of such purchase, repurchase, redemption,defeasance or other acquisition or retirement).

‘‘Sale/Leaseback Transaction’’ means an arrangement relating to property owned by theIssuer or a Guarantor or their respective Subsidiaries on the Issue Date or thereafter acquiredby the Issuer or a Guarantor or their respective Subsidiaries whereby the Issuer or aGuarantor or a respective Subsidiary transfers such property to a Person and the Issuer, aGuarantor or their respective Subsidiaries leases it from such Person.

‘‘Standard & Poor’s’’ means Standard & Poor’s, a division of The McGraw-Hill Companies,Inc., and any successor to its rating agency business.

‘‘Stated Maturity’’ means:

(a) with respect to any Indebtedness, the date specified in such Indebtedness as the fixeddate on which the final instalment of principal of such Indebtedness is due and payable;and

(b) with respect to any scheduled instalment of principal of or interest on any Indebtedness,the date specified in such Indebtedness as the fixed date on which such instalment isdue and payable.

‘‘Subordinated Obligation’’ means, with respect to a Person, any Indebtedness of suchPerson (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate orjunior in right of payment to the Notes or the Note Guarantee or the Note Suretyship,pursuant to a written agreement to that effect.

‘‘Subsidiary of any Person’’ means (a) any corporation more than 50% of the outstandingvoting power of the Capital Stock of which is owned or controlled, directly or indirectly, bysuch Person or by one or more other Subsidiaries of such Person, or by such Person andone or more other Subsidiaries thereof, (b) any limited partnership of which such Person orany Subsidiary of such Person is a general partner, (c) any other Person in which suchPerson, or one or more other Subsidiaries of such Person, or such Person and one or moreother Subsidiaries, directly or indirectly, has more than 50% of the outstanding partnership orsimilar interests or has the power, by contract or otherwise, to direct or cause the direction ofthe policies, management and affairs thereof or (d) any Person whose financial statementsare required by Accounting Standards to be consolidated into the consolidated financialstatements of the Issuer.

‘‘Surety Agreement’’ means the surety agreement dated the Issue Date, between the Issuer,FPM and the Trustee as amended, varied or supplemented from time to time.

‘‘Taxes’’ has the meaning set out in Condition 7.

‘‘Trust Deed’’ means the trust deed to constitute the Notes for the equal and rateable benefitof the Noteholders to be dated the Issue Date between, among others, the Issuer, in itscapacity as issuer, the Guarantors and the Trustee as amended, varied or supplemented fromtime to time.

‘‘Trustee’’ means BNY Mellon Corporate Trustee Services Limited, as trustee under the TrustDeed and any successor thereto as provided thereunder.

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‘‘US dollar Equivalent’’ means with respect to any amount denominated in a currency otherthan US dollars, at any time for the determination thereof, the amount of US dollars obtainedby converting such other currency involved into US dollars at the spot rate for the purchaseof US dollars with such other currency as most recently published under ‘‘Currency Rates’’ inthe section of the Financial Times entitled ‘‘Currencies, Bonds & Interest Rates’’.

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BOOK-ENTRY, DELIVERY AND FORM

The Global Note Certificates

The Regulation S Notes will be evidenced on issue by the Regulation S Global Note Certificateregistered in the name of a nominee for, and deposited with a common depositary on behalf of,Euroclear and Clearstream, Luxembourg. Beneficial interests in the Regulation S Global NoteCertificate may be held only through Euroclear or Clearstream, Luxembourg at any time. See ‘‘–Book-entry Procedures for the Global Note Certificates’’. By acquisition of a beneficial interest inthe Regulation S Global Note Certificate, the purchaser thereof will be deemed to represent,among other things, that it is not a U.S. person, that it is located outside the United States andthat, if it determines to transfer such beneficial interest prior to the expiration of the ‘‘distributioncompliance period’’ (as such term is defined in Rule 902 of Regulation S), it will transfer suchinterest only (a) to a non-U.S. person in an offshore transaction in accordance with Rule 903 orRule 904 of Regulation S or (b) in accordance with Rule 144A, to a person that it and any personacting on its behalf reasonably believe is a QIB purchasing for its own account or the account of aQIB, in each case in accordance with any applicable securities laws of any state of the UnitedStates. See ‘‘Selling and Transfer Restrictions’’.

The Rule 144A Notes will be evidenced on issue by the Rule 144A Global Note Certificatedeposited with a custodian for, and registered in the name of a nominee of, DTC. Beneficialinterests in the Rule 144A Global Note Certificate may only be held through DTC at any time. See‘‘– Book-entry Procedures for the Global Note Certificates’’. By acquisition of a beneficial interest inthe Rule 144A Global Note Certificate, the purchaser thereof will be deemed to represent, amongother things, that it is a QIB and that, if in the future it determines to transfer such beneficialinterest, it will transfer such interest in accordance with the procedures and restrictions contained inthe Trust Deed. See ‘‘Selling and Transfer Restrictions’’.

Beneficial interests in Global Note Certificates will be subject to certain restrictions on transfer setforth therein and in the Trust Deed, and the Global Note Certificates will bear the applicablelegends regarding the restrictions set forth under ‘‘Selling and Transfer Restrictions’’. A beneficialinterest in the Regulation S Global Note Certificate may be transferred to a person who takesdelivery in the form of an interest in the Rule 144A Global Note Certificate only in denominationsgreater than or equal to the minimum denominations applicable to interests in the Rule 144AGlobal Note Certificate and only upon receipt by the Registrar of a written certification (in the formprovided in an Agency Agreement relating to the Notes (the Agency Agreement)) to the effect thatthe transferor reasonably believes that the transferee is a QIB and that such transaction is inaccordance with any applicable securities laws of any state of the United States or any otherjurisdiction. Beneficial interests in the Rule 144A Global Note Certificate may be transferred to aperson who takes delivery in the form of an interest in the Regulation S Global Note Certificateonly upon receipt by the Registrar of a written certification (in the form provided in the AgencyAgreement) from the transferor to the effect that the transfer is being made in an offshoretransaction in accordance with Regulation S.

Any beneficial interest in the Regulation S Global Note Certificate that is transferred to a personwho takes delivery in the form of an interest in the Rule 144A Global Note Certificate will, upontransfer, cease to be an interest in the Regulation S Global Note Certificate and become aninterest in the Rule 144A Global Note Certificate and, accordingly, will thereafter be subject to alltransfer restrictions and other procedures applicable to beneficial interests in the Rule 144A GlobalNote Certificate for as long as it remains such an interest. Any beneficial interest in the Rule 144AGlobal Note Certificate that is transferred to a person who takes delivery in the form of an interestin the Regulation S Global Note Certificate will, upon transfer, cease to be an interest in the Rule144A Global Note Certificate and become an interest in the Regulation S Global Note Certificateand, accordingly, will thereafter be subject to all transfer restrictions and other proceduresapplicable to beneficial interests in the Regulation S Global Note Certificate for so long as itremains such an interest. No service charge will be made for any registration of transfer orexchange of Notes but the Registrar may require payment of a sum sufficient to cover any tax orother governmental charge payable in connection therewith.

Except in the limited circumstances described below, owners of beneficial interests in Global NoteCertificates will not be entitled to receive physical delivery of Definitive Certificates. The Notes arenot issuable in bearer form.

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In addition, each Global Note Certificate will contain a provision which modifies the Terms andConditions of the Notes as they apply to the Notes evidenced by the Global Note Certificate. Thefollowing is a summary of this provision:

Exchange and Registration of Title

Owners of interests in the Notes in respect of which this Global Note Certificate is issued will onlybe entitled to have title to the Notes registered in their names and to receive individual definitiveNotes if a Global Note Certificate is held by or on behalf of (A) DTC, and DTC notifies the Issuerthat it is no longer willing or able to discharge properly its responsibilities as depositary withrespect to the Global Note Certificate or ceases to be a ‘‘clearing agency’’ registered under theExchange Act or, if at any time it is no longer eligible to act as such, the Issuer is unable to locatea qualified successor within 90 days of receiving notice or becoming aware of such ineligibility onthe part of DTC or (B) Euroclear or Clearstream, Luxembourg (or any other clearing system asshall have been designated by the Issuer on behalf of which the Notes evidenced by this GlobalNote Certificate may be held), as the case may be, is closed for business for a continuous periodof 14 days (other than by reason of holidays, statutory or otherwise) or announces an intentionpermanently to cease business or does in fact do so.

In such circumstances, the Issuer will cause sufficient individual definitive Notes to be executedand delivered to the Registrar for completion, authentication and despatch to the relevantNoteholders. A person with an interest in the Notes in respect of which this Global Note Certificateis issued must provide the Registrar with a written order containing instructions and such otherinformation as the Issuer and the Registrar may require to complete, execute and deliver suchindividual definitive Notes.

If only one of the Global Note Certificates (the ‘‘Exchanged Global Note Certificate’’) becomesexchangeable for Definitive Certificates in accordance with the above paragraphs, transfers ofNotes may not take place between, on the one hand, persons holding Definitive Certificates issuedin exchange for beneficial interests in the Exchanged Global Note Certificate and, on the otherhand, persons wishing to purchase beneficial interests in the other Global Note Certificate.

Legends

The holder of a Definitive Certificate may transfer the Notes evidenced thereby in whole or in partin the applicable minimum denomination by surrendering it at the specified office of the Registrar orany Transfer Agent, together with the completed form of transfer thereon. Upon the transfer,exchange or replacement of a Rule 144A Definitive Certificate bearing the legend referred to under‘‘Selling and Transfer Restrictions’’, or upon specific request for removal of the legend on a Rule144A Definitive Certificate, the Issuer will deliver only Rule 144A Definitive Certificates that bearsuch legend, or will refuse to remove such legend, as the case may be, unless there is deliveredto the Issuer and the Registrar such satisfactory evidence, which may include an opinion ofcounsel, as may reasonably be required by the Issuer that neither the legend nor the restrictionson transfer set forth therein are required to ensure compliance with the provisions of the SecuritiesAct.

Book-entry Procedures for the Global Note Certificates

Euroclear, Clearstream, Luxembourg and DTC

Custodial and depositary links have been established between Euroclear, Clearstream, Luxembourgand DTC to facilitate the initial issue of the Notes and cross-market transfers of the Notesassociated with secondary market trading. See ‘‘– Book-entry Ownership – Settlement and Transferof Notes’’.

Euroclear and Clearstream, Luxembourg

Euroclear and Clearstream, Luxembourg each hold securities for their customers and facilitate theclearance and settlement of securities transactions through electronic book-entry transfer betweentheir respective accountholders. Indirect access to Euroclear and Clearstream, Luxembourg isavailable to other institutions which clear through or maintain a custodial relationship with anaccountholder of either system. Euroclear and Clearstream, Luxembourg provide various servicesincluding safekeeping, administration, clearance and settlement of internationally traded securitiesand securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal withdomestic securities markets in several countries through established depositary and custodial

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relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridgebetween their two systems across which their respective customers may settle trades with eachother. Their customers are worldwide financial institutions including underwriters, securities brokersand dealers, banks, trust companies and clearing corporations. Investors may hold their interests insuch Global Note Certificates directly through Euroclear or Clearstream, Luxembourg if they areaccountholders (Direct Participants) or indirectly (Indirect Participants and, together with DirectParticipants, Participants) through organisations which are accountholders therein.

DTC

DTC has advised the Issuer as follows: DTC is a limited-purpose trust company organised underthe laws of the State of New York, a ‘‘banking organisation’’ under the laws of the State of NewYork, a member of the U.S. Federal Reserve System, a ‘‘clearing corporation’’ within the meaningof the New York Uniform Commercial Code and a ‘‘clearing agency’’ registered pursuant to theprovisions of Section 17A of the Exchange Act. DTC was created to hold securities for itsparticipants (DTC Participants) and facilitate the clearance and settlement of securities transactionsbetween DTC Participants through electronic computerised book-entry changes in accounts of itsDTC Participants, thereby eliminating the need for physical movement of certificates. DTCParticipants include securities brokers and dealers, banks, trust companies, clearing corporationsand certain other organisations. Indirect access to DTC is available to others, such as banks,securities brokers, dealers and trust companies, that clear through or maintain a custodialrelationship with a DTC Participant, either directly or indirectly.

Investors may hold their interests in the Rule 144A Global Note Certificate directly through DTC ifthey are DTC Participants in the DTC system or indirectly through organisations which are DTCParticipants in such system.

DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Notesonly at the direction of one or more DTC Participants and only in respect of such portion of theaggregate principal amount of the relevant Rule 144A Global Note Certificates as to which suchDTC Participant or DTC Participants has or have given such direction. However, in thecircumstances described under ‘‘Exchange for Definitive Notes’’, DTC will surrender the relevantRule 144A Global Note Certificate for exchange for individual Rule 144A Definitive Certificates(which will bear the legend applicable to transfers pursuant to Rule 144A).

