I'm on a mission to uncover some of the ASX's most compelling dividend-paying stocks. The aim is to provide readers with the key data and forecasts to make more informed decisions. Today, we're reviewing Fenix Resources – a small-cap iron ore miner with an integrated logistics business
Fenix Resources (ASX: FEX) operates in Western Australia’s Mid-West region through three core divisions:
Westmine – Iron ore mining
Newhaul Road Logistics – Bulk haulage
Newhaul Port Logistics – Port services
The company is ramping up iron ore production to 4 million tonnes per annum (Mtpa) across its Iron Ridge and Shine mines, plus the developing Beebyn-W11 project. Beyond its own operations, Fenix provides logistics services to third-party customers and holds the largest presence at Geraldton Port, with 440,000 tonnes of storage and over 5Mtpa throughput capacity.
Market cap: $205 million
Cash: $56.9 million (as at 31 December 2024)
Enterprise value: $148 million
12-month performance: 4.7%
12-month price range: $0.235 - $0.45
From 2021 to 2023, Fenix consistently paid an annual dividend, with yields of around 10-15% — a sizeable payout backed by a cash-generative business.
However, 2024 brought an unwelcome surprise. Despite reporting a strong FY24 result, featuring record iron ore shipments, solid profits, and a higher cash position, the company did not declare a dividend.
Total iron ore sales up 7.3% year-on-year to 1.46 wet metric tonnes
Average price for Iron Ridge ore was US$125/dmt (FY23: US$113/dmt)
Total iron ore sales revenue up 22% to $240.1 million
Net profit after tax up 15% to $33.6 million
Cash at bank of $77.1 million as at 30 June 2024 (FY23: $76.3 million)
Despite a profitable year and a strong cash position, the Board cited "future funding requirements" as the reason for withholding a dividend.
"Growing production from the current rate of 1.5Mtpa to the expected rate of 4Mtpa during the current financial year, and the expansion of the Newhaul Logistics fleet and related infrastructure upgrades, will require a total capital investment of more than A$50 million," the company said in its FY24 results announcement.
The market didn’t take the news well. Fenix shares dropped 11.9% on the day, hitting a fresh five-month low of 27 cents, where they have largely remained.
Despite the dividend disappointment, analysts remain optimistic. Bell Potter recently reiterated a Buy rating and a 41-cent price target following Fenix’s December quarter results.
The analysts highlighted Fenix’s ambitious expansion plans, expecting production to triple in 2025.
"Fenix will continue to grow its portfolio of low-capital mining assets and leverage its integrated logistics networks to underpin robust cash flows, funding further growth expenditure requirements and shareholder returns," the report said.
Over the next few years, the analysts forecast the following earnings profile.
| 2024a | 2025e | 2026e | 2027e |
---|---|---|---|---|
Revenue (A$m) | 265 | 399 | 616 | 562 |
NPAT (A$m) | 34 | 38 | 68 | 42 |
FCF yield (%) | 16% | 12% | 45% | 23% |
Dividend (cps) | ~ | 1.3 | 1.4 | 1.5 |
Yield (%) | 0% | 5% | 5% | 6% |
One of the biggest factors influencing Fenix’s earnings is iron ore prices, which have declined 17% over the past 12 months, currently sitting at US$101 per tonne. Prices have struggled to gain momentum due to weak demand from China and rising supply from Brazil and Australia.
While iron ore prices remain volatile, Fenix continues to make significant progress toward tripling its annual production. Bell Potter analysts also highlighted several key catalysts that could drive the company’s growth:
Growing resource: In early December 2024, Fenix upgraded its Mineral Resource Estimate at its Iron Ridge Project by 173% to 13.4Mt at 64.9 Fe. The company plans to undertake further exploration work to extend Iron Ridge's mine life, which currently sits at 2.5 years at 1.4Mtpa production rate
Progressing new acquisitions: In December 2024, Fenix acquired two early-stage iron ore projects in WA. "Favourable exploration results could see FEX leverage its existing infrastructure to grow its iron ore production beyond 4Mtpa (from mid-2025) across potential low-capital developments," the analysts said
Strategic investments: In early December 2024, Fenix increased its interest in Athena Resources to 580 million shares (29% shares on issue). Athena owns the high-grade Byro Magnetite Project, which holds a mineral resource estimate of 29.3Mt at 24.7% Fe
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