GRANGE RESOURCES LIMITED. — Annual Report 2005

Feb 9, 2005

February 2005

Grange Resources Limited, Level 13, 221 St Georges Terrace, Perth, WA 6000, Australia Phone: +61 8 9321 1118 Fax: +61 8 9321 1523 Website: www.grangeresources.com.au

CORPORATE PROFILE

Grange Resources Limited is a Western Australian based publicly listed mining company. It holds equity positions and royalty interests in mining, development and exploration projects throughout Australia. The Company's principal objective is to grow through the acquisition, development and exploration of resource projects.

BOARD OF DIRECTORS

Anthony Bohnem Atam Rankhe-Wison :-Geoff Weckock Alex Nutter Hans-Rudolf Moser

Non Executive Chairman Managing Director Executive Director Technical Director Non Executive Director

SHARE CAPITAL AT 3rd FERUARY 2005

Issued Securities

Ordinary Fully Paid Shares

Options 50 cent expiring 28 Nov 2006

Options 12 cent expiring 30 Jun 2007

Options 50 cent expiring 30 Jun 2007

73,249,259 4,285,715 1,500,000

Number

4,500,000

MAJOR SHAREHOLDERS AT 31 DECEMBER 2004

AVZNOmness Trifts National Northers Trifes REC Global Services Aust Nominees Pty Ltd DIASSIMOSSSIM HSEC Custody Nominees (Aust) Limited Equitas Finance Pty Ltd Zero Nominees Pty Ltd Blackmon Nominees Ply Ltd Westpac Custodian Nominees Limited King Chong Chai DESTITI QUESTION Alexander Henry Nutter The Resident Contract of the Contract of the Contract of the Contract of the Contract of the Contract of the C Bayonet Investments Pty Ltd Neteo Nominees Pty Ltd Filst Distribution Services Limited Mr James Ne Bayonet Investments Pty Ltd Golvic Pty Ltd, Officers Nominees Pty Ltd.

24651226 181022444 4,283745 2675742 PAVARZO 2023233 1,350,000 AROLOGIO TAOTO 421 LOGAG50 1,000,000 849,999 MAOZIAO 700,000 RESIGN GOOLOOO 574500 523,606 492450 ZOSTAT

Australia PROJECT LOCATIONS

Southdown Magnetite Project PROJECT SUMMARY

• ♦ Located 90km north east of Port of Albany on south coast of WA
• ♦ 3 granted mining leases, 1700 hectares, freehold farming property
• ♦ Mineralisation occurs within a banded quartz magnetite gneiss
• $\le$ Thickness 50-100m, dipping 60 degrees south
• Weathered surface zone 20 40m thick
• ♦ Drilling and evaluation during 1986/1987 reported a resource of 83 mt at a magnetite cut-off grade of 15% to a depth of 150 - 170 metres in the western 2Km of the mining leases.
• ♦ Deposit is sparsely drilled and potential exists to significantly increase resources both at depth and along strike.
• ◆ A new drilling programme by Grange commenced in November 2004 to evaluate resources at depth and along strike.
• ♦ Metallurgical evaluation in 1987 showed:
• $\bullet$ A coarse concentrate grade of 64.6%Fe could be achieved by
  • grinding ore to 0.15mm and using magnetic separation
• $\triangle$ At a 15% magnetite cut-off grade, magnetite recovery to concentrate at 69.3%Fe estimated at 37.4%

Southdown Magnetite Project
BMR AEROMAĞNETIC SURVEY - 1980

Southdown Magnetite Project
GROUND MAGNETICS & GRAVITY SURVEY - 2004

Southdown Magnetite Project OPEN PIT OPTIMIŠATION AND PROJECTION

GOLDER ASSOCIATES UNDERTOOK AN OPEN PIT OPTIMISATION BASED ON THE 2 KM OF DRILLED RESOURCES AT SOUTHDOWN, EXTENDED TO A DEPTH OF 300 METRES.

