The mine life is 6½ years but Fenix has hopes of extending that and getting its hands on other stranded, high grade deposits in WA’s mid-west.
Although 1.25 million tonnes a year isn't much – about 0.1 per cent of the global market – it was enough for Mrs Rinehart's Hancock Prospecting to want a slice of the action.
Hancock-owned Atlas Iron has exercised its right to market half of the production from Iron Ridge, a project Atlas once owned but sold before the Hancock takeover.
Sinosteel - which last year acquired Japanese giant Mitsubishi's interests in a long-stalled $9.7 billion rail and port iron ore project in the mid-west - has done an off-take deal for the other 50 per cent. Sinosteel is also building infrastructure ties with Fenix at the port of Geraldton.
Fenix managing director Rob Brierley said the company was flattered by the interest it had attracted from suitors for off-take and marketing rights.
The company's feasibility study, released last November, predicted annual EBITDA of $16.4 million based on an Australian dollar iron ore price of $111.43 a tonne - in what Mr Brierley describes as "not a bad little project, but nothing to write home about".
What's changed is that the iron ore price is up about $65 a tonne in Australian dollar terms on the feasibility study number, and Fenix is now looking at an EBITDA margin of more than $80 million in year one on a project where the capital expenditure was just $11.9 million.
Mr Brierley, who in a former life with stockbroker Patersons Securities wrote the first analyst reports on Andrew Forrest's Fortescue Metals Group and did raisings for Fortescue and other iron ore start-ups, said Fenix only had a small resource of 10.5 million tonnes, but at 64.2 per cent iron it was some of the highest grade in WA.
"There is not a lot of premium for high grades at the moment because everyone is just clamouring in for iron ore units," he said.
"All the discounts for low grades have disappeared, but we'll have our time in the sun with the grades.
"We think when the market rebalances or potentially goes into slight oversupply then price premiums for high grade will start to come back into fore.
"To me high grade means always sought after, particularly with the environmental regulations in China. The higher the grade, the less impurities and the less nasties going up the stack."
The biggest cost in the Iron Ridge project is hauling iron ore 490 kilometres by road to Geraldton port where there is a dedicated iron ore ship loader. Fenix has just purchased a storage shed at the port from Sinosteel.
It is expected to be granted export capacity rights from the WA government this week, hot on the heels of GWR Group being granted approval to ship iron ore from Geraldton.
GWR is looking to produce 1 million tonnes a year from its Wiluna West project and truck it 700 kilometres to Geraldton. It expects the first shipment in mid-January.
The Fenix and GWR moves underlined renewed interest in iron ore in the mid-west of the state, where Sinosteel has the potential to become a dominant force after acquiring the Mitsubishi interest in the Oakajee Port and Rail project in October last year.
Sinosteel's $2 billion Weld Range iron ore project was set to be a major customer of Oakajee, but the Chinese halted work on Weld Range in 2011.
Sinosteel also purchased the closed Jack Hills iron ore mine from Mitsubishi in 2019. Fenix will use the road that was used by Jack Hills to cart iron ore to Geraldton and employee the same mining contractor in MACA.
Fenix awarded a $185 million, six-year drill and blast, crushing and screening contract to MACA in October.
Mr Brierley said one of the attractions of Iron Ridge was speed to market while the company looked for other projects in the region. "Our aim is to pluck off other stranded assets in that area."
