Fenix Resources has signed a binding agreement with Sinosteel Midwest Corporation (SMC) for a 30-year exclusive right to mine and export iron ore from the Weld Range Hematite Iron Ore Project in Western Australia (WA).

The Weld Range project boasts a high-quality hematite iron ore deposit with a mineral resource estimate of 290 million tonnes (mt) at a grade of 56.8% iron.

Situated adjacent to Fenix's Iron Ridge Iron Ore Mine, Weld Range's deposits including the Beebyn-W11 are direct shipping ore types that enhance the company's existing operations.

The transaction will cost Fenix A$60m ($39.2m) in cash, payable over two years, along with a production royalty ranging from A$4–A$5 per dry metric tonne.

Additionally, a profit share payment is set at 10% of net profit after tax when iron ore prices are at or below $100 per tonne, increasing to 15% when prices exceed this threshold.

Fenix plans to fund the transaction through existing cash reserves and operational cash flows, entitling it to 100% of the earnings post-payment.

The Weld Range project aligns with Fenix's growth strategy, leveraging its mid-west iron ore, road, rail and port assets.

The existing infrastructure including a road haulage fleet and port logistics positions Fenix to capitalise on the Weld Range project's value.

Fenix executive chairman John Welborn said: “Fenix has delivered on its strategy to unlock the value of the stranded iron ore deposits of Western Australia’s mid-west region. Securing 290mt of high-quality hematite direct shipping iron ore immediately surrounding our existing operations in the Weld Range is a game-changer for Fenix.

“Aligned with our aspiration to become a 10 million tonne per annum iron ore producer, this value accretive right to mine agreement provides the inventory we need to maximise the value of our exceptional transport infrastructure and materially expand our operations and extend our mine life.”

A feasibility study is under way to expand regional production, with initial efforts aimed at extending the Beebyn-W11 mine plan and developing nearby deposits.

SMC (or a designated representative) retains the option to match any offer that Fenix receives from an independent external purchaser for the acquisition of up to 100% of the iron ore from Weld Range.

Should SMC choose to use its matching right, it will engage in an offtake agreement with Fenix that mirrors the conditions of the ‘Third Party Proposal’. However, if SMC decides not to match the offer, Fenix is at liberty to accept the Third Party Proposal.

Story Continues

In March, Fenix Resources entered into an agreement with MACA, part of the Thiess Group, to develop the Beebyn-W11 iron ore project in the mid-west region of WA.

This move aligns with the company's objective to boost its production capabilities to an annual rate of 4mt by 2025.

"Fenix secures rights to Weld Range iron ore project in Australia" was originally created and published by Mining Technology, a GlobalData owned brand.

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