Is Fenix Resources (ASX:FEX) a Buy After 71% Rally and 10Mtpa Expansion News?

Fenix Resources: The key catalyst ahead

Fenix Resources (ASX: FEX) jumped 5.5% to 47.5 cents on Tuesday after releasing a scoping study that maps out an exciting growth story. The company plans to grow production from 6 million tonnes per year in 2028 to 10 million tonnes by 2031, with expansion works specifically kicking off in early 2028. That’s a 67% increase, and the mine would keep running until 2042. With 290 million tonnes of high-grade iron ore in the ground, Fenix has the resources to back up these targets. But here’s the catch: the stock has already rallied 71% this year. So investors need to ask: Is there still upside, or has the market already priced in the good news?

What are the Best ASX Mining stocks to invest in right now?

Check our buy/sell tips

The 30-Year Deal That Changes Everything

The backbone of Fenix’s growth story is a 30-year mining agreement with Sinosteel, part of China Baowu Steel, the world’s largest steelmaker. Signed in September 2025, this deal gives Fenix exclusive rights to mine 290 million tonnes of iron ore at the Weld Range project in Western Australia.

Why does this matter? It gives Fenix something rare for a small-cap miner: long-term certainty. Most junior miners struggle with short mine lives and the constant need to find new deposits. Fenix now has enough iron ore to sustain operations for decades. The ore is also high quality at 56.8% iron content and requires minimal processing before shipping, keeping costs low. Investors should watch for the Definitive Feasibility Study (DFS) in mid-2026, followed by a Final Investment Decision (FID) in 2028, which will be the ultimate ‘green light’ for the 10 Mtpa transition.

Fenix’s Secret Weapon: Pit-to-Port Control

What really sets Fenix apart is that it owns the entire supply chain. The company runs its own trucking fleet through Newhaul, operates rail sidings, and controls the biggest storage position at Geraldton Port. This isn’t just about convenience; it’s a serious competitive edge.

When iron ore prices fall, pure miners get squeezed on transport costs. Fenix keeps more margin because it doesn’t pay middlemen. The scoping study projects Life-of-Mine C1 cash costs of A$55.40 per tonne. That’s 27% cheaper than the current guidance of A$70-80 per tonne. Lower costs mean better profits, even if iron ore prices soften.

The Investor’s Takeaway

Bell Potter rates Fenix a buy with a 65-cent target, roughly 35% above today’s price. Insiders own about 17% of shares, showing management believes in the company’s future. The company has also maintained fully franked dividends throughout its growth phase, a rare feat for a junior miner. These are encouraging signs for long-term holders.

But investors should weigh the risks carefully. The 71% rally this year means expectations are already high. While the expansion requires A$521 million in development capital, Fenix has a strategic advantage: this spending isn’t primarily triggered until 2028 onwards. This gives the company a three-year ‘clear air’ period (FY26–FY28) to accumulate cash from its current operations to self-fund a significant portion of the growth, which is dedicated to a 244 km private haul road to bypass public road constraints.

Iron ore prices remain the wild card. If China’s demand weakens or benchmark prices drop below US$100 per tonne, margins tighten fast. Fenix’s deal includes a profit-sharing arrangement with Sinosteel that steps up from 10% to 15% when the iron ore price exceeds US$100 per tonne.

Our view: Existing shareholders should hold. Fenix is executing well, and the long mine life supports steady returns. For new investors eyeing entry after a big run, waiting for a pullback to the 40-45 cent range would offer better risk-reward. At current prices, the stock assumes everything goes to plan, leaving little room for disappointment.