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Corporate Spotlight

Fenix Resources (ASX:FEX) is acquiring 100% of the Iron Ridge iron ore project in an all-scrip transaction.
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FEASIBILITY STUDY

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Feasibility Study shows Iron Ridge will generate outstanding cashflow and financial returns  

ASX Announcement 4 November 2019 


Initial Capex of less than $12m; Average annual EBITDA of more than $16m


  • Feasibility Study confirms the technical and financial viability of Iron Ridge   
  • Forecast production of 1.25Mtpa for 6.5 years   
  • Ore Reserves of 7.76Mt @ 63.9% Fe underpin 96.5% of the LOM production with the rest in Inferred Resources 
  • Initial capital cost of just $11.9m, with 56% of this payable on a pre‐production basis and the rest expected to be payable after the first shipment 
  • C1 Cash Operating Costs of $76.86 per dry metric tonne*  (life of mine average) 
  • FS based on the 62% Fe index price of $111.43 per dry metric tonne (US$78/t and AUD:USD of US$0.70) compared with current price of $123.33 per dry metric tonne (US$85.10/t and AUD:USD of US$0.69)*** 
  • Estimated pre‐tax Internal Rate of Return of 58.9% and Net Present Value of $54.3 million **   
  • Average annual EBITDA of $16.4 million 
  • Offtake and funding discussions are well advanced 
  • Port access arrangements and mining, road transport and port services contracts almost finalised   
  • Anticipated period from project approval to first sales is four months  


All figures expressed in Australian dollars unless stated otherwise 

* C1 Cash operating costs are reported FOB   

** Based on a real pre‐tax discount rate of 10% on an ungeared basis 

*** Current prices as at 31 October 2019


Fenix Resources Limited (ASX: FEX, “Fenix” or the “Company”) is pleased to announce the findings of the Feasibility Study (“FS”) relating to the Iron Ridge Project (“Project”). The FS reveals a high‐grade and high‐ quality Project that provides strong returns over its life of mine (“LOM”). 


The FS estimates that Iron Ridge will have modest initial capital cost of just $11.9 million, 44% of which will not have to be paid until after the expected first shipment is dispatched.


The FS includes a maiden Ore Reserve of 7.76Mt at 63.9% Fe. This underpins forecast annual production of 1.25 million tonnes.


The  forecast  annual EBITDA  is  $16.4 million  based  on  C1  cash  operating  costs  of  $76.86 a  tonne and an assumed 62% Fe index price of $111.43 per dry metric tonne (dmt) (US$78/t at a foreign exchange rate of US$0.70 per A$). This compares with the current benchmark price of $123.33/t. 


Iron Ridge, which is located 490km from the Port of Geraldton, is based on a Direct Shipping Ore (“DSO”) operation. Ore will be crushed and screened on site and separated into lump and fines product before being trucked to port. 


Company Comment 

Fenix  Managing  Director  Rob  Brierley  said:  “The  Feasibility  Study  demonstrates  that  Iron  Ridge  is  an outstanding high‐grade project which will generate strong financial returns.


“The study shows the project economics will benefit significantly from a combination of the high‐grade of the ore,  the low capital costs and  relatively low initial investment in infrastructure due  to  the proximity of an existing port and sealed roads.


“It has been less than 12 months since Fenix acquired the project and an FS has already been completed. This highlights the quality and simplicity of the project.


“We are now in advanced discussions with potential offtake and funding partners and we believe contracts for port access, mining, road transport and port services are close to being finalised. 


 “It is an exceptional niche asset and the FS confirms our view that it will generate strong returns for Fenix shareholders.”


