Fenix Resources has signed a binding agreement with Sinosteel Midwest Corporation (SMC), granting the company a 30-year exclusive right to mine and export high-grade hematite iron ore from the Weld Range Hematite Iron Ore Project in Western Australia.
The Weld Range project contains a substantial mineral resource estimate of 290 million tonnes (mt) at an average grade of 56.8% iron, positioning it as a significant development in the state’s mid-west iron ore sector.
Located adjacent to Fenix’s Iron Ridge mine, Weld Range includes deposits such as Beebyn-W11, which are direct shipping ore (DSO) types that complement the company’s existing operations.
Under the deal, Fenix will pay $60 million (US$39.2m) in cash over two years, alongside a production royalty of $4–$5 per dry metric tonne.
The agreement also includes a profit-sharing structure: 10 per cent of net profit after tax when iron ore prices are at or below US$100 per tonne, rising to 15 per cent if prices exceed that level.
Funding for the acquisition will come entirely from Fenix’s current cash reserves and operating cash flows, enabling the company to retain full earnings after agreed payments.
Fenix executive chairman John Welborn described the transaction as a transformational step for the business.
“Fenix has delivered on its strategy to unlock the value of the stranded iron ore deposits of Western Australia’s mid-west region,” said Welborn.
“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.”
The company said the Weld Range project will leverage its established logistics network, including a dedicated haulage fleet and port facilities, to accelerate growth and strengthen its position in the mid-west iron ore market.
A feasibility study is currently underway to expand regional production, with initial focus on extending the Beebyn-W11 mine plan and assessing nearby deposits.
Earlier this year, Fenix partnered with MACA, part of the Thiess Group, to progress development of the Beebyn-W11 deposit as part of its strategy to increase annual production to 4mt by 2025.
As part of the arrangement, SMC retains certain marketing rights: if Fenix receives an external offer for Weld Range ore offtake, SMC (or its nominated representative) may elect to match the commercial terms.
Should it choose not to exercise this right, Fenix will be free to proceed with the third-party agreement.
Industry analysts expect the Weld Range project to significantly enhance Fenix’s long-term growth outlook, aligning the company with rising demand for high-quality iron ore from Asian steelmakers.
