Australian iron ore producer Fenix Resources (ASX:FEX) has established new iron ore hedging contracts for 30,000 dry metric tonnes (dmt) of iron ore per month from July to December 2023 at a fixed price of $171.17 per dmt.
The company says these hedging arrangements consist of iron ore swap contracts, which are cash settled at the end of each month for an amount equivalent to the difference between the fixed price of the contracts and the Monthly Average Platts TSI 62 Index converted to Australian dollars.
The new iron ore swap contracts for a total of 180,000dmt at $171.17 per dmt extends Fenix’s existing swap arrangements for January 2023 through to June 2023 for a total of 300,000dmt at a fixed price of $173.25 per dmt (50,000dmt per month up to and including June 2023). Fenix says these hedges provide strong margin support for the company’s iron ore production and cash flows through to the end of 2023.

Commenting on the ore hedging contracts, Fenix Resources Chairman John Welborn says: Hedging is an important component of Fenix’s success as a profitable iron ore producer. We are focused on maintaining a strong margin on our high-grade iron ore products throughout the iron ore price cycle.
Our hedging arrangements secure a solid margin on a base level of our production and support our ability to continue to generate strong cash flows and profitability.”
“Our hedging arrangements secure a solid margin on a base level of our production and support our ability to continue to generate strong cash flows and profitability”
Fenix reports its swap arrangements are consistent with the company’s price protection policy designed to support the medium-term profitability of production from the Iron Ridge Iron Ore Mine whilst maintaining positive exposure to iron ore prices.
Fenix Resources is an Australian iron ore producer focused on its flagship Iron Ridge Iron Ore Mine, located near Cue in Western Australia. Production commenced at Iron Ridge in 2020, and it is currently operating at the planned production run rate of 1.3 million tonnes per annum (Mtpa).
Since production began, Fenix has produced and exported more than 2 million tonnes of premium iron ore. The unaudited net operating margin for the first 2 million dmt of iron ore sold from the project averaged $56 per dmt shipped, which represents an unaudited cash flow operating margin of more than $112 million across 19 months of operation.
Images: Fenix Resources Ltd


