PERTH (miningweekly.com) – ASX-listed Fenix Resources has unveiled plans to become a fully integrated mining, haulage and logistics company with the acquisition of joint venture (JV) partner Newhaul’s 50% interest in a haulage JV.

Fenix told shareholders on Tuesday that taking full ownership of the haulage business would reduce the company’s C1 free-on-board (FoB) costs by A$10/t, enabling the company to target a total C1 FoB cash cost of around A$70/t.

Under the terms of the A$16.5-million agreement, Fenix will pay Newhaul A$7.5-million in cash and will issue 30-million ordinary shares, with a further up to 60-million shares to be issued subject to the achievement of significant value-based performance milestones.

“Consolidation of Fenix-Newhaul ownership is an important strategic initiative as it immediately reduces our haulage costs. It provides Fenix with a significant advantage over our peers given haulage costs are the largest cost input for Mid-West iron-ore miners,” said MD Rob Brierley on Tuesday.

The Fenix-Newhaul JV was established to provide haulage and logistics services to Fenix’s Iron Ridge project located in the Mid-West region of Western Australia, 490 km from Geraldton port.

The JV operates a fleet of 25 quad road trains which provide a daily haulage capacity to Fenix of up to 4 000 t/d. In the last 18 months, Fenix-Newhaul has hauled over 1.8-million wet metric tonnes, equivalent to approximately 1.72-million dry metric tonnes, of high-grade iron-ore to Geraldton, completing over 15 000 round trips travelling almost 15-million kilometers.

The Fenix-Newhaul JV also provides additional logistics support to Fenix’s operating iron-ore loading facilities at Iron Ridge. The business includes a driver change-over facility and a driver accommodation base at Cue, as well as a company-owned 110 000 m² depot in Geraldton with 24-hour workshop and administration support.

“Fenix-Newhaul is a highly profitable state-of-the-art logistics business which is an essential component to Fenix’s business success. Consolidating 100% ownership is a smart move which will reduce our costs and provide operational flexibility,” said Fenix chairperson John Welborn.

“These advantages will make our business significantly more resilient and robust to commodity price volatility. The transaction is a key outcome from the board’s recent strategic review and provides Fenix with a vastly improved platform to evaluate and acquire further growth opportunities.”