Grange Resources : Southdown Magnetite Project Prefeasibility Study

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ASX RELEASE

22 March 2022

ASX: GRR

Southdown Magnetite Project Prefeasibility Study

Southdown Project, Western Australia

• The Prefeasibility Study identifies a reduced-capital development option for the Southdown Magnetite Project (anticipated to deliver reductions in capital spend from A$2.9B down to A$1.39B).
• It focuses on a production rate of 5 million tonnes per annum of high-quality magnetite concentrate at 69.5 % Fe, which attracts a significant price premium in the market.
• The concentrator design utilises dry grinding technology to improve efficiency and reduce power and water demand, while still achieving a high-quality product.
• The reduced water demand can be met with a combination of ground water and recycled water.
• Early works are underway to confirm the potential of power supply via a transmission line to connect to the Southwest Interconnected System at Muja, in order to access significant renewable energy through a 3rd party provider.
• Studies indicate Cape size vessels can be loaded in King George Sound using transhipment methods.
• Work is underway to seek revisions to current environmental approvals for the new aspects of the project, with a new approval required for the transhipping operation.

Disclaimer

The material in this ASX release is not and does not constitute an offer, invitation or recommendation to subscribe for, or

purchase, any security in Grange Resources Limited ("GRR") nor does it form the basis of any contract or commitment. GRR

makes no representation or warranty, express or implied, as to the accuracy, reliability or completeness of this material. GRR, its directors, employees, agents and consultants, shall have no liability, including liability to any person by reason of negligence or negligent misstatement, for any statements, opinions, information or matters, express or implied, arising out of, contained in or derived from, or for any omissions from this material except liability under statute that cannot be excluded.

Statements contained in this material, particularly those regarding possible or assumed future performance, costs, dividends, production levels or rates, prices, resources, reserves or potential growth of GRR or, industry growth or other trend projections are, or may be, forward looking statements. Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties. Actual results and developments may differ materially from those expressed or implied by these forward-looking statements depending on a variety of factors.

The Prefeasibility Study referred to in this ASX release has been undertaken for the purpose of initial evaluation of a potential development option for the Southdown Magnetite Project in Western Australia. It is a preliminary technical and economic study of the potential viability of the Southdown Project, completed to a level of accuracy of +/- 25%. Further work will be required to improve the accuracy and reduce the technical, financial, environmental and stakeholder risks related to this development option.

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Grange Resources Limited (ASX:GRR) (Grange) is pleased to announce that a Prefeasibility Study (PFS 2022) has been completed to assess capital reduction options for the Southdown Magnetite Project (Southdown or the Project).

A Definitive Feasibility Study completed in 2012 (DFS 2012, see ASX announcement May 2012) defined a project to produce 10 million tonnes per annum (mtpa) of high-grade magnetite concentrate at 69.5% iron, over a potential mine life of 14 years.

PFS 2022, completed in February 2022, has identified a reduced-capital development option. This involves a smaller 5mtpa concentrate production operation within the constraints of existing mineral resources and ore reserves; and is anticipated to deliver reductions in capital spend from A$2.9B down to A$1.39B. This alternative case extends the life of mine from 14 years to 28 years for the western zone, and potentially more than 50 years for the total resource (see Project Details below). It is planned to be a pit to port operation involving:

• an open cut mine with contract mining
• a concentrator including dry grinding and wet separation techniques
• slurry and return water pipelines from/to the Port at Albany
• a transhipping operation to export concentrate in Cape size vessels
• a transmission line for power supply by a 3rd party to access a significant component of renewable energy
• a mix of recycled and groundwater to supply reduced water needs.

The 10mtpa DFS 2012 remains the base option, and the decision as to whether the alternative option is further studied to definitive feasibility will be an issue considered together by the joint venture partners.

Commenting on the results of PFS 2022, Grange CEO Mr Honglin Zhao stated:

"PFS 2022 considers innovation in the process to enable a reduction in the capital required to enable the project to proceed.

Southdown is a world-class magnetite deposit that is becoming increasingly relevant as steel markets continue to demand premium iron ore products. At almost 70% iron content, Southdown's concentrate product will be one of the highest-grade seaborne iron ores in the world."

Project Summary

• Southdown is an advanced project with excess of A$180m spent to date on drilling, test work, land acquisition, permitting and engineering studies.
• The project has defined Mineral Resources of more than 1.2 billion tonnes at 33.7% DTR, and Ore Reserves of 388 million tonnes at 35.6% DTR, prepared in accordance with JORC 2012 (see ASX announcement February 2014).

