PERTH (miningweekly.com) - Magnetite miner Grange Resources on Friday said it would look to drive down operational cost, and would focus on regaining access to high-grade ore during the third quarter.

In announcing its results for the three months to December, Grange MD Richard Mehan noted that the company had met the production and cost objectives established following the July 2012 rockslide at its Savage River operations, and soft pellet prices.

“Trading conditions improved late in the quarter and the company is well placed to take advantage of stronger pellet prices in 2013,” he added.

During the three months under review, Grange produced some 21-million tons of iron-ore concentrate, at a cash cost of A$110.44/t.

Operations during the quarter were undertaken in accordance with a revised mine plan, which was developed after the July wall failure, which temporarily delayed access to high-grade ore.

While increased volumes of lower-grade ore were processed from alternative locations, larger-than-anticipated volumes of higher-grade ore were extracted from the North pit, delivering stockpile in excess of the revised mine plan, the company said.

To curb spending, the miner also announced that it would slow capital expenditure on its 70%-owned Southdown project, in Western Australia.

Grange’s share of the total project expenditure for 2013 was expected to be some A$2.5-million, with cost reductions resulting in the project management team being reduced from 24 to 6, over the next five months.

The definitive feasibility study on the Southdown project had already been completed, as well as the delineation of reserve status of a major orebody capable of producing high-grade concentrate.

Mehan said on Friday that, as a result of this work, along with the receipt of all primary environmental approvals, the project could be quickly moved to the development phase when market conditions and the cost environment were more favourable.

The A$2.8-billion Southdown project is jointly owned by Grange and Japan’s Sojitz Resources and Technology Australia, which holds a 30% interest. Grange has an agreement in place to provide 56% of the Southdown production to Shagang Steel at market prices.

As a 30% owner of the Southdown joint venture, Sojitz Resources and Technology would take and market a further 30% of the product, leaving 1.4-million tons a year to be placed with customers.

The project was expected to deliver some ten-million tons a year of magnetite, over an estimated life-of-mine of 14 years, mining a 387-million-ton reserve.