Book-entry Ownership

Euroclear and Clearstream, Luxembourg

The Regulation S Global Note Certificate will have an ISIN and a Common Code and will beregistered in the name of a nominee for, and deposited with a common depositary on behalf of,Euroclear and Clearstream, Luxembourg.

The address of Euroclear is 1 Boulevard du Roi Albert 11, B-1210 Brussels, Belgium, and theaddress of Clearstream, Luxembourg is 42 Avenue J.F. Kennedy, L-1855, Luxembourg.

DTC

The Rule 144A Global Note Certificate will have a CUSIP number and will be deposited with acustodian (the Custodian) for, and registered in the name of a nominee of, DTC. The Custodianand DTC will electronically record the principal amount of the Notes held within the DTC system.The address of DTC is 55 Water Street, New York, New York 10041, United States of America.

Relationship of Participants with Clearing Systems

Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as theholder of a Note evidenced by a Global Note Certificate must look solely to Euroclear,Clearstream, Luxembourg or DTC (as the case may be) for their share of each payment made bythe Issuer to the holder of such Global Note Certificate and in relation to all other rights arisingunder the Global Note Certificate, subject to and in accordance with the respective rules andprocedures of Euroclear, Clearstream, Luxembourg or DTC (as the case may be). The Issuerexpects that, upon receipt of any payment in respect of Notes evidenced by a Global NoteCertificate, the common depositary by whom such Note is held, or nominee in whose name it isregistered, will immediately credit the relevant participants’ or accountholders’ accounts in therelevant clearing system with payments in amounts proportionate to their respective beneficialinterests in the principal amount of the relevant Global Note Certificate as shown on the records of

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the relevant clearing system or its nominee. The Issuer also expects that payments by DirectParticipants or DTC Participants, as the case may be, in any clearing system to owners ofbeneficial interests in any Global Note Certificate held through such Direct Participants or DTCParticipants, as the case may be, in any clearing system will be governed by standing instructionsand customary practices. Save as aforesaid, such persons shall have no claim directly against theIssuer in respect of payments due on the Notes for so long as the Notes are evidenced by suchGlobal Note Certificate and the obligations of the Issuer will be discharged by payment to theregistered holder, as the case may be, of such Global Note Certificate in respect of each amountso paid. None of the Issuer, the Trustee or any Agent will have any responsibility or liability for anyaspect of the records relating to or payments made on account of ownership interests in anyGlobal Note Certificate or for maintaining, supervising or reviewing any records relating to suchownership interests.

Settlement and Transfer of Notes

Subject to the rules and procedures of each applicable clearing system, purchases of Notes heldwithin a clearing system must be made by or through Direct Participants or DTC Participants, asthe case may be, which will receive a credit for such Notes on the clearing system’s records. Theownership interest of each actual purchaser of each such Note (the ‘‘Beneficial Owner’’) will inturn be recorded on the Direct Participants’ or DTC Participants’, as the case may be, records.Beneficial Owners will not receive written confirmation from any clearing system of their purchase,but Beneficial Owners are expected to receive written confirmations providing details of thetransaction, as well as periodic statements of their holdings, from the Direct Participant or DTCParticipants, as the case may be, through which such Beneficial Owner entered into thetransaction. Transfers of ownership interests in Notes held within the clearing system will beaffected by entries made on the books of Direct Participants or DTC Participants, as the case maybe, acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificatesrepresenting their ownership interests in such Notes, unless and until interests in any Global NoteCertificate held within a clearing system are exchanged for Definitive Certificates.

No clearing system has knowledge of the actual Beneficial Owners of the Notes held within suchclearing system and their records will reflect only the identity of the Direct Participants or DTCParticipants, as the case may be, to whose accounts such Notes are credited, which may or maynot be the Beneficial Owners. The Direct Participants or DTC Participants, as the case may be,will remain responsible for keeping account of their holdings on behalf of their customers.Conveyance of notices and other communications by the clearing systems to Direct Participants orDTC Participants, as the case may be, by Direct Participants to Indirect Participants, and by DirectParticipants, Indirect Participants or DTC Participants, as the case may be, to Beneficial Ownerswill be governed by arrangements among them, subject to any statutory or regulatory requirementsas may be in effect from time to time.

The laws of some jurisdictions may require that certain persons take physical delivery in definitiveform of securities. Consequently, the ability to transfer interests in a Global Note Certificate to suchpersons may be limited. Because DTC can only act on behalf of DTC Participants, the ability of aperson having an interest in the Rule 144A Global Note Certificate to pledge such interest topersons or entities that do not participate in DTC, or otherwise take actions in respect of suchinterest, may be affected by the lack of a physical certificate in respect of such interest.

Trading between Euroclear and/or Clearstream, Luxembourg Participants

Secondary market sales of book-entry interests in the Notes held through Euroclear orClearstream, Luxembourg to purchasers of book-entry interests in the Notes held through Euroclearor Clearstream, Luxembourg will be conducted in accordance with the normal rules and operatingprocedures of Euroclear and Clearstream, Luxembourg and will be settled using the proceduresapplicable to conventional Eurobonds.

Trading between DTC Participants

Secondary market sales of book-entry interests in the Notes between DTC Participants will occur inthe ordinary way in accordance with DTC rules and will be settled using the procedures applicableto U.S. corporate debt obligations in DTC’s Same-Day Funds Settlement system in same-dayfunds, if payment is effected in US dollars or, free of payment, if payment is not effected in USdollars. Where payment is not effected in US dollars, separate payment arrangements outside DTCare required to be made between DTC Participants.

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Trading between DTC Seller and Euroclear/Clearstream, Luxembourg Purchaser

When book-entry interests in Notes are to be transferred from the account of a DTC Participantholding a beneficial interest in the Rule 144A Global Note Certificate to the account of a Euroclearor Clearstream, Luxembourg accountholder wishing to purchase a beneficial interest in theRegulation S Global Note Certificate (subject to the certification procedures provided in the AgencyAgreement), the DTC Participant will deliver instructions for delivery to the relevant Euroclear orClearstream, Luxembourg accountholder to DTC by 12.00 p.m., New York time, on the settlementdate. Separate payment arrangements are required to be made between the DTC Participant andthe relevant Euroclear or Clearstream, Luxembourg Participant. On the settlement date, thecustodian of the Rule 144A Global Note Certificate will instruct the Registrar to (i) decrease theamount of Notes registered in the name of Cede & Co. and evidenced by the Rule 144A GlobalNote Certificate of the relevant class and (ii) increase the amount of Notes registered in the nameof the nominee of the common depositary for Euroclear and Clearstream, Luxembourg andevidenced by the Regulation S Global Note Certificate. Book-entry interests will be delivered free ofpayment to Euroclear or Clearstream, Luxembourg, as the case may be, for credit to the relevantaccountholder on the first business day following the settlement date.

Trading between Euroclear/Clearstream, Luxembourg Seller and DTC Purchaser

When book-entry interests in the Notes are to be transferred from the account of a Euroclear orClearstream, Luxembourg accountholder to the account of a DTC Participant wishing to purchase abeneficial interest in the Rule 144A Global Note Certificate (subject to the certification proceduresprovided in the Agency Agreement), the Euroclear or Clearstream, Luxembourg Participant mustsend to Euroclear or Clearstream, Luxembourg delivery free of payment instructions by 7.45 p.m.,Brussels or Luxembourg time, one business day prior to the settlement date. Euroclear orClearstream, Luxembourg, as the case may be, will in turn transmit appropriate instructions to thecommon depositary for Euroclear and Clearstream, Luxembourg and the Registrar to arrangedelivery to the DTC Participant on the settlement date. Separate payment arrangements arerequired to be made between the DTC Participant and the relevant Euroclear or Clearstream,Luxembourg accountholder, as the case may be. On the settlement date, the common depositaryfor Euroclear and Clearstream, Luxembourg will (a) transmit appropriate instructions to thecustodian of the Rule 144A Global Note Certificate who will in turn deliver such book-entryinterests in the Notes free of payment to the relevant account of the DTC Participant and (b)instruct the Registrar to (i) decrease the amount of Notes registered in the name of the nominee ofthe common depositary for Euroclear and Clearstream, Luxembourg and evidenced by theRegulation S Global Note Certificate; and (ii) increase the amount of Notes registered in the nameof Cede & Co. and evidenced by the Rule 144A Global Note Certificate.

Although Euroclear, Clearstream, Luxembourg and DTC have agreed to the foregoing proceduresin order to facilitate transfers of beneficial interest in Global Note Certificates among participantsand accountholders of Euroclear, Clearstream, Luxembourg and DTC, they are under no obligationto perform or continue to perform such procedure, and such procedures may be discontinued atany time. None of the Issuer, the Trustee or any Agent will have the responsibility for theperformance by Euroclear, Clearstream, Luxembourg or DTC or their respective Direct Participants,Indirect Participants or DTC Participants, as the case may be, of their respective obligations underthe rules and procedures governing their operations.

Pre-issue Trades Settlement

It is expected that delivery of Notes will be made against payment therefor on the Issue Date,which is expected to be on or around the fifth business day following the date of pricing (suchsettlement being referred to as ‘‘T+5’’). Under Rule 15c6-l under the Exchange Act, trades in theUnited States secondary market generally are required to settle in three business days (T+3),unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wishto trade Notes in the United States on the date of pricing or the next succeeding business day willbe required, by virtue of the fact the Notes will initially settle in T+5, to specify an alternatesettlement cycle at the time of any such trade to prevent a failed settlement. Settlementprocedures in other countries may vary and purchasers of Notes may be affected by such localsettlement practices. Purchasers of Notes who wish to trade the Notes on the date of pricing orthe next succeeding business day should consult their own adviser.

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SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBALFORM

The Global Note Certificates contain provisions which apply to the Notes in respect of which theGlobal Note Certificates are issued, some of which modify the effect of the Terms and Conditionsof the Notes set out in this Prospectus. Terms defined in the Terms and Conditions of the Noteshave the same meaning in the paragraphs below. The following is a summary of those provisions:

Meetings

The registered holder of each Global Note Certificate will be treated as being two persons for thepurposes of any quorum requirements of a meeting of Noteholders and, at any such meeting, ashaving one vote in respect of each US$1,000 in principal amount of Notes for which the GlobalNote Certificates are issued. The Trustee may allow a person with an interest in Notes in respectof which the Global Note Certificates have been issued to attend and speak (but not vote) at ameeting of Noteholders on appropriate proof of his identity and interest.

Cancellation

Cancellation of any Note by the Issuer following its redemption or purchase by the Issuer, theGuarantors or any of their respective subsidiaries will be effected by a reduction in the principalamount of the Notes in the Register.

Trustee’s Powers

In considering the interests of Noteholders while the Global Note Certificates are registered in thename of a nominee for a clearing system, the Trustee may, to the extent it considers it appropriateto do so in the circumstances, (a) have regard to any information as may have been madeavailable to it by or on behalf of the relevant clearing system or its operator as to the identity of itsaccountholders (either individually or by way of category) with entitlements in respect of the Notesand (b) consider such interests on the basis that such accountholders were the holders of theNotes in respect of which the Global Note Certificates are issued.

Payment

Payments of principal, interest and premium (if any) in respect of Notes represented by the GlobalNote Certificates will be made without presentation or if no further payment is to be made inrespect of the Notes, against presentation and surrender of the Global Note Certificates to or tothe order of the Principal Paying Agent or such other Paying Agent as shall have been notified tothe Noteholders for such purpose.

Notices

So long as the Notes are traded on the Main Securities Market and are represented by the GlobalNote Certificate and the Global Note Certificate is held on behalf of Euroclear or Clearstream,Luxembourg or any alternative clearing system, notices to Noteholders may be given by delivery ofthe relevant notice to Euroclear or Clearstream, Luxembourg, or such alternative clearing system,for communication by it to entitled accountholders in substitution for notification as required by theTerms and Conditions of the Notes.

Enforcement

For the purposes of enforcement of the provisions of the Trust Deed against the Trustee, thepersons named in a certificate of the holder of the Notes in respect of which the Global NoteCertificates are issued shall be recognised as the beneficiaries of the trust set out in the TrustDeed, to the extent of the principal amount of their interest in the Notes set out in the certificate ofthe holder, as if they were themselves the holders of Notes in such principal amounts.

Prescription

Claims in respect of principal, premium and interest on the Notes while the Notes are representedby the Global Note Certificates will become void, unless presentation for payment is made asrequired by Condition 6 within a period of 10 years, in the case of principal and premium, and fiveyears, in the case of interest, from the appropriate Relevant Date (as defined in Condition 7).

