Fenix Resources expects its high-grade Iron Ridge project in Western Australia to deliver strong returns, helped by its low development cost.
Fenix Resources expects its high-grade Iron Ridge project in Western Australia to deliver strong returns, helped by its low development cost.
The mine will consist of a single open pit operation, located 490 kilometres inland from Geraldton.
Fenix said Iron Ridge has ore reserves of 7.76 million tonnes at a high grade of 63.9 per cent iron, according to a feasibility study released today.
The study is based on production at 1.25mt per annum, over a mine life of 6.5 years.
Mining costs were based on a detailed commercial proposal submitted by Perth-based mining contractor MACA.
Fenix said the project would have a modest initial capital cost of $11.9 million, 44 per cent of which would not be paid until after the first shipment was dispatched.
Annual earnings are predicted to be $16.4 million, based on relatively high cash operating costs of $76.68 per dry metric tonne over the life of the mine.
The study has an assumed iron ore price of $111.43 per tonne, with the current benchmark price $123.33/t.
Road transport costs are estimated to be $43.7/t.
Managing director Robert Brierley said the feasibility study had revealed a high-grade project that would 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,” he said.
“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 feasibility study confirms our view that it will generate strong returns for Fenix shareholders.”
Fenix said a new 82-person camp for the site will be built and has been factored into the study.
All other infrastructure and major equipment would be provided by the mining contractor, including offices, ROM pads, crushing and screening facilities, power generation and water storage facilities.
Shares in Fenix Resources were trading at 5.1 cents per share, as at 4pm AEDT.
