Barring any dramatic swings in the last days of 2019, it is the iron ore price with its gain of around 35 per cent that will take the mantle as the best performed of the commodities for the year.

Iron ore last traded at $US92.50 a tonne ($134.06/t). It is a price at which Australia’s leading iron ore producers Rio Tinto (ASX:RIO), BHP (ASX:BHP) and Fortescue Metals Group (ASX:FMG) have licences to print money.

And while expectations remain that iron ore will eventually retreat to more sedate levels of $US60-$US70/t by 2021 as Brazilian production recovers, and as China’s use of scrap steel climbs, the big three look to be able to continue to print money in 2020.

Macquarie’s commodities desk has just released an updated price deck for the Australian resources sector and iron ore remains its preferred exposure, due mainly to the softer outlook for the US exchange rate.

It is tipping a modest retreat in the iron ore price in 2020 to $US84/t ($121.70/t). Fortescue, Mineral Resources (ASX:MIN), Mount Gibson (ASX:MGX), and the Canada-focused Champion Iron (ASX:CIA) are Macquarie’s picks.

They are all producers. And while stuffing them, along with Rio, BHP and Fortescue, into the Christmas stocking seems a fair enough call by Macquarie, their upside from here would seem to be limited given expectations that the iron ore price will head lower come 2021, if not before.

Most of them have already had big share price runs in 2019 as well. So there could well be more fun to have — with the 2020 iron ore thematic of continued strong prices — among the juniors.

The only problem with that is there was a massive hollowing out of the junior iron sector when iron ore slid from $US168/t in 2011-12 to $US55/t in 2015. Most of them switched out to gold and lithium.

But iron ore’s price resilience — China’s steelmake is rising again after a pause and seems to be on its way to 1 billion annual tonnes — and the sub US70c exchange rate has prompted a return of interest in the sector from the juniors.

One of those is Fenix Resources (ASX:FEX) which last traded at 4.5c for an undiluted market cap of $12.3m. It was a 12c stock back in June on the strength of the development potential of its boutique Iron Ridge project near Cue in Western Australia’s Murchison region.

The more recent price weakness is due to a delay in receiving approvals for a low-cost project start-up.

Originally expected in the December quarter, Fenix said last week that “productive discussions’’ on the subject were underway but that an agreement would not be secured until the new year.

Based on a feasibility study into the $12m development of Iron Ridge released early in November, the granting of the approvals could be a major re-rating event for the company.

The study envisaged annual production of 1.25 million tonnes of iron ore for an initial 6.5 years. That’s small beer compared with the major miners but it could mean a lot to a company with Fenix’s modest market cap.

That came through in the study’s finding that at an iron ore price of $US78/t and a US70c exchange rate ($111.43/t, or $22.63/t below the current price), the project could generate annual earnings of $16.4m.

Earning more than your market cap in one year is unusual stuff. Fortescue would have to earn more than $34 billion in a single year, and it can be said that is not going to happen.

Iron Bridge is a proposed mine and truck operation (it is 500km by road to the Port of Geraldton), explaining its low development cost, with 44 per cent of the start-up costs not having to be paid until after the first shipment.

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