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TAXATION

The following summary does not purport to be a comprehensive description of all of the taxconsiderations that may be relevant to a decision to purchase, own or dispose of the Notes anddoes not purport to deal with the tax consequences applicable to all categories of investors, someof which (such as dealers in securities and commodities) may be subject to special rules.

Prospective purchasers of the Notes are advised to consult their own tax advisers as to the taxconsequences, under the tax laws of the United Kingdom and Ukraine and each country of whichthey are residents, of a purchase of Notes including, without limitation, the consequences of receiptof interest and sale or redemption of the Notes or any interest therein.

UNITED ARAB EMIRATES

The following summary of the anticipated tax treatment in the UAE in relation to payments on theNotes is based on the taxation law and practice in force at the date of this Prospectus and doesnot constitute legal or tax advice and prospective investors should be aware that the relevant fiscalrules and practice and their interpretation may change. Prospective investors should consult theirown professional advisers on the implications of subscribing for, buying, holding, selling, redeemingor disposing of Notes and the receipt of any payments with respect to such Notes under the lawsof the jurisdictions in which they may be liable to taxation.

There is currently in force in the emirates of Abu Dhabi and Dubai legislation establishing ageneral corporate taxation regime (the Abu Dhabi Income Tax Decree 1965 (as amended) and theDubai Income Tax Decree 1969 (as amended)). The regime is, however, not enforced save inrespect of companies active in the hydrocarbon industry, some related service industries andbranches of foreign banks operating in the UAE. It is not known whether the legislation will or willnot be enforced more generally or within other industry sectors in the future. Under currentlegislation, there is no requirement for withholding or deduction for or on account of UAE, AbuDhabi or Dubai taxation in respect of payments made under the Notes or the Notes Guarantee. Inthe event of the imposition of any such withholding, the Issuer and/or the Guarantor hasundertaken to gross-up any payments subject to certain limited exceptions.

The Constitution of the UAE specifically reserves to the UAE Federal Government of the UAE theright to raise taxes on a federal basis for purposes of funding its budget. It is not known whetherthis right will be exercised in the future.

The UAE has entered into double taxation arrangements with certain other countries, but these arenot extensive in number.

UNITED STATES

The following is a general summary of certain material U.S. federal income tax consequences ofthe acquisition, ownership and retirement or other disposition of Notes by a U.S. Holder thereof (asdefined below). This summary is not a complete analysis or description of all potential U.S. federalincome tax consequences to holders, and does not address state, local, non-U.S., or other taxlaws. This summary does not address aspects of U.S. federal income taxation that may beapplicable to holders that are subject to special tax rules, such as U.S. expatriates or former long-term residents of the United States, ‘‘dual resident’’ companies, banks, thrifts, financial institutions,insurance companies, real estate investment trusts, regulated investment companies, grantor trusts,individual retirement accounts and other tax-deferred accounts, tax-exempt organisations orinvestors, dealers or traders in securities, commodities or currencies, holders that will hold a Noteas part of a position in a ‘‘straddle’’ or as part of a ‘‘synthetic security’’ or as part of a ‘‘hedging’’,‘‘conversion’’, ‘‘integrated’’ or constructive sale transaction for U.S. federal income tax purposes orthat have a ‘‘functional currency’’ other than the U.S. dollar, or holders otherwise subject to specialtax rules. Moreover, this summary does not address the U.S. federal estate and gift, alternativeminimum tax or net investment income tax consequences of the acquisition, ownership, retirementor other disposition of Notes and does not address the U.S. federal income tax treatment ofholders that do not acquire Notes in exchange for 2016 Notes pursuant to the Exchange Offer atthe initial issue price (defined below) or holders that are not U.S. Holders.

This summary is based on the Code, administrative pronouncements, judicial decisions andinterpretations of the foregoing, and existing and proposed U.S. Treasury Regulations (the‘‘Regulations’’), in each case, as they exist and to the extent they are in effect on the date hereof.

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All of the foregoing are subject to change or differing interpretation, which could apply retroactivelyand affect the tax consequences described herein.

For purposes of this summary, a ‘‘U.S. Holder’’ is a beneficial owner of Notes that (a) exchanges2016 Notes for Notes pursuant to the Exchange Offer at the initial issue price; (b) holds Notes ascapital assets; and (c) is, for U.S. federal income tax purposes:

(i) a citizen or individual resident of the United States;

(ii) a corporation organised in or under the laws of the United States or any state thereof(including the District of Columbia);

(iii) an estate the income of which is subject to U.S. federal income taxation regardless of itssource; or

(iv) a trust (1) that validly elects to be treated as a United States person within the meaning ofsection 7701(a)(30) of the Code for U.S. federal income tax purposes or (2) (a) over theadministration of which a U.S. court can exercise primary supervision and (b) all of thesubstantial decisions of which one or more United States persons have the authority tocontrol.

If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes)holds Notes, the U.S. federal income tax treatment of the partnership and a partner in suchpartnership will generally depend on the status of the partner and the activities of the partnership.Such a partner or partnership should consult its tax adviser as to the U.S. federal income taxconsequences of acquiring, holding, retiring or other disposition of Notes.

THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET OUT BELOW IS FORGENERAL INFORMATION ONLY. ALL NOTEHOLDERS SHOULD CONSULT THEIR TAXADVISERS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING,HOLDING, RETIRING OR OTHERWISE DISPOSING OF THE NOTES, INCLUDING THEAPPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAXLAWS AND POSSIBLE CHANGES IN TAX LAW.

Tax Considerations Related to Exchanging the 2016 Notes

See ‘‘Exchange Offer and Consent Solicitation Memorandum – Tax Consequences – United StatesFederal Income Tax’’ for a discussion of certain U.S. federal income tax consequences of acquiringNotes in exchange for 2016 Notes pursuant to the Exchange Offer.

Treatment of the Notes

In certain circumstances (see ‘‘Terms and Conditions of the Notes – Condition 5.3 (Redemption atthe Option of the Holders Upon a Change of Control)’’), the Issuer may be obligated to payamounts in excess of stated interest or principal on the Notes. These potential payments mayimplicate the provisions of the Regulations relating to ‘‘contingent payment debt instruments.’’According to the applicable Regulations, certain contingencies will not cause a debt instrument tobe treated as a contingent payment debt instrument if these contingencies in the aggregate, as ofthe date of issuance, are remote or incidental, or, in certain circumstances, if it is ‘‘significantlymore likely than not’’ that none of the contingencies will occur. The Issuer intends to take theposition that the contingencies relating to the Notes should not cause the Notes to be treated ascontingent payment debt instruments. The Issuer’s determination is binding on a U.S. Holderunless the holder discloses its contrary position in the manner required by applicable Regulations.The Issuer’s determination is not, however, binding on the U.S. Internal Revenue Service (the‘‘IRS’’), and, if the IRS were to challenge this determination, a U.S. Holder might be required toaccrue income on its Notes in excess of stated interest, and to treat as ordinary income ratherthan capital gain any income realised on the taxable disposition of a note before the resolution ofthe contingencies. If such a contingency occurs, it would affect the amount and timing of theincome recognised by a U.S. Holder. If any such amounts are in fact paid, U.S. Holders will berequired to recognise those amounts as income. U.S. holders are urged to consult their taxadvisors regarding the potential application to the Notes of the contingent payment debt instrumentrules and the consequences thereof.

Holding of the Notes

As discussed in the Exchange Offer and Consent Solicitation Memorandum, it is unclear whetherthe Exchange of 2016 Notes for Notes (the ‘‘Exchange’’) will qualify as a tax-free recapitalisation

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or will be a taxable exchange. The discussion below first assumes that the Exchange will be ataxable exchange, and is followed by a discussion of different consequences that will apply if theExchange is a tax-free recapitalisation.

Notes Acquired in a Taxable Exchange

Issue Price. The issue price of the Notes will depend on whether the Notes or the 2016 Notes are‘‘publicly traded’’ within the meaning of the relevant Regulations. If the Notes are publicly traded forthis purpose, the issue price of the Notes will be the fair market value of the Notes on the date ofthe Exchange. The Issuer expects, and the remainder of this disclosure assumes, that the Noteswill be publicly traded and, therefore, the issue price of the Notes will be their fair market value willbe on the date of the Exchange.

Payments of Interest. Interest paid on a Note will be included in a U.S. Holder’s gross income asordinary interest income at the time it is received or accrued in accordance with the U.S. Holder’susual method of tax accounting.

Interest on the Notes (including the payment of any additional amounts) and original issue discount(‘‘OID’’), if any, accrued with respect to the Notes (as described below under ‘‘– Original IssueDiscount’’) will be treated as foreign source income for U.S. federal income tax purposes, includingU.S. foreign tax credit limitation purposes. The limitation on foreign taxes eligible for the U.S.foreign tax credit is calculated separately with respect to specific ‘‘baskets’’ of income. Interest onthe Notes should generally constitute ‘‘passive category income’’, or in the case of certain U.S.Holders, ‘‘general category income’’. Noteholders should consult their tax advisers concerning theapplicability of the foreign tax credit and source of income rules to income attributable to theNotes.

Original Issue Discount. If the issue price of the Notes (as described above) is less than theirstated principal amount by an amount equal to or greater than a statutorily defined de minimisamount (1/4 of 1% of the principal amount of the Notes multiplied by the number of complete yearsto maturity from their original issue date), then the Notes will be considered to have been issuedwith OID for U.S. federal income tax purposes. In such case, a U.S. Holder must include a portionof the OID in gross income as interest in each taxable year or portion thereof in which the U.S.Holder holds the Notes even if the U.S. Holder has not received a cash payment in respect of theOID.

U.S. Holders of Notes must include OID in income calculated on a constant-yield method beforethe receipt of cash attributable to the income, and generally will have to include in incomeincreasingly greater amounts of OID over the life of the Notes. The amount of OID includible inincome by a U.S. Holder of a Note is the sum of the daily portions of OID with respect to the Notefor each day during the taxable year or portion of the taxable year on which the U.S. Holder holdsthe Note (‘‘accrued OID’’). The daily portion is determined by allocating to each day in any‘‘accrual period’’ a pro rata portion of the OID allocable to that accrual period. Accrual periods withrespect to a Note may be of any length selected by the U.S. Holder and may vary in length overthe term of the Note as long as (i) no accrual period is longer than one year; and (ii) eachscheduled payment of interest or principal on the Note occurs on either the final or first day of anaccrual period. The amount of OID allocable to an accrual period equals the excess of (a) theproduct of the Note’s adjusted issue price at the beginning of the accrual period and the Note’syield to maturity (determined on the basis of compounding at the close of each accrual period andproperly adjusted for the length of the accrual period) over (b) the sum of the payments of intereston the Note allocable to the accrual period. The ‘‘adjusted issue price’’ of a Note at the beginningof any accrual period is the issue price of the Note increased by the amount of accrued OID foreach prior accrual period.

Amortisable Bond Premium. A U.S. Holder that acquires a Note for an amount in excess of itsprincipal amount may elect to treat the excess as ‘‘amortisable bond premium’’, in which case theamount required to be included in the U.S. Holder’s income each year with respect to interest onthe Note will be reduced by the amount of amortisable bond premium allocable (based on theNote’s yield to maturity) to that year. Any election to amortise bond premium applies to all bonds(other than bonds the interest on which is excludible from gross income for U.S. federal income taxpurposes) held by the U.S. Holder at the beginning of the first taxable year to which the electionapplies or thereafter acquired by the U.S. Holder, and is irrevocable without the consent of theIRS. See also ‘‘– Election to Treat All Interest as Original Issue Discount’’.

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Basis and Holding Period. A U.S. Holder’s adjusted tax basis in a Note generally will be equal itsinitial issue price (as determined above under ‘‘– Issue Price’’) increased by the amount of anyOID or market discount included in the U.S. Holder’s income with respect to the Note and reducedby the amount of any amortisable bond premium applied to reduce interest on the Note. The U.S.Holder’s holding period for the Notes will begin on the day after the Exchange.

Notes Acquired in a Tax-Free Recapitalisation

If the exchange of Notes for 2016 Notes qualifies as a tax-free exchange of securities in arecapitalisation, the tax considerations relating to holding and disposing of the Notes generallyshould be determined above under ‘‘– Taxable Exchange’’, except as described in this sectionbelow.

Basis and Holding Period. A U.S. Holder’s adjusted tax basis in a Note generally will be equal tothe holder’s adjusted tax basis in the 2016 Note exchanged therefor, increased by the amount ofany OID or market discount included in the U.S. Holder’s income with respect to the Note andreduced by the amount of any amortisable bond premium applied to reduce interest on the Note.The holding period for the Notes will include the period during which the holder held the 2016Notes.

