Fenix Resources Limited (ASX:FEX) made significant progress in the December quarter on development of the Iron Ridge Iron Ore Project in WA’s Mid-West, with production underway and the first shipment of about 60,000 tonnes of combined lump and fines product scheduled for early February.
The company had a busy quarter. In addition to signing port access and service agreements with Mid West Ports Authority, the operator of the Port of Geraldton, it also acquired existing port facilities at the port.
During the quarter, the West Australian high-grade iron ore developer also signed an offtake agreement with Sinosteel International Holding Company for 50% of production and sales from Iron Ridge.
It also signed a road transport contract with Fenix Newhaul Pty Ltd, an incorporated joint venture company between Fenix and Newhaul.
Iron Ridge Project
Fenix commenced production at the Iron Ridge Project in December
Lump and fines products are now being stockpiled at the Port of Geraldton in preparation for the first shipment, expected early next month.
Production and road haulage is ramping up in line with expectations, with deliveries to the Fenix-owned port facilities currently at about 60% of planned annualised output, with full capacity of 1.25 million tonnes per annum (Mtpa) expected in March 2021.
As of January 17, 2021, there was slightly more than 32,000 tonnes of product stored in the port shed ready for export.
The company’s cash reserves at the end of 2020 stood at $10.2 million.
Port infrastructure acquisition
Fenix executed a binding terms sheet with Sinosteel Midwest Corporation Ltd (SMC) to acquire SMC’s iron ore storage shed, truck unloading and conveyor systems at the Geraldton Port.
Both SMC and the company also reached agreement to cooperate on commercial terms to ensure that the Iron Ridge project has the necessary lease area to fit all of its infrastructure during the economic life of the Iron Ridge Project.
Port access and lease agreements
Also during the quarter, Fenix executed a port lease agreement and a port access and services agreement with Mid West Ports Authority (MWPA) for the export of iron ore products through the Port of Geraldton.
The agreement allows Fenix to export 1.25 million tonnes per annum of iron ore, with a four-year initial term and two additional two-year extensions at Fenix’s election
During the quarter, Warwick Davies was appointed as non-executive director. He has worked in the iron ore and minerals industries for more than 50 years.
Also, Garry Plowright will step down from his executive role and will move into a non-executive director role, effective January 1, 2021.
In the quarter, the company issued a total of 39.7 million fully paid ordinary shares upon exercise of unlisted options exercisable at 8 cents per option on or before November 21, 2021, receiving $3.2 million.