Metinvest to invest UAH 3.5 bln into Northern and Central Iron Ore

Metinvest announced yesterday in a press release that it planned to invest UAH 2.6 bln into Northern Iron Ore (UX: SGOK UK) and UAH 0.9 bln into Central Iron Ore (UX: CGOK UK) in 2011. For Northern Iron Ore, Metinvest plans to purchase a pelletizing machine and ore transportation machinery, as well as modernize its ore mill. For Central Iron Ore, Metinvest plans to develop its fine material division and construct a crushing & transfer complex. Metinvest Iron Ore Division Director Nikolay Ishchenko said this year’s investments would be channeled for debottlenecking and solving of quality issues, strengthening of enrichment process and reduction of environmental impact. Metinvest said that since 2007 it has invested more than UAH 7.5 bln into its iron ore division. Andriy Gerus: This news confirms our positive view on Northern & Central Iron Ore. We forecast both companies to increase revenue by 40% y-o-y in 2011. We reiterate BUY recommendations for both stocks, with a target price of UAH 19.4 for Northern Iron Ore and UAH 12 per share for Central Iron Ore.