Fenix Resources Ltd (ASX:FEX) has taken additional steps to minimise the impact of fluctuating iron ore prices on its profitability by securing additional iron ore hedging contracts from September through to December.
The iron ore producer has entered into arrangements to hedge a total of 40,000 tonnes of iron ore structured as 10,000 tonnes per month at a fixed price of A$170.10 per tonne.
These new contracts have been added to the company’s existing iron ore hedging arrangements, bringing the total to 240,000 tonnes structured as 60,000 tonnes per month at A$170.10 per tonne during the period.
Protecting 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 arrangements align with the company’s Price Protection Policy aimed at safeguarding profitability in the medium term while retaining positive exposure to iron ore prices.
Premium miner
Fenix Resources is a high-grade, high-margin iron ore producer located in the Mid-West mining region of Western Australia.
The company is the sole owner of the Iron Ridge Iron Ore Project, 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 port about 490 kilometres away using the company’s 100%-owned FenixNewhaul haulage and logistics business.
The company also operates its own loading and storage facilities at Geraldton Port.