By Dan Stratful
Thursday 10th November 2011
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Grange Resources (ASX: GRR) is a higher risk, speculative, junior Australian iron ore producer which owns and operates the Savage River magnetite iron ore mine, an integrated iron ore mining and pellet production business located in the north west of Tasmania. Savage River is set to continue operation to 2023 possibly extending to 2028.
GRR is also developing a magnetite project at Southdown in WA with the project forecast to supply 6.6 million tonnes of premium magnetite concentrate annually, 3 times the amount of ore iron from Savage River.
GRR changed its balance date from 30 June to 31 December during the six months to 30 June 2011, and for the first half of the new financial year GRR reported an 8% increase in revenue from mining operations to $209 million. Gross profit from mining operations increased 45% to $92 million and the company reported that pellet prices remained very strong during the half year averaging US$211 per tonne, while first half production was 840,000 tonnes of iron ore pellets.
GRR finished the interim period with a net tangible asset (NTA) backing of 54c per share meaning the shares are trading below NTA. The Savage River mine continues to target 2 million tonnes of pellet production in the 2011 year, and it is expected that the second half of the year will see significantly more tonnage than in the first half.
GFF reports that it is in a great position to grow, from a combination of increased production, enhanced prices and the Southdown development project in WA. GFF’s shares should be treated as speculative, as the company still needs to develop the Southdown project, which is currently progressing on schedule and under budget.
Status: SPECULATIVE BUY
GRR shares today traded at 45c
For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, email@example.com
**A disclosure statement is available, on request and free of charge.
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