Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>It is hard to get constructive on iron ore due to poor lending data in China, with August TSF down 38% YoY, negative mill margins, and expectations of increased supply.</li>
<li>We believe, though, that we are now bumping up against the higher end of the cost curve as iron ore prices have drifted down to 90-91 USD/ton. </li>
<li>While we see a small bounce in prices, we find it hard to be positive on equities, as elevated diesel and shipping costs are causing a margin squeeze.</li>
</ul>


It is hard to get constructive on iron ore due to poor lending data in China, with August TSF down 38% YoY, negative mill margins, and expectations of increased supply.
We believe, though, that we are now bumping up against the higher end of the cost curve as iron ore prices have drifted down to 90-91 USD/ton. 
While we see a small bounce in prices, we find it hard to be positive on equities, as elevated diesel and shipping costs are causing a margin squeeze.


Iron Ore Prices: Small Bounce From 90 USD/Ton, Cost Pressures Still Negative For Equities

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a> presented a <a href="https://wcsecure.weblink.com.au/pdf/FEX/03036040.pdf" target="_blank" rel="noopener">3-year production plan</a>, with iron ore shipments growing from 2.4 million tons in FY25 to 5.7 million tons in FY28 (midpoint guidance).  </li>
<li>The company upgraded its FY26 production guidance to 4.2-4.8 million tons (from earlier 4.1 million tons), while maintaining its cash costs in the 70-80 AUD/ton range (C1 cash costs).  </li>
<li>A feasibility study has commenced, which will take Fenix Resources (FEX AU) into the 6-10 million range from FY29—more details in a management conference call on 15th December. </li>
</ul>



Fenix Resources (FEX AU) presented a 3-year production plan, with iron ore shipments growing from 2.4 million tons in FY25 to 5.7 million tons in FY28 (midpoint guidance).  
The company upgraded its FY26 production guidance to 4.2-4.8 million tons (from earlier 4.1 million tons), while maintaining its cash costs in the 70-80 AUD/ton range (C1 cash costs).  
A feasibility study has commenced, which will take Fenix Resources (FEX AU) into the 6-10 million range from FY29—more details in a management conference call on 15th December. 


Fenix Resources (FEX AU) 3-Year Production Plan Has An Exciting Ramp And Upgrade To FY26

<ul>
<li>There were further updates on the Simandou iron ore mine, <a href="https://www.mining.com/web/iron-ore-shakeup-begins-as-simandous-first-boat-heads-for-china/" target="_blank" rel="noopener">which commenced operations</a><a href="https://www.mining.com/web/iron-ore-shakeup-begins-as-simandous-first-boat-heads-for-china/" target="_blank" rel="noopener"> </a>last week, igniting bearish sentiment and taking iron ore prices down 3% WoW to 103 USD/ton.</li>
<li>Demand, though, for higher-grade material remains strong, resulting in a widening spread between 65 and 62 Fe to almost 16 USD/ton (from 12-13 USD/ton a week ago). </li>
<li>We favor <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a> for its high growth profile and potential to increase production from 1.5 million tons to around 10 million tons. </li>
</ul>


There were further updates on the Simandou iron ore mine, which commenced operations last week, igniting bearish sentiment and taking iron ore prices down 3% WoW to 103 USD/ton.
Demand, though, for higher-grade material remains strong, resulting in a widening spread between 65 and 62 Fe to almost 16 USD/ton (from 12-13 USD/ton a week ago). 
We favor Fenix Resources (FEX AU) for its high growth profile and potential to increase production from 1.5 million tons to around 10 million tons. 


Iron Ore 65-62 Spread Widens, Despite The Commencement of Simandou Shipments

<ul>
<li>Iron ore prices have remained rock-solid at 104 USD/ton, but the fundamentals are on slightly shaky ground as <a target="_blank" rel="noopener">Rio Tinto (RIO US)</a> commenced shipments from its Simandou project. </li>
<li>Chinese steel production and apparent demand in October tracked an extremely weak 12%/12.5% YoY, with annualized production rates now 864 million tons, and lending (TSF) was lacklustre at -42% YoY.</li>
<li>We like <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a> despite the negative sentiment, due to its production growth profile from 4 million to 10 million tons over the next 3 years. </li>
</ul>


Iron ore prices have remained rock-solid at 104 USD/ton, but the fundamentals are on slightly shaky ground as Rio Tinto (RIO US) commenced shipments from its Simandou project. 
Chinese steel production and apparent demand in October tracked an extremely weak 12%/12.5% YoY, with annualized production rates now 864 million tons, and lending (TSF) was lacklustre at -42% YoY.
We like Fenix Resources (FEX AU) despite the negative sentiment, due to its production growth profile from 4 million to 10 million tons over the next 3 years. 


Iron Ore At 104 USD/Ton: Where To Now With Simandou Online? Still Like Fenix, Others Fairly Valued

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a> has pulled back 25% from its recent highs, as iron ore prices have fallen 6% from their highs, <a href="https://www.mining.com/web/chinas-massive-african-mine-threatens-to-upend-iron-ore-market/" target="_blank" rel="noopener">amid the Simandou project nearing completion</a>. </li>
<li>Despite the negative sentiment, with steel mill margins hovering around -300 RMB/ton, we still see iron ore at 95-110 USD/ton, as China's imports were a record in September. </li>
<li>We like <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a> and are pounding the table on the name. Read our recent update, <a href="https://www.smartkarma.com/insights/fenix-resources-fex-au-q1-fy26-report-multibagger-in-the-making" target="_blank" data-smartkarma-citation="insights:206251" rel="noopener">Fenix Resources (FEX AU) Q1 FY26 Report: Multibagger In The Making</a> </li>
</ul>



Fenix Resources (FEX AU) has pulled back 25% from its recent highs, as iron ore prices have fallen 6% from their highs, amid the Simandou project nearing completion. 
Despite the negative sentiment, with steel mill margins hovering around -300 RMB/ton, we still see iron ore at 95-110 USD/ton, as China's imports were a record in September. 
We like Fenix Resources (FEX AU) and are pounding the table on the name. Read our recent update, Fenix Resources (FEX AU) Q1 FY26 Report: Multibagger In The Making 


Fenix Resources (FEX AU): Pullback With Iron Ore Prices And Attractive Entry Point

Australia

Fenix Resources Ltd operates as a resource exploration company. The Company explores for iron ore, vanadium, and manganese. Fenix Resources develops its projects in Australia.

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Fenix Resources (FEX AU)

Iron Ore Prices: Small Bounce From 90 USD/Ton, Cost Pressures Still Negative For Equities

Iron ore prices have drifted lower due to weak Chinese lending data and negative mill margins. We update readers on the iron ore industry's current...

Sameer Taneja