Fenix Resources boosts production with 500kt iron ore purchase agreement

Fenix Resources (ASX:FEX) has signed a binding ore purchase agreement with iron ore producer 10M for the purchase of 500kt of high-grade hematite iron ore.

Under the 24-month period, 10M will supply 500kt of +60% iron direct shipping ore (DSO) from the Woolbung Peak deposit within the Twin Peaks direct shipping iron ore project.

Using its expanded port capacity and logistics capabilities, Fenix will be responsible for haulage, storage, port services, ship loading, marketing and sales.

Fenix chairman John Welborn says the company is delighted to be partnering with 10M.

“The 10m ore purchase agreement is an immediate boost to our export tonnages while we work to bring the Shine iron ore mine and Beebyn-W11 deposit into production alongside our flagship Iron Ridge iron ore mine,” he said.

“Fenix’s transformation into a fully integrated mining, haulage, rail and logistics business is progressing, with our ambition to build a major regional iron ore producer and profitable third-party logistics provider.”

Under the agreement, Fenix will supply an upfront pre-payment of $5m in cash to 10M which accrues 10% interest per year following an initial six-month interest-free period. The loan will be repaid to Fenix at a rate of $1m per shipment.

Up until the ore is loaded onto the trucks, 10M will retain responsibility for all mining and processing activities.

10M managing director Phil Robinson commented on the agreement.

“10M is committed to environmentally responsible conventional mining methods, and to working closely with Traditional Owners, pastoralists, State Government departments, regulatory governing bodies and all stakeholders to achieve safe, sustainable and culturally appropriate mining outcomes,” he said.

“Given Fenix’s success as a highly profitable Mid-West iron ore miner, and their unparalleled Mid-West infrastructure and logistics capabilities, they represent a logical and ideal partner for 10M in monetising our project.”