Shagang Offtake, page-33

I think Grange is doing an OK job but voting against here as the new offtake agreement seems to be giving an unfair discount. Also there needs to be more transparency of why they are only paying out <25% of FCF as dividends and letting cash and receivables to build up to >$300m which is basically half the market cap of the company. Saving it for a rainy day is not a good enough explanation. The cash reserves are way higher than they need to be. Shareholders deserve to be getting much bigger dividends (i.e. 10c a half which they could easily pay out of FCF) and only when the dividends significantly increase will we see the stock start to rerate.

The property fiasco and $14m loan write down also looks very dodgy to be and concerns need to be raised to management. MOre amazing is they are still holding onto these properties and have failed to sell even in a rising market. Unfortunately this all smells bad. I think overall the company is doing well and is very cheap which is why I have a huge holding but we should be pushing management to do better. Management need to be aware they are being held to a high standard to shareholders and not given a free pass just because Iron Ore prices are high.