Fenix signs 'game changing' deal with Mount Gibson

29th June 2023 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

Fenix signs 'game changing' deal with Mount Gibson

Photo by: Bloomberg

PERTH (miningweekly.com) – Junior Fenix Resources has reached a near A$25-million agreement with fellow-listed Mount Gibson Iron to acquire its Mid West iron-ore mining and infrastructure assets.

The assets will include the Shine iron-ore mine, two storage sheds at Geraldton port with a combined capacity of 360 000 t, two Mid-West rail sidings and assets at the Extension Hill iron-ore mine. The Shine mine, which is currently on care and maintenance, is estimated to host a mineral resource of 15-million tonnes.

Under the terms of the agreement, Fenix will pay Mount Gibson an initial A$10-million in cash and will issue the company 60-million ordinary shares in the company. Mount Gibson will also receive 12.5-million five-year options exercisable at 25c each and 12.5-million five-year options exercisable at 30c each, subject to the satisfaction of certain transaction-related conditions.

“Acquiring Mount Gibson’s Mid-West iron-ore and port assets is a game changer for Fenix,” said chairperson John Welborn.

“Since 2003, Mount Gibson has mined and shipped more than 50-million tonnes of iron-ore in the Mid-West using robust rail and port infrastructure. We are delighted to continue this successful regional legacy and to have Mount Gibson as a significant shareholder as we work to create exceptional future value.

“The investment by Fenix will be immediately cashflow accretive to our existing business, allowing for cost savings in port and haulage costs for Iron Ridge operations of approximately A$5/t. The Shine iron-ore mine is a shovel-ready mining project. We are excited by the potential to recommence mining and investigate the potential to market high quality blended iron-ore products,” said Welborn.

“The substantial port and rail assets we are acquiring have an assessed replacement cost of more than A$80-million. The assets provide Fenix with valuable Mid-West rail transportation and Geraldton port unloading, storage and ship loading facilities which are required by regional bulk commodity producers and exporters, allowing Fenix to diversify our revenue base by becoming a third-party logistics provider.

“These acquisitions are a transformational event for Fenix and will drive material economies of scale, provide flexibility to expand iron-ore production and operate new projects concurrently. In expanding a mine-to-port logistics solution for ourselves and other producers in the Mid-West, we also create employment opportunities which will strongly support regional economic growth.” 

Mount Gibson CEO Peter Kerr told shareholders on Thursday that the transaction with Fenix would facilitate the formation of a consolidated innovative mining and logistics business that would benefit the shareholders of both companies and support the continued growth of the Mid-West region as a significant producer and exporter of mineral commodities.

“It also enables Mount Gibson to realise value for assets not presently reflected in its market price, and free the company to concentrate on maximising cashflow from its high-grade Koolan Island iron-ore mine in the Kimberley region and to pursue new resource investment opportunities.

“Consolidating our remaining Mid-West iron-ore assets with those of Fenix in return for A$10-million in cash and a significant equity interest in Fenix, for a total in excess of A$25-million, is a sensible and attractive combination that has the potential to unlock and generate substantial further value for the shareholders of both companies, as well as to support the ongoing growth of bulk materials exports from Geraldton port. We look forward to a positive long-term relationship with Fenix as one of its major shareholders,” said Kerr.

The transaction is subject to the surrender and replacement of an existing port services and lease agreement between the two companies, and consent from various parties and banking institutions relating to the tenure and contractual rights of certain of the asset groups.

It is expected that the transaction will be completed in the September quarter of this year.