Fortescue Ltd (ASX: FMG) shares are in the spotlight today after the iron ore giant released its quarterly update.
But the ASX iron ore stock that investors should be focusing more on is Fenix Resources Ltd (ASX: FEX), according to analysts at Bell Potter.
That's because they believe this iron ore miner's shares are significantly undervalued at current levels.
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What is the broker saying?
Bell Potter was impressed with Fenix's performance during the third quarter, highlighting that production and sales were ahead of expectations despite the impact of Tropical Cyclone Narelle on operations. It said:
FEX reported quarterly group iron ore production of 1,243kt (BPe 955kt) and sales of 974kt (BPe. 955kt) at an average realised price of US$101/dmt CFR (A$146/dmt; BPe US$97/t), a 2% discount to the 61% Fe benchmark index. Group C1 cash costs were A$70/t (BPe A$78/t), down 7% QoQ. Stockpiles were drawn to support sales following impacts of Tropical Cyclone Narelle, with two shipments (~120kt) deferred into April 2026 due to the temporary Geraldton Port closure.
At 31 March 2026, FEX had cash of $86m (31 December 2025 $79m); we estimate debt (including leases) of around $74m. Key quarterly cash flows include: Operating cash flow +$18m; iron ore prepayments +$13m; capex -$11m; and debt repayments -$8m.
Another positive is that the ASX iron ore stock has reaffirmed its upgraded guidance for the full year despite diesel shortages. It adds:
FEX has maintained guidance (upgraded December 2025) of 4.2-4.8Mt sales at average C1 cash cost of A$70-80/wmt. The company is confident it will maintain sufficient diesel supply for all operational activities. However, costs are expected to rise in the current quarter with higher fuel and freight rates.
At the Beebyn Hub, construction of a new 5Mtpa crushing and screening facility is underway and mining is ramping up as Iron Ridge and Shine near the end of current mine plans. Several workstreams are underway at the broader Weld Range Project aiming to optimise the mine plan and product mix, and advance the permitting pathway ahead of the release of a Definitive Feasibility Study scheduled for 2H CY26.
Big potential returns
According to the note, Bell Potter has retained its buy rating and 63 cents price target on Fenix Resources' shares.
Based on its current share price of 34 cents, this implies potential upside of 85% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
FEX has outlined a clear pathway to incrementally grow iron ore production to 10Mtpa at significantly lower unit costs, leveraging its integrated logistics network to underpin cash flows and fund its substantial organic growth outlook. FEX holds the largest storage position at the strategic and fast-growing Geraldton Port.
