Fenix Resources has signed definitive agreements to acquire 100 per cent ownership in haulage joint venture, Fenix-Newhaul.
The transaction sets up Fenix as a fully integrated mining, haulage and logistics company and reduces operating costs it said in a statement.
Value accretive, the arrangement will also ensure that the company now receives 100 per cent of profits and cashflows from Fenix Newhaul’s highly profitable haulage business.
During the June Quarter, approximately 340,000 tonnes of iron ore were hauled by Fenix Newhaul, slightly higher than budgeted levels of approximately 110,000 tonnes per month.
Fenix Newhaul has now converted the majority of the haulage fleet to a quad-trailer configuration after a successful trial period conducted in late 2021.
The innovative quad-trailer combination, relying on Volvo and Mack prime movers, has increased haulage capacity to approximately 140 tonnes per truck delivering cost savings on a per tonne basis.
Currently there are 26 truck and trailer combinations in the Fenix Newhaul fleet, 18 of which are quad-trailer combinations.
Delivery of the remaining seven A-trailers is expected to occur during the current quarter.
“Fenix’s ongoing ability to generate cash and profits was significantly improved during the quarter with the signing of the agreement to consolidate ownership of our road haulage joint venture,” said Fenix Resources Managing Director Rob Brierley.
“The Fenix-Newhaul transaction is an important strategic initiative that will reduce our future haulage costs and result in cost savings and additional operational flexibility as well as supporting growth initiatives.”
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 is a highly profitable state-of-the-art logistics business which is an essential component of Fenix’s business success,” said John Welborn, Fenix Chairman.
“Consolidating 100 per cent 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.”
The disclosed transaction will involve upfront payment of $16.5million in cash and equity, including $7.5 million in cash consideration to be paid on completion; and 30,000,000 Fenix ordinary shares issued to Newhaul and valued at $9m based on the last closing price for Fenix shares of A$0.30.
“In collaboration with Fenix, Newhaul has established a highly efficient haulage solution to connect Fenix’s Iron Ridge mine in the Mid-West, to the Company’s port operations in Geraldton,” said Craig Mitchell, Newhaul Founder and Executive Director.
“This has been achieved by combining a modern, intelligent haulage fleet with a skilled and dedicated workforce, and strong systems and processes,” he said.
“The entire Fenix-Newhaul team are excited to join with Fenix and contribute to building an even stronger and more scalable logistics business. We remain committed to supporting Fenix’s business and are particularly excited by their expansion plans in the Mid-West region.”