Click here to view the full announcement

POSITIVE RESULTS

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POSITIVE RESULTS FROM CSIRO METALLURGICAL TESTING  

ASX Announcement 13 September 2019 


  • Positive results from CSIRO evaluation of the sintering characteristics of an Iron Ridge Ore Sample 
  • Iron Ridge composite fines matrix blends performed well when substituted at 10%, 20%, 30%, 40% and even 100% in a typical Japanese Steel Mill blend in sintering tests 
  • Composite  fines  classified  as  high  grade  with  moderate  alumina  and  low  silica


Fenix  Resources  Limited  (ASX:  FEX,  “Fenix”  or  the  “Company”)  is  pleased  to  provide  an  update  on  the metallurgical studies conducted on the Company’s 100% owned Iron Ridge DSO hematite project (“Project”) in Western Australia.


The Commonwealth Scientific and Industrial Research Organisation  (“CSIRO”) has developed a laboratory test  methodology  that  allows  the  relative  sintering  properties  of  fine  ores  and  concentrates  to  be determined.  The  tests  have  returned  positive  results  on  both  the  ore  characterisation  and  sintering characteristics as summarised below.  


Ore Characterisation 

The Iron Ridge composite fines were classified as high‐grade (>64% Fe), with moderate alumina (2.48%), and low silica (3.57%), total LOI (1.68%) and phosphorous (0.05%) contents. In terms of sizing, the majority of the sample fell within the ‐4+0.5 mm range, with little material in the ‐0.25+0.038 mm range and relatively few coarse +4 mm particles.


The ore was dominated by friable to moderately microporous, fine‐ to very fine‐grained microplaty hematite textures, with minor goethite and kaolinitic shale content, increasing slightly with decreasing size fraction and with significant concentration of alumina in the ‐0.038 mm ultrafines.   


Sintering Characteristics 

Laboratory  sintering  tests  were  carried  out  to  evaluate  the  performance  of  the  ‐1  mm  matrix‐forming component of the ore then substituted in a simulated customer blend, as well as the reactivity of the coarse, ore nucleus‐forming fraction.


The Iron Ridge composite fines proved to be highly compatible with the simulated Japanese Steel Mill (“JSM”) customer blend, with all blends achieving high strength, well above the target value, over a relatively wide temperature  range.  The  20%  Iron  Ridge  blend  produced  the  best  result,  with  improved  characteristics relative to the JSM blend.


In terms of overall characteristics, the Iron Ridge composite fines were closest to a high‐grade Brockman fine ore  product,  albeit  with  atypically  fine‐grained  microplaty  hematite  textures.  The  Iron  Ridge  fines  also showed some mineralogical/textural similarly to Vale’s Carajas fines, although with lower silica and higher alumina content.


The high reactivity and excellent sinter matrix strength of the fines suggest good blending compatibility with other fine ores contributing stable, coarse ore nuclei, at immediate fuel rates. 


CSIRO Testing Undertaken 

Fenix sent the CSIRO a composite fines sample from equal mass proportions from drill holes IR003, IR004 and IR005. The headgrade of the composite sample was 64.15% Fe, 3.57% SiO2, 2.48% Al2O3 and 0.053% P, which is considered representative of the Iron Ridge deposit given that the Indicated Mineral Resource averages 64.3% Fe, 3.21% SiO2, 2.56% Al2O3 and 0.046% P.


Representative polished sections of the composite fines were prepared from sized fractions for microscopic characterisation of the ore mineralogy and texture.  


Additionally, laboratory‐scale sintering tests were carried out on the composite fines sample. The composite fines were substituted in a typical JSM blend at the following six levels: 0, 10, 20, 30, 40 and 100%. Blends were fluxed to a basicity of 1.8 and silica level of 5.0% (on a whole blend basis) and fired in a laboratory under controlled conditions of temperature, gas atmosphere and time that simulate the actual sintering process. The  strength  versus  temperature  behaviour  of  the  ore  was  determined  and  its  optimum  melting  point, reactivity and matrix strength established. The CSIRO sintering test methodology is universally well regarded. 


Managing Director Comment 


Fenix’s Managing Director, Robert Brierley, commented: 

“We  are  very  pleased with  these  results  from  the  highly  reputable  CSIRO Mineral  Resources  division. The results suggest that the Iron Ridge fines can improve the sinter blend characteristics due to the high proportion of  low‐temperature  bonding  phase  formation  and  its  generally  high  matrix  strength.  We  now  have independent evidence of the potential of Iron Ridge product to form a high‐quality sinter matrix at a low cost which we will be pleased to share with the parties that we are currently engaged with in discussing potential product offtake.”


