Grange Resources Reports 4.5% Increase in Pellet Sales Amid Rising Fuel Costs and Price Pressures in June 2026 Quarter

Pellet Sales Growth Offsets Concentrate Production Decline at Savage River Mine

At its integrated Savage River facility in Tasmania’s north-west, Grange Resources achieved a 4.5% increase in pellet sales volume to 580,239 dry metric tonnes in the June 2026 quarter, up from 555,439 tonnes in March. This growth underscores the effectiveness of the company’s production strategy and the strong performance of its pellet plant and Port Latta export operations. The increase aligns with Grange's long-life asset strategy focused on delivering premium iron ore pellets through secured term offtake agreements and spot market sales.

Conversely, concentrate production declined to 586,906 tonnes from 607,436 tonnes in the prior quarter, mainly due to a reduced weight recovery rate of 34.9% versus 41.3%. This was a planned operational adjustment involving ore blend management and controlled drawdown of high-grade stockpiles rather than an unplanned production issue. Additionally, the company recorded iron ore chip sales of 45,488 tonnes in June, a product category absent in the previous quarter, indicating diversification in product offerings and enhanced market capture potential.

Rising Middle East Fuel Prices Push Unit Cash Operating Costs Higher

Unit cash operating costs surged 15.5% to A$157.69 per tonne in the June quarter from A$136.56 per tonne in March, primarily driven by elevated diesel fuel and energy prices linked to Middle East market volatility. CEO Weidong Wang emphasized that increased diesel costs have materially impacted the cost base of the Tasmanian operations. Lower concentrate production volumes further pressured per-tonne costs as fixed overheads were spread over reduced output.

This cost inflation poses a significant challenge to profitability in the competitive iron ore market, where unit costs directly affect cash flow and investment capacity. The C1 cash cost metric, excluding capital-intensive items, highlights Grange Resources’ exposure to global energy price fluctuations and underscores the importance of efficiency improvements and project development to sustain shareholder value.

Average Realised Iron Ore Prices Drop 12.22% Despite Premium Spot Sales

Grange Resources’ average realised iron ore price fell 12.22% to A$160.30 per tonne (US$114.32 per tonne FOB Port Latta) in the June quarter, down from A$182.61 per tonne (US$126.29 per tonne) in March. This decline reflects broader commodity market weakness and reduced investor risk appetite. The company maintained deliveries under secured term offtake agreements, which typically yield price premiums, alongside spot market sales.

The Australian dollar exchange rate provided partial cushioning, averaging 0.7132 AUD:USD in June versus 0.6916 in March. Grange’s strategy to balance long-term premium contracts with opportunistic spot sales aims to stabilize pricing amid market volatility. Nonetheless, the significant quarterly price drop highlights ongoing commodity headwinds and reinforces the critical role of cost management and project development.

North Pit Underground Project Advances Following Positive Technical Review and Legislative Progress

An Independent Technical Expert review confirmed the North Pit Underground Project is technically sound with no fatal flaws identified across technical, operational, or permitting aspects, marking a key milestone for this growth initiative. This validation supports the transition from open-pit to underground mining at Savage River and aligns with Tasmania’s regulatory framework.

Simultaneously, the Grange Resources (Tasmania) Pty Ltd (Alternative Application Period) Bill 2026 progressed through the Tasmanian Parliament, enhancing long-term tenure certainty for the Savage River operation and future underground development. The company continues to refine project development strategies to reduce funding needs while safeguarding shareholder value.

Ongoing Capital Expenditure on Growth and Equipment Rebuilds

During the June quarter, Grange Resources invested approximately A$13.3 million in growth capital, supporting operational and strategic initiatives. Key projects included the DT256 Powertrain rebuild, 789 Haul Truck Rebuild Program, underground mine planning for the North Pit project, and Main Creek Tails Dam Stabilisation Berm development. This balanced capital allocation supports both equipment reliability and future growth.

Investment in haul truck and powertrain infrastructure underscores the company’s commitment to operational productivity at Savage River. Progress in underground mine engineering and environmental infrastructure development reflects a dual focus on sustaining current operations and enabling future expansion. The company did not provide full-year 2026 capital expenditure guidance.

Cash Reserves Decline Amid Working Capital and Capital Spending

Grange Resources’ cash and liquid assets decreased to A$267.90 million at 30 June 2026 from A$284.13 million at 31 March 2026, a reduction of A$16.23 million. Trade receivables rose to A$23.72 million from A$20.89 million, reflecting freight costs and final pricing settlements on provisional sales. The cash decline results from capital expenditure, working capital needs, and lower realised iron ore prices impacting cash flow.

Despite the decline, the company maintains a strong cash position to fund growth projects, sustain operations through commodity cycles, and pursue strategic financing for initiatives like the North Pit Underground Project. The cash reduction alongside cost pressures highlights the need for disciplined capital management and efficient project execution.

Safety Incident Reported as Risk Management Systems Strengthen

During the quarter, Grange Resources recorded a Lost Time Injury (LTI). The affected employee received medical treatment and has since returned to work. The company is conducting a thorough review of risk controls, demonstrating commitment to safety management and continuous improvement.

Despite the LTI, safety systems were strengthened throughout the quarter. For a mining operation with capital-intensive underground and open-pit activities in challenging conditions, safety culture remains critical for productivity, workforce retention, regulatory compliance, and insurance costs. Transparent reporting of safety metrics aligns with investor expectations amid increased scrutiny of mining sector risk management.

Southdown Magnetite Project Remains in Development Amid Market Challenges

Grange Resources continues to seek equity investment partners for its Southdown Magnetite Project, maintaining all tenements, approvals, and assets in readiness for future development. This reflects a long-term commitment despite current focus on Savage River operations. Southdown represents a potential growth asset leveraging the company’s magnetite expertise within Australia’s iron ore sector.

The company’s strategy to pursue equity partnerships rather than debt or internal funding spreads financial risk and preserves balance sheet flexibility for core operations and near-term projects like North Pit Underground. Maintaining regulatory approvals ensures readiness to advance Southdown when market conditions improve.

Shareholder Base Stable at Approximately 8,600 Registered Investors

As of 30 June 2026, Grange Resources reported about 8,600 registered shareholders, reflecting a mature and diversified investor base. The company did not disclose detailed shareholding distributions or major institutional holders. The stable register indicates sustained investor confidence despite commodity price challenges.

Quarterly shareholder reporting supports transparency on corporate governance and capital structure. Detailed ownership information is typically available in annual reports or ASX substantial shareholding notices.

Market Uncertainty Drives Project Optimisation and Financing Strategy

CEO Weidong Wang described the operating environment as marked by global market and commodity price uncertainties affecting risk appetite and long-term value assessments. This has led Grange Resources to optimise project development strategies aimed at reducing funding requirements while preserving shareholder value. Capital market conditions for mining project financing remain challenging, prompting a disciplined approach focused on efficiency and value preservation rather than aggressive expansion.

The company’s balanced approach to the North Pit Underground Project and ongoing search for equity partners for Southdown align growth capital intensity with available financing and investor appetite. This strategy balances long-term asset development with near-term financial discipline amid declining commodity prices and rising costs. Continued investment in sustaining operations and technical development, combined with restrained capital deployment, reflects management’s anticipation of a prolonged challenging market environment requiring prudent capital allocation to maintain optionality for future growth acceleration.