To reduce the impact of iron ore price fluctuations on its profitability, Fenix Resources Ltd (ASX:FEX) has entered into new swap contracts to extend its hedging cover and guarantee prices from July until 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$170.10 per dmt.
The new contracts are in addition to Fenix's existing iron ore hedging arrangements, resulting in a total of 50,000 dmt per month being hedged during the same period.
Safeguarding profits
The iron ore swap arrangements executed by Fenix involve contracts with Macquarie Bank Ltd, which are cash settled at the end of each month based on the difference between the fixed price stated in the agreements and the Monthly Average Platts TSI 62 Index converted to Australian dollars.
These swap arrangements align with Fenix's Price Protection Policy, aimed at safeguarding the company's profitability in the medium term while maintaining positive exposure to iron ore prices.
Premium producer
Fenix Resources is a high-grade, high-margin iron ore producer located in the Mid-West mining region of Western Australia.
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.
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.