Click here to view the full announcement 

SIGNIFICANT INCREASE

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Significant Increase in Iron Ridge Mineral Resource

ASX Announcement 21 August 2019 


Highlights 

  • Total Mineral Resource at Iron Ridge increased to 10.5Mt @ 64.2% Fe  following recent drilling programme (from 9.2Mt @ 64.1% in March 2019) 
  • This  update  delivered  a  significant  increase  in  overall  Resource  confidence,  with  the Indicated Mineral Resource increasing by 51% to 10.0Mt at 64.3% Fe, 3.2% SiO2, 2.6% Al2O3 and  0.05%  P  (from  previous estimate  of  6.6Mt  at  64.5%  Fe,  3.1%  SiO2, 2.5%  Al2O3 and 0.04% P) 
  • The upgraded Mineral Resource will be incorporated into the detailed mine design and schedule. Increased confidence is highly likely to have a beneficial impact   
  • The  Feasibility  Study  for  Iron  Ridge  is  progressing  well,  and  remains  on  schedule  for delivery in October 2019  


The  Directors  of  Fenix  Resources  Limited  (ASX:  FEX,  Fenix  or  the Company)  are  pleased  to  announce  that  the Company  has  completed  a  revised  Mineral  Resource  Estimate  that  incorporates  the  results  from  its  recently completed infill drilling program at its flagship Iron Ridge Project in the Mid‐West region of Western Australia.  


The Mineral Resource is categorised into Indicated and Inferred Mineral Resources as shown in Table 1.



Commenting on the Mineral Resource upgrade, Fenix Managing Director, Mr Rob Brierley, said: 


“We are very pleased with this significant increase in Mineral Resource at Iron Ridge and in particular, the fact that 95% of the total Mineral Resource is in the Indicated category. The grade of the deposit continues to be a strong point of differentiation from other iron ore projects, which we are confident will continue to create a higher‐than‐ usual demand for our product.   


“This significant upgrade in Indicated Resource will clearly be positive for our upcoming Feasibility Study, which in all other respects is progressing very well.”


Click here to view the full announcement 

CONTINUES TO RISE

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Fenix continues to rise at its WA Iron Ridge Project


Wednesday 31 July 2019 


  • Fenix Resources has struck more high-grade iron ore at its Iron Ridge Project in Western Australia
  • Drilling was conducted on key targets that were outlined in a Mineral Resource from March
  • Ten diamond drill holes and five reverse circulation water monitoring bore holes were drilled in the latest program
  • This is the fourth set of strong results released from the Iron Ridge Project this year


WA minerals explorer Fenix Resources has struck more high-grade iron ore at its Iron Ridge Project in Western Australia.


The company uncovered key drilling targets at the project in a Mineral Resource estimate of the area in March this year. In response, Fenix set out on a dual-focussed drilling program at these targets.


As part of the program, ten diamond drilling holes were drilled: seven to test the shallow part of the recently-announced Inferred Mineral Resource estimate of the area, and three for geotechnical test work.


On top of this, five reverse circulation water monitoring bore holes were drilled.


The diamond drilling returned some strong results, with the most notable of the intersections including 54.5 metres at 66.2 per cent iron from 106 meters, and 40.4 metres at 65.5 per cent iron from 67 metres.


This is the fourth set of strong results released from the Iron Ridge Project this year.


As well, on top of the ongoing high-grade iron returned at Iron Ridge, the project area continues to deliver low impurity levels of silicon oxide, aluminium oxide, and phosphorus.


The continued results also validate two significant partnerships Fenix signed this year for the development and commercialisation of Iron Ridge.


In May, Fenix partered with trucking specialist Minehaul to form a new 50/50 joint venture, Premium Minehaul, which will provide all trucking services to the Iron Ridge Project.


