Fenix Resources Ltd (ASX:FEX) has locked in iron ore hedging contracts for another six months to the end of this year, securing a guaranteed price of A$171.17 per dry metric tonne (dmt) at a monthly rate of 30,000 tonnes.
The company has established new iron ore hedging contracts production from the Iron Ridge Iron Ore Mine in WA consisting of iron ore swap contracts which are cash settled at the end of each month.
These are for an amount equivalent to the difference between the fixed price of the contracts and the Monthly Average Platts TSI 62 Index converted to Australian Dollars.
Strong margin support
The hedges provide strong margin support for the company’s iron ore production and cash flows through to the end of 2023 with chairman John Welborn stating: “Hedging is an important component of Fenix’s success as a profitable iron ore producer.
"We are focused on maintaining a strong margin on our high-grade iron ore products throughout the iron ore price cycle.
"Our hedging arrangements secure a solid margin on a base level of our production and support our ability to continue to generate strong cashflows and profitability.”
Swap arrangements extended
The new iron ore swap contracts for a total of 180,000 dmt at $171.17 per dmt extend the existing swap arrangements for January 2023 through to June 2023 for a total of 300,000 dmt at a fixed price of $173.25 per dmt.
This arrangement provides for 50,000 dmt per month up to and including June 2023 and 30,000 dmt per month for the six-month period from July 2023 to December 2023.
Fenix’s swap arrangements are consistent with its Price Protection Policy designed to support the medium-term profitability of production from the Iron Ridge Mine whilst maintaining positive exposure to iron ore prices.
About Fenix
The company is a high-grade, high-margin iron ore producer operating in the Mid-West mining region of Western Australia with a unique fully integrated mining and logistics business.
Mining at Iron Ridge is via conventional open pit methods with a low strip ratio and simple crushing and screening of high-grade lump and fines direct shipping ore products.
High-quality iron ore products from Iron Ridge are transported by road to Geraldton using the company’s 100%-owned FenixNewhaul haulage and logistics business.
The company also operates its own loading and storage facilities at the Geraldton Port.
Iron Ridge hosts some of the highest-grade iron ore in Western Australia. The high-grade iron ore attracts a premium price on the seaborne market.
Increasingly, global customers are demanding high-grade ore to meet increasingly strict government regulations.