Fenix Resources (ASX: FEX) Surges 14% on Production Plan- Why This Iron Ore Stock Could Be a Buy

Fenix Resources (ASX: FEX) surged 14% to around 49.5 cents after releasing an ambitious three-year production plan that targets a ramp-up from 2.4 million tonnes in FY25 to as much as 6 million tonnes by FY28. The plan centres on the company’s transition from its maturing Iron Ridge and Shine mines to the larger-scale Weld Range Project, which Fenix secured in September 2025. For investors watching the mid-tier iron ore space, the key question is whether this growth blueprint can deliver on its promise or whether the rally has already priced in the upside.

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Weld Range Positions Fenix for Multi-Decade Growth

The Weld Range Project is the main driver of Fenix’s growth. Under a 30-year exclusive right-to-mine agreement with Sinosteel Midwest Corporation, a subsidiary of China Baowu (the world’s largest steel producer), Fenix now controls a resource of 290 million tonnes at 56.8% iron. In our view, this provides the kind of resource depth that could support production for decades and sets Fenix apart from smaller peers with limited mine life.

What makes Weld Range particularly attractive is the high-grade Beebyn-W11 deposit, which contains 20.5 million tonnes at 61.3% iron. This premium ore is already in production, giving Fenix a solid foundation to build from. The company’s integrated infrastructure is another key advantage, with its own haulage fleet, rail sidings, and more than 400,000 tonnes of storage at Geraldton Port. This pit-to-port control helps keep costs steady and margins healthy.

Fenix Targets 150% Production Growth by FY28

The three-year plan sets out a clear path to scale. In FY26, Fenix is targeting production of 4.2 to 4.8 million tonnes, nearly double last year’s output. This rises to 4.7 to 5.3 million tonnes in FY27 before reaching 5.4 to 6 million tonnes in FY28.

The growth comes from ramping up Beebyn-W11 from 1.5 million tonnes to 3 million tonnes annually, with additional deposits like Beebyn-W10 expected to come online once approvals are received in 2026. Management has reaffirmed FY26 cost guidance at A$70 to A$80 per tonne, which we view as competitive and suggests costs should remain stable despite the production ramp-up.

Importantly, the entire plan is funded from operating cash flow. With sustaining capital of just A$35 million to A$45 million over three years, there is no need for share issues that would dilute existing holders. For shareholders, this means the benefits of production growth flow directly to them.

The Investor’s Takeaway

Fenix has been one of the stronger performers in the iron ore space, with the stock up around 61% over the past 12 months. Analyst consensus points to a price target of approximately A$0.65, suggesting roughly 30% upside from current levels. We believe this “Buy” rating reflects confidence in the company’s ability to execute its growth plan.

That said, investors should weigh the risks carefully. Iron ore prices remain tied to Chinese steel demand, which has been volatile. A sustained downturn could squeeze margins and slow reinvestment. Mining approvals for future deposits also need to be secured, which adds some uncertainty.

For growth-oriented investors comfortable with commodity exposure, Fenix appears well-positioned. The combination of a long-life resource, integrated infrastructure, and self-funded growth creates a compelling setup. However, after a 14% rally in a single session, those wanting a margin of safety may prefer to wait for a pullback before building a position.