It’s been a exceptional week for Ferrexpo (LSE:FXPO). Since shut of enterprise on 25 April, the FTSE 250 iron ore pellet producer’s share price has risen 40%. And in comparison with 4 April, the corporate’s now price 62% extra.

But throughout this era — so far as I can see — there hasn’t been any excellent news to report. Actually, the other seems to be the case.

Money circulation issues

That’s as a result of, on 17 April, the group stated that the Ukrainian tax authorities are usually not going to settle its February VAT reclaim of $11.1m. It follows an analogous resolution to carry on to the $12.5m claimed for January. And the results are vital.

The group’s suggested that the choice is “placing financial pressure on [its] liquidity and has forced a reduction in production to 25% of full capacity”.  

The suspension of the repayments is as a result of imposition of non-public sanctions on Kostiantyn Zhevago, the Ukrainian billionaire and largest shareholder in Ferrexpo. It’s believed that he controls just below 50% of the group’s shares. The corporate’s administrators are eager to level out that the sanctions are private in nature and that the group hasn’t been sanctioned in any method.

Nonetheless, at this stage, it’s unsure how – or when – the difficulty will probably be resolved. Subsequently, it seems probably that future claims will even be suspended.

At 31 December 2024, Ferrexpo had $106m of money on its stability sheet. I think it received’t take lengthy for this to be depleted if the Ukrainian VAT continues to be withheld.

It’s a disgrace as a result of the group claims to have reserves of over 5bn tonnes, which might hold it going for a minimum of 50 years. It specialises in producing increased grades of iron ore. When used within the manufacturing course of, this helps enhance productiveness and decrease carbon emissions.

A complicated image

Nonetheless, given the unsure backdrop, it makes the current upward motion within the share price a little bit of a thriller. Normally, issues about an organization’s liquidity would have the other impact.

However the share price rally might have one thing to do with the announcement that the long-awaited US- Ukraine minerals deal has been signed. I ponder if traders assume this might result in American (or different) traders launching a takeover bid. This appears unlikely to me. My understanding is that the settlement is about establishing an funding fund to find new mineral deposits, not exploit current ones.

Lengthy-suffering shareholders will probably be delighted with the current motion within the group’s share price. It can allow them to recoup a few of their paper losses. Since Could 2020, the group’s inventory market valuation has fallen 41%.  

Nonetheless, the current scenario makes me nervous. With none apparent motive to justify the motion, it seems as if some speculative traders are taking a place. This implies the share price might fall as shortly because it’s risen. It’s simply too dangerous for me.

Because of this, I’m going to look at from the sidelines and see how the scenario unfolds.