Fenix on the fast track for high-grade iron ore production as it gets closer to ASX debut
Special Report: Fenix Resources is ticking a lot of boxes as it prepares to become the ASX’s newest and one of very few emerging junior high-grade producers.
The company was previously known as Emergent Resources and is re-listing as Fenix with a proposed ticker of ASX:FEX.
Fenix has picked up a high-grade project in Western Australia’s mid-west that is on track to be a near-term producer, with all the necessary infrastructure already in place, fetching high premiums.
The Iron Ridge project, which the company is adding to its portfolio through the acquisition of Prometheus Mining, already has a current resource of 5 million tonnes at 64.1 per cent iron ore.
Fenix has now successfully closed its $4.5 million capital raising and is finalising the acquisition of Prometheus, paving the way for it to re-list on the ASX.
Fenix’s goal is to increase the Iron Ridge resource up to 8 to 10 million tonnes at 65 per cent iron ore, which attracts big dollars and is something not even majors BHP (ASX:BHP) and Rio Tinto (AS:RIO) are producing.
The price gap between low-grade and high-grade iron ore has widened as Chinese steelmakers increasingly favour higher grade feedstocks to boost mill productivity and meet more stringent pollution control measures.
A low-grade 58 per cent product is fetching around $US48 a tonne, while the benchmark 62 per cent product sells for about $US72 a tonne at the moment.
A 65 per cent product, meanwhile, is attracting as much as $US97 a tonne – a substantial premium over the low-grade stuff.
Fenix’s Iron Ridge project is located between two of the iron ore deposits that form part of Sino Steel’s Weld Range project, which already has native title agreements and environmental approvals in place.
Fenix’s plan is to be producing high-grade iron ore within 12 to 18 months.
Director Rob Brierley told Stockhead that Fenix should be able to move through the permitting process fairly quickly given the level of work already done by Sino Steel for its near-by project.
“Sino Steel spent a lot of time getting the heritage agreements, native title agreements and all the environmental requirements passed,” he said.
“We don’t have to be a trailblazer here, we can piggyback off a lot of the work that they’ve done in the area of permitting.
“So that’s what we plan to do, just follow in their footsteps and hopefully we should be able to expedite the permitting process in a timely fashion.”
Fenix should also have no problem securing access to the Geraldton Port, which has a lot of spare capacity at the moment.
Mount Gibson Iron (ASX:MGX) is close to the end of mining at its Extension Hill project, which will free up more infrastructure, including ship loaders and storage sheds, that could be used by Fenix.
“The capital light model that we’re trying to play out is really just using a mining contractor to do the mining and crushing, using a road haulage contractor to haul the ore to port and then we’ve got a port that should be very welcoming of us because there’s not a lot of activity going on at Geraldton at the moment,” Mr Brierley said.
A high-grade product only needs minimal processing and no tailings disposal facility.
A 1-million-tonne-per-annum operation would also only need a small fleet of heavy earthmoving equipment and a mobile crushing and screening plant, both of which are readily available from contractors.
There is a road that runs straight past the Iron Ridge project and was previously used for the bulk haulage of iron ore to the Geraldton Port around 490km away.
“So that also reduces the risk of permitting delays,” Mr Brierley said.
Hitting the ground running
By the time Fenix lists, it plans to be ready to start drilling holes and working towards getting the resource to the target level of 8 to 10 million tonnes.
The company is well advanced in its planning for the drill program, which will focus on the larger, higher-grade formation that already hosts a resource of 4 million tonnes at 65 per cent.
There is a smaller formation that hosts the remaining 1 million tonnes at a grade of 58.8 per cent.
“Our drilling program focuses wholly and solely on that main big high-grade mineralisation,” Mr Brierley said.
“So that’s why we’ve got some confidence that we can get that resource up to a decent level.”
While drilling is underway, Fenix will also be advancing permitting and sending off samples for met studies and to potential buyers.
Fenix Resources is a Stockhead advertiser.