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Hi Ethuman2,

I would prefer brokers value the stocks i hold a lot higher too. However i am just posting information as it comes to hand. As i mentioned, pattersons are conservative, as evidenced by the 38% Fe price forecast. Look how accurate that turned out to be.


Grange Resources (GRR) $0.61
Recommendation: Buy

Vale has announced pellet prices for the June 2010 Q of US$261.83/dmtu up 130% from current prices (JPFY09 US$113.87/dmtu).

GRR sells pellets to its major customers (Shagang) based on a market price meaning that this increase will flow to the price it receives for Savage River production.

The price increase is for the April - June Q with major iron ore miners recently precipitating a change in the iron ore pricing basis from annual to so prices can better reflect short term changes in demand.
Impact

Patersons had previously forecast an increase in the price of pellets for JPFY10 of 38% accordingly this 130% price increase (for the June Q) leads to a significant jump in FY10 earnings forecasts (NPAT forecast up 60%).
FY10 EARNINGS REVISION - PELLET PRICES JUNE Q 2010 +130%

While this round of price increase was the principle positive catalyst we were expecting for GRR it exceeded our expectations and we note the stock remains cheap on revised earnings forecasts.

Buy recommendation maintained with a price target of $0.74/share.


In my opinion, it is hard to forecast a long term stable price target with 3 month contract negotiations. This may explain the lower than expected target price, as revenue can only be accurately predicted 3 months forward in reality.