GRANGE RESOURCES LIMITED. — Annual Report 2004

Aug 30, 2004

RANGE RESOURCES LIMITED A.C.N. 009 132 405

STOCK EXCHANGE ANNOUNCEMENT

PRELIMINARY FINAL REPORT

31 August 2004

The directors of Grange Resources Limited ("Grange" or "the Company") are pleased to release the consolidated results for the Grange group of companies and the attached Preliminary Final Report for the financial vear ended 30 June 2004.

Grange recorded a consolidated operating profit of \$5.00 million for the financial year ended 30 June 2004, compared with a consolidated operating loss of \$2.21 million in the previous financial year. The operating profit was generated on consolidated revenue of \$27.33 million. compared to \$6.88 million over the previous financial year. The increase in the consolidated revenue was largely attributed to maintaining continuous mining operations at the Reward Deeps/Conviction underground mine over the financial year. During the financial year, four shipments of copper concentrate from the Reward Deeps/Conviction underground project were sold compared with only one shipment in the previous financial year.

The Company expects to remain profitable in the next financial year with production of copper concentrate from the Reward Deeps/Conviction underground mine expected to continue until the second quarter of the current financial year. Based on current ore reserve estimates at the Reward Deeps/Conviction underground mine, mining operations are expected to cease in December 2004.

Grange had consolidated net assets of \$17.14 million at the end of the financial year. comprising largely of the following:

• \$17.93 million held in cash investments including security deposits: $\mathbf{r}$
• $\mathbf{r}$ \$0.54 million being receivables;
• \$2.22 million being the value attributable to mining assets; and
• \$2.05 million being payables largely associated with mining activities:

The Company increased its cash reserves by \$12.46 million during the financial year, recording a surplus from operating activities of \$11.81 million, a surplus from financing activities of \$1.47 million and a deficit in investing activities of \$0.83 million.

Major Activities & Highlights

The Company's major activities and highlights during the financial year ended 30 June 2004 were as follows:

The Company's capital management programme delivered further concentration of $\mathbf{r}$ wealth to shareholders. In July 2003 shareholders of the Company approved the terms of an on-market share buy-back authorising the Company to acquire up to a maximum of 6.675.522 of the fully paid ordinary shares on issue, representing 10% of the capital of the Company, over a six month period which commenced 1 August 2003. During the six-month period, the Company acquired 1,366,677 fully paid ordinary shares for a total consideration of \$446,202.

• 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 and was approved by shareholders at the Company's annual general meeting held in November 2003.
• $\triangleright$ During the financial year 787.588 tonnes of ore grading 4.17% copper from the Reward Deeps/Conviction underground mine were processed through the Thalanga plant for the production of 110,149 tonnes of copper concentrate (Grange's share being 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 (Grange's share being 47.546 tonnes) containing 26.4% copper.

Exploration activities at the Reward Deeps/Conviction underground mine throughout the financial year were focused on increasing mine life by extending the resource base. Underground diamond drilling to delineate resources at Hanging Wall Lens, Lower Reward Deeps and Highway South were undertaken.

$\mathbf{w}$ . Royalties continued to be received from the Freshwater project during the financial year with ore production from both underground and open pit. Royalty income for the financial year ended 30 June 2004 totalled \$173,788 comprising \$29,984 from open pit ore and \$143,804 from underground ore.

Rovalty income derived from open pit ore from November 1996 when the rovalty was first established, to 30 June 2004 totals \$2.54 million. Gold ore treated during this period has been 3.8 million tonnes at an average grade of 2.03g/t gold for the recovery of 232,000 ounces. The royalty has averaged \$10.95 per ounce of gold produced.

Royalty income for underground ore from December 2001 when development of the Plutonic East mine commenced, to 30 June 2004 amounts to \$396,000. Gold ore treated during this period has been 119,776 tonnes at an average grade of 6.55g/t gold for the recovery of an estimated 23,400 ounces. The royalty has averaged \$16.90 per ounce of gold produced

As at 31 December 2003 the Freshwater ore reserves amounted to 820,000 tonnes grading 4.3g/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.

