Fenix, which commenced production at its flagship Iron Ridge project about a year ago, and cognisant of a lack of extension opportunities, quickly struck a deal to earn 70% of the iron ore rights over Scorpion’s contiguous 640sq.km leases in return for determining a 10 million tonne resource, or a feasibility study on a resource of at least 1Mtpa.
Now, Fenix, whose new chair is mining entrepreneur John Welborn, has struck a revised agreement with the Bronwyn Barnes-led Scorpion to move to 100% by issuing four million Fenix shares, worth about A$1 million today.
A further 10 million shares will now be due once a 10Mt inferred resource or 1Mt measured or indicated resources are defined, and the Fenix completes its first shipment.
Pharos contains known iron ore targets, several of which appear similar to the high-grade Iron Ridge.
Welborn said the new deal gave both parties greater clarity.
“Our agreement to collaborate in the future means Fenix will enjoy Scorpion’s support for any mining licences, miscellaneous licences or other licence applications required by Fenix to expand our operations,” he said.
“Most importantly, we can now explore with confidence that any commercially viable iron ore deposit we define can be processed and mined for the benefit of Fenix using our existing infrastructure and capabilities.”
Barnes described it as a “sensible deal” that provided Scorpion strategic exposure to any future iron ore exploration and development success via its shareholding in a proven iron ore developer, while allowing it to explore across Pharos and its other Murchison leases for gold, platinum group elements, nickel, copper, and lithium.
It already has a polymetallic resource at the Mount Mulcahy volcanic-hosted massive sulphide deposit.
In recent days Scorpion increased its position in the Murchison mineral field by 150% to 1544sq.km with the acquisition of eMetals’ large Poona project.
It is now planning an extensive drilling program across non-iron ore targets within Pharos, including Mt Mulcahy, the Cap Lamp gold prospect, and Pallas PDE-nickel-copper prospect.
Scorpion has about $130,000 in remaining cash, and about $1 million in undrawn facilities.
Fenix, which has been impacted by see-sawing iron ore prices and higher freight costs over the past year, but avoided pausing production, is producing about 50,000t per month under its hedge contracts paying $230/t.
The commodity has plunged from a record above US$220 per tonne, to below $90/t, and is currently back around $150/t.
Fenix expects to produce around 1.25Mtpa of 64.2% iron over almost seven years for life of mine from a resource of 7.8Mt grading 63.9% that is limited by the lease borders, and not the geology.
Fenix started the year with A$55 million cash.
