Fenix Resources Secures Right to Mine 10 Million Tonnes from Beebyn-W11 Iron Ore Deposit in WA’s Mid-West

About Fenix Resources

Fenix Resources Limited (ASX:FEX) is an emerging iron ore producer focused on the Mid-West region of Western Australia. The company commenced production at its 100% owned, flagship Iron Ridge Iron Ore Mine in late 2020 and has rapidly grown into a profitable producer exporting premium high-grade direct shipping ore (DSO).

Fenix has a unique fully integrated mining and logistics business, controlling the entire production process from mine to port. High quality iron ore from the Iron Ridge mine is transported by Fenix’s haulage division, Fenix-Newhaul, using road trains to the port of Geraldton. Here, the company owns port infrastructure and storage facilities, with capacity to load cape-size vessels destined for Asian steel mills.

Over the past three years, Fenix has successfully ramped up Iron Ridge production to 1.3 million tonnes per annum and exported over 3 million tonnes of iron ore. Its cost-efficient mining and logistics operations generated strong cashflow over FY2022.

The recent acquisition of the Shine iron ore mine and Geraldton port infrastructure from Mount Gibson Iron Limited provides a platform for Fenix to significantly grow production. The company also aims to realise further cost reductions from economies of scale.

Securing the Right to Mine 10 Million Tonnes from Beebyn-W11

On October 17, 2023, Fenix announced it had signed binding agreements securing the exclusive right to mine and export 10 million dry metric tonnes (dmt) of iron ore from Sinosteel Midwest Corporation’s Beebyn-W11 deposit in the Weld Range.

Key details:

• Beebyn-W11 is located just 20km from Fenix’s Iron Ridge mining operations and will allow the company to leverage existing infrastructure.
• The deposit hosts 20.5 million tonnes of high-grade iron ore with average grades of 61.3% Fe, as per a JORC 2012 compliant resource estimate.
• Fenix will control all mining, haulage, port and export logistics for Beebyn-W11 ore.
• Low upfront payment of A$10 million to Sinosteel Midwest, comprising A$5 million upfront and A$5 million on approval of a Mining Proposal.
• Ongoing royalties include A$2 per tonne base payment plus a 12.5% profit share, reverting to 50% profit share once Fenix recovers capital expenditure.
• Targeting first ore production from Beebyn-W11 in 2024.

The Right to Mine agreement provides Fenix access to substantial additional iron ore reserves on highly favourable terms. With full control over mining and logistics, Fenix can replicate its successful Iron Ridge operating model and benefit from significant synergies.

Beebyn-W11 Fast Facts:

• JORC 2012 compliant resource estimate of 20.5Mt @ 61.3% Fe
• Nearly 70% classified as Measured Resource
• Mineralisation is high-grade hematite & goethite iron formation
• Similar geology and expected mining method to Iron Ridge
• Located just 20km from Iron Ridge mine

The proximity of Beebyn-W11 to Fenix’s existing Iron Ridge operations is a major advantage. Fenix has already constructed efficient road haulage infrastructure connecting Iron Ridge to Geraldton Port, which passes within several kilometres of Beebyn-W11. This will allow rapid mobilisation and low operational costs.

Fenix has developed strong capabilities in mining, crushing, road haulage and port logistics which can be directly applied to fast-track Beebyn-W11 into production. The company has established relationships with contractors and service providers in the region.

By acquiring the right to mine Beebyn-W11 ore, Fenix can grow production beyond Iron Ridge and Shine, supporting its target to materially boost iron ore exports. Increased scale will also lower unit costs.

The agreement with Sinosteel Midwest further strengthens the partnership between the two companies. Sinosteel Midwest subsidiary Sinosteel Trading Co. has a long-term offtake agreement for 50% of Iron Ridge production. The deal provides Sinosteel Midwest upside exposure to Beebyn-W11 through profit sharing, reflecting the potential value of Fenix’s logistics infrastructure and expertise.

Next Steps

Fenix will immediately commence work on securing necessary approvals and permits required to develop Beebyn-W11. The company will also finalise mine planning and design activities to support the start of mining operations during 2024.

Key advantages for Fenix in developing Beebyn-W11 include:

• Extensive knowledge of regional geology, mining conditions and operating requirements
• Existing road haulage infrastructure providing low cost access to port
• In-house mining, crushing, haulage and port capabilities
• Experienced management team with strong execution track record
• Relationships with local contractors, suppliers and communities

Fenix has demonstrated an ability to safely and efficiently develop iron ore projects in the Mid-West region. The low capital intensity and operating costs of Beebyn-W11 make it an attractive growth opportunity.

Conclusion

The binding agreement securing the right to mine 10 million tonnes from Beebyn-W11 provides Fenix Resources with an opportunity to significantly grow production beyond its current Iron Ridge mining operations.

Fenix can apply its proven technical capabilities and infrastructure to fast-track Beebyn-W11 into production during 2024. The proximity and similar geology to Iron Ridge will allow major synergies.

Incremental iron ore tonnes from Beebyn-W11 will support Fenix’s target to materially increase exports and generate additional economies of scale.

With minimal upfront capital required, the agreement offers attractive terms that limit risks for Fenix. The company will maintain full control over mining, haulage and port operations.

The partnership with Sinosteel Midwest strengthens ties to a key customer and provides potential to unlock further value from Sinosteel’s extensive iron ore resources in the Mid-West region.

Fenix Resources is poised to become a leading ASX-listed pure play iron ore producer. The Beebyn-W11 agreement provides a low-cost pathway to significantly grow production and cashflows.

Strong operational capabilities, established infrastructure and an expanding project pipeline position Fenix to deliver substantial value growth for shareholders.