- 01Grange approves $287m Savage River underground mine.
- 02SLC targets pellet supply through 2035; first ore due 2028.
- 03Base-case NPV: $357m; IRR: 43%.
Grange Resources (ASX: GRR) has approved the development of its North Pit Underground project at Savage River in Tasmania, committing to a lower-capital mining strategy designed to maintain iron ore pellet production through 2035.
The final investment decision clears the way for a sub-level cave (SLC) operation requiring an estimated $287 million in underground capital.
The underground operation is expected to be largely self-funded, avoiding the scale of external financing previously contemplated for the larger mine.
The approved project carries an estimated after-tax net present value of $357m and internal rate of return of 43% under the base-case iron ore price assumptions.
Development is scheduled to begin in the first quarter of 2027, with the company retaining the option to pursue a larger block cave (BC) development at a later stage.
Lower-Capital Pathway
Grange selected SLC mining after reassessing the funding demands of its earlier BC plan against weaker iron ore prices, rising costs, and reduced appetite for financing a larger development.
The staged approach allows the business to access ore beneath North Pit as open-pit mining approaches its economic depth limit of approximately 450 metres, while preserving infrastructure and development work that could support a future BC.
Environmental approvals are already in place, and the existing exploration decline will provide access for underground development.
“The Sub-Level Cave development is a significant step for Grange and for Savage River operations [that] secures our ability to continue supplying high-quality pellets to customers well into the next decade,” chief executive officer Weidong Wang said.
“It also maintains our options as we build the foundation for a large-scale underground mine—this represents a significant investment in our operation and our community.”
Economics and Production Outlook
The base case assumes a benchmark iron ore fines price of US$90 per tonne and an exchange rate of A$1 to US$0.68, with the NPV calculated using an 8.3% real after-tax discount rate.
Projected sustaining capital over the mine life totals $234m, while average C1 cash operating costs are estimated at A$132/t of concentrate and all-in costs at A$164/t.
The integrated plan targets 44.1 million tonnes of ore, comprising 27.8Mt from underground mining and 16.3Mt from the remaining open-pit operations.
Across the schedule, Grange expects to produce 25.1Mt of concentrate and 24.3Mt of pellets, supporting continuity of supply from the Savage River operations.
The underground component is drawn entirely from Probable Ore Reserves, with no Inferred Mineral Resources included in the production target.
Transition to Underground Mining
Open-pit mining is planned to finish in 2028, when first SLC production ore is expected, before underground output ramps towards approximately 4Mt annually by 2030.
The mining sequence will initially recover ore remaining in the northern wall of North Pit, using existing access before progressing south through successive production levels.
Grange plans to award the underground mining contract and begin mobilisation during the fourth quarter of 2026, followed by renewed underground development and engineering work in 2027.
The company will also undertake workforce transition planning, provide additional contractor accommodation, and procure long-lead electrical equipment for the site power upgrade.
Longer Term Options
The staged mine is intended to sustain operations independently until 2035 while generating operating information and underground expertise relevant to any future BC investment.
A subsequent BC could extend the mine life towards 2040 or beyond, but would require further studies, suitable market conditions, funding and a separate investment decision.
The broader underground Ore Reserve stands at 60.6Mt grading 45.9% Davis tube recovery, with the SLC targeting the higher-grade upper part of the orebody.
Further development studies and drilling will run alongside the approved mine, without including potential deeper mineralisation in the current production target or financial forecasts.
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