Fenix Resources Ltd (ASX:FEX) has passed a major milestone of 1 million dry metric tonnes of high-grade iron ore sales from its flagship Iron Ridge Project in the Mid-West region of Western Australia.
The company plans to this quarter begin business reviews designed to optimise the current operational strategy and evaluate synergistic growth opportunities to build on achieving this production milestone.
Notably, Fenix’s net operating margin is averaging A$64 per tonne for the one million tonnes of iron ore sold to date.
“Supported by hedge position”
Fenix managing director Rob Brierley said: “I’m proud of the entire Fenix and Iron Ridge team, which includes our major service providers MACA Ltd, Fenix Newhaul Pty Ltd, Alpha 1 WA Pty Ltd and Champion Bay Electrical, for delivering this significant milestone.
“Although current macroeconomic conditions in the iron ore industry have been challenging in the last few months, we are maintaining a solid production and sales profile supported by our hedge position, which is currently more than A$52 million in the money based on the November 26, 2021 price and exchange rate data.”
Performance share milestone
Fenix acquired a 100% interest in the high-grade Iron Ridge Iron Ore Project in May 2018 for share-based consideration of 25 million ordinary shares plus 112.5 million performance shares.
The performance shares comprised 15 million Class A performance shares, 30 million Class B performance shares, 37.5 million Class C performance shares and 30 million Class D performance shares.
The performance shares have milestones upon which they convert to ordinary shares based on mineral resources and significant production performance hurdles.
Achieving 1 million dry metric tonnes of shipped iron ore production from Iron Ridge, and the validation that this has been achieved with a net operating margin above US$15 per dry metric tonne (the unaudited margin of A$64/tonne corresponds to more than US$48/tonne), triggers the conversion of the 30 million Class B performance shares to ordinary shares in Fenix.