GRANGEX AB (publ.): GRANGEX announces Updated Feasibility Study for the Dannemora Mine

The Company is today pleased to announce the results of an Updated Feasibility Study ("DFS") for Dannemora, confirming Dannemora's technical and economic viability to be a producer of high-grade magnetite concentrate. The Updated DFS was completed by SLR Consulting Limited ("SLR") in accordance with the JORC Code1).
Together with the Company's recent acquisition of the brownfield Sydvaranger iron ore mine in Norway, the completion of the Dannemora Updated DFS further advances the Company's strategy of becoming a leading independent producer of high quality iron ore products for the global green steel revolution. 
Updated DFS Summary:
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|Net Present Value at 8.0% (Pre-Tax)                          |US$269m   |
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|Internal Rate of Return (Pre-Tax)                            |25.6%     |
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|Life of Mine ("LoM")                                         |11 Years  |
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|Average Annual 68% Concentrate Production                    |1.085 Mtpa|
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|Long-Term Average Product Price (CFR China)                  |US$151/t  |
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|Cash Operating Cost (FOB/tonne Oxelösund Port)               |US$63.3/t |
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|Pre-Production Capital Expenditure                           |US$215.1m |
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|Total Capital Expenditure (Including LoM Capital Expenditure)|US$262.4m |
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|USD / SEK Exchange Rate                                      |10.5      |
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A full copy of the Executive Summary of the Updated DFS is available on the Company's website at: www.grangex.se
Conclusion
The conclusion from SLR is that based on the results of the DFS and future market expectations, Dannemora should be advanced to the next stage of development and project financing. Furthermore, SLR have identified a number of potential opportunities to further improve and optimize the development of Dannemora which will now be considered by the Company.
Grangex will now, together with its advisors, continue the development of Dannemora towards a final investment decision.  Further announcement regarding Dannemora project development will be made by the Company as appropriate.
Christer Lindqvist, Chief Executive Officer of Grangex, states: "Today we announce the Updated DFS for Dannemora demonstrating the mine's potential to be a producer of high-grade magnetite concentrate for the European and global steel industries. Dannemora's product will be essential for the global steel industry as it transitions towards more sustainable methods of steel production with a target for significant CO2 emission reductions.
The most important contribution by Dannemora, once in production, is filling the supply gap by production of approximately 1.1Mtpa of high-grade magnetite concentrate that will enable customers to produce approximately 700,000t of fossil-free steel, thus reducing their Scope 1,2,3 emissions by more than one million tonnes of CO2 equivalent annually.
Developing mining projects is a complex process and it is therefore essential that we have the most up to date technical and economic validation of Dannemora. This Updated DFS provides to us confirmation that Dannemora is a robust project with strong development potential.
Dannemora is the project upon which Grangex was founded and we now look forward to taking the next steps in the mine's development. Together with our recently acquired Sydvaranger project, we are delivering on our promise to become a leading player in the `green iron ore' sector and to make the Nordics once again a showcase for mine development.
I would like to thank the SLR team, other related advisors and the Grangex team for their hard work in delivering this Updated DFS."
DFS Highlights:
Financial Evaluation
A cashflow model evaluation has been completed for Dannemora, analyzing capital costs, operating costs and revenue on an annual basis over the full 13-year project life. The Dannemora plan comprises a 28-month pre-development period, followed by 11 years of mine production and processing to a saleable high-grade magnetite concentrate.
A financial model for Dannemora has been prepared based on a run-of-mine ("RoM") estimate of approximately 30.95Mt @30.62% Fe, 1.75% Mn and 0.21% S, and on LoM physical schedules, capital and operating costs, discount rate and revenue assumptions provided by the Company and compiled by SLR.
A conventional discounted cashflow model has been prepared to derive a Dannemora NPV, IRR, payback period and cashflow results on a before and after-tax basis. A standard discount rate of 8% has been applied that considers cost of capital and geographical risk.
Based on the DFS capital expenditure and operating cost inputs, Dannemora generates a pre-tax US$269m NPV at a discount rate of 8%, with a pre-tax IRR of 25.6%. This results in a post-tax US$200m NPV, with a post-tax IRR of 21.9%, and a payback period of 4.09 years from start of production.
Pricing
Current indices for high-grade concentrate (MB65 or Platts IODEX65) are forecast to be at an average level of US$150/t, which is approximately US$20/t above the 62% Fe index (i.e. with an additional US$6-7/t per extra Fe-unit above 62%).  Applying the same Fe-premium up to 68% will result in US$170/t for the Dannemora product on CFR China basis.
In order to establish the Oxelösund Port FOB price, long-term freight rates from Brazil to China, freight rates from Brazil to Dannemora's customers and freight rates from Oxelösund Port are applied, resulting in a long-term average price for the Dannemora product of approximately US$151/t on a CFR China basis.
Capital Expenditure
Total pre-production capital expenditure for Dannemora has been estimated at US$215.1m, including a US$18.3m contingency.  Total LoM capital expenditure has been estimated at US$262.4m, including the pre-production capital expenditure. Estimates have been based on supplier quotations and Company estimates to within an estimated +/- 10-15% order of accuracy, reviewed and compiled by SLR.
In the capital expenditure calculations, leasing has been used to finance a major part of the underground equipment (such as loaders, drill rigs and trucks).  Leasing has also been used to finance part of the electrical equipment. 
The leasing for the underground equipment has been based on a 15% downpayment and the balance payable over the lifetime of the equipment and the monthly leasing cost calculated as operating costs.  The leasing of the electrical equipment is based on a proposal received from a major player in electrical power industry in Sweden.
Capital expenditure
Capital Cost  Cost (US$m)
Initial       215.1
Sustaining    47.3
Total         262.4
Pre-production capital expenditure (excluding contingency and indirect expenditure)
Initial Capital Cost  Cost (US$m)  % Cost
Civil Works           43.2         25%
Mine Dewatering       6.3          4%
Mine                  32.1         18%
Ore Treatment         77.3         44%
Infrastructure        16.0         9%
Total                 174.9        100%
Indirect and contingencies
Other Capital Cost  Cost (US$m)
Indirect            21.9
Contingency         18.3
Total               40.2
Operating Costs
For Dannemora, total operating costs have been estimated at approximately US$63.3/t average over an 11-year mine life. It is proven to be cost effective to run the production based on standard mobile equipment and trucks fueled with HVO. It is the endeavor to move to fully electrified underground mobile equipment as soon as economically feasible.
Expenditure is comprised of key areas throughout the project life as detailed in the table below. Unit operating costs per tonne of ore processed are also provided. Estimates have been based on quotations and in-house estimates prepared by the Company within a within a +/- 10 - 15% order of accuracy, reviewed and compiled by SLR.
Operating costs
Operating Cost            LoM Cost (US$m)  US$/t Product
Mining                    285              27.1
Processing                150              14.3
General & Administration  39               3.7
Logistics                 145              13.8
Closure                   1                0.1
Leasing Related Costs     44.5             4.2
Total                     664.7            63.3
Mineral Resource Estimate2)
The Mineral Resource Estimate produced for inclusion in the Updated DFS is compliant with the principles as set out in JORC-2012.
Mineral Resource Estimate for Dannemora Mine for 5th April 2024 compared to 8th August 2022
Category       2024                             2022
Tonnes         Fe%         Mn%    S%    Tonnes  Fe%         Mn%    S%
Measured       17,344,000  37.19  1.92  0.27    17,319,000  37.49  1.90  0.25
Indicated (In  11,622,000  34.74  2.35  0.27    11,882,000  34.66  2.20  0.27
Situ)
Sub-Total      28,966,000  36.21  2.09  0.27    29,201,000  36.34  2.02  0.26
Indicated -    2,200,000   21.00  2.50  0.19    3,000,000   22.50  2.50  0.19
Tailings
Total          31,166,000  35.14  2.12  0.26    32,201,000  35.05  2.07  0.25
Measured +
Indicated
Inferred (In   5,709,000   34.16  2.32  0.13    5,948,000   33.33  2.27  0.15
Situ)
The principal differences between the 2022 and 2024 Mineral Resource Estimates are:

