GRANGE RESOURCES LIMITED. — AGM Information 2004

Nov 29, 2004

STOCK EXCHANGE ANNOUNCEMENT

RANGE

RESOURCES LIMITED

CHAIRMAN'S ADDRESS - ANNUAL GENERAL MEETING

A.C.N. 009 132 405

30 November 2004

During the financial year the group reported a consolidated operating profit after tax of \$5.00 million. The result was achieved on group revenue of \$27.44 million. The increase in Grange's revenue was largely attributable to sales of copper concentrate from the Reward Deeps and Conviction underground mine increasing to four shipments during the financial year compared with only one shipment in the previous financial year. The group profit included the following items of significance:

• $\frac{1}{2}$ revenue generated from sales of copper concentrate from the Reward Deeps and Conviction underground mine increased by over 300%, totalling \$26.56 million;
• expenditure associated with mining operations at the Reward Deeps and Conviction $\overline{a}$ underground mine totalled \$19.51 million for the year including mining, transportation, milling, depreciation, amortisation and administration; and
• rovalty income generated from the Freshwater and Redhill Projects for the year was \$264,095.

At the end of the financial year the Company had cash assets of approximately \$16.23 million. The Company expects the final shipment of copper concentrate from the Reward Deeps project to be exported from Townsville in the third quarter of the current financial year, which will generate additional revenue of approximately \$7.50 million. Royalty income from the Freshwater and Redhill Projects is expected to continue throughout the current financial vear.

During the financial year the Company generated sufficient cash reserves to fund its operations and was able to remain debt free for the entire period. The Company has sufficient funds to finance its current operations.

CORPORATE

During the financial year, the Company concluded its capital management programme that delivered a significant concentration of wealth to shareholders by reducing the number of shares on issue in the capital of the Company. In July 2003, shareholders of the Company approved an on-market share buy-back authorising the Company to acquire up to 10% of its issued capital over a six month period. The Company bought-back and cancelled 1,366,677 fully paid ordinary shares for a total consideration of \$446,187 exclusive of transaction costs.

During the financial year the Company arranged a share placement to The Golden Arrow Fund II comprising of 4,285,715 fully paid ordinary shares at an issue price of \$0.35 each with a one for one free attaching unlisted option (exercisable at 50 cents each on or before 28 November 2006), raising \$1.50 million before expenses of the issue. The placement took place in two tranches.

UPDATE ON PROJECTS

REWARD DEEPS

During the year 787,588 tonnes of ore grading 4.17% copper were processed through the Thalanga plant for the production of 110,149 tonnes of copper concentrate of which Grange's share was 33,044 tonnes containing 25.98% copper. Since extraction of underground ore commenced in December 2002 to 30 June 2004, 1.1 million tonnes grading 4.2% copper have been processed through the Thalanga plant for the production of 158,487 tonnes of copper concentrate of which Grange's share being 47,546 tonnes containing 26.4% copper.

Mining of the Reward Deeps ore body was completed in June 2004 and mining of the Conviction ore body was completed in July 2004. Reconciliations of copper production from the mill to the ore body models show that the Reward Deeps and Conviction ore bodies performed close to expectations. Underground diamond drilling undertaken during the year was successful in proving up ore reserves at Lower Reward Deeps, Hanging Wall Lens and Highway South resulting in an extension to the life of the project.

Copper recovery and concentrate grade were below budget for the year primarily due to variable head grade and some poorer quality ore. Zones of ore containing higher than expected zinc were encountered in the Reward Deeps ore body and this together with excessive dilution from wall rock material caused problems in maintaining quality feed to the mill.

Up to the end of June 2004 the average cash cost of production for the project was \$0.67/lb of payable copper, selling expenses \$0.14/lb of payable copper and amortisation and depreciation costs \$0.11/lb of payable copper. The project has, to the end of June 2004, generated for the Company an operating profit after depreciation and amortisation of \$5.68 million.

Until the closure of the mine in March 2005, the project is based on mining 233,000 tonnes @4.1% Cu from the Lower Reward Deeps and Highway South ore bodies and milling 272,626 tonnes $@3.91\%$ Cu to produce 36,319 tonnes of concentrate containing 26.6% Cu. HIGHWAY & REWARD COPPER MINES

Rehabilitation of the Highway and Reward mine site continued during the year. Capping and top soiling of the Reward and Highway waste rock dumps was completed in June 2003 and seeding of the dumps was undertaken during January 2004 following suitable rainfall.

FRESHWATER

During the year ore production from the Freshwater leases was from both underground and open pit with 41,389 tonnes grading 6.69g/t gold being mined from the Plutonic East underground mine and 85,573 tonnes grading $2.22g/t$ gold being mined from the Callop and Piranha open pits. Total royalty income earned for the year ended 30 June 2004 amounted to \$173,788 made up of \$29,984 from open pit ore and \$143,804 from underground ore.

Barrick has advised that as at 31 December 2003 the Freshwater ore reserves amounted to $820,000$ tonnes grading $4.3$ g/t gold containing 114,200 ounces gold. Of these reserves 328,000 tonnes grading 6.6g/t gold containing 69,600 ounces gold are underground reserves from Plutonic East and 492,000 tonnes grading 2.8g/t gold containing 44,600 ounces gold are open pit reserves from Salmon and Callop.

