Grängesberg Iron AB – Grängesberg Iron Mine
The Grängesberg project is a substantial iron ore asset of over 80Mt of magnetite/haematite located in a very favourable jurisdiction. During the 1980s the mine, located about 200 kilometres north-west of Stockholm, had produced around 180Mt of iron ore and current plans envisage the production of high grade ore at or above 70% Fe. The group holds a direct 49.75% interest in the Grängesberg project, together with management rights and a right of first refusal to increase its interest to 50.25%.
Anglesey, in conjunction with its Swedish partners in Grängesberg, commissioned an updated PFS on the development of the project, based on updated forecasts for long term iron prices and on a modified development programme to take advantage of optimisations expected since the previous 2012 Pre-Feasibility Study. The update by leading mining consultant Micon International Limited commenced in late 2021 and was finalised in July 2022.
The updated PFS demonstrates a very robust project with production of 2.3 – 2.5Mtpa of iron ore concentrate grading 70% Fe over an initial 16-year life, generating strong economic returns, including a NPV8% of US$688 million post-tax. The study assumed an iron ore price of US$120/t (62% Fe benchmark, CFR China) with sensitivities indicating a long-term price of US$80/t required to achieve a positive return at a discount rate of 8%.
Grängesberg PFS Study Highlights
The study confirmed the previous estimate of 82.4Mtpa of Probable Ore Reserves which would support a 16-year mine life at a throughput of 5.3Mtpa. Production of between 2.3 and 2.5Mtpa of iron ore was envisaged with concentrate grading 70% Fe generating strong economic returns including:
- Post-tax NPV of US$688 million at an 8% discount rate
- IRR of 25.9% post-tax
- Operating costs of US$53.60/t FOB to the port of Oxelösund
- Net cashflow post-tax of US$2.08bn, for an average annual net cashflow of US$130 million
- Pre-production capital of US$399 million
- 3.6 years payback
Micon concluded that the Grängesberg Project demonstrates an economically viable project using the stated price assumptions, cost estimates and technical parameters generated by the PFS, with the sensitivity analysis indicating positive returns can be achieved even with using a 30% lower underlying iron ore price.