Fenix Aims to Boost Iron Ore Output with CZR Resources Acquisition

Fenix Resources (ASX:FEX,OTC Pink:FEXRF) has announced plans to acquire exploration firm CZR Resources (ASX:CZR) through an off-market takeover, according to a Tuesday (February 25) statement.

The company said its move to absorb CZR will create a large-scale, diversified iron ore mining and logistics business operating in Western Australia's key midwest and Pilbara iron ore regions.

“The acquisition of CZR is a transformational event for Fenix," said Fenix Executive Chairman John Wellborn, noting that CZR's Robe Mesa is one of the Pilbara's last large-scale high-quality iron ore development assets.

“Fenix’s market-leading port, logistics and mining capabilities are ideally suited to rapidly and efficiently advance the Robe Mesa into production and maximise value creation for our combined shareholder group.”

Robe Mesa is CZR’s flagship project, boasting ore reserves of 33.4 million tonnes at 55 percent iron and a resource base of 45.2 million tonnes at 56 percent iron. According to an October 2023 definitive feasibility study (DFS), the asset is expected to produce between 3.5 million and 5 million tonnes per annum over an eight year mine life.

“Robe Mesa provides the opportunity to develop long life iron ore production at a C1 FOB cash cost below AU$50 per wet metric tons, as outlined in the CZR DFS,” Wellborn added in the company's release.

Fenix is on track to triple its iron ore output this year following its portfolio expansion in the midwest area. By adding CZR's assets to its portfolio, it will have interests in projects with resources of about 140 million tonnes of iron ore.

Fenix’s flagship asset is its wholly owned Iron Ridge mine, home to some of the highest-grade iron ore in Western Australia. Iron grades increase with depth, and the site has a current resource of 6.6 million tonnes at 65.1 percent iron.

Under the proposal, CZR shareholders will receive 0.85 Fenix shares for every CZR share held.

The amount is subject to increased offer consideration, with CZR shareholders entitled to 0.98 Fenix shares should Fenix acquire a 75 percent relevant interest in CZR shares on or before March 21, 2025.

The proposal remains subject to shareholder approval. However, the CZR board has unanimously recommended that shareholders accept the offer, describing it as “a robust premium” to the current CZR share price.

Once effective, CZR shareholders will hold approximately 23.8 percent of the combined group.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.