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Fenix in fine fettle as metal demand remains robust

DEMAND for its Mid West iron ore remains robust, but tiny producer Fenix Resources continues to keep the whip-hand on costs to ensure its Iron Ridge mine in Western Australian continues to remain profitable.

 Iron Ridge

Iron Ridge

The company shipped 361,000 wet metric tonnes of 62.2% iron ore for the September quarter, bringing its total exports since mining started to more than 2Mt earlier this month, after 19 months of operation and two profitable years. 
 
The lump to fines ratio of 46%:54% continues to be significantly higher than the life-of-mine assumed average of 25%:75%.
 
The company ended the first quarter of financial 2023 with A$95 million in cash, and sales supported by a hedge book that is helping it bolster margins in an environment where iron ore prices continue to face downward pressure, while costs generally are moving in the other direction.
 
Fenix, which completed absorbing the Fenix-Newhaul haulage business, during the quarter, managed to reduce C1 costs for its 1.3Mtpa operation 8% to $84.14/t, and shipping costs from the Geraldton Port fell 17% to US$26.60/t.
 
That was good news given the average pre-hedging price received fell sharply from $142 per dry metric tonne to $105/t.
 
The results were net C1 margins before hedging and adjustments of A$25/dmt, although that is under half the average of $56/t for the first 2Mt. It had to pay out $6.5 million in adjustments due to the falling price during the quarter.
 
The hedging contracts generated A$10 million of revenue during the quarter, with a mark-to-market valuation at the end of September of $14.6 million.
 
Some 35,000t per month is hedged until June 2023 at a fixed price of A$180.65/dmt.
 
Chair John Welborn said Fenix continued to look for ways to deploy its capital.
 
While it examines its investment options it has also put boots on the ground at the 385sq.km Pharos project, near Iron Ridge, to examine known iron ore targets. 
 
Fenix shares closed at 24.5c yesterday, valuing it at $143 million. 
 
It has traded at 21-37c over the past year.

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