In addition to these reserves, Freshwater mineral resources as at 31 December 2003 amounted to approximately 4.1 million tonnes grading 5.0 g/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.

$\triangleright$ During the financial year royalty payments from mining activities at the Red Hill Mining Lease (M27/57) commenced as a consequence of the 85,000-ounce gold production threshold being reached during the June 2004 quarter. Royalty income for the financial year ended 30 June 2004 totalled \$90,307. As at 30 June 2004 gold production from M27/57 totalled 89.127 ounces.

Ore reserves within M27/57 as at 30 June 2004 amounted to 4.3 million tonnes grading 1.96g/t gold containing 272,000 ounces of gold. The ore reserves are estimated to a depth of 145 metres. Mineral resources within M27/57 as at 30 June 2004 amounted to 6.3 million tonnes grading 1.8g/t gold containing 365,000 ounces of gold to a depth of 150 metres. The mineral resources are inclusive of those resources modified to produce the ore reserves.

• Horseshoe Gold Mine Pty Ltd, a wholly owned subsidiary of Grange has a joint venture agreement with Gleneagle Gold Limited ("Gleneagle") over the Wembley Gold Project. During the financial 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. The results confirmed the presence of high-grade mineralisation within the current resource and the potential for high grade shoots extending below the known resource.

• $\triangleright$ During the financial vear the Company acquired the Southdown Magnetite Project. located approximately 90 km from Albany on the south coast of Western Australia. Evaluation of the project has commenced and the following activities have been completed:
• detailed ground magnetic and gravity surveys confirmed the extent and structure of the deposit and identified extensive strongly magnetic zones untested by previous drilling.
• logging of drill core and development of an electronic data base and geological model to enable resource estimates to JORC standard to be undertaken.
• planning of diamond drilling programme to determine the size and grade of the resource.
• study of development options for the project.

Significant Events Since Balance Date

The Company's primary focus during the next financial year will be to maximise the potential return from mining and processing operations at the Reward Deeps/Conviction underground mine, which are expected to cease in December 2004. An underground diamond-drilling programme designed to test several targets within 200 metres of the Reward Deeps decline commenced during August 2004. A review of all previous exploration within the joint venture tenements has commenced with the objective of outlining new targets for follow up exploration.

During the financial year ended 30 June 2004, the Company devoted significant resources to the identification of new investment opportunities in the resources sector with emphasis on iron ore, manganese and coal deposits located in Southeast Asia. The Company continues to actively pursue investment opportunities in Malaysia and Indonesia.

Grange's objective is to acquire mining projects that have the potential to provide the Company with immediate cash flow to compliment the Company's existing mining projects, including development of the Southdown Magnetite Project. The Board of Grange is committed to pursuing a strategy that will deliver long-term growth to shareholders.

For further information visit the Grange website at www.grangeresources.com.au or alternatively contact Alec Pismiris on (+618) 9321 1118.

ALEC PISMIRIS Company Secretary

APPENDIX 4E

PRELIMINARY FINAL REPORT

FINANCIAL YEAR ENDED 30 JUNE 2004

GRANGE RESOURCES LIMITED ABN 80 009 132 405

RESULTS FOR ANNOUNCEMENT TO THE MARKET

				\$A'000
Revenues from ordinary activities	Up	397%	to	27,331
Profit/(loss) from ordinary activities after tax attributable to members	Up	326%	to	5,004
Net profit/(loss) for the period attributable to members	Up	326%	to	5,004
Dividends (distributions)		Amount per security		Franked amount per security
Final dividend	ΝiΙ			Nil
Previous corresponding period	ΝiΙ			Nil
Record date for determining entitlements to the dividend			Not applicable
The Company does not propose to pay a dividend for the current period.

EARNINGS PER SECURITY (EPS)

Diluted EPS

Current period	Previous corresponding period
7.3 cents	$(3.02)$ cents
6.9 cents	$(3.02)$ cents

Weighted average ordinary shares used in the calculation of the basic EPS is 68,867,613 shares and diluted EPS is 72,105,954 shares.

