Grangex: Anglo American deal marks crucial step in transforming Grangex into leader in sustainable iron ore - Emergers

Hours before the Christmas weekend, GRANGEX announced a Royalty and off-take agreement with Anglo American of USD 5m + 12.5m for the part-funding and development of the Sydvaranger Mine, along with a rights issue of SEK 81m. This is an important step forward for the venture into Sydvaranger, as evidenced by the 23% surge in the share price on the news. The capital injection will cover the first installment for Sydvaranger of USD 20m due on March 31st, 2024, but GRANGEX will need to raise additional capital to meet the price tag of USD 33m and the subsequent development expenses. While the case in Dannemora already offers good potential for shareholders, we await the updated Feasibility study to include Sydvaranger into our NPV, but note that the first data points from Sydvaranger indicate an even greater potential than in the previous DFS (i.e. an NPV well above USD 550m) when raising the output from blast furnace concentrate to direct reduction iron ore, and accounting for significantly higher iron ore prices. Interestingly, the separate funding of subsidiary Sydvaranger will provide a fresh data point on valuation of Sydvaranger already in Q1’24, most likely exceeding parent company GRANGEX’ current market cap of SEK 200m.

Länk till analysen i sin helhet: https://www.emergers.se/grangex_23r/