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• DFS 2012 was completed in April 2012 based on a design to produce at a nominal rate of 10mtpa of concentrate at a premium quality specification of 69.5% Fe, which attracts a significant price premium in the market.
• PFS 2022 was completed in February 2022 based on a design to produce at a nominal rate of 5mtpa of concentrate, with a mine life of 28 years within the current permitted area, with potential to extend to more than 50 years.
• PFS 2022 generates an NPV of A$243 million at a nominal discount rate of 10%, and an ungeared internal rate of return (IRR) of 12%, based on average price assumptions from long term forecasts of US$102.52/tonne FOB Albany, at an AUD:USD exchange rate of $0.71. By comparison, an NPV of A$2,071 would be achieved based on the average realised 65% index prices over past three years.
• Initial capital expenditure is estimated at A$1.39 billion and sustaining capex at A$203 million.
• C1 operating costs are estimated at A$60.61 per tonne of concentrate delivered at the ships rail in Albany, with an all-in sustaining cost of A$84.12.
• All primary environmental approvals are in place and being maintained in good stead for the existing DFS 2012, with a revision of the existing land-side approval in preparation to include the new aspects, and a new approval required for the marine transhipment operations.
• All land required for the DFS 2012 project site, slurry and water pipelines has been secured, with negotiations progressing to secure new areas identified in PFS 2022
• Aboriginal heritage issues have been successfully resolved or in progress for DFS 2012, with engagement ongoing in relation to new areas and sites identified in PFS 2022.

Detailed Project Information for the 5mtpa Alternative Development Option

Just 90km from Albany in Western Australia's Great Southern region, Southdown is a joint venture (JV) between Grange (70%) and SRT Australia Pty Ltd (30%). SRT is jointly owned by the Sojitz Corporation, a Japanese global trading company, and Kobe Steel, the third largest Japanese steel maker.

The Southdown Magnetite Project is an advanced project with more than 1.2 billion tonnes of high-quality mineral resources, including ore reserves of 388Mt. A Definitive Feasibility Study completed in 2012 (DFS 2012, see ASX announcement May 2012) defined a project to produce 10 million tonnes per annum (mtpa) of high-grade magnetite concentrate at 69.5% iron, over a potential mine life of 14 years.

In February 2022 Grange completed a prefeasibility level study into an alternative development option based on a reduction of the nominal concentrate production rate to

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5mtpa. DFS 2012 is the base case option for the JV.

Grange recognises and respect the Traditional Owners of this Country and their connection to the lands, waters and skies. Grange would like to acknowledge the support and assistance of the Wagyl Kaip and Southern Noongar Native Title claimants, and the Menang people in the development to date of the Southdown Project.

Grange would like to thank and acknowledge that the following organisations were engaged in the Grange's development of the PFS 2022:

• Wood (principal and process), and its subconsultant GHD (non-process infrastructure),
• Ausenco (pipeline),
• BMT (marine),
• Snowden Optiro (mining)
• and many specialists in individual areas.

Location

The Project is located ~90km northeast of Albany in the southwest corner of Western Australia. The Southdown deposit extends approximately 12km in length, under Mining Lease (M70/1309) and Retention Licence (R70/61) covering an area of more than 120 square kilometres on largely freehold farming property.

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Mineral Resource & Ore Reserve

The Project contains a total resource of 1.25 Bt of magnetite ore grading at Davis Tube Recovery (DTR) of 33.7%. This resource has been defined using geological boundaries and a cut-off grade of 10 weight percent Davis Tube Concentrate (DTC) and includes minor internal dilution. A resource statement prepared in accordance with JORC 2012 has been declared for the Project. The mineral resource consists of alternating bands of magnetite hosted in clinopyroxene and primary quartz located within SDJV mining lease, M70/1309 and Exploration Licence R70/61 (see ASX announcement, 28 February 2014).

The metallurgical plant has been designed to achieve 69.5% Fe in the final concentrate (see ASX announcement, April 2012).

Table 2: Southdown Magnetite Ore Reserve

An additional 24.4 Mt of Inferred Resources is included within the designed pit.

A detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 28 February 2014. Grange confirms in reproducing the Mineral Resources and Ore Reserves in this subsequent report, that it is not aware of any new information or data that materially affects the information included, and all the material assumptions and technical parameters underpinning the estimates in this report continue to apply and have not materially changed. Grange confirms that all material environmental approvals and tenure have been maintained in compliance and terms extended as required to retain currency.