Fe Limited (ASX: FEL) has successfully completed loading the first cargo from its JWD Iron Ore Project in Western Australia.
The MV Bison was loaded with the maiden cargo of high-grade JWD lump product, departing with the maximum allowable quantity of 60,500wmt tonnes on board.
The cargo loaded efficiently, departing in less than 40 hours after arrival, well inside the time allowed for when fixing the vessel, meaning no demurrage charge will accrue.
The cargo has been sold to a leading South East Asian mill, which results in a slightly lower freight cost relative to delivery to China.
The first shipment had 50,000dmt tonnes hedged at a 62% index price equivalent of US$160/dmt. The Company has recently sold 25,000dmt of this hedge and realised a gain of US$45.10/dmt. FEL has also entered a swap for 50,000dmt of lump product, whereby it swaps its October floating lump price for a fixed price of US$0.16/dmtu.
Based on an indicative grade for the JWD product of 63.5% Fe, this equates to a lump premium of approximately US$10/dmt. This compares to the September average lump premium of US$0.059/dmtu.
Haulage of product has commenced for the second lump shipment which is expected to load in November. Iron ore pricing has been extremely volatile in recent weeks, dropping from US$218/dmt on July 12, when the company commenced hauling, to a low of US$94/dmt, before rebounding somewhat to the October 1 price of US$117.
This volatility has presented challenges for the company and it has been working with its contractors across the value chain to reduce cost ensuring the JWD product remains cost competitive, particularly against a backdrop of significantly elevated freight costs which are more than double levels seen in 2020 and assumed when evaluating the project initially.
FEL Executive Chairman, Tony Sage, said the company is reducing stock levels at the mine to assist in cashflow management and is continuing to look for efficiencies in conjunction with its key contractors.
“It’s a great milestone for our team, contracting partners and shareholders to have the first shipment of JWD high grade lump completed,” Mr Sage said.
“We only acquired the JWD asset in September 2020 and just over a year later we have already completed our first shipment which is a remarkable achievement.
“Iron ore pricing has been extremely volatile in recent weeks, which makes things challenging for a new project like JWD.
“We are pushing on with our next shipment, which also has the headline price hedged at US$160/dmt. We will continue to work hard with our contractors to take cost out and maximise the sale value of the product to try ensure the project remains viable in the longer term. We thank them all for their ongoing support and hard work.”
For further information please visit: https://www.felimited.com.au/