TREATHER.

		nan an 22 an 23 an 23 an 23 an 24 an 25
CASE	WASTE (Mt)	ORE (Mt)	STRIP (t/t)	DEPTH $(m \, RL)$	DTR $(%)$
EASE	4720	6663	408	-620	RGIER
EASE	ARKI	488/6	3.09	5260)	86159
EASE	5817	445.8	8.65	570	86.34
WDE	460	GOWA	169	-180	86%19
WIDE	47704	1574	610Z	570	86 T.L
WIDE	678 XI	16746	822	E230	8622

OPTIMISATION INDICATES THAT 157.1 Mt OF MAGNETITE ORE AT A MAGNETITE CUT OFF COULD BE ACHIEVED AT A STRIP RATIO OF 3.04 [WASTE(t): ORE(t)]

Southdown Magnetite Project OPEN PIT OPTIMIŠATION AND PROJECTION

PROJECTION TO THE ADDITIONAL 4KM OF MINERALISATION ON GRANGE'S MINING LEASES INDICATES THAT 400 MT OF MAGNETITE RESOURCE IS A SUITABLE TARGET FOR THE NEXT STAGE OF DRILLING PROGRAMME

DRILLING OVER THE UNTESTED 4 KM ZONE COMMENCED IN NOVEMBER 2004. DURING 2005 GRANGE WILL HAVE 4 DRILL RIGS ON SITE.

Southdown Magnetite Project DEVELOPMENT DI AN

MINING AND CONCENTRATION Production of 6.6 Mtpa of Magnetite Concentrate at 69%Fe

G TRANSPORT AND SHIPLOADING

Concentrates transported by slurry pipeline to Port of Albany (90kms), dewatered, stockpiled and loaded onto Capesize vessels for transport to Southeast Asia.

4 PELLETIZATION

Concentrates to be made into Direct Reduction (DR) and Blast Furnace (BF) pellets at a new plant to be constructed in Southeast Asia.

MARKETS

Pellets to be sold to Direct Reduction market (Malaysia, Indonesia, Middle East) and to steel producers in China, Japan, South Korea and Taiwan.

Southdown Magnetite Project
INFRASTRUCTURE SLURRY PIPELINE

Southdown Magnetite Project
INFRASTRUCTURE - PELLET PLANT n an san san san san san san san san san ADMIN LOCALLY MINED EXPORT CONVEYOR STACKER/ RECLAIMER DS 6 EaTM(49) DS 6 CRUSHING & SCREENING
PLANT PELLET STOCKPILE $200_m$ $\Omega$ CONCEPTUAL PELLET PLANT LAYOUT

Southdown Magnetite Project
INFRASTRUCTURE PELLET PLANT

BOUTHDOMN 6.6 M(JA IRONORE CONQENIEVATE

ESTIMATED GAPITAL COSTS 71911

Bankable Feasibility Study Infrastructure (Land, Pipeline, Power Supply, Port facilities and dredging) Concentrator Plant

13.0 217.0 185.0 415.0

SOUTHEAST ASIA 6.9 MIOA PELLET PLANT

ESTIWATED GAPTAL COSTS

Land Port, shiploader, stockyards Pellet Plant

10.0 43.0 260.5 313.5

NISANTI

Southdown Magnetite Project PROJECT SUMMARY

Magnetite Ore Water Electricity Power Generation Requirement Slurry Pipeline Diameter Operational Workforce Life of Mine

17.3 Mtpa 2.0 Glitres pa 263 Gwh 42 Mwatts 150-200mm 200 +25 years

I SOUTHEOWN PLANT OUTPUTS

Iron Ore Concentrate (at 37% magnetic recovery)

6.6 Mtpá

Southdown Magnetite Project PROJECT SUMMARY

SOUTHEAST ASIA PELA ET PLANT INFUTS

Iron Ore Concentrate Feed Water Linestone Electricity Natural Gas

G.G.Mtpa 0.21 Glitres pa 0.07 Mtpa 275 Gwn 2.75 Pi

Operating Workforce 60-100 (excluding Maintenance and Port services)

QUEELES

Iron Ore Pellets Produced

G.9 Mtpa

Southdown Magnetite Project PROJECT TIMETABLE

INDIOZVING TIME 1/ABRE

74

Re-commence Diamond Drilling Commence Bankable Feasibility Study Complete Bankable Feasibility Study Southeast Asian Plant Approvals Southdown Mining Approvals Project Construction Commences Pellet Plant Commissioned