Current period	Previous corresponding period
NIA	NIA

Net tangible assets per ordinary security

REVIEW AND RESULTS OF OPERATIONS

Principle Activities

The principal activities during the year of entities within the Consolidated Entity were:

• production of copper concentrate and mine development:
• minerals exploration and evaluation:
• investment of cash assets: and
• administration of the Consolidated Entity.

Operating Results

The consolidated operating profit of the Consolidated Entity after providing for income tax amounted to \$5.00 million (2003; loss \$2.21 million). The result included the following items of significance:

• revenue generated from the production of copper concentrate from the Reward Deeps and Conviction underground mine was \$26.80 million:
• royalty income for the year was \$0.26 million ; and
• expenditure associated with mining operations at the Reward Deeps and Conviction underground mine totalled \$19.51 million for the year including mining, transportation, milling, depreciation, amortisation and administration.

Shareholders' equity increased \$6.03 million or 54% during the financial year from \$11.1 million to \$17.13 million. Factors contributing to this increase included the following:

• the buy-back and cancellation of 1,366,677 fully paid ordinary shares for a total consideration of \$446.202;
• the issue 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 issue of 35,000 fully paid ordinary shares issued at an issue price of \$0.12 each during the financial year pursuant to the exercise of options; and
• the profit from ordinary activities of \$5.00 million.

Capital Structure

During the financial year the Company arranged a placement to The Golden Arrow Fund II 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 and was approved by shareholders at the Company's annual general meeting held in November 2003.

In addition, 35,000 fully paid ordinary shares were issued at an issue price of \$0.12 each during the financial year pursuant to the exercise of options issued under the Grange Resources Limited Directors' and Officers' Option Plan.

In July 2003 shareholders of the Company approved the terms of an on-market share buy-back authorising the Company to acquire up to a maximum of 6,675,522 of the fully paid ordinary shares on issue, representing 10% of the capital of the Company over a six month period commencing 1 August 2003. During the six month period, the Company acquired 1.366.677 fully paid ordinary shares for a total consideration of \$446,202.

Likely Developments and Expected Results of Operations

The Company expects to remain profitable in the 2004/05 financial year. The coming year should see the cessation of mining activities at the Reward Deeps and Conviction underground mine.

The Company expects royalty payments from Barrick Gold to continue during the 2004/05 financial year from mining activities on the Freshwater leases. The Company further expects royalty payments from Placer Dome Asia Pacific to continue during the 2004/05 financial year from mining activities at the Red Hill project.

The Company will continue to actively pursue investment opportunities in the resources sector with emphasis on iron ore, manganese and coal deposits located in Malaysia and Indonesia.

$(30)$

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

	Current period \$A'000	Previous corresponding period \$A'000
Revenues from ordinary activities	27,331	6,875
Expenses from ordinary activities	(22, 260)	(9,056)
Borrowing costs Share of net profits (losses) of associates and joint venture entities	(33)	(28)
Profit (loss) from ordinary activities before tax	5,038	(2, 209)
Income tax on ordinary activities	(34)
Profit (loss) from ordinary activities after tax	5,004	(2,209)
Profit (loss) from extraordinary items after tax
Net profit (loss)	5,004	(2, 209)
Net profit (loss) attributable to outside + equity interests
Net profit (loss) for the period attributable to members	5,004	(2, 209)
Increase (decrease) in revaluation reserves
Net exchange differences recognised in equity
Other revenue, expense and initial adjustments recognised directly in equity - share issue costs Initial adjustments from UIG transitional provisions	(30)

Total changes in equity not resulting from transactions 4,974 $(2, 209)$ with owners as owners

$(30)$

NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

PROFIT/(LOSS) FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO MEMBERS

Total transactions and adjustments recognised directly in equity

Profit (loss) from ordinary activities after tax	5.004	(2,209)
Less (plus) outside + equity interests
Profit (loss) from ordinary activities after tax, attributable to members	5.004	(2,209)

NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE (CONTINUED)