For purposes of determining the amount, if any, of market discount, acquisition premium oramortisable bond premium on a Note, the U.S. Holder will be treated as having acquired the Notefor an amount equal to the holder’s adjusted tax basis in the 2016 Note exchanged therefor.

Acquisition Premium. A U.S. Holder that acquires a Note for an amount less than or equal to theNote’s principal amount but in excess of its adjusted issue price (this excess being ‘‘acquisitionpremium’’) and that does not make the election described below under ‘‘– Election to Treat AllInterest as Original Issue Discount’’ is permitted to reduce the daily portions of OID by a fraction,the numerator of which is the excess of the U.S. Holder’s adjusted basis in the Note immediatelyafter its acquisition over the Note’s adjusted issue price, and the denominator of which is theexcess of the Note’s principal over the Note’s adjusted issue price. No OID will accrue on a Noteacquired for more than its principal amount, but the U.S. Holder may elect to treat the excess asamortisable bond premium as described above under ‘‘– Taxable Exchange – Amortisable BondPremium.’’

Market Discount. A note generally will be treated as acquired at a market discount (a ‘‘MarketDiscount Note’’) if the note’s ‘‘revised issue price’’ exceeds the amount for which a U.S. Holderacquired the note by at least 0.25% of the note’s revised issue price multiplied by the number ofcomplete years from the date acquired by the U.S. Holder to the note’s maturity. If this excess isnot sufficient to cause the Note to be a Market Discount Note, then the excess constitutes ‘‘deminimis market discount’’. For this purpose, the ‘‘revised issue price’’ of a Note generally equals itsissue price, increased by the amount of any OID that has accrued on the Note.

Under current law, any gain recognised on the maturity or disposition of a Market Discount Notewill be treated as ordinary income to the extent that the gain does not exceed the accrued marketdiscount on the note. Alternatively, a U.S. Holder of a Market Discount Note may elect to includemarket discount in income currently over the life of the note. This election applies to all debtinstruments with market discount acquired by the electing U.S. Holder on or after the first day ofthe first taxable year for which the election is made. This election may not be revoked without theconsent of the IRS. A U.S. Holder of a Market Discount Note that does not elect to include marketdiscount in income currently generally will be required to defer deductions for interest onborrowings incurred to acquire or carry a Market Discount Note that is in excess of the interest andOID on the note includible in the U.S. Holder’s income, to the extent that this excess interestexpense does not exceed the portion of the market discount allocable to the days on which theMarket Discount Note was held by the U.S. Holder.

Under current law, market discount on a Market Discount Note will accrue on a straight-line basisunless the U.S. Holder elects to accrue the market discount on a constant-yield method. Thiselection applies only to the Note with respect to which it is made and is irrevocable.

To the extent that a 2016 Note that is a Market Discount Note is exchanged for a Note and theissue price of the Note exceeds the U.S. Holder’s adjusted basis in the Note, then the Note will bea Market Discount Note and the amount of any accrued market discount on the 2016 Note thathas not already been treated as ordinary income will be treated as accrued market discount withrespect to the Note received in the exchange and the U.S. Holder will have unaccrued market

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discount in the Note in an amount equal to the difference between the U.S. Holder’s adjusted basisin the Note and the issue price of the Note. If the issue price of a Note received in exchange for a2016 Note that is a Market Discount Note does not exceed the U.S. Holder’s adjusted basis in theNote, then any accrued market discount on the 2016 Note will be includable as ordinary incomewhen the Note is ultimately disposed of, as described below in ‘‘– Sale, Exchange or Retirement’’,however, no market discount will accrue on the Note.

U.S. Holders should consult their tax advisers on the interaction between the regular marketdiscount rules described above under ‘‘– Market Discount’’ and the rules regarding the carryover ofaccrued market discount, including the appropriate treatment of any accrued market discountcarried over from the 2016 Notes.

Election to Treat All Interest as Original Issue Discount.

A U.S. Holder may elect to include in gross income all interest that accrues on a Note using theconstant-yield method described above under ‘‘– Original Issue Discount’’, with certainmodifications. For purposes of this election, interest includes interest, OID, market discount and deminimis market discount, as adjusted by any amortisable bond premium or acquisition premium.This election generally applies only to the Note with respect to which it is made and may not berevoked without the consent of the IRS. If the election to apply the constant yield method to allinterest on a Note is made with respect to a Note having market discount, the electing U.S. Holderwill be treated as having made the election discussed above under ‘‘– Market Discount’’ to includemarket discount in income currently over the life of all debt instruments having market discount thatare acquired on or after the first day of the first taxable year to which the election applies. U.S.Holders should consult their tax advisers concerning the propriety and consequences of thiselection.

Sale, Exchange or Retirement

General. Upon the sale, exchange, retirement or other disposition of a Note, a U.S. Holder willgenerally recognise taxable gain or loss equal to the difference, if any, between the amountrealised on the sale, exchange, retirement or other disposition (other than amounts attributable toaccrued but unpaid interest, which will be taxable as such) and the U.S. Holder’s adjusted taxbasis in such Note. Any such gain or loss (except to the extent of accrued market discount) willgenerally be capital gain or loss and will generally be long-term capital gain or loss if such U.S.Holder’s holding period for such Notes exceeds one year.

Certain U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federalincome tax in respect of long-term capital gain. Any gain or loss realised on the sale, exchange,retirement or other disposition by a U.S. Holder of a Note generally will be treated as U.S. sourcegain or loss for U.S. foreign tax credit limitation purposes, as the case may be. The deductibility ofcapital losses is subject to substantial limitations.

Substitution of the Issuer

The terms of the Notes provide that, in certain circumstances, the obligations of the Issuer underthe Notes may be assumed by another entity. Any such assumption might be treated for U.S.federal income tax purposes as a deemed disposition of Notes by a U.S. Holder in exchange fornew notes issued by the new obligor. As a result of this deemed disposition, among other things, aU.S. Holder could be required to recognise capital gain or loss for U.S. federal income taxpurposes as described above equal to the difference, if any, between the issue price of the newnotes (as determined for U.S. federal income tax purposes), and the U.S. Holder’s tax basis in theNotes. U.S. Holders should consult their tax advisers concerning the U.S. federal income taxconsequences to them of a change in obligor with respect to the Notes.

U.S. Backup Withholding Tax and Information Reporting

Backup withholding tax and information reporting requirements apply to certain payments ofprincipal of, and interest on, and to proceeds of the sale or redemption of a Note, to certain U.S.Holders of the Notes. The payor will be required to withhold backup withholding tax on paymentsmade within the United States, or by a U.S. payor or U.S. middleman, on a Note to a U.S. Holder,other than a U.S. Holder that is an exempt recipient if the holder fails to furnish its correcttaxpayer identification number or otherwise fails to comply with, or establish an exemption from,the backup withholding requirements. Payments within the United States, or by a U.S. payor or

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U.S. middleman, of principal, interest and proceeds of sale to a holder of a Note that is not a U.S.person should not be subject to backup withholding tax and information reporting requirements ifan appropriate certification is provided by the holder to the payor and the payor does not haveactual knowledge or a reason to know that the certificate is incorrect.

Backup withholding tax is not an additional tax. A holder generally will be entitled to credit anyamounts withheld under the backup withholding rules against such holder’s U.S. federal income taxliability provided the required information is furnished to the U.S. Internal Revenue Service in atimely manner.

U.S. Holders may be required to report to the IRS certain information with respect to theirbeneficial ownership of certain foreign financial assets, such as the Notes, if the aggregate value ofsuch assets exceeds US$50,000 at the end of the taxable year or US$75,000 at any time duringthe taxable year. The thresholds are higher for individuals living outside of the United States andfor married couples filing jointly. U.S. Holders who fail to report required information could besubject to substantial penalties.

Prospective investors should consult their tax advisors concerning the application of the informationreporting and backup withholding rules to their particular circumstances.

United Kingdom

The following paragraphs are a summary of the Issuer’s understanding of current tax law and H.M.Revenue & Customs (‘‘HMRC’’) (which may not be binding on HMRC) practice in the UK (both ofwhich are subject to change at any time, possibly with retrospective effect) in respect of certainaspects of United Kingdom taxation. They relate only to persons who are the beneficial owners ofthe Notes. Some aspects do not apply to certain classes of Noteholders (such as dealers andpersons who are connected with the Issuer) to whom special rules may apply. These paragraphsdo not consider the UK tax consequences of the Exchange Offer. Subject as specifically set outbelow, these paragraphs do not consider the UK tax consequences of any payment under the NoteGuarantee or the Note Suretyship. These paragraphs assume that there will be no substitution ofthe Issuer or any Guarantor and do not consider the tax consequences of any such substitution.The UK tax treatment of Holders depends on their individual circumstances and may be subject tochange in the future.

Any Holders who are in doubt as to their own tax position, or who may be subject to tax in ajurisdiction other than the United Kingdom, should consult their professional advisors.

A. Interest on the Notes Withholding tax

(i) Payments of interest on the Notes may be made by the Issuer without deduction for or onaccount of United Kingdom income tax provided that the Notes continue to be listed on a‘‘recognised stock exchange’’ within the meaning of section 1005 of the Income Tax Act 2007(the ‘‘Act’’). The Irish Stock Exchange is a recognised stock exchange for these purposes.Securities will be treated as listed on the Irish Stock Exchange if they are included in theOfficial List and admitted to trading on the Main Securities Market. Provided, therefore, thatthe Notes remain so listed, interest on the Notes will be payable by the Issuer withoutwithholding or deduction on account of United Kingdom income tax.

(ii) Interest on the Notes may also be paid without withholding or deduction on account of UnitedKingdom income tax where interest on the Notes is paid by the Issuer and, at the time thepayment is made, the Issuer reasonably believes (and any person by or through whominterest on the Notes is paid reasonably believes) that the beneficial owner is a UK residentcompany or non-UK resident company within the charge to United Kingdom corporation taxas regards the payment of interest or that the recipient falls within a list of specified entitiesand bodies, provided that HMRC has not given a direction (in circumstances where it hasreasonable grounds to believe that it is likely that the above exemption is not available inrespect of such payment of interest at the time the payment is made) that the interest shouldbe paid under deduction of tax.

(iii) In other cases, an amount must generally be withheld from payments of interest on the Notesby the Issuer on account of United Kingdom income tax at the basic rate (currently 20%).However, where an applicable double tax treaty provides for a lower rate of withholding tax

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(or for no tax to be withheld) in relation to a Holder, HMRC can issue a notice to the Issuerto pay interest to the Holder without deduction of tax (or for interest to be paid with taxdeducted at the rate provided for in the relevant double tax treaty).

(iv) If a Guarantor makes any payments in respect of interest on the Notes (or other amountsdue under the Notes other than the repayment of amounts subscribed for the Notes), suchpayments may be subject to United Kingdom withholding tax at the basic rate, subject to theavailability of other reliefs available under domestic law or to any direction to the contraryfrom HMRC in respect of such relief as may be available pursuant to the provisions of anyapplicable double taxation treaty. However, such payments by a Guarantor may not beeligible for the exemption in respect of securities listed on a recognised stock exchangedescribed in (i) above in relation to payments of interest by the Issuer.

B. Non-United Kingdom Holders

Interest on the Notes constitutes UK source income for tax purposes and, as such, may be subjectto income tax by direct assessment even where paid without withholding.

However, interest with a UK source received without deduction or withholding on account of UnitedKingdom income tax will not be chargeable to UK tax in the hands of a Holder (other than certaintrustees) who is not resident for tax purposes in the UK unless that Holder carries on a trade,profession or vocation in the UK through a UK branch or agency in connection with which theinterest is received or to which the Notes are attributable or, where that Holder is a company,unless that Holder carries on a trade in the UK through a permanent establishment in connectionwith which the interest is received or to which the Notes are attributable. There are exemptions forinterest received by certain categories of agent (such as some brokers and investment managers).The provisions of an applicable double taxation treaty may also be relevant for such Holders.

C. United Kingdom Corporate Tax Payers

In general, Holders which are within the charge to UK corporation tax (including non-UK residentHolders whose Notes are used, held or acquired for the purposes of a trade carried on in the UKthrough a permanent establishment) will be charged to tax as income on all returns, profits orgains on, and fluctuations in value of, the Notes (whether attributable to currency fluctuations orotherwise) on a basis which is broadly in line with their statutory accounting treatment so long asthe accounting treatment is in accordance with generally accepted accounting practice as that termis defined for tax purposes.

