Join our daily newsletter At The Bell to receive exclusive market insights
- In Q4 2021, Fenix Resources (FEX) shipped a record 357,000 tonnes of iron ore from its Iron Ridge Project, but this was accompanied by lower iron ore prices and higher costs
- C1 cash costs were 7 per cent higher than the previous quarter and the average realised price dropped considerably to US$55.96 (A$77.58) per dmt
- Fenix reported an operating cash outflow of $11.1 million compared to an inflow of $25.4 million in Q3, and ended the quarter with $54.9 million in cash and no debt
- Fenix has a positive outlook for the new year and says the current quarter has started positively with higher iron ore prices and lower freight rates
- Company shares dropped 25.4 per cent to trade at 23.5 cents
In Q4 2021, Fenix Resources (FEX) shipped a record 357,000 tonnes of iron ore from its Iron Ridge Project, but this was accompanied by lower iron ore prices and higher costs.
The Iron Ridge Project is a premium direct shipping ore (DSO) deposit which is located 486 kilometres by road from Geraldton port in Western Australia.
In the December quarter, six shipments of iron ore were sent off and they included 188,391 wet metric tonnes (wmt) of lump and 168,319 wmt of fines.
The average grade shipped was 61.6 per cent iron for fines compared to 62.2 per cent in the previous quarter, and 64.4 per cent iron for lump product — a slight decrease from 64.8 per cent in the September quarter.
The average realised free on board (FOB) price was US$55.96 (A$77.58) per dry metric tonne (dmt), which is a notable decrease from the US$129.2 (A$179) per dmt in the September quarter.
Unaudited C1 cash costs — the cost for mining, processing and administration after accounting for movements in inventory — were $94.09 per wmt shipped. That represents a roughly 7 per cent increase compared to the previous quarter due to increased fuel prices, contract costs and the temporarily elevated strip ratio at the mine.
Fenix said received prices were “adversely impacted” by quotation period price adjustments from the previous quarter.
“We generated an outstanding production performance which unfortunately was accompanied by lower iron ore prices and higher ocean freight costs. Pricing adjustments from the September 2021 quarter also impacted cash flows,” Managing Director Rob Brierley said.
“However, we have stayed the course with our mine plan and continued to accelerate waste stripping to ensure we have orderly access to high grade ore sources, with the benefits of this strategy to be yielded in the June 2022 quarter and beyond.”
Fenix reported a net operating cash outflow of $11.1 million compared to an inflow of $25.4 million in the September quarter. While production and staff and admin costs were roughly aligned across both quarters, the September quarter saw $71.8 million in customer receipts compared to $34.1 million in the final quarter.
Capital expenditure was $3.5 million, taking the total project capital expenditure to date to $20.2 million. The majority of capital expenses for the quarter related to the purchase of three new front end loaders, which have been deployed to conduct ship loading through a new business and will translate into port cost savings.
The company expects capital expenditure to be less than $1 million for the current quarter as the final site infrastructure is completed by the mining contractor.
In September, Fenix declared a fully franked dividend of 5.25 cents per share after announcing a $49 million after-tax profit for FY21. It was paid in early October. However, the company doesn’t have any franking credits available, and is not considering declaring an interim dividend.
The iron ore miner rounded off the December quarter with $54.9 million in cash and no bank debt compared to the $93 million it had in cash at the end of the previous quarter.
“The current quarter has started positively with higher iron ore prices and lower freight rates, and the high likelihood that pricing adjustments will result in cash inflows,” Mr Brierley concluded.
Company shares dropped 25.4 per cent to trade at 23.5 cents at 11:36 am AEDT.
