Grange Faces Higher Costs and Lower Output as Underground Project Financing Progresses

Operational Highlights and Safety Milestone

Grange Resources Limited (ASX: GRR) has released its quarterly report for the period ending 31 March 2025, showcasing a commendable safety achievement with the Savage River operations marking 722 days without a Lost Time Injury (LTI). This milestone underscores the company’s ongoing commitment to operational safety and workforce wellbeing, a critical factor in sustaining long-term mining productivity.

Despite the safety success, the quarter saw a deliberate reduction in production volumes due to a scheduled annual preventative maintenance program. Concentrate production fell to 495,000 tonnes from 683,000 tonnes in the previous quarter, while pellet sales dropped to 426,000 tonnes from 668,000 tonnes. These maintenance activities, including the replacement of a Ball Mill Shell and Balling Drum replacements, were essential to ensure plant reliability and future operational stability.

Pricing and Cost Dynamics

Market conditions provided a silver lining as Grange reported an improved average realised iron ore price of US$124.15 per tonne (A$198.01/t) FOB Port Latta, up nearly 9.6% from the December quarter’s US$118.91/t (A$180.59/t). This price uplift reflects robust demand fundamentals and supports the company’s revenue outlook despite lower shipment volumes.

However, the maintenance-related production dip contributed to a rise in unit cash operating costs, which increased to A$178.08 per tonne from A$133.65 per tonne in the prior quarter. The company attributes this to lower output spread over fixed costs, a common short-term effect during planned shutdowns.

Project Development and Financing Progress

Grange is advancing its strategic growth initiatives, notably the North Pit Underground (NPUG) Project. The company has completed a transition plan review and made significant progress on the underground decline and preparatory works. The timeline remains on track for project execution in 2026, with first ore production anticipated in late 2028 or mid-2029. Financing efforts for this development are progressing well, signaling confidence from potential investors and lenders in the project’s viability.

Complementing this, the Southdown Magnetite Project feasibility study, released post-quarter, revealed a 6% increase in Ore Reserves to 412 million tonnes and confirmed a robust 28-year mine life producing high-grade concentrate near 70% Fe. Grange continues to seek equity partners to advance this project, with plans for a bridging study and final environmental approvals once partners are secured.

Financial Position and Corporate Updates

Grange maintains a strong cash position with A$265 million in cash and liquid investments, down slightly from A$298 million in the previous quarter due to capital expenditure on growth projects and reduced sales. The company’s disciplined capital allocation supports ongoing sustaining investments and project development.

On the corporate front, director Chongtao Xu resigned from the Board but remains with Grange as a senior executive, reflecting a strategic reshuffle rather than a governance concern. The shareholder base remains stable with approximately 10,300 shareholders as of March 31, 2025.

CEO Weidong Wang highlighted the company’s focus on safely completing maintenance, advancing project financing, and unlocking long-term value from its asset portfolio, particularly the NPUG and Southdown projects. The company’s integrated approach positions it well to navigate market fluctuations while preparing for future growth.