D. Other United Kingdom Tax Payers

Income Tax

HMRC’s practice is not to treat debt securities such as the Notes as deeply discounted securities.Accordingly, no charge to income tax should arise on a disposal of the Notes, except in relation toaccrued interest (see below the paragraph headed ‘‘Accrued Income Scheme’’).

Holders who are either individuals or trustees and are resident for tax purposes in the UK or whocarry on a trade, profession or vocation in the UK through a branch or agency to which the Notesare attributable will generally be liable to UK tax on the amount of any interest received in respectof the Notes.

Taxation of Chargeable Gains

A disposal of Notes by an individual Holder who is resident in the UK or who carries on a trade,profession or vocation in the UK through a branch or agency to which the Notes are attributable,may give rise to a chargeable gain or allowable loss (whether attributable to currency fluctuationsor otherwise) for the purposes of the UK taxation of chargeable gains.

Accrued Income Scheme

On a transfer of Notes by a Holder, any interest which has accrued since the last interest paymentdate may be chargeable to tax as income under the rules of the accrued income scheme as setout in Chapter 2 of Part 12 of the Act, if that Holder is resident in the UK or carries on a trade,profession or vocation in the UK through a branch or agency to which the Notes are attributable. Intheory, the application of the accrued income scheme can result in an element of double taxation.

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Holders who may be unsure as to their position in respect of the accrued income scheme shouldseek their own professional advice.

E. Stamp Duty and Stamp Duty Reserve Tax

No UK stamp duty or SDRT should be payable on the issue of the Notes or on a transfer of theNotes.

F. Disclosure of Information

Information relating to securities (including the Notes) and accounts may be required to beprovided to HMRC in certain circumstances. This may include the value of the Notes, details of theholders or beneficial owners of the Notes (or the persons for whom the Notes are held), details ofthe persons to whom payments derived from the Notes are or may be paid and information anddocuments in connection with transactions relating to the Notes. Information may be required to beprovided by, amongst others, the Issuer, the Holders, persons by (or via) whom payments derivedfrom the Notes are made or who receive (or would be entitled to receive) such payments, personswho effect or are a party to transactions relating to the Notes on behalf of others and certainregistrars or administrators. In certain circumstances, the information obtained by HMRC may beprovided to tax authorities in other countries.

EU Savings Tax Directive

Under the EU Savings Tax Directive, Member States are required to provide to the tax authoritiesof another Member State details of payments of interest (or similar income) paid by a person withinits jurisdiction to an individual resident in that other Member State or to certain limited types ofentities established in that other Member State; however, for a transitional period, Austria is insteadrequired (unless during that period it elects otherwise) to operate a withholding system in relationto such payments (the ending of such transitional period being dependent upon the conclusion ofcertain other agreements relating to information exchange with certain other countries). A numberof non-EU countries and territories (including Switzerland) have adopted similar measures (forexample, a withholding system in the case of Switzerland).

On 24 March 2014, the European Council adopted the Amending Directive amending andbroadening the scope of the requirements described above. The Amending Directive requiresMember States to apply these new requirements from 1 January 2017, and if they were to takeeffect the changes would expand the range of payments covered by the EU Savings Tax Directive,in particular to include additional types of income payable on securities. The Amending Directivewould also expand the circumstances in which payments that indirectly benefit an individualresident in a Member State must be reported or subject to withholding. This approach would applyto payments made to, or secured for, persons, entities or legal arrangements (including trusts)where certain conditions are satisfied, and may in some cases apply where the person, entity orarrangement is established or effectively managed outside of the EU; however, on 18 March 2015,the European Commission proposed the repeal of the EU Savings Tax Directive from 1 January2017 in case of Austria and from 1 January 2016 in case of all other Member States (subject toon-going requirements to fulfil administrative obligations, such as the reporting and exchange ofinformation relating to, and accounting for withholding taxes on, payments made before those datesand to certain other transitional provisions in case of Austria). This is to prevent overlap betweenthe EU Savings Tax Directive and a new automatic exchange of information regime to beimplemented under Council Directive 2011/16/EU on Administrative Cooperation in the field ofTaxation (as amended by Council Directive 2014/107/EU). The proposal also provides that, if itproceeds, Member States will not be required to apply the new requirements of the AmendingDirective.

The Proposed Financial Transactions Tax

On 14 February 2013, the European Commission published a proposal (the ‘‘Commission’sProposal’’) for a Directive to establish a common financial transactions tax (‘‘FTT’’) in Belgium,Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the‘‘participating Member States’’).

The Commission’s Proposal is very broad in scope and could, if introduced, apply to certaindealings in the Notes (including secondary market transactions) in certain circumstances.

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A joint statement issued on 6 May 2014 by 10 of the 11 participating Member States indicated anintention to implement the FTT progressively such that it would initially apply to shares and certainderivatives, with this initial implementation occurring by 1 January 2016.

The proposed FTT remains subject to negotiation between the participating Member States and thetiming remains unclear. It may therefore be altered prior to any implementation. Additional EUMember States may decide to participate. Prospective holders of Notes are advised to seek theirown professional advice in relation to the FTT.

Ukraine

General

The following summary is included for general information only. Potential investors in and holdersof the Notes should consult their own tax adviser as to the tax consequences under the laws ofUkraine of the acquisition, ownership and disposition of the Notes. This summary is based uponthe Ukrainian tax laws and regulations as in effect on the date of this Prospectus. Such laws andregulations are subject to change or varying interpretations, possibly with retroactive effect. As withother areas of Ukrainian legislation, tax law and practice in Ukraine is not as clearly established asthat of more developed jurisdictions. It is possible, therefore, that the current interpretation of thelaw or understanding of the practice may change or that the law may be amended with retroactiveeffect. Accordingly, it is possible that payments to be made to the holders of the Notes couldbecome subject to taxation or that rates currently in effect with respect to such payments could beincreased in ways that cannot be anticipated as at the date of this Prospectus.

Payments under the Surety Agreement

If FPM makes any payments in respect of interest on the Notes (or other amounts due in respectof the Notes), such payments (or a part thereof corresponding to interest under the Notes) couldbe viewed as Ukrainian source income of the recipient of such payments and, thereby, may besubject to 15% withholding tax (in respect of non-resident legal entities) and 20% withholding tax(in respect of non-resident individuals).

Ukrainian tax legislation does not specifically list payments made under the Surety Agreement asUkrainian source income of the beneficiary of such payments. However, Article 141.4 of the TaxCode, contains a catch-all clause, which considers ‘‘any other income’’ of a foreign residentreceived from carrying out business in Ukraine as Ukrainian source income. It remains uncertainwhether the ‘‘Ukrainian source income’’ concept should apply to the whole amount of paymentunder the Surety Agreement or only to that amount which corresponds to the unpaid interest underthe Notes. The latter interpretations seems to be fair but has not been confirmed by the Ukrainiantax authorities.

Even if the payments under the Surety Agreement are viewed to be Ukrainian source income and,thereby, subject to withholding tax in Ukraine, the foreign beneficiary of such payments may,nevertheless, be exempt from withholding tax in Ukraine (or allowed to apply a lower withholdingtax rate), provided the recipient of such income is (i) a tax resident of a jurisdiction, which has atax treaty with Ukraine (ii) entitled to the benefits of such tax treaty, (iii) deemed not to carry onbusiness in Ukraine through its permanent establishment; and (iv) the beneficial owner of suchincome. In order to benefit from the tax treaty exemption, confirmation of the current tax residencystatus of the foreign beneficiary must be available on or prior to the date of payment of Ukrainiansource income.

Under the terms UK/Ukraine Double Tax Treaty, as it is currently applied, payments by FPM to theTrustee under the Surety Agreement may be exempt from withholding tax in Ukraine, provided thatcertain conditions set forth in the UK/Ukraine Double Tax Treaty and under applicable Ukrainianlaw are satisfied. However, there can be no assurance that the exemption from withholding tax is,or will continue to be, available. Payments to the Trustee under the Surety Agreement would beexempt from Ukrainian withholding tax under the UK/Ukraine Double Tax Treaty provided that theTrustee is a resident of the United Kingdom for the purposes of the UK/Ukraine Double TaxTreaty, is the ‘‘beneficial owner’’ of the payments and is ‘‘subject to tax’’ in respect of suchpayments in the United Kingdom. Under applicable Ukrainian law, the Trustee’s residence in theUnited Kingdom for purposes of the UK/Ukraine Double Tax Treaty will be evidenced by acertificate issued by the taxing authority in the United Kingdom. The exemption of payments fromUkrainian withholding tax will not be available under the UK/Ukraine Double Tax Treaty if theTrustee carries on business in Ukraine through a permanent establishment situated therein, and

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the debt claim in respect of which the payments are made is effectively connected with suchpermanent establishment.

Ukraine does not have an established practice of applying the concept of ‘‘beneficial ownership’’ ofpayments. For tax law purposes, this concept was introduced in Ukraine by the Tax Code. Underthe Tax Code a person that acts as agent, nominal holder (owner) or intermediary in respect ofUkrainian source income would not qualify as the ‘‘beneficial owner’’ of the income. Although theUkrainian tax authorities did not apply the ‘‘beneficial ownership’’ concept to deny tax treatybenefits to foreign payees in similar transactions in the past, and there is yet no practice ofinterpretation or application of this concept in similar transactions in Ukraine, it cannot be excludedthat, based on the above specified provisions of the Tax Code, the Trustee may be viewed by theUkrainian tax authorities as a person acting as agent, nominal holder or intermediary for theNoteholders and, for this reason, the Trustee may fail to satisfy the ‘‘beneficial ownership’’ test inrespect of payments under the Surety Agreement. In such event, such payments would not beexempt from the Ukrainian withholding tax, and FPM would be required by the terms of the SuretyAgreement to gross-up their payments to compensate the Trustee for such tax withholding.However, a recent interpretation of the Ukrainian tax authorities indicates that tax gross-upprovisions like those contained in the Surety Agreement may be seen as contravening theUkrainian tax law and unenforceable. For more information, see ‘‘– Gross-up Provisions’’.

In addition, Article 11(7) of the UK/Ukraine Double Tax Treaty contains a ‘‘main purpose’’ anti-avoidance provision, which may apply to that part of payments under the Surety Agreement whichcorresponds to interest under the Notes. While there is no established practice of the Ukrainian taxauthorities with respect to the application of this provision, if the Ukrainian tax authorities take theposition that the main or one of the main purposes of using the United Kingdom as the Trustee’sjurisdiction of residence for this transaction was to take advantage of the tax benefits (i.e.exemption of interest payments from withholding taxation in Ukraine) under the UK/Ukraine DoubleTax Treaty, the tax authorities may potentially invoke the anti-avoidance provision of Article 11(7)of the UK/Ukraine Double Tax Treaty. In such circumstances, there is a risk that payments to theTrustee under the Surety Agreement would cease to have the benefit of the UK/Ukraine DoubleTax Treaty.

Under applicable Ukrainian law, the Trustee’s residence in the United Kingdom for purposes of theUK/Ukraine Double Tax Treaty will be evidenced by a certificate issued by the taxing authority inthe United Kingdom. A new tax residency certificate must be obtained by the Trustee for eachcalendar year.

Gross-up provisions

If any payments (including payments of premium and interest) under the Surety Agreement aresubject to any withholding tax, FPM may, in certain circumstances specified in the SuretyAgreement and subject to certain exceptions, become obliged to pay such additional amounts asmay be necessary so that the net payments received by the Trustee on behalf of Noteholders willnot be less than the amount the Trustee on behalf of Noteholders would have received in theabsence of such withholding. Notwithstanding the foregoing, the Tax Code prohibits contractualprovisions under which residents undertake to pay taxes for non-residents on their income receivedfrom sources in Ukraine. If interpreted widely, the restriction would apply to gross-up provisions inthe Surety Agreement and obligations of FPM to pay additional amounts thereunder. As a result,gross-up provisions set out in the Surety Agreement could be found null and void and, therefore,unenforceable in Ukraine.

Tax on Issue of and Principal, Premium and Interest Payments under the Notes

No Ukrainian withholding tax will be applicable to the issue of the Notes or principal, premium orinterest payments on the Notes because the Notes will not be issued in Ukraine and principal,premium and interest payments on the Notes will not be made from Ukraine.

Tax on Redemption of Notes

Principal payments on redemption of the Notes will not be subject to Ukrainian tax because suchpayments will not be made by FPM.

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Taxation of interest under the Notes paid by the Issuer

Non-residents

Interest received by individuals and companies who are non-tax residents of Ukraine and do nothave a permanent establishment in Ukraine (in case of companies) is not subject to taxes inUkraine, provided that such interest income is derived from sources outside of Ukraine.

