Fenix Resources executes binding iron ore offtake with Sinosteel and purchases Geraldton port facilities

Fenix Resources Ltd (ASX:FEX) has executed a binding offtake terms sheet with Sinosteel International Holding Company Limited for iron ore from the Iron Ridge project in WA's Mid-West. The binding offtake terms sheet is for 50% of the estimated iron ore production and sales and spans the life-of-mine, with annual review periods. Sales arrangements are now in place for 100% of iron ore production from Iron Ridge, after a marketing agreement was forged in late August with Atlas Iron. “Making good progress” Fenix managing director Rob Brierley said: “We are delighted to have an organisation such as Sinosteel as an offtake party, given its rich knowledge of the iron ore market and strong networks with iron ore users in China - the dominant importer of iron ore and the world’s largest steel producer. “Site development at Iron Ridge has already commenced, we now have our final statutory permit after receiving our Works Approval and we are making good progress in delivering on our previously stated timeframe of first iron ore sales in early 2021.” On-track for production Iron Ridge production is on track to commence later this year with the first shipment scheduled for early 2021 The Works Approval has been granted by the Western Australian Department of Water and Environmental Regulation. Terms sheet details Under the Sinosteel agreement, sales will be made on a free-on-board (FOB) basis and the pricing structure is based on a monthly average PLATTS 62% iron index and includes a premium to reflect the higher iron content of Iron Ridge. Hong-Kong-based Sinosteel International Holding Company Limited is an export and import company, wholly owned by Sinosteel Group Corporation Limited, a Chinese state-owned enterprise. The terms sheet contains comprehensive terms relating to sale, shipment, delivery and pricing and the parties will now proceed to prepare and execute a formal sales agreement. Fenix now has sales arrangements in place for 100% of projected iron production from Iron Ridge, after Atlas Iron subsidiary Weld Range Iron Ore Pty Ltd took up a marketing election on 50% of production and sales for the project. Existing Geraldton port infrastructure.  Geraldton Port infrastructure The agreement also binds Sinosteel Midwest Corporation Limited (SMC) to sell the iron ore storage shed, truck unloading and conveyor systems located at the Geraldton Port to Fenix. This purchase is on an as-is, where-is basis, with Fenix having already conducted a detailed assessment of the infrastructure and established a recommissioning plan that should see the facility ready to accept iron ore haulage trucks in December 2020. The purchase price of $1 million will be paid on completion, which is expected in November 2020, and will be funded from current cash holdings after finalisation of the capital raising of $15 million announced in August 2020. Fenix is working closely with the Midwest Ports Authority to execute the Port Services and Port Lease agreements now that it has secured a port storage and trucking unloading solution at Geraldton Port. Additional to the sale and purchase of the port infrastructure, SMC and Fenix have reached agreement to cooperate on commercial terms to ensure that the Iron Ridge project has the necessary area to fit all of its infrastructure during the economic life of the project. "Strategic asset"  Brierley added: “We believe that we have secured a strategic asset that should facilitate the timely development of the Iron Ridge project by gaining access to bulk export facility. “We look forward to fostering our strong relationship with Sinosteel further." Fenix shares have been as much as 22% higher to 17 cents intra-day.