Fenix Resources Ltd (ASX:FEX) has extended its hedging cover and guaranteed pricing through new iron ore swap contracts covering the six-month period from July 2023 to December 2023.
These contracts will see the company hedge an additional 10,000 dry metric tonnes (dmt) of iron ore per month at a fixed rate of A$180 per dmt.
Add to existing hedge book
The new contracts add to the company’s existing iron ore hedge book such that a total of 50,000 dmt of iron ore per month is hedged up to and including June 2023 at a fixed price of A$173.25 per dmt and 40,000 dmt per month is hedged from July 2023 through to December 2023 at A$173.38 per dmt.
Fenix Resources is a high-grade, high-margin iron ore producer located in the Mid-West mining region of Western Australia.
From Iron Ridge mine
The company’s 100%-owned, flagship Iron Ridge Iron Ore Mine is a premium direct shipping ore deposit that hosts some of the highest grade iron ore in Western Australia with the product attracting a premium price on the seaborne market.
Increasingly, global customers are demanding high-grade ore to meet increasingly tightening government regulations.
Hedging arrangements
Fenix’s hedging arrangements consist of iron ore swap contracts with an Australian top-tier financial institution which are cash settled at the end of each month for an amount equivalent to the difference between the fixed price of the contracts and the Monthly Average Platts TSI 62 Index converted to AUD.
These swap arrangements are consistent with the company’s 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.
Integrated business
In 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 Geraldton Port.