Aspiring iron ore producer Fenix Resources (ASX: FEX) has achieved a key milestone in advancing its flagship Iron Ridge project after securing access at the Port of Geraldton to export its ore.
The company has executed a binding agreement with the Mid West Ports Authority which gives it a port allocation to export 1.25 million tonnes annually of iron ore using the Berth 5 shiploader.
Initially, the agreement is for four years, with Fenix able to extend this a further two times for two years each.
Fenix managing director Rob Brierly said the company had been liaising with the Mid West Ports Authority for more than a year in order to lock-in the current contract.
The agreement paves the way for Fenix to begin iron ore production and export its first product early next year.
Additionally, the commercial terms of the contract are in line with feasibility study published for Iron Ridge in November last year.
Iron Ridge project
It has been a busy year for Fenix as it gears up to ship its first iron ore from Iron Ridge early next year.
The company has secured offtake arrangements for 100% of its initial planned production of 1.25Mt over 6.5-years.
Sinosteel agreed to take 50% of the iron ore production in October over the initial life of mine, while Atlas Iron’s subsidiary will 50% market the other 50%.
Iron Ridge has a resource of 10.5Mt at 64.2% iron, which Fenix claims represents some of the highest grade iron ore in Western Australia.
Mining is underpinned by a reserve of 7.8Mt at 63.9% iron.
The Iron Ridge operation will begin as an open pit and produce a direct shipping ore product.
Once operating, Iron Ridge is estimated to generate annual average earnings before interest tax depreciation and amortisation of $16.4 million for Fenix.
Forecast life of mine revenue is $802.9 million, with the project having a net present value of $54.3 million and 59% internal rate of return.