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PERTH (miningweekly.com) – ASX-listed Fenix Resources has struck a deal with Sinosteel Midwest Corporation (SMC) for the exclusive right to mine and export up to 10-million tonnes of iron-ore from the Beebyn-W11 iron-ore deposit, in the Weld Range.
Under the terms of the agreement, Fenix will pay A$5-million in cash on the execution of a definitive agreement, and a further A$5-million milestone payment on the receipt of mining approvals.
A fixed A$2/t base royalty payment will also be due, along with a variable profit share royalty based on a share of notional profit calculated as actual revenue received for the Beebyn-W11 shipments, less certain actual costs and a fixed margin.
“From the inception of Fenix’s production from Iron Ridge, Sinosteel has been a valued partner both as an offtaker and a provider of infrastructure. I am delighted to be expanding our mutually successful partnership with this important right-to-mine agreement,” said Fenix chairperson John Welborn.
“Fenix is committed to an exciting growth path to expand our high-grade, high-margin mining operations in the Mid-West. Our unique road, rail and port infrastructure and capabilities provide an advantage which enables the efficient monetisation of high-quality regional deposits which for too long have been stranded. We are delighted to have secured this initial 10-million-tonne right-to-mine opportunity with Sinosteel and look forward to working with them in partnership to unlock the immense value in their extensive iron-ore holdings in the Mid-West.
“Fenix’s operations in the Mid-West, following our strategic consolidation of our haulage business and the acquisition of Mount Gibson’s port and rail infrastructure, have significant scale potential. Our strategic intent is to expand our resource inventories, maintain the quality of our operations, and materially boost production to enable cost reduction and the generation of strong profit margins to reward our shareholders,” said Welborn.
The Beebyn-W11 deposit has a Joint Ore Reserves Committee-compliant resource of 20.5-million tonnes, grading 61.3% iron. Fenix told shareholders on Tuesday that the company’s due diligence indicated that the resource could be mined in a similar manner to the existing Iron Ridge operations.
Fenix will maintain exclusive control of all mining, hauling, logistics and port operations related to the mining and export of the ten-million tonnes of iron-ore.
The company will immediate progress with the required approvals for the mining operation, in the hopes of starting mining during 2024.