Poltava Iron Ore establishes Yeristovsky Iron Ore

At their AGM on May 29, Poltava Iron Ore (PGOK: SELL) shareholders voted to establish Yeristovsky Iron Ore to develop the Yeristovskoe deposit. The AGM also approved a UAH 11.1 mln (USD 2.2 mln) dividend payout, ~3.3% of the company’s 2007 net income. DPS is USD 0.02, dividend yield 0.09%. Eugene Cherviachenko: Poltava Iron Ore will own a 51% stake in the new entity (another 49% will belong to parent Ferrexpo AG). Ferrexpo told us that at this point, the JV is simply a statutory entity and will not be used by the group as a management entity. In our view, this does not merit changes to Poltava Iron Ore’s investment case. We stick to our target price of USD 13.5 per share (26% downside). Our recommendation is SELL (for more details see our note from Friday).