REVENUE AND EXPENSES FROM ORDINARY ACTIVITIES

	Current period \$A'000	Previous corresponding period \$A'000
Revenue from sales or services	26,558	6,088
Interest revenue	332	382
Other relevant revenue	441	405
Details of relevant expenses: Cost of sales Administration costs Devaluation of exploration assets Write down and loss on sale of fixed assets Total expenses Depreciation and amortisation excluding amortisation of	27,331 (17, 156) (2,396) (19, 552)	6,875 (6, 273) (1,652) (31) (7,956)
intangibles	(2,708)	(1, 100)
Capitalised outlays
Interest costs capitalised in asset values
Outlays capitalised in intangibles (unless arising from an acquisition of a business)

CONSOLIDATED RETAINED PROFITS

Retained profits/(accumulated losses) at the beginning of the financial period	(25.039)	(22, 830)
Net profit/(loss) attributable to members	5,004	(2,209)
Net transfers from (to) reserves (details if material)	$\mathbf{r}$
Net effect of changes in accounting policies
Dividends and other equity distributions paid or payable	$\mathbf{r}$
Retained profits/(accumulated losses) at end of financial period	(20, 035)	(25,039)

COMMENTARY - CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

Revenue from sales increased by 406% to 26,822,000 due largely to the shipment of copper concentrate from theReward Deeps and Conviction underground mine. Four shipments of copper concentrate were exported during the financial year compared with only one shipment in the previous financial year.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	At end of current	As shown in last
	period	annual report
	\$A'000	\$A'000
Current assets
Cash	16,232	3,771
Receivables	238	1,165
Inventories	273	3,045
Other	53	42
Unrealised receivable on currency hedge		2,115
Total current assets	16,796	10,138
Non-current assets
Receivables	310	310
Other investments	746
Exploration and evaluation expenditure capitalised	799	767
Development properties (+mining entities)	676	3,350
Other property, plant and equipment (net)	261	280
Security Deposit (cash backed)	1,702	1,615
Total non-current assets	4,494	6,322
Total assets	21,290	16,460
Current liabilities
Payables	1,681	866
Provisions exc. tax liabilities	537	616
Other - tax liabilities	34
Unrealised payable on currency hedge		2,115
Total current liabilities	2,252	3,597
Non-current liabilities
Interest bearing liabilities
Provisions exc. tax liabilities	1,500	1,757
Other	400
Total non-current liabilities	1,900	1,757
Total liabilities	4,152	5,354
Net assets	17,138	11,106
Equity
Capital/contributed equity	31,299	30,271
Reserves	5,874	5,874
Retained profits (accumulated losses)	(20, 035)	(25, 039)
Equity attributable to members of the parent entity	17,138	11,106
Outside + equity interests in controlled entities
Total equity	17,138	11,106

NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

EXPLORATION AND EVALUATION EXPENDITURE CAPITALISED

	Current period \$A'000	Previous corresponding period \$A'000
Opening balance	767	697
Expenditure incurred during current period	32	101
Expenditure written off during current period		(31)
Acquisitions, disposals, revaluation increments, etc.	÷
Closing balance as shown in the consolidated balance
sheet	799	767

DEVELOPMENT PROPERTIES

Opening balance	3,350	3,784
Expenditure incurred during current period		620
Amortisation of mine properties	(2,674)	.054)
Closing balance as shown in the consolidated balance
sheet	676	3.350

COMMENTARY - CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The increase in cash assets is largely due to the increased number of shipments of copper concentrate from the Reward Deeps and Conviction underground mine that occurred during the financial year.

Inventory levels are lower than last year as a shipment of copper concentrate was sold close to the end of financial year.

The value of development properties is lower than last year due mainly to the increased amortisation charge which coincides with the number of shipments made in the financial year.

The movement in share capital is due to the implementation of an on-market share buy back and the completion of a share placement to an institutional investor, all of which occurred during the financial year.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Current period \$A'000	Previous corresponding period \$A'000
Cash flows related to operating activities
Receipts from customers	27.459	6,449
Payments to suppliers and employees	(15, 946)	(10, 748)
Interest and other items of similar nature received	332	382
Interest and other costs of finance paid	(33)	(28)
Net operating cash flows	11,812	(3,945)
Cash flows related to investing activities
Payment for purchases of property, plant and equipment	(14)	(40)
Proceeds from sale of property, plant and equipment
Payment for purchases of investments	(246)
Other:
-Payment for exploration, evaluation and development	(32)	(725)
-Payment for security deposit	(87)	(1,615)
-Refund of security deposit		117
-Advances to related parties		(199)
Net investing cash flows	(379)	(2, 462)
Cash flows related to financing activities
Proceeds from issues of + securities (shares, options, etc.)	1,504	60
Payment for shares bought back	(446)	(2, 239)
Other (provide details if material)
- Payment of share issue expenses	(30)
Net financing cash flows	1,028	(2, 179)
Net increase (decrease) in cash held	12,461	(8,586)
Cash at beginning of period (see Reconciliation of cash)	3,771	12,357
Cash at end of period	16,232	3,771

