Tag Archives: Iron Ridge

Fenix takes control of road train haulage business to cut Iron Ridge costs

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Fenix Resources says it has signed definitive agreements with Newhaul Pty Ltd to acquire Newhaul’s 50% interest in Fenix-Newhaul Pty Ltd, resulting in the consolidation of 100% ownership of the haulage business into Fenix.

Factoring in the upfront consideration of A$7.5 million ($5.2 million) in cash and 30 million Fenix ordinary shares – with contingent consideration of a further 60 million Fenix shares subject to achievement of significant value-based performance milestones – the additional cash flows generated from the consolidation of the company’s haulage operations will result in higher earnings for Fenix and higher dividends available to Fenix shareholders, it said.

Fenix-Newhaul was incorporated in October 2020 as a 50:50 joint venture company to implement the strategic alliance between Fenix and Newhaul. It was established to provide haulage and logistics services to Fenix’s Iron Ridge Project, in the Mid-West region of Western Australia, 490 km from Geraldton Port.

Fenix-Newhaul operates a fleet of 25 quad road trains which provide a daily haulage capacity to Fenix of up to 4,000 t/d. In the last 18 months, Fenix-Newhaul has hauled the equivalent of over 1.72 Mt of high-grade iron ore to Geraldton, completing over 15,000 round trips travelling almost 15 million km.

The Fenix-Newhaul business provides additional logistics support to Fenix’s operating iron ore loading facilities at Iron Ridge.

The business includes a driver change-over facility and a driver accommodation base at Cue, as well as a company-owned 110,000 sq.m depot in Geraldton with 24-hour workshop and administration support.

Fenix said the transaction will deliver lower operating costs for Fenix with additional value expected from operational flexibility advantages, as well as unlocking new growth opportunities that can now be explored for the benefit of Fenix. It quantified the former as cutting FOB costs by circa-A$10/t ($6.9 t), enabling Fenix to target total C1 FOB cash costs of circa-A$70/t (wet).

Rob Brierley, Managing Director of Fenix, said: “Consolidation of Fenix-Newhaul ownership is an important strategic initiative as it immediately reduces our haulage costs. It provides Fenix with a significant advantage over our peers given haulage costs are the largest cost input for Mid-West iron ore miners.”

John Welborn, Chairman of Fenix, said: “Fenix-Newhaul is a highly profitable state-of-the-art logistics business which is an essential component of Fenix’s business success. Consolidating 100% ownership is a smart move which will reduce our costs and provide operational flexibility. These advantages will make our business significantly more resilient and robust to commodity price volatility. The transaction is a key outcome from the board’s recent strategic review and provides Fenix with a vastly improved platform to evaluate and acquire further growth opportunities.”

Fenix in it for the long haul at Iron Ridge

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Fenix Resources says it has executed a contract for the road transport component of its Iron Ridge project, in Western Australia, with Fenix Newhaul Pty Ltd.

Fenix Newhaul, formerly Premium Minehaul Pty Ltd, is the incorporated joint venture company established to implement the strategic alliance between Fenix 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, as announced in May 2019.

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

Fenix Newhaul has already ordered prime movers and trailers for the project and secured funding for this specialist equipment through an equipment manufacturer, Fenix said. Fenix Newhaul also has funding for start-up costs and equipment deposits through shareholder loan facilities totalling up to A$3.9 million ($2.8 million).

The contract is valued at around A$360 million for the estimated six-year life-of-mine, based on a terminal gate diesel price ex-Geraldton of around A$1.34/litre (current diesel price is around A$1.05/litre). It is due to commence in December 2020, in line with the current project development timeline.

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 plan 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.”

The terms of the contract are in line with the company’s feasibility study, announced on November 4, 2019, which outlined that circa-8 Mt of high-grade hematite, grading some 64% Fe, will be extracted over a 6.5-year life of mine.

Last week, Fenix awarded the drill & blast, mining, and crushing & screening contract for Iron Ridge to MACA Ltd.

MACA to get mining Fenix Resources’ Iron Ridge project

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Fenix Resources has awarded the drill & blast, mining, and crushing & screening contract for its Iron Ridge project, in Western Australia, to MACA Ltd.

MACA is a reputable contractor with a strong track record of operational experience in the mining sector and has been involved in the Australia iron ore industry having carried out long-term works for Atlas Iron Ltd and Crossland Resources, Fenix said.

Early stage works commenced last month through local contractors, with MACA currently mobilising heavy earthmoving equipment to site.

Open-pit mining and crushing and screening operations are due to commence in the current quarter.

MACA said the contract is expected to generate around A$185 million ($131 million) in revenue for it over the 75-month term.

Fenix Managing Director, Rob Brierley, said: “We having been interacting with MACA on all aspects associated with the Iron Ridge project for well over a year now, and we are pleased that this relationship will continue as we transition to production in the near-term.

“MACA has vast experience in all aspects of iron ore mining operations and has essentially offered Fenix a one-stop shop for all our service requirements leading up to the transport of the ore from site to the port of Geraldton.”

The terms of the contract are in line with the company’s feasibility study, announced on November 4, 2019, which outlined that circa-8 million tonnes of high-grade hematite grading some 64% Fe will be extracted over a 6.5 year life of mine.

This same study assumed a single open-pit operation using conventional excavator‐truck mining fleet, adopting 10 m benches and mining these benches in three flitches. Ore and waste would be hauled to the run of mine pad and waste dump, respectively, by a fleet of 100 t haul trucks, while drill and blast will be conducted using a top hammer drill rig and ANFO or heavy ANFO explosives.

Minehaul and Fenix form trucking and logistics JV to move Iron Ridge project forward

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Fenix Resources says it has formed a strategic alliance with trucking and logistics company, Minehaul Pty Ltd, in a move seen as a significant step towards the development of its Iron Ridge project in the Mid-West region of Western Australia.

The alliance will see Fenix and Minehaul form a new 50/50 joint venture company, to be known as Premium Minehaul Pty Ltd (PM). It is intended that PM will provide all trucking services to the Iron Ridge project.

Craig Mitchell, the founder and former owner of Mitchell Corp, a major supplier of transport and logistics services to the Western Australia mining industry, has been elected as Chairman and CEO of the newly formed JVC.

The Iron Ridge project is a greenfield development and, therefore, requires all infrastructure, equipment, power, water, communications and other services to be established, according to Fenix.

Pursuant to the JVC agreement, Fenix has provided an undertaking that it will ensure all iron ore transport it is involved with in the Mid-West region of WA (including relating to the project) will be conducted through the JVC.

The terms relating to the provision of these services are to be agreed in the coming months and are pursuant to a separate road haulage contract agreement, however Fenix expects the JVC arrangements to provide several key benefits, including:

  • Greater transparency in relation to the likely transport costs associated with the project;
  • Significant experience that Craig Mitchell brings to Fenix’s trucking operations;
  • Potential for significant cost savings relating to transport costs, and;
  • Elimination of management role duplication and the sharing of the benefits of innovation throughout the life of the project.

The Iron Ridge project is some 490 km by road from the Geraldton port and, therefore, it is expected that a significant proportion of the total operating costs associated with the project will be related to the cost of road transport and logistics, Fenix said.

Fenix’s Managing Director, Robert Brierley, said the company already had a well-developed road transport model with detailed cost estimates for the task at hand, and this model will be refined further now the JVC had been formed.

Related to this agreement, Minehaul has subscribed for A$250,000 ($173,975) of new Fenix shares as part of a larger A$1.25 million placement.