Fenix outlines low-cost iron ore operation

Fenix Resources could be producing iron ore within months from its Iron Ridge project, near Cue in Western Australia (reports MiningNews).
8th November 2019
Resources Rising Stars

Fenix Resources could be producing iron ore within months from its Iron Ridge project, near Cue in Western Australia (reports MiningNews).

A feasibility study outlined capital costs of just A$11.9 million for a 6.5-year operation producing 1.25 million tonnes of iron ore per annum at C1 costs of $76.86 per tonne.

Just 56% of the capital costs are payable on a pre-production basis, with the remainder to be payable after the first shipment.

The project returned an estimated pre-tax internal rate of return of 58.9% and a net present value of $54.3 million.

The study was based on a 65% iron price of $111.43/t (US$78/t and an exchange rate of 70c) and ore reserves of 7.76Mt at 63.9% iron.

Average annual EBITDA is forecast at $16.4 million.

Ore will be trucked 490km to Geraldton for shipping, with port access, transport and port services contracts almost finalised.

Fenix managing director Rob Brierley said the study demonstrated the robustness of the project.

"The study shows the project economics will benefit significantly from a combination of the high‐grade of the ore, the low capital costs and relatively low initial investment in infrastructure due to the proximity of an existing port and sealed roads," he said.

"It has been less than 12 months since Fenix acquired the project and an FS has already been completed. This highlights the quality and simplicity of the project."

The company is already in advanced discussions with potential offtake and funding partners.

Fenix said it would seek $12-15 million in funding, likely via a combination of debt and equity.

Fenix had cash of $2.77 million at the end of September.

The company plans to start construction in early 2020 with first ore in the June 2020 quarter due to accessibility of ore at surface.

Shares in Fenix were unchanged at 5.1c, valuing the company at just under $14 million. The stock traded as high as 13c in June, but dipped to 4.2c last month.

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