Fenix Resources Ltd (ASX:FEX) has completed the acquisition Mount Gibson Iron (ASX:MGX) Ltd’s Mid-West iron ore, port and rail assets in a transaction described as “transformational” by FEX chairman John Welborn.
The assets now in Fenix’s hands include the Shine Iron Ore Mine, two on-wharf bulk material storage sheds at Geraldton Port, two rail sidings at Ruvidini and Perenjori, and mining assets and obligations at the Extension Hill Iron Ore Mine.
Benefits to Fenix
The acquisition of these iron ore and port assets provides Fenix with the opportunity to:
- reduce the cost of the company’s existing Iron Ridge production;
- expand production from Iron Ridge;
- re-commission the Shine Iron Ore Mine as a second production asset;
- create a substantial new revenue generating business from the provision of logistics solutions
- to existing and future Mid-West bulk commodity producers; and
- benefit from the expected growth in bulk commodity production and export in the Mid-West.
Fenix chairman John Welborn said acquiring Mount Gibson’s Mid-West iron ore and port assets was a game changer.
“Transformational event”
"We are extremely excited about the start of a new chapter for Fenix. We are delighted to be continuing the successful legacy of Mount Gibson in the Mid-West and to have their support as a large shareholder.
“This transformational event for Fenix 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 and create exceptional shareholder value.”
Consideration
The transaction consideration has been transferred to Mount Gibson, consisting of A$10 million in cash, 60 million fully paid ordinary shares in Fenix and 25 million options.
Following completion of the transaction, Mount Gibson holds approximately 8.6% of the company’s issued ordinary shares.