Resident individuals

Interest income derived from the Notes, which is received by individuals who are tax residents ofUkraine, is subject to 20% personal income tax in Ukraine. A lower personal income tax rate of15% applies if the aggregate monthly income of an individual does not exceed the amount of tenminimum monthly salary payments, which is, at the date of this Prospectus, UAH 12,180.

Resident companies/permanent establishments

Any interest income received by resident companies or permanent establishments of non-residentcompanies is subject to 18% corporate income tax.

Transfers of Notes by Non-Ukrainian Investors to Ukrainian Investors

Ukrainian source profits of non-resident legal persons derived from trading in securities aregenerally subject to Ukrainian withholding tax at 15% in the case of non-resident companies and atthe rate of 20% in the case of non-resident individuals.

Non-resident Noteholders are, therefore, likely to be subject to Ukrainian withholding tax on anycapital gain on the disposal of Notes where the proceeds of such disposal are received from asource within Ukraine that is when Ukrainian investors (residents of Ukraine or permanentestablishments of non-residents in Ukraine) pay for the Notes from Ukraine. Non-residentNoteholders may be exempt from Ukrainian withholding tax on their capital gains from the sale ofthe Notes under applicable tax treaty, provided that they comply with specific requirements setforth therein and the Tax Code .

Ukrainian Stamp Duty

No Ukrainian stamp duty, transfer or similar tax will be payable by a Noteholder in respect of thesubscription, issue, delivery or transfer of the Notes.

Switzerland

The following is summary of certain tax consequences under the tax laws of Switzerland of theacquisition, ownership and disposal of the Notes. This summary does not purport to be acomprehensive description of all tax considerations which may be relevant to a decision topurchase the Notes. In particular, this summary does not consider any specific facts orcircumstances that may apply to a particular purchaser. This summary is based on the laws ofSwitzerland currently in force and as applied on the date of this Prospectus, which are subject tochange, possibly with retroactive or retrospective effect. Prospective purchasers of the Notes areadvised to consult their own tax advisors as to the tax consequences of the acquisition, ownershipand disposal of the Notes.

Swiss Federal Withholding tax

Payments by the Issuer of interest on, and repayment of principal of, the Notes, will not be subjectto Swiss federal withholding tax, provided that the Issuer is at all times resident and managedoutside Switzerland and provided that the proceeds will be used at all times outside Switzerlandwhile any Notes are outstanding.

On 24 August 2011, the Swiss Federal Council (Bundesrat) proposed draft legislation for a revisedSwiss withholding tax regime. For bonds, this draft legislation foresees a shift from the currentwithholding tax system at source to a paying agent tax system with regard to certain interestpayments. Therefore, if this legislation or similar legislation were enacted, Swiss paying agents,such as for instance banks in Switzerland, would be required to deduct Swiss federal withholdingtax at a rate of 35% on certain payments to an individual resident in Switzerland or to any otherperson resident abroad (i.e., outside Switzerland). If indeed such a tax were to be deducted orwithheld with respect to (interest) payment under the Notes, neither the Issuer nor a paying agent

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nor any other person would, pursuant to the terms of the Notes, be obliged to pay additionalamounts for this tax.

Stamp Tax

The issue and redemption of the Notes by the Issuer are not subject to Swiss federal issuancestamp tax (Emissionsabgabe).

Purchases or sales of Notes (with a maturity in excess of 12 months), where a Swiss domesticbank or a Swiss domestic securities dealer (as defined in the Swiss federal stamp tax legislation)is a party, or acts as an intermediary, to the transaction, may be subject to Swiss federal transferstamp tax (Umsatzabgabe) at a rate of up to 0.3% of the purchase price of the Notes. Whereboth, the seller and the purchaser, of the Notes are non-residents of Switzerland or the Principalityof Liechtenstein, no Swiss federal transfer stamp tax is payable.

Income Tax

Notes held by non-Swiss holders

Payments by the Issuer of interest and repayment of principal to, and gain realised on the sale orredemption of the Notes by, a holder of Notes who is not a resident of Switzerland and who duringthe relevant taxation year has not engaged in a trade or business through a permanentestablishment or a fixed place of business in Switzerland to which the Notes are attributable andwho is not subject to income taxation in Switzerland for any other reason will not be subject to anySwiss federal, cantonal or communal income tax.

Notes held by Swiss holders as private assets (Privatvermogen)

Individuals who reside in Switzerland and who hold the Notes as private assets are required toinclude all payments of interest (as well as an original issue discount or a repayment premium) inrespect of the Notes by the Issuer, in their personal income tax return and will be taxable on anynet taxable income (including the payments of interest in respect of the Notes) for the relevant taxperiod.

Swiss resident individuals who sell or otherwise dispose of privately held Notes realise either a tax-free private capital gain or a non-tax-deductible capital loss.

Notes held as Swiss business assets (Geschaftsvermogen)

Individuals who hold the Notes as part of their business in Switzerland and Swiss-residentcorporate taxpayers and corporate taxpayers residing abroad holding the Notes as part of apermanent establishment or fixed place of business in Switzerland are in general taxed accordingto Swiss statutory accounting principles (Massgeblichkeitsprinzip) for purposes of Swiss federal,cantonal and municipal income taxes. Interest and capital gains realised on the sale or redemptionof the Notes are part of their taxable business profit and subject to Swiss federal, cantonal andmunicipal income taxes. The same also applies to individuals who, for income tax purposes, qualifyas so-called professional securities dealers (gewerbsmassige Wertschriftenhandler) for reasons of,inter alia, frequent dealings and leveraged transactions in securities.

Foreign Final Withholding Tax

On 1 January 2013 treaties on final withholding taxes between the Switzerland and the UnitedKingdom and between Switzerland and Austria entered into force. The treaties, inter alia, require aSwiss paying agent to levy final withholding tax at specified rates in respect of an individualresident in the United Kingdom or resident in Austria, as applicable, on interest or capital gainpaid, or credited to an account, relating to the Notes. The final withholding tax substitutes theUnited Kingdom or Austrian income tax, as applicable, on such income of interest or capital gain. Ifsuch final withholding tax is levied, Swiss withholding tax can be reclaimed by the Swiss payingagent on account of the holder of the Notes. Such a person may, however, in lieu of the finalwithholding tax, opt for voluntary disclosure of the interest or capital income to the tax authority ofhis or her country of residency. Note that Switzerland may conclude similar treaties with otherEuropean countries.

EU Savings Tax

On 26 October 2004, the European Community and Switzerland entered into an agreement on thetaxation of savings income pursuant to which Switzerland will adopt measures equivalent to those

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of the European Directive 2003/48/EC of 3 June 2003 on the taxation of savings income in theform of interest payments (the ‘‘EU-Swiss Savings Tax Agreement’’).

In accordance with this agreement respectively the Swiss law implementing this agreement, Swisspaying agents have to withhold tax at a rate of 35% on certain interest payments to a beneficialowner who is an individual and resident of an EU member state, with the option of the individual tohave the paying agent and Switzerland provide to the tax authorities of the EU member state thedetails of the interest payments in lieu of the withholding. Currently, payments under the Notes arenot subject to such withholding tax. On 14 May 2013 the European Council gave a mandate to theEuropean Commission to negotiate an amendment of the EU-Swiss Savings Tax Agreement.

Withholding Tax

Swiss Federal Withholding Tax

According to the present Swiss law and practice of the Swiss Federal Tax Administration,payments of interest on the Notes and repayment of principal of the Notes by the Issuer will notbe subject to Swiss withholding tax, even though the Notes are guaranteed by the Guarantors,provided that the Issuer uses the proceeds from the offering and sale of the Notes at all timeswhile they are outstanding outside Switzerland.

On December 22, 2010 the Swiss Federal Council issued draft legislation, which, if enacted, mayrequire a paying agent to deduct Swiss withholding tax at a rate of 35% on any payment ofinterest in respect of a Note to an individual resident in Switzerland or to a person resident in acountry which has no double tax treaty with Switzerland. If this legislation or similar legislation wereenacted and an amount of, or in respect of, Swiss withholding tax were to be deducted or withheldfrom that payment, neither the Issuer nor the Guarantor nor any paying agent nor any other personwould pursuant to Condition 7, as applicable, be obliged to pay additional amounts with respect toany Note as a result of the deduction or imposition of such withholding tax.

Payments under the Note Guarantee by Ferrexpo AG of amounts due in respect of the Notes maygive rise to Swiss withholding taxes on dividends (up to 54% at present rates) to the extent thatsuch payments are regarded as a deemed distribution by Ferrexpo AG to its shareholder Ferrexpoplc as set out under ‘‘Risk Factors – Risks relating to our indebtedness and the Notes – Swiss lawmay limit Ferrexpo AG’s liability for payments due in respect of the Notes under the NoteGuarantee and the gross-up obligation in respect of the Swiss Guarantor may not be valid andmay prejudice its enforceability’’.

European Savings Tax

According to the agreement between Switzerland and the EU on the taxation of savings income,entered into force on 1 July 2005, Switzerland agreed to introduce a special withholding tax.Interest payments from non-Swiss sources made by a Swiss paying agent to a beneficial ownerwho is an individual and resident of an EU member state are subject to a withholding tax inSwitzerland at a rate of 20% on the gross interest amount until June 30, 2011 and 35% thereafter.

Stamp Duties

The issue and the redemption of the Notes made by the Issuers will not be subject to Swissfederal stamp duty on the issuance of securities (Emissionsabgabe), or Swiss federal stamp dutyon transfer of securities (Umsatzabgabe), as the case may be, even though the Notes areguaranteed by the Guarantors, provided that the relevant Issuer uses the proceeds from theoffering and sale of the Notes at all times while they are outstanding outside Switzerland.

Dealings in Notes with a maturity in excess of 12 months where a Swiss domestic bank or a Swissdomestic securities dealer (as defined in the Swiss Federal Stamp Duty Act of June 27, 1973) actsas a party or as an intermediary to the transaction may be subject to Swiss federal stamp duty ondealing in securities at a rate of up to 0.3% of the purchase price of the Notes.

Income Taxation on Principal or Interest for Non-resident Noteholders

Under current Swiss law, payments of interest and repayment of principal to a holder of a Notewho is a non-resident of Switzerland and who, during the current taxation year, has not engaged intrade or business through a permanent establishment or fixed place within Switzerland to which theNotes are attributable and who is not subject to income taxation in Switzerland for any otherreason will not be subject to any Swiss federal, cantonal or communal income tax.

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Swiss-resident Taxpayers (Notes Held as Private Assets)

Notes without a ‘‘predominant one-time interest payment’’: Holders of Notes without a predominantone-time interest payment (the yield-to-maturity predominantly derives from periodic interestpayments and not from a one-time-interest-payment) who are individuals receive payments ofinterest on Notes are required to include such payments in their personal income tax return andwill be taxable on any net taxable income (including the payments of interest on the Notes) for therelevant tax period.

Notes with a ‘‘predominant one-time interest payment’’: In the case of Notes with a ‘‘predominantone-time interest payment’’ (the yield-to-maturity predominantly derives from a one-time-interest-payment such as an original issue discount or a repayment premium and not from periodic interestpayments), the positive difference (including any capital and foreign exchange gain) between theamount received upon sale or redemption and the issue price (if price (if the Notes werepurchased thereafter) will be classified as a taxable interest payment, as opposed to a tax-freecapital gain (differential taxation method). Losses realised on the sale of Notes with a ‘‘predominantonetime interest payment’’ may be offset against gains realised within the same tax period on thesale of any notes with a ‘‘predominant one-time interest payment’’.

Swiss-resident Taxpayers (Notes Held as Business Assets)

Swiss-resident individual taxpayers who hold Notes as part of Swiss business assets and Swiss-resident corporate taxpayers and corporate taxpayers resident abroad holding Notes as part of aSwiss permanent establishment or a fixed place of business in Switzerland, are required torecognise the payments of interest on Notes in their income statement for the respective tax periodand will be taxable on any net taxable earnings for such period.

Income Taxation on Gains on Sales or Redemption

Non-resident Noteholders

Under current Swiss law, a holder of a Note who is not resident in Switzerland and who, duringthe taxation year, is not engaged in trade or business through a permanent establishment or fixedplace of business within Switzerland to which the Notes are attributable and who is not subject toincome taxation in Switzerland for any other reason will not be subject to any Swiss federal,cantonal or communal income tax on gains realised during that year on the sale or redemption ofa Note.

Swiss-resident Taxpayers (Notes Held as Private Assets)

Holders of Notes residing in Switzerland and who hold the Notes as private assets and who sell orotherwise dispose of the Notes during the taxation year realise, in general, either a taxfree capitalgain or a tax-neutral capital loss. See ‘‘– Income Taxation on Principal or Interest Non-resident forNoteholders’’ above for a summary of the tax treatment of a gain or a loss realised on Notes witha ‘‘predominant one-time interest payment’’.

