Iron ore explorer Fenix Resources Ltd <FEX.AX> said on Wednesday it signed a deal with a unit of state-owned Sinosteel Group for half of the output and sales from its Iron Ridge project in Western Australia, sending the company's shares 21.4% higher.
The deal ensures that the Perth-based firm has sales arrangements in place for all of the output from the Iron Ridge project, with the other half of the production reserved for Hancock Prospecting-owned Atlas Iron.
China has been steadily increasing its imports of iron ore, with September figures rising 10.8% as the world's second-largest economy recovers from a COVID-19-induced slump.
Fenix said the pricing of the ore will be based on a monthly average of the benchmark spot price for iron ore with 62% iron content and will include a premium to reflect the higher iron content in the ore from the project.
Production at Iron Ridge is on track to start later this year with the first shipment scheduled for early 2021, the company said.
(Reporting by Nikhil Subba in Bengaluru; Editing by Aditya Soni)
