This iron ore miner is no Fortescue – But it plans to triple production in 2025

While iron ore remains a cornerstone of Australia’s export economy, the pool of pure-play investment opportunities is shrinking. Heavyweights like BHP and Rio Tinto are steadily shifting their focus to future-facing metals like copper and lithium. Among larger-cap iron ore companies, Fortescue — gradually diversifying into green energy — and Champion Iron stand out.

In terms of larger cap pure plays, this leaves us with Fortescue – which will eventually become a more diversified green energy producer – and Champion Iron.

However, at the smaller end of the market, Fenix Resources (ASX: FEX) is arguably one of the only iron ore names poised for major growth this year.

Fenix at a Glance

Based in Western Australia’s Mid-West region, Fenix operates across three integrated divisions:

• Iron Ore: Mining and exploration through its fully owned Iron Ridge mine (high-grade, direct shipping ore), Shine mine (open-pit, DSO), and W11 deposit (rights to mine up to 10Mt).

• Logistics: Road and rail haulage solutions for Fenix’s operations and third-party clients.

• Port Services: In-loading via truck or rail with secure storage for up to 400,000 tonnes at Fenix’s on-wharf facilities.

In FY24, Fenix generated $259.2 million in revenue, with $240.1 million driven by iron ore sales.

Scaling Up: From 1.5Mtpa to 4Mtpa

The 2024-25 period marks a pivotal shift for Fenix as it boosts iron ore production from 1.5 million tonnes to 4 million tonnes per annum. The company’s latest quarterly report (15 April 2025) highlighted recent developments: "Shine is now in full production, Iron Ridge continues to perform, and our third mine, Beebyn-W11, is moving rapidly towards first production."

The March 2025 quarter saw record shipments of 704,000 tonnes — nearly double the previous year’s figure — fueled by Shine’s ramp-up. Fenix also trimmed cash costs at Iron Ridge by 4.8%, dropping to A$73.8 per tonne from A$77.6 a year earlier, signaling operational efficiency.

Analyst Outlook

Bell Potter analysts reaffirmed a Buy rating in January 2025, with a 41-cent target price. Their optimism rests on Fenix’s ability to “expand its portfolio of low-capital mining assets and leverage integrated logistics to drive strong cash flows.” These cash flows are expected to fund growth initiatives and shareholder returns. Analysts project a significant earnings increase from FY24 to FY26, alongside a return to dividends:

Source: Bell Potter | January 2025

Recent performance

Fenix shares have remained flat year-to-date and over the past 12 months. A notable setback came in August 2024 when the company announced it would pause dividends to fund current growth plans.

The market did not take the news well, with Fenix shares down 11.9% on the day of the announcement (29-Aug-24). Compounding the pressure, iron ore prices slipped from ~US$100 to US$92 per tonne that month.

Historically, Fenix has been a reliable high-yield stock, delivering 10-15% annual dividend yields. The shift toward growth may have pushed out some income-focused investors, but the company’s progress on its expansion plans — and the anticipated resumption of dividends — could serve as a key catalyst for share price recovery.