Swiss-resident Taxpayers (Notes Held as Business Assets)

Swiss-resident individual taxpayers holding Notes as part of Swiss business assets and Swiss-resident corporate taxpayers and corporate taxpayers resident abroad holding Notes as part of aSwiss permanent establishment or a fixed place of business within Switzerland are required torecognise capital gains or losses realised on the sale of a Note in their income statement for therespective tax period and will be taxable on any net taxable earnings for such period. The sametaxation treatment also applies to Swiss-resident individuals who, for income tax purposes, areclassified as ‘‘professional securities dealers’’ for reasons of, inter alia, frequent dealing andleveraged investments in securities.

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CERTAIN ERISA AND OTHER CONSIDERATIONS

The U.S. Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’), imposescertain requirements on ‘‘employee benefit plans’’ (as defined in Section 3(3) of ERISA) subject toPart 4 of Subtitle B of Title I of ERISA, including entities such as collective investment funds andseparate accounts whose underlying assets include the assets of such plans (collectively, ‘‘ERISAPlans’’) and on those persons who are fiduciaries with respect to ERISA Plans. Investments byERISA Plans are subject to ERISA’s general fiduciary requirements, including, but not limited to,the requirement of investment prudence and diversification and the requirement that an ERISAPlan’s investments be made in accordance with the documents governing the ERISA Plan.

Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended (theCode) prohibit certain transactions involving the assets of an ERISA Plan (as well as those plansthat are not subject to ERISA but which are subject to Section 4975 of the Code, such asindividual retirement accounts (together with ERISA Plans, ‘‘Plans’’)) and certain persons (referredto as ‘‘parties in interest’’ under ERISA or ‘‘disqualified persons’’ under the Code) having certainrelationships to such Plans, unless a statutory or administrative exemption is applicable to thetransaction. The types of transactions between Plans and parties in interest that are prohibitedinclude: (a) sales, exchanges or leases of property, (b) loans or other extensions of credit and (c)the furnishing of goods and services. A party in interest or disqualified person who engages in aprohibited transaction may be subject to excise taxes under ERISA and the Code. In addition, thepersons involved in the prohibited transaction may have to rescind the transaction and pay anamount to the Plan for any losses realised by the Plan or profits realised by such persons andcertain other liabilities could result that have a significant adverse effect on such persons. Certainexemptions from the prohibited transaction provisions of Section 406 of ERISA and Section 4975of the Code may apply depending in part on the type of Plan fiduciary making the decision toacquire a Note and the circumstances under which such decision is made. Included among theseexemptions are Section 408(b)(17) of ERISA (relating to certain transactions between a plan and anon-fiduciary service provider), Prohibited Transaction Class Exemption (‘‘PTCE’’) 95-60 (relating toinvestments by insurance company general accounts), PTCE 91-38 (relating to investments bybank collective investment funds), PTCE 84-14 (relating to transactions effected by a ‘‘qualifiedprofessional asset manager’’), PTCE 90-1 (relating to investments by insurance company pooledseparate accounts) and PTCE 96-23 (relating to transactions determined by an in-house assetmanager). There can be no assurance that any of these class exemptions or any other exemptionwill be available with respect to any particular transaction involving the Notes.

Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Codemay arise if any Notes are acquired by a Plan with respect to which the Dealer Manager or any ofits affiliates are a party in interest or a disqualified person. Certain exemptions from the prohibitedtransaction provisions of Section 406 of ERISA and Section 4975 of the Code may be applicable,depending in part on the type of Plan fiduciary making the decision to acquire Notes and thecircumstances under which such decision is made. There can be no assurance that any exemptionwill be available with respect to any particular transaction involving the Notes, or that, if anexemption is available, it will cover all aspects of any particular transaction. By its purchase andholding of any Notes, the purchaser thereof will be deemed to have represented and agreed eitherthat: (i) it is not and for so long as it holds Notes will not be (and is not acquiring the Notesdirectly or indirectly with the assets of a person who is or while the Notes are held will be) anERISA Plan or other Plan, an entity whose underlying assets include the assets of any suchERISA Plan or other Plan, or a governmental or church plan or non-U.S. employee benefit planwhich is subject to any U.S. federal, state or local law, or non-U.S. law, that is substantially similarto the provisions of Section 406 of ERISA or Section 4975 of the Code, or (ii) its purchase andholding of the Notes will not result in a prohibited transaction under Section 406 of ERISA orSection 4975 of the Code (or, in the case of such a governmental or church plan or non-U.S.employee benefit plan, any such substantially similar U.S. federal, state or local law, or non-U.S.law). Similarly, each transferee of any Notes, by virtue of the transfer of such Notes to suchtransferee, will be deemed to have represented and agreed either that: (i) it is not and for so longas it holds Notes will not be (and is not acquiring the Notes directly or indirectly with the assets ofa person who is or while the Notes are held will be) an ERISA Plan or other Plan, an entity whoseunderlying assets include the assets of any such ERISA Plan or other Plan, or a governmental orchurch plan or non-U.S. employee benefit plan which is subject to any U.S. federal, state or locallaw, or non-U.S. law, that is substantially similar to the provisions of Section 406 of ERISA or

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Section 4975 of the Code, or (ii) its purchase and holding of the Notes will not result in aprohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case ofsuch Certain ERISA and Other Considerations a governmental or church plan or non-U.S.employee benefit plan, any such substantially similar federal, state or local law, or non-U.S. law).

Governmental plans, certain church plans and non-U.S. plans, while not subject to the fiduciaryresponsibility provisions of ERISA or the prohibited transaction provisions of ERISA and Section4975 of the Code, may nevertheless be subject to U.S. federal, state or local laws, or non-U.S.laws that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciariesof any such plans should consult with their counsel before purchasing any Notes.

The foregoing discussion is general in nature and not intended to be all inclusive. Any Planfiduciary who proposes to cause a Plan to purchase any Notes should consult with its counselregarding the applicability of the fiduciary responsibility and prohibited transaction provisions ofERISA and Section 4975 of the Code to such an investment, and to confirm that such investmentwill not constitute or result in a non-exempt prohibited transaction or any other violation of anapplicable requirement of ERISA.

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SELLING AND TRANSFER RESTRICTIONS

The Notes, the Note Guarantee and the Note Suretyship have not been and will not be registeredunder the Securities Act and, subject to certain exceptions may not be offered or sold within theUnited States. Terms used in this paragraph have the meanings given to them by Regulation Sunder the Securities Act.

The Notes, the Note Guarantee and the Note Suretyship are being offered and sold outside of theUnited States in reliance on Regulation S and within the United States only to qualified institutionalbuyers in reliance on Rule 144A. In addition, until 40 days after the commencement of the offeringof the Notes, the Note Guarantee and the Note Suretyship an offer or sale of Notes, the NoteGuarantee and the Note Suretyship within the United States by a dealer that is not participating inthe offering may violate the registration requirements of the Securities Act if such offer or sale ismade otherwise than in accordance with Rule 144A.

Rule 144A Notes

Each purchaser of Rule 144A Notes within the United States pursuant to Rule 144A, by acceptingdelivery of this Prospectus and the Notes, will be deemed to have represented, agreed andacknowledged that:

(i) It is (a) a QIB, (b) acquiring such Notes for its own account, or for the account of one ormore QIBs, and (c) aware, and each beneficial owner of such Notes has been advised, thatthe sale of such Notes to it is being made in reliance on Rule 144A.

(ii) It understands that the Rule 144A Notes have not been and will not be registered under theSecurities Act and may not be offered, sold, pledged or otherwise transferred except (a) inaccordance with Rule 144A to a person that it and any person acting on its behalf reasonablybelieve is a QIB purchasing for its own account or for the account of one or more QIBs eachof which is purchasing not less than US$100,000 principal amount of Notes, (b) outside theUnited States in accordance with Rule 903 or Rule 904 of Regulation S under the SecuritiesAct or (c) pursuant to an exemption from registration under the Securities Act provided byRule 144 thereunder (if available), and in each case in accordance with any applicablesecurities laws of any state of the United States.

(iii) It understands that the Rule 144A Notes, unless otherwise agreed between the Issuer andthe Trustee in accordance with applicable law, will bear a legend to the following effect:

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S.SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’) OR WITH ANYSECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OFTHE UNITED STATES AND may NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISETRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THESECURITIES ACT (‘‘RULE 144A’’) TO A PERSON THAT THE HOLDER AND ANYPERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIEDINSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A ‘‘QIB’’) PURCHASINGFOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB WHOM THE HOLDER HASINFORMED, IN EACH CASE, THAT SUCH OFFER, SALE, PLEDGE OR OTHERTRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, AND IN AN AMOUNT NOTLESS THAN US$100,000 PRINCIPAL AMOUNT OF NOTES OR (2) OUTSIDE THE UNITEDSTATES IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDERTHE SECURITIES ACT (‘‘REGULATION S’’), OR (3) PURSUANT TO AN EXEMPTIONFROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144THEREUNDER (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANYAPPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NOREPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF ANY EXEMPTIONUNDER THE SECURITIES ACT FOR RESALES OF THIS NOTE.

(iv) The Issuer, the Registrar, the Dealer Manager and its affiliates, and others will rely upon thetruth and accuracy of the foregoing acknowledgments, representations and agreements. If it isacquiring any Notes for the account of one or more QIBs, it represents that it has soleinvestment discretion with respect to each such account and that it has full power to makethe foregoing acknowledgments, representations and agreements on behalf of each suchaccount.

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(v) It understands that the Rule 144A Notes will be evidenced by the Rule 144A Global NoteCertificate. Before any interest in the Rule 144A Global Note Certificate may be offered, sold,pledged or otherwise transferred to a person who takes delivery in the form of an interest inthe Regulation S Global Note Certificate, it will be required to provide a Transfer Agent with awritten certification (in the form provided in the Agency Agreement) as to compliance withapplicable securities laws. Prospective purchasers are hereby notified that sellers of the Notesmay be relying on the exemption from the provisions of Section 5 of the Securities Actprovided by Rule 144A.

Regulation S Notes

Each purchaser of Regulation S Notes outside the United States will be deemed to haverepresented, agreed and acknowledged that:

(i) It understands that the Notes, the Note Guarantee and the Note Suretyship have not beenand will not be registered under the Securities Act, and such Notes, Note Guarantee andFPM Suretyship are being offered and sold in accordance with Regulation S.

(ii) It or any person on whose behalf it is acting is, or at the time the Notes, the Note Guaranteeand the Note Suretyship are purchased will be, the beneficial owner of such Notes, NoteGuarantee and Note Suretyship and (i) it is purchasing the Notes, the Note Guarantee andthe Note Suretyship in an offshore transaction (within the meaning of Regulation S) and (ii) itis not an affiliate of the Issuer or a person acting on behalf of such an affiliate.

(iii) It will not offer, sell, pledge or otherwise transfer Notes, except in accordance with theSecurities Act and any applicable securities laws of any states of the United States.

(iv) The Issuer, the Registrar, the Dealer Manager and its affiliates, and others will rely upon thetruth and accuracy of the foregoing acknowledgments, representations and agreements.

ERISA

Each purchaser of Notes, and each subsequent transferee of any Notes by virtue of the transfer ofsuch Notes to such transferee, by accepting delivery of this Prospectus and the Notes, will bedeemed to have represented, agreed and acknowledged that either:

* It is not (a) an ‘‘employee benefit plan’’ (as defined in Section 3(3) of ERISA that is subject toTitle I of ERISA, (b) a ‘‘plan’’ subject to Section 4975 of the Code, (c) an entity whoseunderlying assets include ‘‘plan assets’’ (within the meaning of ERISA) or (d) a governmentalor church plan or non-U.S. employee benefit plan which is subject to any U.S. federal, stateor local law, or non-U.S. law that is substantially similar to the provisions of Section 406 ofERISA or Section 4975 of the Code; or

* Its purchase and holding of any note or Notes will not result in a non-exempt prohibitedtransaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of agovernmental or church plan or non-U.S. employee benefit plan, a violation of anysubstantially similar federal, state or local law, or non-U.S. law).

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GENERAL INFORMATION

1. It is expected that listing of the Notes on the Official List and admission of the Notes totrading on the Main Securities Market will be granted on or before 9 July 2015, subject onlyto the issue of the Global Note Certificates. The total expenses related to the admission totrading of the Notes are expected to be EUR5,000.

Arthur Cox Listing Services Limited is acting solely in its capacity as Listing Agent for theIssuer in relation to the Notes and is not itself seeking admission to the Official List or tradingon the Main Securities Market for the purpose of the Prospectus Directive.

