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OPERATIONAL REVIEW
DIGGeRs & DeALeRs PReVIeW MACA.NET.AU

From little things, big things grow

ever one to consider restricted horizons, are undervalued but I don’t believe markets ful position to look at growth, by maximis-
NJohn Welborn has big ambitions for Fe- are irrational. I look at the company and ask ing our own opportunities,” he said. “We
nix Ltd, the iron ore miner where he recently why, when we are making up to $10 million have huge potential to expand operations,
took over as chair. cash flow a month, the market isn’t provid- and I think that is being missed because
His last major role may have been with ing more value? I think it is because there is of the discrete nature of Iron Ridge. It is
West African gold producer Resolute Min- a pessimistic outlook on the iron ore price constrained it terms of size and scale but
ing Ltd, but Welborn has always been an and a view that Fenix has a short mine life. the Weld Ranges is prolific for high-grade
iron ore man at heart, he confirmed to Pay- That leads to a discount on the future value pods and we have 400sq km of ground that
dirt. of the company.” hasn’t been tested properly.
“For a long time, I’ve been passionately The success has, however, given Fenix “After that, we should then be looking
interested in small-scale iron ore produc- a degree of autonomy unusual for iron ore around us to see where we can leverage
ers,” Welborn said. “Our ambitions for Equa- juniors. off our haulage operations and maximise
torial [Resources Ltd] in the Congo Craton “We’re not the same as some of those value by partnering with others.
in West Africa was to build large-scale pro- juniors who’ve gone before,” Welborn ex- “The third element is replicating our busi-
jects like those in the Pilbara. I was always plained. “Bulk commodities is about infra- ness model elsewhere. Rob and Garry
interested in what happened in the Pilbara, structure and while other small iron ore min- have been involved right from the genesis
where the industry started quite small and ers usually rely on third-party infrastructure of the company and it is a privilege to be
built gradually. The best way to do that is by and are therefore strategically disadvan- chair of a board who have owned that pro-
finding projects which have low capital and taged, Fenix is in the infrastructure game.” cess, all the really key arrangements with
low infrastructure requirements.” As well as its own storage and loading Traditional Owners, governments, shire
In Fenix, Welborn sees a definite oppor- facilities at the Port of Geraldton, Fenix is councils and local landowners; they’ve
tunity to start small and grow big. The com- a 50% owner of Iron Ridge’s road transport done a fantastic job.
pany has enjoyed a remarkable 18 months, contractor, Fenix Newhaul. “Then, there is all the geological, engi-
turning out more than $112 million in net op- “The mine is only one of three key ele- neering, logistics knowledge. Package all
erating cash flow since starting production ments in the integrated business,” Welborn that up and you have to ask yourself where
at its Iron Ridge iron ore mine in Western said. “I’m very confident we operate the else we can use that skills set and replicate
Australia’s Mid West region early last year. highest technological, most efficient fleet and diversify our operations.”
Producing more than 1.6mt since opera- in the Mid West and perhaps Australia. While exploration and corporate deals lay
tions started last February at a C1 cost of Our C1 cash costs came down from $90 as the answer to market concerns about fu-
$88.20/t, Fenix has been revelling in resil- to $80, which comes from recognising the ture production, Fenix will have to produce
ient iron ore pric- equally innovative
es. Welborn takes solutions to scep-
little credit for ticism around the
that performance iron ore market.
given he only ar- “We intend to
rived on the board keep generating
earlier this year, high-quality prod-
but he is eager to ucts,” Welborn
see the company said. “We have to
make the most of rationalise the cost
its obvious advan- line and we have
tages. locked in hedging
“Fenix’s suc- which guarantees
cess has been a base level at a
stunning, and is good margin.”
exactly that low Fenix’s final
capital, highly ef- advantage is the
fective highly prof- quality of the Iron
itable operation Ridge product.
producing a high- Fenix has enjoyed a prolific start to life on its Iron Ridge project in WA’s Mid West “We’ve been
grade product, able to get into
with a self-developed infrastructure solu- 50% share of the gross profit in the haulage production with a very attractive product
tion,” he said. operation. We see flexibility and profitability which gets a higher price,” Welborn said.
Despite having more than $80 million in coming from owning that fleet.” “We provide to a number of end-users and
the bank, Fenix was only valued at $150 It is in this area where Welborn may add our company and product is known as high-
million in the middle of June, a point of frus- value to the strong base established by quality and also as a dependable supplier.
tration for board and shareholders alike. Fenix managing director Rob Brierley and We have established good links with offtak-
Welborn is intent on rectifying what he sees director Garry Plowright. ers who recognise if we are say we are go-
as a discrepancy. “Fenix will end the year with more than ing to deliver something we deliver it.”
“The standard line is always to say we $80 million in cash so we are in a wonder-
– Dominic Piper

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