Fe Limited backs JWD iron ore project to deliver by boosting stake to 60%
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Australia’s newest iron ore producer Fe Limited wants to capitalise on high prices for the steelmaking commodity by upping its stake in the JWD iron ore project.
Fe Limited (ASX:FEL) will pay $2.5 million to exercise an option for another 9% of the joint venture, taking its share of the deposit to 60% from original owner GWR Group (ASX:GWR).
The mine is part of the Wiluna West iron ore project which has an overall resource of 10.7Mt at a high grade of 63.7%, well above the benchmark 62% fines index.
About 65% of its output is lump, a product that generates a significant premium from steel mills.
That has drawn interest from global trading powerhouse Glencore, which this week agreed to become the offtake partner for all the mine’s ore, in a deal which will include a US$7.5 million prepayment to Fe which will be recovered through early shipments.
Iron ore prices in China remain near record levels at over US$200/t, with JWD’s lump content and grade making it a sought-after product.
“With our JWD operations progressing well and iron ore prices remaining high it was a simple decision for us to exercise our option to increase our JWD interest to give our shareholders further exposure to this exciting project,” Fe executive chairman Tony Sage said.
Haulage began earlier this month on a 24/7 basis, with Fe’s first shipment from JWD set to sail in the second half of August.
It has secured 800,000tpa of port capacity to load in and load out product from JWD for the next 12 months, with two additional 12 month options on hand as JWD ramps up.
The first stage of the development consists of a test pit from which Fe has the right to extract up to 300,000t of ore by January 2022.
After that Fe can choose to pay $4.25m to expand to a second stage, which allows a further 2.7Mt of ore to be extracted.
It can also opt to mine any remaining economically recoverable ore from the project under the third stage by paying GWR a $3.50/t fee.
This article was developed in collaboration with Fe Limited, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.