4an 06 Féb 05 Dec 05 Mar 06 Jun 06 Jul 06 Dec 08

Mt Windsor Joint Venture LOCATION AND GEOLOGY

Highway Open Pit Mine
PANORAMIC OVERVIEW

Territorium et al.

la kazili kilik 2 kilik 2, 2, 1 ko hili ki

2000 - Paris Carl 1999 - Johann Harry Start, fransk konge og forskellige og forskellige og stoffen og stoffen og stoffen og s

SA MARIN

Highway and Reward Open Pit Manual CROSS SECTION

Reward Deeps Project
LOCATION OF ORE BODIES

gan masara

Mt Windsor Joint Venture ginnar y

Underground Mining at Highway South KG Mining Scheduled to finish in May 2005 214,000t @ 4.4% cooper to be produced in 2005 K 1 Grange share of production +12,0001 concentrate Final Shipment of Copper concentrate - June 2005 KO Projected net cash surplus to Crange A\$3.0 million 69 (assuming Cu @ US\$3000/t, A\$:US\$ 0.76)

Freshwater Project - Plutonic/Marymia District
REGIONAL GEOLOGY

Freshwater Gold Project

Freshwater Gold Project gi nana a pv

MITHILIA

Owned and Operated by Bardek Gold of Austfalla

Shding Scale Royalty on gold production from underground and open pit operations

Over \$3 million in royalites paid since 1996 on production of 276,000 ozs

Over 600,000 ozs of gold in indicated and inferred TESOUTORS

Freshwater Project
PRODUCTION & ROYALTY RECEIPTS - OPEN PIT ORE

Year	Tonnes	Grade g/t Au	Payment \$	Gold OZ'S	Royalty \$/oz
4096	132,669	2403	54,699	8,174	6169
4997	1,185,591	240Z)	476,456	72,509	657
4008	763,398	THE REA	454,780	45,445	20074
1099	942,121	1184	587,569	53,086	ET NOTE
2000	242,227	$2\pi$	430,139	18,971	22.67
2001	257,758	240	290,025	17,129	46.98
2002	104,893	THE 22	110,117	6,141	1798
ZOOS	117,342	$\mathcal{V}(\mathcal{N})$	125,923	6,995	48400
2004	212,862	TIGS	76,184	10,155	7450
TOTAL	61326746	TAGE	200609	PAIDING	EDEST

Freshwater Project
PRODUCTION & ROYALTY RECEIPTS - UNDERGROUND ORE

Year	Tonnes	Grade g/t Au	Payment \$	Gold OZ'S	Royalty $\sqrt{2}$
2001	600	5,00	930	420	802
2002	54,235	GWO	185,590	10,863	ETAOS
2003	46,117	6108	128,645	8.388	15.34
2004	78,080	GWZ	268,736	46,940	15.86
TOTAL	TAS 231	GEO	RECEPTE	REALE	TEACH

Freshwater Project
ORE RESERVES AS AT 31 DECEMBER 2003

Location	Category	Tonnes	Grade Au g/t	Contained Ounces
Underground
Plutonic East	Probable	328,000	646	69,600
Open Pit
Salmon	Probable	419,000	340	40,200
Callop	Probable	73.000	W.	4,400
TOTAL RESERVES		ESZOTOTO	ZIC	CELLEZOOT

Freshwater Project
MINERAL RESOURCES AS AT 31 DECEMBER 2003

Location	Category	Tonnes		Contained Ounces
Underground
Plutonic East	Indicated Inferred	578,000 3,068,000	HX 58	98,000 523,000
TOTAL U/GROUND		6646000	STO	C22 TOOO
Open Pit
Salmon	Indicated	304,000	224	23,000
Callop	Incred Indicated Interred	5,000 48,000 23,000	80 EK. EK)	500 900 4200
Barramundi	Indicated	35,000	82	3700
Goldfish	Inferred Indicated	6,000 64,000	243 276	500 44600
TOTALOPENEET		ZEEZOOOO	24	84.00
TOTAL RESOURGES		ZZOZNOVO	EAO	GESZATO

