Fenix Resources Limited (ASX: FEX) is preparing a checklist in order to become a high-grade producers of iron ore before it makes a debut in ASX. Earlier the company was known by the name Emergent Resources.
The company has taken up high-grade project in mid region of Western Australia. This is taking a step ahead to be a near-term producer. It has prepared itself with all the necessary infrastructure which is attracting high premiums.
Through the acquisition of Prometheus Mining, the company will add the Iron Ridge project to its portfolio. This project will bring additional resource of 5 million tonnes at 64.1% of iron ore within itself
The capital raising of amount $4.5 million is completed and is closed now. Now the company is into the phase of finalizing the acquisition of Prometheus. This will create path in order to get it re-listed on ASX.
Fenix is now targeting to increase the Iron Ridge resource in range from 8 to 10 million tonnes at 65 per cent iron ore. The company claims that iron ore which they expect to produce will give a tough competition to BHP (ASX: BHP) and Rio Tinto (ASX: RIO) and it will also have potential to attract big dollars.
The Chinese steelmakers are looking for higher grade feedstocks that will help to boost the productivity of mill and also help to meet more strict pollution control measures. This could be an opportunity for the company as a result of wide price gap between the low-grade and high-grade iron ore
From a low-grade iron ore, only 58% of product can be fetched generating revenue around $US48 a tonne. However, the benchmark is set that 62% of the product sold will generate revenue for about $US72 a tonne at the moment.
It is expected that a revenue of approximately $US97 will be generated from 65% of the product, the revenue is considered premium over the low-grade iron ore.
The Iron Ridge project of Fenix lies in between two of the iron ore deposits which forms a part of Sino Steel’s Weld Range project. At present the project is already into native title agreements and approval in regard to the environment is in place.
Rob Brierley who is the director of Fenix stated that the company is able to move ahead in order to receive the permit very soon based on the level of work already done in the nearby projects by Sino Steel. A lot of time is utilized by the Sino Steel so that they get the heritage agreements as well as the native title agreements. It has also cleared all the environmental requirements as well. He also said that in this matter they do not need to be the leader. Instead they can get aligned with a lot of work done in the area of permitting which will help to get the work done on time
Fenix also does not object to have any problem to access the Geraldton Port. This port at present has a lot of spare capacity.
The infrastructure which Mount Gibson Iron Limited (ASX: MGX) could also be used by Fenix. The company has no problem to use the ship loaders and storage sheds as well. MGX is about to complete its mining at Extension Hill project.
Mr. Brierley said that a high-grade product only requires a minimal processing. There is no requirement of tailings disposal facility. A small fleet of heavy earthmoving equipment and a mobile crushing and screening plant is only required to produce 1-million-tonne-per-annum. He stated that these two equipments are readily available from contractors. He also stated that the road which is running straight past the Iron Ridge project will also help in reducing the risk of permitting delays.
The company has already planned in advance for its drilling program. They will be focusing the larger, higher-grade formation of 4 million tonnes at 65%. The drilling program of the company is targeting fully on the main big high-grade mineralization which makes the company confident resource up to a decent level.
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