The Fenix Resources Ltd (ASX: FEX) share price is trading nearly 2% higher at 26.5 cents a share today. The price bump follows the release of the company’s quarterly results.
The company has experienced significant growth over the previous 12-month period with the Fenix share price powering up close to 400% higher.
Here’s what we learned.
Everyone is loving iron ore
In its December quarterly activities report, Fenix advised that iron ore production is underway at Fenix’s Iron Ridge project in Western Australia.
Fenix estimates “approximately 60,000 tonnes of combined lump and fines product scheduled for early February”.
With the price of iron ore up around 79% for the year trading close to $170 a ton, that’s roughly a $10.2 million pile of iron ore before costs and fees are considered.
The Federal Government has been vocal about iron ore prices soaring and how this benefits the Australian economy, as discussed during the mid-year economic and fiscal outlook.
A strategic offtake agreement
During the December quarter, Fenix announced an offtake agreement with Sinosteel International Holding Company Limited.
This means that Fenix has sales arrangements that are now in place for 100% of the company’s projected iron production. Atlas Iron subsidiary Weld Range Iron Ore Pty Ltd has already staked 50% of production and sales for Iron Ridge.
Additionally, the Sinosteel deal also entitles Fenix to acquire an iron ore storage shed, truck unloading, and conveyor systems located at the Geraldton Port.
Port lease agreement
Importantly, Fenix has secured the access necessary to export the company’s iron ore products.
Also in today’s announcement, the company advised that during the December quarter, it had executed a port lease agreement and a port access and services agreement with Mid West Ports Authority (MWPS) for the export of iron ore products through the port of Geraldton. The agreement allowed Fenix to export 1.25 million tonnes per annum of iron ore.
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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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