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Fenix Resources eyes off first iron ore shipment from Iron Ridge Project in early 2021

Snapshot

Production is on track to start later this year and the first shipment from the premium direct shipping ore deposit is scheduled early next year.

Fenix Resources Ltd - Fenix Resources makes significant progress on Ridge Iron Ore Project with first shipment set for early 2021

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Price: 0.215 AUD

ASX:FEX
Market: ASX
Market Cap: $84.54 m
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Fenix Resources Ltd (ASX:FEX) is making progress on its planned development of the Iron Ridge Iron Ore Project in Western Australia’s Mid-West, with production on track to start later this year.

First shipment from the premium direct shipping ore deposit is scheduled for early 2021.

High-grade iron ore attracts a premium price on the seaborne market as Chinese steelworks increasingly demand more pure inputs with lower emissions due to increasing strict government regulations.

Iron Ridge Project

Fenix wholly-owns the high-grade (64.2%) Iron Ridge iron ore deposit, around 490 kilometres by road from Geraldton port.

The feasibility study completed in November 2019 found that the high-grade and high-quality project has the potential to provide strong returns over its life of mine.

Ore will be crushed and screened on-site and separated into lump and fines product before being trucked to port.

It is estimated Iron Ridge will have a modest initial capital expenditure of $11.9 million, 44% of which need not be paid until after the expected first shipment is dispatched.

The feasibility study included a maiden ore reserve of 7.76 million tonnes at 63.9% iron, which underpins forecast annual production of 1.25 million tonnes for a mine life of around 6.5 years.

 

Average annual EBITDA is forecast at A$16.4 million based on benchmark iron price of A$111.43 per tonne, with the current spot price around A$171.29 per tonne.

The study confirms the following key attributes of Iron Ridge:

➢ High-grade nature of the deposit;

➢ Existing infrastructure that is currently under-utilised (bitumen roads, surplus port storage/ship loading capacity);

➢ Granted Mining Lease which contains all the mineral resource;

➢ Rapid Delivery Time with the ability to mine ore from month one of operations; and

➢ Meaningful production at a simple single-excavator scaleable to maintain a steady-state iron ore production profile of 1.25 million tonnes per annum.

Mining approvals

The Department of Mines, Industry Regulation and Safety approved the Stage 1 Mining Proposal and Mine Closure Plan for the Iron Ridge project in August 2020.

It has also executed a Mining Cooperation and Benefits Agreement with the Wajarri Yamatji Native Title Claimant # 1 Group by Deed Poll.

Offtake and marketing deals

In August 2020, Atlas Iron Pty Ltd became the marketing agent for 50% of production and sales from the Iron Ridge project.

Subject to the marketing election, Atlas Iron has waived its right to the A$1 per tonne royalty on the iron ore, subject to the marketing election.

In October 2020, the company executed a binding terms sheet with Sinosteel International Holding Company for the remaining 50% of production and sales from the Iron Ridge project.

During the September quarter, significant advancements with infrastructure agreements with key services providers including the mining, crushing and screening, road transport and port services contractors were achieved.

Critical items of plant and equipment have been ordered/secured and early site works have started at the project.

Fenix Resources has also agreed to purchase existing port infrastructure at the Geraldton Port from Sinosteel Midwest Corporation.

Also, MACA Limited has been appointed mining and crushing contractor.

Early-stage works started in August through the use of local contractors, with MACA now mobilising heavy earthmoving equipment to site.

Open pit mining and crushing and screening operations are due to start in the current quarter.

Capital raising

Fenix raised $15 million before costs via a two-tranche equity capital raising exercise.

The placement was completed on October 8, 2020, with a total of 103,448,276 shares issued at an issue price of $0.145 per share.

Funds raised will go towards the development of the Iron Ridge project.

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