Fenix Resources (ASX:FEX) has signed a binding right-to-mine agreement with Sinosteel Midwest Corporation, granting the company a 30-year exclusive right to mine and export iron ore from the Weld Range Project in Western Australia.
The company will pay $60 million cash over a 24-month period to Sinosteel. Fenix will also grant Sinosteel a production royalty ranging from $4 per dry metric tonne to $5 per dry metric tonne, as well as a profit share royalty which will be funded from the company’s existing cash reserves and operational cashflow.
Once paid, Fenix – which has a market capitalisation of $238.12 million – is entitled to 100% of the earnings from iron ore sold under the Weld Range Project.
This deal provides Fenix 290 million tonnes of iron ore measured, indicated, and inferred resource.
Executive Chairman John Welborn says securing 290 million tonnes of hematite direct shipping iron ore is a game changer for the company.
“Aligned with our aspiration to become a 10 million tonne per annum iron ore producer, this value accretive right to mine agreement provides the inventory we need to maximise the value of our exceptional transport infrastructure and materially expand our operations and extend our mine life,” Welborn says.
“This major mining and logistics project is a perfect match for Fenix’s ambition and track record of achievement. Sinosteel is a foundation partner in our growth as an emerging iron ore producer.
“We are delighted this successful partnership has now expanded to include the Baowu Group, the world’s largest steelmaker. Together we are confident in the strength of our collaboration and ability to deliver win-win solutions.”
A Feasibility Study has begun at the Weld Range Project which will focus on expanding the existing regional production. The initial focus will be on accelerating and extending the existing Beebyn-W11 mine plan and adding further mining operations at the nearby Beebyn-W10 and Madoonga W-14 deposits.
The study will include Fenix’s existing road haulage and Geraldton Port logistics solutions, as well as identify opportunities to capture cost savings through scale and innovation.
Fenix Resources is a fully integrated mining, logistics, and port services business aiming to achieve an annual production rate of 4 million tonnes per year of iron ore.
Write to Aaliyah Rogan at Mining.com.au
Images: Fenix Resources
