The company plans to commence the $360 million contract with Fenix Newhaul for the estimated six-year life-of-mine in December 2020.

Fenix Resources Ltd - Fenix Resources executes road transport contract for Iron Ridge

The project is around 490 kilometres by road from Geraldton port, Western Australia.

Fenix Resources Ltd (ASX:FEX)  has executed a contract for the road transport component of its Iron Ridge Project in Western Australia with Fenix Newhaul Pty Ltd, an incorporated joint venture company between Fenix and Newhaul Pty Ltd.

The contract is valued at around $360 million for the estimated six-year life-of-mine, based on a terminal gate diesel price ex Geraldton of around $1.34 per litre with the current diesel price being around $1.05.

This arrangement is due to start in December 2020, in line with the current project development timeline.

Prime movers ordered

Fenix Newhaul has ordered prime movers and trailers for the project and secured funding for this specialist equipment through an equipment manufacturer.

The joint venture company also has funding for start-up costs and equipment deposits through shareholder loan facilities totalling up to $3.9 million.

Joint venture concept

Fenix managing director Rob Brierley said: “Road transport was quickly identified as the largest cost component for the commercialisation of Iron Ridge.

“We took an innovative approach to optimise this aspect and we strongly believe that the joint venture concept with Craig Mitchell has been the right way to go.

“Fenix Newhaul plans to commence operations with a mix of sub-contract and owned fleet and they are actively recruiting for personnel, with most of their employees to be Geraldton-based.”

JV company

The joint venture company was incorporated to implement the strategic alliance between the company and Craig Mitchell, the founder and former owner of Mitchell Corp, a major supplier of transport and logistics services to the Western Australian mining industry.

Fenix Newhaul is 50% owned by Fenix and 50% by Newhaul Pty Ltd (formerly Minehaul Pty Ltd), an entity controlled by Mitchell.

Iron Ridge Project

The company’s 100%-owned Iron Ridge Iron Ore Project is a premium direct shipping ore (DSO) grade deposit around 490 kilometres by road from Geraldton port, Western Australia.

Iron Ridge hosts a JORC 2012-compliant indicated and inferred resource of 10.5 million tonnes at 64.2% iron with an ore reserve of 7.76 million tonnes at 63.9% iron.

High-grade iron ore attracts a premium price on the seaborne market on higher demand from Chinese steelmakers who faced with strict government regulations are seeking quality inputs with lower emissions.

Only requiring crushing and screening, 1.25 million tonnes of ore per annum is proposed to be trucked to the port by a JV signed off in May 2019.

Negotiations are well advanced with Mid-West Ports Authority at Geraldton where export capacity is available.

Statutory permitting is complete, the mining and road transport contracts have been awarded and contract documentation with other key service providers is advanced.