Grangex: Visibility improves

Rapidly changing market conditions

Since we finalised our initial analysis three months ago, the world has changed dramatically, and the iron and steel market with it. The trade war launched by the Trump administration - with a particular focus on steel and aluminium - risks fragmenting the world market for these products and affecting demand through indirect effects. Against this, there is increased stimulus in China and a sudden awakening in Europe, not least Germany, where the new government is now skirt-ing the debt brake and announces modernisation and infrastructure projects worth several hundred billion euros each. Demand for green steel far exceeds capacity for a long time, mainly due to a lack of ore of the right quality, which is what Grangex is focusing on.

Sydvaranger's financing limbo

Grangex's most important mining project, Sydvaranger in Kirkenes, Norway, is approaching the moment of truth. In 6 months, we will know if Grangex has managed to get the full financing package re-quired for the restart of the mine. It amounts to some USD 100m in debt and USD 70m in equity, of which USD 37m is secured from Grangex's partner Anglo American, one of the world's largest mining companies. The remaining amount is expected to be raised from ex-ternal investors. All permits are already in place and the Definitive Feasibility Study (DFS) required for financing due diligence is set to be finalised in August. If all goes well, the entire investment and re-start process of the mine will begin early next year and the first salvos will be fired at the end of 2026. Throughout the process, the coopera-tion with Anglo American is of great importance and inspires confi-dence from counterparts.

In addition to financing, materials and equipment must be procured, staff must be hired without costly delays, production processes must function in real life, restrictions and environmental requirements must be met, and, not least, global ore prices and the dollar exchange rate must not fall too much. The exogenous factors are difficult to in-fluence, but internal factors require skilful and experienced leader-ship, which is exactly what the CEO and largest owner Christer Lind-qvist, with decades in the industry, delivers.

Great potential - Great risk

It is difficult to value a start-up like Grangex, as real operations with concentrate production and deliveries are still at least 1.5 years away. It is only then that we will see if all the plans will work out as planned and the road ahead is full of tripwires.

However, if the potential were to be fully realised, it could justify a price some ten times higher than today. The potential is thus very high, but so is the risk. The best way to manage such a stock is not to refrain from investing, but to be careful about the size of the position in the portfolio.