- Fenix Resources (FEX) enters iron ore swap arrangements for its Iron Ridge Project for the 12 months from October 2021 to September next year
- The deal covers 50,000 tonnes of material per month, calculated at the average monthly iron ore 62 per cent Fe futures index (Platts IODEX), converted to AUD
- The conversion will see pricing for ore fixed at $230.30 per dry metric tonne
- Managing director Rob Brierley says the deal locks in around 45 per cent of planned production for the period to cover most of FEX’s budgeted cost base
- Shares are up by 4.27 per cent to 42.8 cents apiece at 1:12 pm AEST
Fenix Resources (FEX) has entered into iron ore swap arrangements for its Iron Ridge Project for the 12 months from this October to September, 2022.
The company’s flagship project is a premium direct shipping ore deposit located in Western Australia’s Murchison region.
The deal covers 50,000 tonnes of material per month calculated at the average monthly iron ore 62 per cent Fe futures index (Platts IODEX) and converted to Australian dollars.
Accordingly, this conversion will see pricing for ore fixed at $230.30 per dry metric tonne during the period.
In light of the announcement, Fenix said the arrangements followed a newly implemented price protection policy designed to secure the medium-term future of Iron Ridge, while maintaining the company’s exposure to the price of iron ore.
Fenix’s managing director Rob Brierley hinted the deal was foreshadowed in the company’s quarterly activities report for the most recent June period.
“We are effectively locking in approximately 45 per cent of our planned production during a 12-month period, commencing October 2021, at a fixed price that is sufficient to cover the majority, if not the entirety, of our budgeted cost base,” he said.
“These contracts will be cash-settled at the end of each month and are unsecured, meaning there are no margin calls or requirements to lodge cash at call or on deposit.”
Fenix plans to finalise its capital allocation policy ahead of releasing full financial results for the 2021 fiscal year.
According to Mr Brierley, the company is confident it has secured profitability until at least the end of the fourth quarter of financial year 2022, by which time the Iron Ridge mine plan predicts production of even higher specification ore.
Shares were up by 4.27 per cent to 42.8 cents apiece at 1:12 pm AEST.