In the same month, Fenix signed a joint cooperation agreement with the Mid West Ports Authority (MWPA), which manages Geraldton Port.


This agreement would see MWPA investigating how the Port might be able to provide Fenix with an export capacity of one million tonnes per annum from Iron Ridge.


Fenix Managing Director Robert Brierley said at the time, these two partnerships combined with excellent preliminary metallurgical results at Iron Ridge, were important steps in completing the company's logistics chain in the area.


After announcing the recent results yesterday, Fenix's share price hit a premium 9.4 cents a piece, compared to 8.6 cents each when they closed on Monday.


Today, Fenix shares trade for 8.9 cents per share in a $21.23 million market cap.


View The Market Herald here

DIRECTORS

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Director Profiles


Robert Brierley
Executive Director

Mr Brierley holds a Bachelor of Engineering (Mining Engineering) and a Graduate Diploma in Applied Finance and Investment. He is experienced in project and mine management, corporate finance, leadership, corporate governance and equities research. Mr Brierley has significant experience in many mining operations, including acting as Registered Mine Manager/Quarry Manager at several iron ore mines including Yandi, Marandoo and Koolan Island.

Additionally, he has over 13 years of experience in financial markets, predominantly as Head of Equities Research. It is expected that Mr Brierley will be at the forefront of the Company’s fundraising whilst also progressing the Company’s development of the high-grade Iron Ridge iron ore deposit.

Mr Brierley is a Graduate Member of the Australian Institute of Company Directors. He has had previous executive and non-executive roles with Brockman Resources Ltd (ASX: BRM), Alchemy Resources Ltd (ASX: ALY), BrazIron Ltd (ASX: BZL) and Carbine Resources Ltd (ASX: CRB).


Garry Plowright
Executive Director

Mr Plowright is an experienced executive with over 25 years’ experience in finance, commercial and technical development within the mining and exploration industry, working for some of Australia’s leading resource companies. He had been involved in gold, base metals and iron ore exploration and mining development projects in Australia and worldwide.

Previous experience with the supply and logistics of services to the mining and exploration industry including capital raising, corporate governance and compliance, project management, mining and environmental approvals and regulations, contract negotiations, tenure management, land access, stakeholder and community engagement. Mr Plowright has extensive experience in mining law and has provided services to the industry in property acquisitions, project generation and joint venture negotiations.

Mr Plowright has held global operational and corporate roles with Gindalbie Metals Ltd, Mt Edon Gold Ltd, Pacmin Mining, Atlas Iron Ltd, Tigris Gold (South Korea) and Westland Titanium (New Zealand). He has a strong background in strategic management, business planning, building teams, capital/debt raising, and experience with a variety of commodities.


Bevan Tarratt
Non-Executive Chairman

Mr Tarratt has an extensive background in capital markets, accounting and corporate advisory with a specific focus on small cap Australian equities. Mr Tarratt was previously a client advisor at Patersons Securities and partner of a venture capital firm. He has been involved in the re-capitalisation, restructuring and acquisition of assets for numerous ASX listed companies.

In the last three years Mr Tarratt has been a director in the following other ASX listed companies – Pura Vida Energy NL (ASX:PVD): 1 August 2011 to 13 January 2014 and then from 25 may 2018 to present, Protean Energy Ltd (ASX:POW) : 12 June 2007 to present.


Petar Tomasevic
Non-Executive Director

Mr Tomasevic has significant experience in the financial services industry having worked with numerous ASX listed companies in marketing and investor relations roles.  Whilst engaged by Stocks Digital, a leading Australian marketing firm, he specialized in digital marketing strategies and investor relations.

Mr Tomasevic has substantial practical business knowledge and was the former Managing Director of an international sports manufacturing company.  In addition to his business acumen, Mr Tomasevic was a professional athlete for 10 years and was part of the Rio 2016 French Olympic Team.

Mr Tomasevic is fluent in 5 languages and is currently appointed as a French language specialist to assist in project evaluation for various ASX listed junior explorers.


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