• Addition of recently assayed samples which filled in gaps where the grades had either been set to 0% Fe and thus diluted the overall grade or not been included in the wireframing process thereby reducing tonnage;
• Re-classification from inferred to indicated of the tailings stored underground during the previous production phase;
• Recently acquired information on the previous depletion in Upper Konstäng mine body removed a substantial part of its tonnage; and
• Further studies on the recovery of the previously deposited tailings in Upper Konstäng have concluded that some 800,000t not recoverable due to geotechnical risks

Ore Reserve Estimate3)

The Mineral Resource Estimate presented above has been subject to detailed mine planning, including the consideration of expected or actual Modifying Factors such as, waste inclusions (dilution), and planned and operational ore losses. The resulting tonnage is therefore considered to be a Probable Ore Reserve.

The tailings included in the ore reserve estimate are based on tailings historically placed as backfill in a number of the stopes in the Konstäng and Kruthus orebodies, in the south of the Dannemora Mine.

All Diluted Diluted Fe-grade (wt%) Mn-grade (wt%) S-grade (wt%)
Orebodies tonnes
(kt)
Total 30,949,000 30.62 1.75 0.21

Qualified Persons (CP JORC)

Competent Person for Mineral Resources: Mr. Thomas Lindholm, GeoVista AB, who is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM), is the Competent Person responsible for the Mineral Resource estimate for Dannemora based on his training and experience in exploration, mining and mineral resource estimation of iron ore, base and precious metals. The Mineral Resources are reported following the guidelines of the JORC Code, 2012 edition. Thomas is regularly involved in Resource Estimation for Scoping Studies through to full Feasibility Study, site supervision and exploration drill programme design.

Competent Person for Ore Reserves: Mr. John Walker (FGS, FIMMM, FIQ) Principal Mining Engineer with SLR Consulting UK Ltd, is the Competent Person as defined by JORC (2012) responsible for the estimation of the Ore Reserves following the guidelines of the JORC Code, 2012 edition.

Competent Person for Mineral Processing: Mr. Bo Arvidson (PhD) of Bo Arvidson Consulting LLC, is the Competent Person defined under JORC (2012) based on being a Qualified Person (QP) under NI 43-101, responsible for metallurgical test work and process flowsheet design.

Competent Person for Process Plant Engineering: Mr. Chris Stinton (C.Eng.), Zenito, is the Competent Person for the process plant engineering.

Notes

1)         The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (’the JORC Code’) is a professional code of practice that sets minimum standards for Public Reporting of minerals Exploration Results, Mineral Resources and Ore Reserves. The JORC Code provides a mandatory system for the classification of minerals Exploration Results, Mineral Resources and Ore Reserves according to the levels of confidence in geological knowledge and technical and economic considerations in Public Reports.

2)         As defined under JORC, a `Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

3)         As defined under JORC, an `Ore Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. The reference point at which Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported.

4)         A Table 1 according to JORC will be published shortly.

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