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Grange Resources unfazed by downturn in iron ore price, shares up 10%

Published: 15:45 10 Sep 2012 AEST

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Grange Resources (ASX: GRR) is on track to sell around 2.3 million tonnes of iron ore pellets during 2012 from its Savage River magnetite iron ore mine in Tasmania, which continues to attract a premium price relative to daily 62% iron ore fines prices.

The news was well received by the market today with shares up 10% to an intra-day high of $0.325 on the exchange of around 8 million shares by mid-afternoon.

Around 2.1 million tonnes of premium 65%-plus iron ore pellets will be produced for the full 2012 year.

Grange is targeting C1 cash operating costs of about A$110 per tonne of pellets produced for the year.

Regular pellet shipments continue according to plan at prices in excess of targeted C1 cash operating costs for 2012.

Current stockpiles are at low levels of about 170,000 tonnes, indicating that production is being sold into the market.

Grange’s cash position remains strong with cash and term deposits in excess of $200 million, while gearing remains low with borrowings of $38 million and no net debt.

The company will pay an interim dividend of $0.01 per share (unfranked) on 2 October 2012.

Meanwhile, work is progressing with Deutsche Bank to secure a strategic partner for the development of the Southdown Magnetite Project, with site visits by interested parties underway.

Grange is looking to sell at least a 30% stake in the project.

Extensive drilling at Southdown has confirmed over 1.2 billion tonnes of Resources and close to 400 million tonnes of Reserves, with the project designed to produce 10 million tonnes per annum of premium magnetite concentrate.

The project remains on target for first production in 2015.


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