Grängesberg Iron AB

Grängesberg Iron receives positive PFS on Grängesberg iron ore project

Swedish mining company Grängesberg Iron AB is pleased to announce the positive outcome of the Pre-Feasibility Study (PFS) on its iron ore mine project in Grängesberg, Bergslagen area in central Sweden. The study proves the project to be robust and as of the situation in 2012 clearly feasible.

View over the planned industrial area for the new Grängesberg mine (pelletizing plant alternative).

On behalf of Grängesberg Iron AB, the Pre-Feasibility Study has been performed by the independent global engineering firm URS Corporation (which in 2010 acquired engineering consultancy Scott Wilson), with contributions by other consultant companies and suppliers. The study describes all aspects of the future mining operations, from ore geology and mineral reserves, through mining, hoisting and beneficiation, to transportation and market analysis for the final iron ore products. The PFS has been performed according to the NI 43-101 regulations, with an accuracy of + / – 25% and represents a sound base for the further development of the project towards production.
The total capital investment costs are estimated to 554 MUSD in a scenario for production of iron ore concentrate (pellet feed), and 848 MUSD in a scenario with a pelletizing plant producing iron ore BF pellets. According to the financial model, which is based on a forecast of the future price development for iron ore products by Raw Material Group, the annual revenue in the pellet feed scenario will be approx. 320 MUSD, and in the pellets scenario approx. 350 MUSD.

The Grängesberg mine, which was closed in 1989, still has an extensive infrastructure underground, of which a significant part can be re-used. The mining schedule and the technical planning for the mining operations have been designed according to the latest underground mining principles and comprises an average of 5.3 million tonnes of crude ore mined yearly, resulting in a yearly production of 2.5 million tonnes of iron ore products. The PFS also provides a detailed technical solution for the initial dewatering of the mine, estimated to take up to two years. The time is partly dependent on details in the future environmental permit.

The PFS describes the railway transportation 250 kilometres down to the Port of Oxelösund, which has excellent capabilities and potential for handling and ship loading of the iron ore products, with Panamax capacity today and a future potential for Capesize vessels. Grängesberg Iron AB signed a Letter of Intent with the port company Oxelösunds Hamn AB in 2010. Grängesberg Iron AB also has a co-operation agreement with the Swedish Transport Administration regarding investigations and planning of the future railway capacity between the Grängesberg mine and the Port of Oxelösund.

For more information, please see further in the Overview section and in the press release.