Fenix Resources Ltd (ASX: FEX), a mineral exploration company from the metals and mining sector on 7 May 2019, announced that it had formed a strategic alliance with Minehaul Pty Ltd (Minehaul), which is a trucking and logistics company. The strategic alliance is being considered as an important move towards the growth of Iron Ridge Project of the company. The Iron Ridge Project is situated in the MidWest region of Western Australia.
Both the companies, Fenix and Minehaul, will form a 50:50 joint venture company (JVC), which would be known as Premium Minehaul Pty Ltd (PM). Under the strategic alliance, Premium Minehaul Pty Ltd will be providing all trucking services to the Project. Thus, the formation of the JVC would help the company to step towards its aim to commercialize the Project.
Mr Craig Mitchell will be holding the position of Chairman and CEO in the new JVC. Mr Mitchell was the founder and former owner of Mitchell Corp, which is a major supplier of transport and logistics services to the Western Australian mining industry. In 2011, Mitchell Corp was acquired for $110 million by Toll Group. Mr Craig Mitchell’s vast experience in the industry will help the company to ensure that the potential future trucking operations are managed effectively.
As per the JVC agreement, FEX has provided an undertaking, where would make sure that all iron ore transport it is involved with in the Mid-West region of WA, will be conducted via the JVC. The terms and condition related to the provision of these services are to be agreed in the upcoming months and pursuant to a separate road haulage contract agreement.
FEX anticipates that there will be several key benefits from the JVC arrangements, as follows:
- Greater transparency with respect to the conveyance costs linked with the project.
- Through the JVC, there will be potential for significant cost savings related to conveyance costs.
- The duplication of the management role will be eliminated, and the benefits of innovation will be shared throughout the life of the project.
For the quarter ended on 31 March 2019, the company announced that there was a significant upgrade to the Iron Ridge Mineral Resource. At the Iron Ridge Project, high-grade iron-ore assays were received. The total mineral resource during the quarter, increased by 84% to 9.2Mt at 64.1% of iron, 3.36% of silicon, 2.66% of aluminium oxide and 0.045% of phosphorus with respect to the previous inferred mineral resources.
From the cash flow perspective, the company used A$0.488 million in its operating activities. By the end of the March 2019 quarter, the company had net cash and cash equivalent of A$2.110 million.
On 2 May 2019, the shares of FEX were placed on trading halt pending release of an announcement related to the potential joint venture. Post the announcement on the potential joint venture on 7 May 2019, the shares of FEX started trading on ASX.
The shares of the company are currently trading at A$0.063, down by 3.077% (as on 8 May 2019, 12:52 PM AEST). The company holds a market capitalization of A$15.91 million with approximately 244.83 million outstanding shares.
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