The road transport component of the Iron Ridge Project in Western Australia has been executed under contract by Fenix Resources.
Prime movers and trailers for the project have already been ordered through Fenix Newhaul, the incorporated joint venture company established in May, 2019, to implement the strategic alliance between Fenix Resources and Craig Mitchell.
It is understood that the majority of the newly purchased commercial vehicles have been ordered from Volvo and Mack Trucks.
Mitchell is the founder and former owner of Mitchell Corp, a major supplier of transport and logistics services to the mining industry in Western Australia.
Fenix Newhaul is 50 per cent owned by Fenix and 50 per cent owned by Newhaul Pty Ltd, an entity controlled by Mitchell.
Funding has been secured by Fenix Newhaul for the specialist equipment through an equipment manufacturer. Additional funding for start-up costs and equipment deposits was sourced through shareholder loan facilities are estimated to be in the vicinity of $3.9 million.
The contract is valued at around $360 million for the estimated six year life-of-mine, based on a terminal gate diesel price ex Geraldton of around $1.34 per litre bearing in mind the current diesel price is around $1.05.
In accordance with the current project development timeline, the project is scheduled to commence sometime in December this year.
Road transport was quickly identified as the largest cost component for the commercialisation of Iron Ridge according to Fenix Managing Director Rob Brierley.
“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,” he said in an issued statement.
“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,” he said.
The terms of the contract are in line with the company’s feasibility study, announced on 4 November 2019.
These are reportedly customary for contracts of this nature.
The flagship Iron Ridge Iron Ore Project is a premium DSO desposit. It hosts a JORC 2012 compliant resource located around 490 km by road from Geraldton port.
High grade iron ore attracts a premium price on the seaborne market as Chinese steel works increasingly demand more pure inputs with lower emissions due to increasingly strict government regulations.