2. The Issuer and each of the Guarantors has obtained, or will obtain prior to the Issue Date, asthe case may be, all necessary consents, approvals and authorisations in the UnitedKingdom, Switzerland, the United Arab Emirates and Ukraine, as the case may be, inconnection with the issue and performance of the Notes, the Note Guarantees and the NoteSuretyship. The issue of the Notes was authorised by a resolution of the Board of Directorsof the Issuer passed on 13 May 2015 and the giving of the Guarantees was authorised: (i) bya resolution of the Board of Directors of Ferrexpo passed on 13 May 2015, (ii) by a writtenresolution of the Board of Directors of Ferrexpo AG passed on 27 May 2015, and (iii) by awritten resolution of the Board of Directors of FME passed on 13 May 2015. The NoteSuretyship was authorised by a resolution of the general meeting of shareholders of FPM on11 June 2015.

3. There has been no significant change in the financial or trading position (i) of the Issuer since31 December 2014, and (ii) of the Guarantors or of the Group since 31 March 2015. Therehas been no material adverse change in the financial position or prospects of the Issuer, theGuarantors or of the Group since 31 December 2014.

4. Neither the Issuer, the Guarantors nor the Group are, nor have been, involved in anygovernmental, legal or arbitration proceedings (including any such proceedings which arepending or threatened of which the Issuer or the Guarantors or the Group are aware) duringthe 12 months preceding the date of this Prospectus which may have or has had in therecent past significant effects on the financial position or profitability of the Issuer or theGroup or the Guarantors.

5. The Notes have been accepted for clearance through the Euroclear and Clearstream,Luxembourg systems and DTC. The Common Code and ISIN numbers for the Regulation SNotes are 125237240 and XS1252372401 respectively. The ISIN and CUSIP numbers of theRule 144A Notes are US31529TAD54 and 31529TAD5 respectively. The Common Code forthe Rule 144A Notes is 125335144.

The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium and theaddress of Clearstream, Luxembourg is 42 Avenue JF Kennedy L-1855 Luxembourg. Theaddress of DTC is 55 Water Street, New York, New York 10041, United States of America.

6. There are no material contracts entered into other than in the ordinary course of the Issuer’sor Guarantors’ or the Group’s business, which could result in any member of the Group beingunder an obligation or entitlement that is material to the Issuer’s or Guarantors’ ability to meetits obligations to noteholders in respect of the notes being issued.

7. Where information in this Prospectus has been sourced from third parties, this information hasbeen accurately reproduced and, as far as the Issuer and the Guarantors are aware and areable to ascertain from the information published by such third parties, no facts have beenomitted which would render the reproduced information inaccurate or misleading. The sourceof third-party information is identified where used.

8. For the life of the Prospectus (being a period of 12 months starting on the date on which thisProspectus is made available to the public), copies (and English translations where thedocuments in question are not in English) of the following documents will be available (inelectronic form), during usual business hours on any weekday (Saturdays, Sundays andpublic holidays excepted), for inspection at the office of the Issuer:

(a) the Surety Agreement, the Trust Deed (which includes the forms of the Global NoteCertificates and the definitive Notes);

(b) the Memorandum and Articles of Association of the Issuer and each of the Guarantors;

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(c) the published audited accounts of the Issuer for the three financial years most recentlyended 31 December 2014 and the published annual report and audited consolidatedannual accounts of the Group for the three years ended 31 December 2014; and

(d) a copy of this Prospectus together with any supplement to this Prospectus or furtherProspectus.

This Prospectus will, following publication, be available on the website of the Central Bank ofIreland at www.centralbank.ie.

9. The Issuer’s Financial Statements for the years ended 31 December 2012, 31 December2013 and 31 December 2014 and the Group’s Financial Statements for the years ended31 December 2012, 31 December 2013 and 31 December 2014 incorporated by reference inthis document do not constitute statutory accounts within the meaning of Section 434 of theCompanies Act 2006 (the ‘‘Act’’). The Group’s statutory accounts for the three financial yearsended 31 December 2014 and the Issuer’s statutory accounts for the three financial yearsended 31 December 2014 have been delivered to the Registrar of Companies in England andWales. The Issuer’s and the Group’s auditors have made a report under Section 495 of theAct on the last statutory accounts that was not ‘‘qualified’’ within the meaning of Section 539of the Act and did not contain a statement made under Section 498(2) or Section 498(3) ofthe Act.

10. Ernst & Young LLP of 1 More London Place, London SE1 2AF (Independent PublicAccountants) which is registered to carry out audit work by the Institute of CharteredAccountants in England and Wales have audited, and rendered unqualified audit reports on,the accounts of the Issuer and the Group for the three years ended 31 December 2014 andthe accounts of the Group for the three years ended 31 December 2014.

11. The Company has not issued any non-voting equity securities such as participation certificates(Partizipationsscheine) or profit sharing certificates (Genussscheine).

12. An affiliate of the Dealer Manager is a lender to the Issuer, Ferrexpo Middle East andFerrexpo AG.

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GLOSSARY OF SELECTED TERMS

‘‘2016 Note Guarantee’’ The guarantee in respect of the 2016 Notes provided by theParent, AG and FME as contained in the trust deed dated 7 April2011 (as may be amended, restated and/or supplemented fromtime to time)

‘‘2016 Note Suretyship’’ The note suretyship in respect of the 2016 Notes provided byFPM as contained in the surety agreement dated 7 April 2011 (asmay be amended, restated and/or supplemented from time totime)

‘‘2019 Note Guarantee’’ The guarantee in respect of the 2019 Notes provided by theParent, AG and FME as contained in the trust deed dated24 February 2015 (as may be amended, restated and/orsupplemented from time to time)

‘‘2019 Note Suretyship’’ The note suretyship in respect of the 2019 Notes provided byFPM as contained in the surety agreement dated 24 February2015 (as may be amended, restated and/or supplemented fromtime to time)

‘‘2019 Notes’’ The US$160,724,000 10.375% Guaranteed Amortising Notesdue 2019 issued by the Issuer on 24 February 2015

‘‘AMC’’ Ukrainian Anti-monopoly Committee

‘‘BIP’’ Business Improvement Programme

‘‘C1 cash costs’’ Cash costs per tonne of pellets, ex-works, excludingadministrative and distribution costs

‘‘Cape size’’ Cape size vessels are typically above 150,000 tonnesdeadweight. Ships in this class include oil tankers, supertankersand bulk carriers transporting coal, ore and other commodity rawmaterials

‘‘CFR’’ Delivery including cost and freight

‘‘CIF’’ Delivery including cost, insurance and freight

‘‘CPI’’ Consumer Price Index

‘‘CSR’’ Corporate Safety and Social Responsibility

‘‘DAF’’ Delivery at frontier

‘‘DAP’’ Delivered at place

‘‘FBM’’ Ferrexpo Belanovo Mining

‘‘FOB’’ Delivered free on board

‘‘FPM’’ Ferrexpo Poltava Mining, a company incorporated under the lawsof Ukraine

‘‘FPP’’ Ferrexpo Premium Pellets

‘‘FYM’’ Ferrexpo Yeristovo Mining, also known as LLC FerrexpoYeristovo GOK or YGOK, a company incorporated under thelaws of Ukraine

‘‘GPL’’ Gorishne-Plavninskoe and Lavrikovskoe deposits operated byFPM

‘‘Growth markets’’ Markets which have the potential to add new and significanttonnage to the Group, especially Asia

‘‘Guarantors’’ Ferrexpo, Ferrexpo AG and FPM

‘‘Indicated resource’’ That part of a Mineral Resource for which tonnage, densities,shape, physical characteristics, grade and mineral content can beestimated with a reasonable level of confidence

‘‘Inferred resource’’ That part of a Mineral Resource for which tonnage, grade andmineral content can be estimated with a low level of confidence

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‘‘Helogistics’’ Helogistics Holdings GmbH

‘‘JORC’’ Australian Joint Ore Reserves Committee

‘‘Measured resource’’ That part of a Mineral Resource for which tonnage, densities,shape, physical characteristics, grade and mineral content can beestimated with a high level of confidence

‘‘Mineral resource’’ Defined in the JORC Code as a concentration or occurrence ofmaterial of intrinsic economic interest in or on the Earth’s crust insuch form and quantity that there are reasonable prospects foreventual economic extraction. The location, quantity, grade,geological characteristics and continuity of a Mineral Resourceare known, estimated or interpreted from specific geologicalevidence and knowledge

‘‘Mt’’ Million tonnes

‘‘Mtpa’’ Million tonnes per annum

‘‘Natural markets’’ Markets in which, because of our location, we believe we havepotential competitive advantages over more distant producers,and hence we are targeting for future growth. Our Naturalmarkets include Turkey, the Middle East and Western Europe

‘‘Ore reserve’’ Defined in the JORC Code as the economically mineable part of aMeasured and/or Indicated Mineral Resource

‘‘Overburden’’ Material that lies above an area of economic or scientific interestin mining; most commonly the rock, soil and ecosystem that liesabove an ore body

‘‘Probable reserve’’ The economically mineable part of an Indicated, and in somecircumstances, a Measured Mineral Resource

‘‘Proved reserve’’ The economically mineable part of a Measured Mineral Resource

‘‘Tax Code’’ The Ukrainian tax code officially promulgated on 4 December2010

‘‘Traditional customers’’ Customers in Traditional markets

‘‘Traditional markets’’ Markets we have supplied over a long period in which we havelongstanding customer relationships, and enjoy clear andestablished competitive advantages. These markets includeAustria, Russia, Czech Republic, Hungary, Serbia and Slovakia

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REGISTERED/HEAD OFFICE OF THE ISSUER

Ferrexpo Finance plc2-4 King Street

London SW1Y 6QLUnited Kingdom

REGISTERED/HEAD OFFICE OF THE GUARANTORS

Ferrexpo Poltava Mining16 Budivelnykiv Street

Komsomolsk 39802Poltava Region

Ukraine

Ferrexpo AGBahnhofstrasse 13

CH- 6340 BaarSwitzerland

Ferrexpo plc2-4 King Street

London SW1Y 6QLUnited Kingdom

Ferrexpo Middle East FZE1203 The Galleries – 04

Jebel Ali Down TownP.O. Box 18341

DubaiUnited Arab Emirates

AUDITORS OF THE ISSUER

Ernst & Young LLP1 More London Place

London SE1 2AFUnited Kingdom

AUDITORS OF THE GUARANTORS

To Ferrexpo Poltava MiningErnst & Young Audit Services LLC

Khreschatyk Street 19A01001 Kyiv

Ukraine

To Ferrexpo AGErnst & Young AG

Maagplatz 1CH-8101

Zurich

To Ferrexpo plcErnst & Young LLP

1 More London PlaceLondon SE1 2AFUnited Kingdom

To Ferrexpo Middle East FZEErnst & Young Dubai

P.O. Box 9267Al Attar Business Tower, 28th floor

Sheikh Zayed RoadDubai

United Arab Emirates

TRUSTEE REGISTRARBNY Mellon Corporate Trustee Services Limited

One Canada SquareLondon E14 5ALUnited Kingdom

The Bank of New York Mellon(Luxembourg) S.A.

Vertigo Building-Polaris2-4 rue Eugene Ruppert

L-2453Luxembourg

PRINCIPAL PAYING AGENT ANDTRANSFER AGENT

U.S. PAYING AGENT ANDTRANSFER AGENT

The Bank of New York Mellon,London Branch

One Canada SquareLondon E14 5ALUnited Kingdom

The Bank of New York Mellon,New York Branch101 Barclay Street

New York, NY 10286United States

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Legal Advisers

To the Issuer/Guarantorsas to English and United

States lawHerbert Smith Freehills LLP

Exchange HousePrimrose Street

London EC2A 2EGUnited Kingdom

To the Issuer/Guarantorsas to Ukrainian lawAvellum Partners

Leonardo Business Center19-21 Bohdana Khmelnytskoho

Str.01030, Kyiv, Ukraine

To the Issuer/Guarantorsas to Swiss law

Walder Wyss LtdSeefeldstrasse 123

CH-8034Zurich

Switzerland

To the Issuer/Guarantorsas to UAE law

Herbert Smith Freehills LLPDubai International Finance

CentreGate Village 7, Level 4

P.O. Box 506631Dubai

United Arab Emirates

To the Dealer Manager andthe Trustee as to English and

United States lawLinklaters LLPOne Silk Street

London EC2Y 8HQUnited Kingdom

To the Dealer Managerand the Trustee as to

Ukrainian lawEgorov Puginsky

Afanasiev & Partners38 Volodymyrska Street

Kyiv 01030Ukraine

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