Fenix delivers on its promise of more premium-grade iron ore, starts mine planning
Special Report: Fenix Resources has done exactly what it said it was going to — increase both the tonnage and the confidence of the high-grade resource at its Iron Ridge project in Western Australia.
Fenix (ASX:FEX) has successfully boosted the total resource by 84 per cent to 9.2 million tonnes at 64.1 per cent iron, 3.36 per cent silica, 2.66 per cent alumina and 0.045 per cent phosphorus, using a cut-off grade of 58 per cent iron.
On top of that, a large chunk of that resource is now in the higher confidence “indicated” category — 6.6 million tonnes at 64.5 per cent iron, 3.14 per cent silica, 2.51 per cent alumina and 0.042 per cent phosphorus.
It is the first indicated resource for the project.
Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured.
By moving resources into the indicated category, it means a company has sufficient information on geology and grade continuity to support mine planning.
Fenix is one of only a couple of juniors that has such a high-grade of iron ore.
The company’s goal was to increase the resource, while maintaining a grade higher than the 62 per cent benchmark level for iron ore — which is a challenge even for the bigger players such as BHP (ASX:BHP) and Rio Tinto (ASX:RIO).
65 per cent is premium-grade product, and which Fenix will look to sell at premium prices.
“We are very pleased with this significant increase in mineral resource at Iron Ridge, and the fact that 72 per cent of the total mineral resource is indicated,” executive director Rob Brierley said.
“The grade of the deposit is a strong point of differentiation and we believe that we may be able to apply a capital-light development plan to bring the project into production within a tight timeframe.”
The larger resource has paved the way for Fenix to immediately start open pit designs with the aim of beginning a feasibility study.
The company has also started talks with mining, crushing and screening, bulk road haulage and port handling service providers, and will engage with potential off-take and financing partners.
Fenix is well advanced with metallurgical testwork to determine the lump to fines ratio, with results expected in April.
Disruption to the supply of iron ore following another Brazil dam disaster has sent iron ore prices north.
The potential longer-term impacts of tougher government regulations on mine operations, especially dam safety, has prompted analysts to revise their iron ore price predictions up to $US100 ($141) a tonne.
Keep in mind that’s just for the benchmark 62 per cent fines, which right now fetches just over $US88 a tonne.
Buyers will pay more for the 65 per cent premium product, which is currently sitting around $US98 a tonne.