In addition to these reserves. Freshwater mineral resources as at 31 December 2003 amount to approximately 4.1 million tonnes grading $5.0g/t$ gold containing 655,400 ounces gold. The majority of the mineral resources, 3.6 million tonnes grading $5.3g/t$ gold, are present at the Plutonic East underground mine with the remaining 455,000 tonnes grading 2.4g/t gold containing 34,400 ounces of gold being open pit resources from Salmon, Callop and Barramundi.

RED HILL

Grange holds a 4% gross revenue royalty on all production after the first 85,000 ounces of gold produced from the Red Hill Mining Lease (M27/57), which is located approximately 4km north east of the Kanowna Bell Gold Mine, 20km north east of Kalgoorlie. The project is owned and operated by Placer Dome Asia Pacific. Mining operations at Red Hill commenced in February 2003 and by the end of June 2004 Total reconciled mined ore production from commencement of mining in February 2003 until 30 June 2004 was $1,747,271$ tonnes grading 1.62g/t gold. Total dry tonnes hauled to the Paddington mill during this period were $1,484,033$ and ore processed was $1,442,652$ tonnes grading $1.58g/t$ gold. The total gold recovered from M27/57 at Red Hill as at 30 June 2004 was 89,127 ounces resulting in the 85,000 ounce threshold limit being surpassed. Royalty payments to Grange commenced in the June 2004 quarter.

As at 30 June 2004, mineral resources within M27/57 amounted to 6.3 million tonnes grading 1.80g/t gold containing 365,000 ounces of gold. Within these resources PDAP has estimated ore reserves of 4.3 million tonnes grading 1.96g/t gold (272,000 contained ounces) at a cut-off grade of 1.20g/t gold and a gold price of A\$542/ounce.

SOUTHDOWN

During the financial year the Company entered into an agreement to acquire the Southdown Magnetite Project from Global Doctor Pty Ltd, a wholly owned subsidiary of MedAire Inc. on a staggered purchase arrangement. The Southdown project is located approximately 90 kilometres northeast of the Port of Albany on the south coast of Western Australia and comprises of three granted mining leases covering an area of 1700 hectares on freehold farming property.

During 1986 and 1987 drilling programmes were undertaken to appraise the potential of the Southdown resource. The drilling was undertaken over the western 2 km of the deposit and outlined a significant resource of magnetite ore grading 37.4% magnetite. The magnetite mineralisation is contained within a banded quartz-magnetite-gneiss that varies in thickness from 50 to 100m in the portion of the deposit that has been subject to detailed drilling. The deposit dips at 60 to 65 degrees to the south and has been intersected to vertical depths of approximately 230m. The deposit extends for a strike length of approximately 12 km and the Company's mining leases cover the western 6km of the deposit.

Grange has commenced a detailed review of the Southdown project to assess its viability and evaluate development options. Detailed ground magnetic and gravity surveys have been completed and results have confirmed the extent and structure of the deposit and identified extensive strongly magnetic zones untested by previous drilling. Modelling of the geophysical data indicates that the width of the magnetic zones is similar along the 6km strike length and that the average depth to the top of the magnetic zones is approximately 20 to 25 metres.

Grange has recently commenced a 3,000 metre drilling programme designed to test the continuity of mineralisation in the eastern portion of the deposit. Grange is further planning to undertake a second phase drilling programme to commence in January 2005 which will comprise of 16,000 metres. This programme will assess mineralisation over the entire length of the ore body.

WEMBLEY

The Wembley Gold Project is located approximately 65km south east of the Fortnum Gold Project which is owned by Gleneagle Gold Limited and comprises of one granted mining lease and a mining lease application. The granted mining lease covers the Durack and Outback prospects, which host a resource of 557,000 tonnes grading 2.18g/t gold (39,000 contained ounces). Gleneagle is earning an 80% interest in the tenements by spending \$500,000 on exploration.

During the year Gleneagle completed a fifteen hole reverse circulation drilling programme, aggregating 1.578 metres, at the Durack Project. The programme was designed to test for high grade near surface mineralisation within the Durack resource and test the potential down dip extensions of interpreted high grade shoots. Eleven of the holes recorded intersections in excess of 2.0g/t gold the most significant intersections being 12m $\omega$ 8.04g/t Au from 87m, 8m @ 7.15g/t Au from14m and 25m @ 3.19g/t Au from 77m.

OUTLOOK

The Company has a strong balance sheet and expects maintain its strong financial position with cash flows generated over the next year from its interests in the three following mining operations:

• The Reward Deeps/Conviction underground copper mine where mining operations will continue with the final shipment of copper concentrate expected in the third quarter:
• The Freshwater Gold Project where the Company has a production royalty and is $\overline{a}$ currently contributing revenue.
• The Redhill Gold Project where the Company has a 4% gross revenue royalty and is currently contributing revenue.

Revenue from mining operations is expected to decrease over the current financial year as a consequence of the cessation of mining operations at the Reward Deeps and Conviction underground mine. In anticipation of this reduction in operating cash flows, the Company has devoted significant resources to the identification of new investment opportunities in the resources sector with particular emphasis on iron ore, manganese and coal deposits that require development capital and are located in South East Asia. Grange's objective is to acquire mining projects that have the potential to provide an immediate cash flow to compliment the Company's existing mining projects, including the potential development of the Southdown Magnetite Project.

The outlook for commodities remains buoyant due to continued strong global demand, particularly from China.

The board and management of Grange are committed to enhancing long-term shareholder value through growth achieved via the acquisition of mining projects.

For information in relation to this announcement or the Company visit the Grange website at www.grangeresources.com.au, or alternatively contact Alec Pismiris on (+618) 9321 1118.

ALEC PISMIRIS
Company Secretary