The Motley Fool

Why Ferrexpo Plc & Metals Exploration Plc Are Plummeting Today

The shares of Ferrexpo (LSE:FXPO) and Metals Exploration (LSE: MTL) are down 32% and 20%, respectively, around midday — why? And should you hurry to buy them?

Bank Bankruptcy 

Ferrexpo issued an update today on its “transactional bank in Ukraine, Bank Finance and Credit JSC, a related party ultimately controlled by Ferrexpo’s largest shareholder Kostyantin Zhevago“.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

It’s very bad. 

Following the close of business on the 17th of September 2015, the National Bank of Ukraine made an announcement on its website stating that it had adopted a decision to declare Bank F&C insolvent.”  

But just how bad is the situation? 


“As of the 16 September 2015, the group’s total cash balance was approximately $280m after the payment of the interim dividend. Of this cash balance, approximately $174m was held at Bank F&C with the remainder held offshore.”

Its operations “are not currently affected,” the miner added, and the board is assessing the situation and will update the market as necessary.

A supplier of iron ore pellets to the steel industry, Ferrexpo had a net debt position of $653m in the first half (1H) of the year ending 30 June, for a net leverage of 1.9x (1.2x on 31 December 2014). Revenues have plunged and operating cash flow have declined fast in recent months, and these trends are likely to persist, in my view.

Even if we assume that its level of adjusted operating cash flow (Ebitda) in the second half will be in line with 1H at $176m, then its net leverage could easily soar to between 2.4x and 2.8x, based on its cash balances, according to my calculations.

Also noteworthy is that the group’s net leverage must stay withinnet debt to Ebitda covenant of 3x“, according to the agreement with its lenders, and this could be a real problem.

A dividend cut is a base-case scenario right now, in my view, yet more bad news could be around the corner. Incidentally, Citigroup raised its price target from 38p to 58p on Thursday, but the stock today plunged from 59p to 39p. The analysts, who have a sell recommendation, could not predict what was about to hit Ferrexpo, and I’d agree that its valuation wasn’t incredible high — yet its price-to-book value already testified to a very risky investment. 


Elsewhere in the resources space, Metals Exploration announced today that it had “obtained commitments to raise US$5 million via the issue of a total of 108m new ordinary shares (…) at a price of 3 pence per new ordinary share, from certain existing shareholders.

It stock traded around 3.3p around midday. 

A much smaller entity with a market cap of less than £50m, and whose stocks trade on thin volumes, it kindly reminds us what kind of risk we face investing in tiny explorers, and why diversification rules!

Moreover, the group said that “is in final discussions to receive commitments from certain shareholders to raise up to a further $5m for working capital and contingency purposes by way of the creation and issue of debt securities up to a maximum nominal amount of $5m.” 

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.