Re comments by prhb -I was also somewhat "sucked in" by the...

Re comments by prhb -

I was also somewhat "sucked in" by the company announcements which appear to have been carefully worded to avoid any reference to the impact (of the rockslide) on costs.

The GRR announcement of 20/7/2012 stated "At this stage the slip is not expected to have a material adverse effect on the operation and it is anticipated that the 2012 production target is not materially at risk. The Company will keep the market informed if there is a change to that view."

Next (in the half-yearly report of 30/08/2012) came the following comment "The rock slide on the eastern wall of the North Pit in July 2012 has bought forward part of the Phase Two remediation works for the East Wall. This remediation work was planned to be completed as part of the 2015 operating plan and is now being rescheduled into the 2013 operating plan. This will require ore to be sourced from other deposits on the mine site on several occasions during the remediation work. It is expected that the redesign and rescheduling plans will be finalised during early September. Grange does not anticipate any material adverse impact on our 2012 production target at this stage."

Next came a market update on 10/09/2012 stating -
"Targeting C1 cash operating costs of approximately A$110 per tonne of pellets produced for 2012. Regular pellet shipments continue according to plan at prices in excess of targeted C1 cash operating costs for 2012."
and later in the same update -
"At this stage no major challenges in delivering the revised mine plan and schedules are expected. Grange remains of the view that the slip is not expected to have a material adverse effect on the operation."

Then six weeks later, in the quarterly production report issued 23/10/2012 -
"C1 cash operating costs of A$130.47 per tonne of product produced reflect increased costs arising from the July 2012 rock slide at Savage River. Ore was predominantly sourced from alternate locations until a return to the high grade main ore zone in late September 2012."

This C1 cost blowout would have been known to GRR well before the quarterly figures were finalised, so I too believe that there has been inadequate disclosure.

Despite my disappointment I still retain my GRR shares and take some comfort from the fact that with over $200M cash, this provides GRR with interest income of around $2.0M per quarter.


DYOR