Grange's Iron ore pellets at A$427/tonne, page-51

OK - just a few random thoughts here. A lot will disagree with my comments no doubt.

Where to now with Grange? My view is that GRR is a "dividend share" - it is all about the income return for share holders. Capital gain will follow the yield anyway.

Currently GRR has a great cash balance. They do need to start giving a fair increase in dividends back to shareholders - all of us agree on that.

Southdown is an asset but if they want to develop it they are looking at selling 30% of the 70% they own to get another partner. That leaves 40% of a 10mil tonne annual resource - not that much bigger than the 3mil tonne potential production at Savage river.

Issue will be that to develop Southdown will require more cash that they would receive from the sale of 30% and the cash holdings they have now. That would probably nean 1) they would have to borrow, 2) they would probably have a CR which will be a dilution of shareholder value and 3) there would be no dividends paid while Southdown is being developed. We can add to this that the current high IO prices are unlikely to be in play 3 years from now.

If expansion into the central pit and UG mining can go ahead and maybe the pipeline can move to maximum capacity of 3mil tonnes annually, then the sale of Southdown will fund this expansion. I recall reading that the expansion at Savage river would extend mine life by a further 10 to 15 years. That would make Grange an even better long term investment.

Personally, I would prefer three things to happen.
1) that dividends be increased to 40 -50% of operational profits.
2) high cash levels to be maintained. That is within reason of course.
3) Southdown to be sold with the view that the return goes to fund the expansion works at Savage river and the pipeline - with the view of obtaining a 3mil tonne annual production rate.

If this can be achieved then GRR will be a little gem.