Grange Resources has approved the Savage River North Pit Underground Project, targeting underground development from Q1 2027 and production continuity to 2035. The decision arrived alongside stronger September-quarter production, sales, realised pricing and cash reserves.
- Final investment decision for Savage River North Pit Underground Project
- Underground development scheduled to recommence in Q1 2027
- Concentrate production rose to 631,649 tonnes and pellet sales to 732,944 tonnes
- Unit cash operating cost fell to A$144.80 per tonne
- Cash and liquid investments increased to A$300.41 million
North Pit approval sets Savage River’s next production phase
Grange Resources Limited (ASX:GRR) has committed to the next stage of Savage River’s mine life, confirming a Final Investment Decision for the North Pit Underground Project as quarterly operating performance improved. The Sub-Level Cave project is scheduled to restart underground development in the first quarter of 2027, produce its first ore in 2028 and ramp up towards approximately 4 million tonnes a year by 2030.
The project is designed to extend production and pellet supply continuity to 2035. Grange said the selected Sub-Level Cave requires significantly less initial capital than the previously studied Block Cave, while preserving the option of a future Block Cave development subject to further studies, funding and a separate investment decision. The company’s earlier North Pit development decision had also described a lower-capital underground plan aimed at extending Savage River’s operating life.
Higher recovery lifts concentrate and pellet sales
Savage River produced 631,649 tonnes of concentrate in the September quarter, up from 586,906 tonnes in the June quarter. The improvement was driven mainly by weight recovery, which rose to 41.3% from 34.9%, despite minor unplanned maintenance, mill and conveying downtime and periods of harder ore affecting throughput.
Pellet sales climbed 26.3% to 732,944 tonnes, while total iron ore product sales reached 810,894 tonnes, compared with 625,727 tonnes in the previous quarter. Pellet production was 604,184 tonnes, supported by continued four-furnace-line operation and strong concentrate availability.
Lower unit costs strengthen quarterly cash generation
Grange’s average realised product price increased to A$164.41 a tonne from A$160.30, equivalent to US$116.13 a tonne. The company said it continued delivering under secured term offtake agreements and sold spot shipments at additional premiums above index prices.
Unit cash operating cost fell to A$144.80 a tonne from A$157.69, mainly reflecting higher concentrate production and moderate energy prices. Cash and liquid investments rose to A$300.41 million at quarter-end from A$267.90 million, while trade receivables fell to A$7.82 million from A$23.72 million. Planned growth capital expenditure of approximately A$15.9 million was incurred during the quarter across equipment rebuilds, furnace controls and underground planning.
Execution and funding remain the next tests
The schedule now places greater weight on execution: open-pit mining is expected to finish during 2028, with underground ore due to follow. Grange said the Sub-Level Cave design, schedule and mining cost estimates were independently reviewed in August, while underground asset maintenance, engineering and development planning continued.
The filing does not disclose the project’s total initial capital requirement or a detailed funding structure. Southdown remains a separate unresolved piece of the portfolio, with Grange still searching for suitable equity investors while maintaining its tenements, approvals and project assets. For North Pit, the market’s next hard evidence will be the start of underground development in Q1 2027 and whether the operation progresses towards first ore in 2028 without eroding the stronger cash position reported this quarter.
Bottom Line?
Grange has secured a clearer path beyond open-pit mining, but the investment case now turns on funding visibility and delivery against the 2027-2028 underground timetable.
Questions in the middle?
- What will the North Pit Underground Project’s final funding mix and total capital requirement be?
- Can underground development begin in Q1 2027 while Savage River maintains its improved production and cost performance?
- Will Southdown attract an equity investor before management’s attention and capital are absorbed by North Pit execution?