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

RECONCILIATION OF CASH

Cash on hand and at bank	425	384
Deposits at call	15,554	3,144
Bank overdraft	$\mathbf{r}$	$\mathbf{r}$
Cash at bank - joint ventures	253	243
Total cash at end of period	16,232	3,771

COMMENTARY - CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

During the financial year cash assets increased by \$12,461,000 largely attributable to cash receipts derived from four shipments of copper concentrate from the Reward Deeps and Conviction underground mine.

OTHER NOTES TO THE CONDENSED FINANCIAL STATEMENTS

	Current period \$A'000	Previous corresponding period \$A'000
Ratios
Profit before tax I revenue

Profit before tax / revenue Consolidated profit (loss) from ordinary activities before tax as a percentage of revenue	18%	(32)%
Profit after tax $l$ + equity interests Consolidated net profit (loss) from ordinary activities after tax attributable to members as a percentage of equity (similarly attributable) at the end of the period	29%	$(20) \%$

CONTROL GAINED OVER ENTITIES

The Consolidated entity did not gain control over any entity during the period.

DIVIDENDS

Since the end of the previous financial year, no amount has been paid or declared by the Company by way of a dividend.

DETAILS OF ASSOCIATES AND JOINT VENTURE ENTITIES

Name of associate and joint venture	Not applicable
Percentage holding in joint venture	Not applicable
Group's share of associates' and joint venture entities'.	Not applicable

ISSUED AND QUOTED SECURITIES AT END OF FINANCIAL PERIOD

Category of security	Total Number	Number quoted	Issue price per security	Amount paid up per security
Ordinary securities	69,709,259	69,709,259
Changes during current period - Increases through issues - Decreases through returns of capital,	4,320,715	4,320,715	35 cents/ 12 cents	35 cents/ 12 cents
buybacks	(1,366,677)	(1,366,677)	٠

	Total Number	Number quoted	Exercise Price	Expiry date
Options	5,040,000 4,285,715 4,500,000	$\mathbf{r}$ $\mathbf{r}$	12 cents 50 cents 50 cents	30 Jun 2007 28 Nov 2006 30 Jun 2007
Issued during current period	4,285,715 4,500,000		50 cents 50 cents	28 Nov 2006 30 Jun 2007
Exercised during current period	(35,000)	$\mathbf{r}$	12 cents	30 Jun 2007
Expired/Cancelled during current period

ANNUAL MEETING

The annual meeting will be held as follows:

Place

Date

Time

Approximate date the +annual report will be available

AUDIT

This report is based on accounts which are in the process of being audited.

September 2004 (subject to the completion of the Notice of Annual General Meeting)

Level 14 The Forrest Centre

To be determined

To be determined

221 St George's Terrace, Perth, WA

INCOME TAX NOTE

	Economic Entity 2004 \$A '000
The prima facie income tax expense/(benefit) on the operating profit/(loss) is reconciled to the income tax provided in the accounts as follows: Operating profit/(loss)	5.038
The prima facie income tax expense/(benefit) on the operating profit/(loss) at 30%	1.512
Tax effect of permanent differences: Non-deductible expenses w Income tax benefit from prior years not previously brought to account	117 (1.595)
Income tax expense/(benefit) attributable to operating profit/(loss)	34

SEGMENT NOTE

l,

Geographic Segments $(a)$

The Consolidated Entity operates predominantly in one geographic segment, Australia.

$(b)$ Industry Segments

The Consolidated Entity operates predominantly in the mining and exploration industry and has progressively wound up its interests the technology and financial services industry.

