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    Fenix Resources (FEX)

    Greetings MM Team, I am a long time shareholder of Fenix Resources and I would appreciate your opinion. What I do like about this mining company is: 1.) it is fully integrated, from shovel to onboard ships, 2.) carries relatively little debt. What I dislike is: 1.) it has stopped paying dividends, presumably to accumulate funds, for the purpose of acquiring other miners (acquisitions are always risky), 2.) the share price going nowhere, but sideways. With the lack of dividends and the price going nowhere, is there any point, to hold this stock? If you held it, would you sell it or would you continue to hold it? Best regards, John

    Answer

    Hi John,

    We’ve had a few questions around FEX over the last 6-months as the stock bounces between 25c and 45c, a large trading range.

    FEX has chosen not to declare a final dividend for the financial year 2024 instead allocating capital toward significant growth initiatives, including expanding iron ore production and enhancing infrastructure.

    • Fenix is increasing its iron ore production capacity from 1.4 to 4 million tonnes per annum. This expansion necessitates capital investment, estimated at over A$50 million, to develop mining operations and upgrade logistics infrastructure.

    We like that despite a profitable year and a strong cash position of A$77.3 million as of June 30, 2024, the company has adopted a conservative approach. By retaining earnings, Fenix aims to ensure sufficient funding for ongoing projects, thereby supporting sustainable long-term growth and avoiding the need for capital raisings.

    However, at this stage, its still a high cost producer and with the market nervous towards China and iron ore into 2025/6 we prefer the lower cost “big boys” – BHP, RIO and FMG.

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    Fenix Resources (FEX)
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