Fenix has secured the full mining rights over the Weld Range project from China’s Sinosteel Midwest Corporation under a $60 million deal, bolstering its resource base in the Mid West.
Mid-tier miner Fenix has secured the full mining rights over the Weld Range iron ore project from China’s Sinosteel Midwest Corporation under a $60 million deal, bolstering its footprint and resource base in the Mid West.
Fenix inked the deal with the subsidiary of China Baowu Steel Group Corporation - the mammoth state-owned steelmaker - for the 30-year exclusive rights to mine and export all of the iron ore from the 290 million tonne Weld Range project.
It builds on its existing mining rights deal over the Beebyn-W11 mine within the Weld Range envelope, consolidating Fenix’s ownership over the Mid West project’s mining and export rights.
Fenix will pay Sinosteel $60 million in cash over a two-year period, alongside a $4 per dry metric tonne production royalty and $5/dmt profit share royalty.
The deal includes a profit share payment of 10 per cent of net profit after tax from the Weld Range project when the average iron ore price hovers below US$100/t, increasing to 15 per cent when the price rises above that threshold.
Aside from the royalties, Fenix would be entitled to the full earnings from ore sold.
Fenix has also agreed to maintain production of at least 6 million tonnes per annum, and to collaborate with Baowu to export and sell 10 million tonnes per annum from Weld Range.
Fenix managing director John Welborn said securing Weld Range's 290 million tonnes of high-quality hematite direct shipping iron ore surrounding its existing operations was a game changer for Fenix.
"Aligned with our aspiration to become a 10 million tonne per annum iron ore producer, this value accretive right to mine agreement provides the inventory we need to maximise the value of our exceptional transport infrastructure and materially expand our operations and extend our mine life," he said.
"Development of the Weld Range Project has long promised to be a significant value creator for Western Australia.
"This major mining and logistics project is a perfect match for Fenix’s ambition and track record of achievement."
Fenix told the market it had commenced a feasibility study for the Weld Range project, with its initial focus on building on its plan for the Beebyn-W11 mine, which came into production in June. It also notched the rights to several exploration tenements.
Fenix plans to use its existing infrastructure at its neighboring Iron Ridge project and included Beebyn-W11 mine to cut capital expenditure and speed up project timelines, with an eye to production within 24 months of the ink drying on the deal.
The Weld Range iron ore will be trucked and exported through the Port of Geraldton, where Fenix ships iron ore from its flagship Iron Ridge and Beebyn-W11 projects.
Last month, Fenix shipped its its first batch of iron ore from Beebyn-W11, pushing its combined production run rate across all three operations to 4 million tonnes per annum ahead of its 10mtpa ambition.
Sinosteel will have the right-to-match the price Fenix can attract from a third-party buyer for the iron ore churned out of Weld Range under an off-take arrangement.
The Chinese steelmaker previously named Weld Range as the cornerstone project to export through the long-mooted Oakajee multi-user deep-water port that's been under Sinosteel’s ownership since 2019.
But with Fenix set to export Weld Range iron ore through the Port of Geraldton - being the only option in the region - it marks another bump in the road for Oakajee's stagnate development.
Fortescue was mulling a deal with Sinosteel for a stake in the Oakajee port, rail and a magnetite iron ore mine, with the study results yet to be aired.
Fenix and Sinosteel also shook hands on pursuing future opportunities in the Mid West region, including Fenix potentially constructing a private haul road connecting Weld Range to its logistics assets near the Port of Geraldton, subject to feasibility studies.
It recently completed its 18-kilometer private haul road connecting its Beebyn-W11 to Iron Ridge operation.
Fenix and Sinosteel also outlined the potential for other cooperative opportunities, naming the development of large-scale magnetite projects and green iron or green steel initiatives.
Shares in Fenix were rallying more than 10 per cent to close at 35.5 cents per share.
