Fenix Resources has monetised most of its iron ore swap book for more than A$10 million, converting protection on 480,000 tonnes into near-term cash. The move leaves the company retaining diesel and currency hedges while restoring exposure to prevailing iron ore prices on the settled tonnes.
- More than A$10 million expected from iron ore hedge close-out
- A$8.5 million from November 2026 to June 2027 swaps monetised immediately
- October contracts valued at about A$1.7 million remain due to settle in November
- Diesel swaps and currency options retain combined mark-to-market value of about A$6.1 million
- Fenix says the move aligns with its price protection policy
Iron Ore Hedge Book Converts Into More Than A$10 Million
Fenix Resources Ltd (ASX:FEX) has turned a weaker iron ore market into a cash event, arranging the early settlement of its Australian dollar iron ore swaps for more than A$10 million. The hedge book covered 480,000 tonnes at an average price of A$151.31 a tonne across October 2026 to June 2027.
About A$8.5 million from the November 2026 to June 2027 contracts is being monetised immediately, with the proceeds due during October 2026. The October contracts, currently valued at approximately A$1.7 million, are due to settle under their existing terms during November.
Weaker Iron Ore Prices Created the Settlement Opportunity
Fenix said recent weakness in iron ore prices allowed it to crystallise the value of the swaps. During the September quarter, the Platts 61% CFR Index averaged US$96.90 a tonne, equivalent to approximately A$137.22 a tonne, below the average price at which the company had hedged its tonnes.
The decision is consistent with Fenix’s Price Protection Policy, which the company says is intended to secure positive cash flow while maintaining exposure to prevailing spot prices. In practical terms, the close-out converts much of the near-term iron ore hedge position into cash rather than leaving those contracts in place through June 2027.
Diesel and Currency Hedges Remain in Place
Fenix has not abandoned hedging altogether. Its remaining book includes diesel swaps covering 13.5 million litres of Sing Gasoil 10ppm for FY27, or about 30% of expected diesel use, at prices ranging from US$0.6874 to US$0.7383 a litre. Those swaps have a current mark-to-market valuation of approximately A$5.6 million.
The company also holds currency call options covering US$99 million between October 2026 and June 2028, with an average exercise price of AUD:USD 0.7532. Fenix says the options provide the right, but not the obligation, to convert US dollars into Australian dollars at expiry, protecting Australian-dollar revenue from US-dollar iron ore sales if the Australian dollar strengthens. Their current mark-to-market valuation is approximately A$0.5 million.
Cash Timing Matters More Than the Headline Valuation
The headline figure is not a single completed receipt: approximately A$8.5 million is to be received immediately, while the remaining A$1.7 million is tied to the October contracts’ November settlement. The filing does not disclose the counterparty terms or the detailed accounting treatment, so the eventual effect on reported earnings may differ from the cash timing.
For a producer expanding its Mid-West operations, the immediate liquidity benefit is the central feature of the announcement. The trade-off is that the settled iron ore swaps no longer provide the same contractual price protection on those tonnes, leaving future realised revenue more directly linked to spot prices. Fenix says the remaining hedge book continues to cover selected operating costs and foreign-exchange exposure.
Bottom Line?
The close-out strengthens near-term cash availability, but the next test is how Fenix balances that liquidity with greater exposure to iron ore prices through June 2027.
Questions in the middle?
- When will the A$8.5 million monetisation proceeds and approximately A$1.7 million November settlement appear in reported cash flow and earnings?
- How will Fenix adjust its hedge strategy if iron ore prices remain volatile during the FY27 production ramp-up?
- Will the retained diesel and currency hedges continue to offset key cost and revenue risks as production expands?