Note: Measured and Indicated Resources are exclusive of those Mineral Resources modified to produce the Ore Reserves

Red Hill Project --
TENEMENT LOCATION PLAN

Red Hill Project SUMMARY

• Grange has 4% Gross Revenue Royalty after first 85,000oz's of gold production from M27/57
• Owned and operated by ALACER DOME ASIA PACIFIC
• 4km NE of Kanowna Belle Gold Mine, 20km NE of Kalgoorlie
• Continuous gold mineralisation from surface within porphyry
• Large tonnage low grade gold resource (6.8mt@ 1.80g/t Au) K) containing 365,000ozs within M27157 to 150 metres depth
• Mining commenced rebriery 2006
• 122,898 ozs góld produced from M27/57 to 81 Dec 2004 Royalty payments of \$847,504 received up to 31 Dec 2004

Red HIII Project
ESTIMATED ROYALTY INCOME

Wembley Gold Project SUMMARY

• Located 14 km south of the Peak Hill Gold Mine, 120 km NNE of Meekatharra in the Peak Hill Mineral Field in WA
• Cientet Mining Lesse contains in Differ koold tesoure of 557,000 tonnes @ 2.4 8g/t gold (39,000 contained ounces gold)
• Potential to extend known resource and locate additional deposits
• Mineralisation occurs as steeply dipping lodes within altered volcanies
• 100% owned by Grange Resources with Glancagle Gold Limited farming in by expending \$500,000 to earn 80%
• Grange free carried to decision to mine at which stage Grange can 67 elect to contribute, sell or convert to a 3% gross revenue royalty
• Durack deposit located 50 km from Fortnum treatment plant KC. owned by Gleneagle

Wembley Gold Project
DURACK PROSPECT DRILL HOLE LOCATIONS

Abercromby Well Project SUMMARY

• Located approximately 30 km SE of Willina in the Agnew-67 Wittna Greenstone Bah
• Crange holds a 10% free carried interest in M58/886 to a K 20 decision to mine or expenditure of \$2 million
• The tenement forms bart of the Honeymoon Well gold 51 project being explored by Perilya Limited in joint venture WHA MPI PHY LIG
• « Tenement is prospective for cold mineralisation and significant intersections recorded from the Capital and Bungarra prospects located along strike including: 16m @ 17.6gA Au, 24n @ 11.3gA Au, 9n @ 16.7gA Au

STEP

M53/336 covered by Lake Way alluvials and calcrete which has hampered exploration

Abercromby Well Project
LOCATION AND GEOLOGY

Horseshoe Lights Project

Horseshoe Lights Project
MINERAL RESOURCES AS AT 31 DECEMBER 2004

Location	Category	Tonnes	Grade $%$ Cu	Contained Copper (t)
NW Stringer Ore	Indicated	1,606,000	OK:Ko	13,800
	Inferred	1,606,000	OWE	42,500
Main Zone	Indicated	949.000	ENACI	12,200
	Inferred	233,000	EKOS	2,600
Motters Zone	Indicated	169,000	0.30	1.300
	Inferred	61,000	(0,30)	500
MEH	Indicated	250,000	(0, 0)	2,000
	Indicated	40,000	(0,30)	300
Flotation Tailings	Measured	1,420,000	0133	74300
Barrack Waste Dump	Inferred	250,000	(0,30)	24000
TOTAL RESOURCES		GEEZIOOO	DR:ZE	EZREDO

Mount Samuel Project SUMMARY

Grange 85%, Prospectors 15%

KO.

K÷

67

STANDARD

ANDRO

Z,

• 6km south of Tennant Oreek
• Located along same structural trend as previous producing mines June (810,000oz/Au), Nobles Nob (1,100,000oz Au) and Eldorado (100,000oz Au)
• Polenta for high grade gold, copyrig, bismugh CCOOST
• Last drilling programme in 1987/88 recorded Significant intersections including 17th @ 10807.Au from 28 metres depth
• Access currently not available due to Aboriginal Sacred Site

Mount Samuel Project LOCATION PLAN

Mount Samuel Project
GEOLOGICAL CRÓSS SECTION