SEGMENT INFORMATION - PRIMARY SEGMENT

Business segments	Mining & Exploration Industry		Financial Services & Technology Services		Total
	2004 \$'000	2003 \$000	2004 \$'000	2003 \$'000	2004 \$'000	2003 \$000
Revenue
Sales to customers outside the consolidated entity	26,558	6.088			26,558	6.088
Other revenues from customers outside the consolidated entity	264	351	25		289	351
Inter segment revenues
Share of net profit of equity accounted investments
Total segment revenue	26822	6.439	25.		26 847	6.439
Unallocated revenue					484	436
Total consolidated revenue					27,331	6.875
Results
Segment result	7.267	(954)	24	11)	7.291	(955)
Unallocated expenses					(2737)	(1,690)
Unallocated revenue					484	436
Consolidated entity profit from ordinary activities before income tax expense					5,038	(2,209)
Income tax expense					(34)
Consolidated entity profit from ordinary activities after income tax expense					5,004	(2,209)
Extraordinary item
Net profit					5,004	(2.209)

Business segments	Mining & Exploration Industry			Financial Services & Technology Services		Total
	2004 \$'000	2003 \$000	2004 \$'000	2003 \$'000	2004 \$'000	2003 \$000
Assets
Segment assets	20,318	15.491	415	101	20,433	15,592
Unallocated assets					851	868
Total assets					21,284	16,460
Liabilities
Segment liabilities	3,474	5.235	48	18	3.492	5,253
Unallocated liabilities					653	101
Total liabilities					4,145	5.354
Other segment information:
Equity method investments included in segment assets
Acquisition of property, plant and equipment, intangible assets and other non-current assets		39			44,	43
Depreciation and Amortisation	2708	1.054			2,708	1,100
Non-cash expenses other than depreciation and amortisation	2.425	2,694			2,425	2,694

IMPACT OF THE ADOPTION OF IFRS

The company has recently commenced its review of accounting policies and financial reporting from current Australian Standards to Australian equivalents of International Financial Reporting Standards (IFRS). As the company has a 30 June year-end, priority has been given to considering the preparation of an opening balance sheet in accordance with AASB equivalents to IFRS as at 1 July 2004. This will form the basis of accounting for Australian equivalents of IFRS in the future. and is required when the company prepares its first fully IFRS compliant financial report for the year ended 30 June 2006.

It is not considered there are any significant differences likely to arise as part of this review, however the likely impact on the company's existing accounting policies is as follows:

• Mineral Exploration and Evaluation Expenditure / Development Properties No specific IFRS quidance currently exists for the treatment of exploration and evaluation expenditure. An exposure draft ED6, has been drafted which proposes that the treatment previously used under Australian GAAP may continue to be used subject to impairment testing. If it was determined that the asset was impaired it would be immediately written off to the statement of financial performance:
• Recoverable Amount of Non-current assets Under the Australian equivalent to IAS 38 "Intangible Assets", in determining recoverable amount the expected net cashflows are required to be discounted at a risk adjusted rate. Grange's existing policy is also to determine recoverable amount based on discounted cashflows. The company do therefore not consider that this will represent a significant change to the existing policy;
• Restoration, Rehabilitation and Environmental Costs Under the Australian equivalent to IAS 16 "Property, Plant & Equipment", an initial estimate of costs of dismantling and removing an item, including restoration are required to be included in the determination of an assets cost:
• Taxation Under the Australian equivalent to IAS 12 "Income Taxes", the company will be required to used a balance sheet liability method which focuses on the tax effects of transactions and other events that affect amounts recognised in either the Statement of Financial Position or a tax-based balance sheet. The impact of the adoption of this standard is yet to be quantified by the company; and

Employee Benefits - Under AASB 2 "Share Based Payments", the company will be required to determine the fair value of options issued to employees as remuneration and recognise an expense in the Statement of Financial Performance. This standard is not limited to options and also extends to other forms of equity-based remuneration. It applies to all share-based payments issued after 7 November 2002, which have not vested as at 1 January 2005. Reliable estimation of the future financial effects of this change in accounting policy is impracticable as the details of the future equity based remuneration plans are unknown.