GRANGE RESOURCES LIMITED. — Annual Report 2014

Mar 30, 2015

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2014

ANNUAL REPORT Australia’s most experienced magnetite producer

Grange Resources Limited

BOARD OF DIRECTORS

Michelle Li Non-executive Chairperson Yan Jia Non-executive Deputy Chairperson Clement Ko Non-executive Director Daniel Tenardi Non-executive Director Liming Huang Non-executive Director John Hoon Non-executive Director

(resigned 31 December 2014) Honglin Zhao Chief Executive Officer (“CEO”) (as from 6 March 2015) and Director

COMPANY SECRETARY

Piers Lewis

REGISTERED OFFICE

Grange Resources Limited ABN 80 009 132 405 34a Alexander Street, BURNIE, TAS 7320 Telephone: + 61 (3) 6430 0222 Facsimile: + 61 (3) 6432 3390

SHARE REGISTRY

Computershare Investor Services Pty Ltd Yarra Falls 452 Johnston Street, ABBOTSFORD, VIC 3067

AUDITORS

PricewaterhouseCoopers Freshwater Place 2 Southbank Boulevard, SOUTHBANK, VIC 3006

STOCK EXCHANGE

Grange Resources Limited is listed on the ASX Limited (ASX Code: GRR) and the “OTC” Markets in Berlin, Munich, Stuttgart and Frankfurt in Germany (Code: WKN. 917447)

WEBSITE

www.grangeresources.com.au

CONTENTS

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About Grange 1
2014 Overview 2
2015 Priorities 3
About the Grange Business 4-5
Chairperson’s and Chief Executive Officer’s Review 6
Operating and Financial Review 7-19
Corporate Governance Statement 20-28
Directors’ Report 29-44
Auditor’s Independence Declaration 45
Financial Statement 46-86
Tenement Schedule 87
ASX Additional Information 88
List of Significant ASX Announcements 89
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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Top to bottom L-R: Nigel Duggan – Process Operator Andrew Cathcart – Process Operator Brett Quirke – Fitter Jack Robertson – Day Shift

About Grange

OUR BUSINESS

Grange Resources Limited (Grange or the Company), ASX Code: GRR, is Australia’s most experienced magnetite producer with over 47 years of mining and production from its Savage River mine and has a projected mine life beyond 2030.

Grange’s operations consist principally of owning and operating the Savage River integrated iron ore mining and pellet production business located in the north-west region of Tasmania. The Savage River magnetite iron ore mine is a long life mining asset. At Port Latta, on the north-west coast of Tasmania, Grange owns a downstream pellet plant and port facility producing over 2 million tonnes of premium quality iron ore pellets annually, with plans to increase annual production to 2.7 million tonnes. Grange has a combination of spot and contracted sales arrangements in place to deliver its pellets to customers throughout the Asia Pacific region.

In addition, Grange is a majority joint venture partner in a major magnetite development project at Southdown, near Albany in Western Australia. The Southdown magnetite project, once developed, is expected to have the capacity to supply over four times the amount of iron ore produced at Savage River, at an annual production rate of 10 million tonnes of premium magnetite concentrate. The Company announced that it was significantly reducing its expenditure on the project from 2013 and is continuing its search for an equity partner for a strategic share of the Company’s interest in the project.

OUR VISION

We will produce high quality steel making raw materials economically and effectively. Our operations will be efficient, flexible and stakeholder focused.

OUR VALUES

At Grange we ALL will...

• Work safely

• Lead and act with fairness, integrity, trust and respect

• Be responsible and accountable for our actions

• Utilise our resources efficiently and effectively

• Engage with stakeholders and proactively manage our impact on their environment

• Work together openly and transparently

• Promote an environment in which our people can develop and prosper

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

2014 Overview

In 2014 we delivered a record year with respect to production and safety, efficiently navigating through a very challenging year in the market. We sustained consistent production and continue to see demand for our premium product.

OPERATIONAL OVERVIEW

FINANCIAL OVERVIEW

• Exceptional safety record continued. No Lost Time Injuries recorded since July 2010

• Sustained access to high grade ore and recovered from a major pit wall failure in July 2014

• Increased production rates and tightly controlled operating costs

• Delivered record production of over 2.6 million tonnes of concentrate

• Invested in the protection and progressive refurbishment of critical core process infrastructure

• Developed strategies to extend the life and value of Savage River’s operations

• Preserved balance sheet strength with disciplined operational planning and execution enabling internal funding of critical mine re-development

• Maintained an attractive dividend return to shareholders provided in a difficult market

• Sales volumes increased to 2.5 million tonnes of iron ore products

• Revenues from mining operations increased to $297.2 million

• Average realised product price of US$107.34 per tonne (FOB Port Latta)

• Underlying profit after tax was $76.4 million, after excluding

• significant non-cash items

• Net cash inflows from operating activities increased to $177.1 million

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• Maintained a strong Balance Sheet with cash and term deposits of $153.7 million

• Final dividend of 1.0 cent per share

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

2015 Priorities

Grange is Australia’s proven, safe, reliable, long life producer of premium quality magnetite pellets. Grange is committed to the local community of North West Tasmania and makes a significant contribution to the state economy.

2015 PRIORITIES

• Maintain cost control disciplines and increase efficiencies

• Ensure the qualities of our premium product are realised

• Deliver into committed sales off-take agreements

• Formulate a valid alternate development model and seek to secure equity partners for a strategic share of the Company’s interest in the Southdown project

• Continue investment in mine development – produce quality ore from South Deposit and progress the next phase of cutbacks in North Pit

• Continue to develop and implement “real time” operational scheduling and management processes to improve daily productivity

• Continue to invest in process infrastructure through disciplined capital management programmes

• Complete the installation of the first new Autogenous Mill at Savage River

• Progress the implementation of the South Deposit tailings storage facility which provides sufficient tailings storage for the balance of the mine life at Savage River

• Maintain and further develop Mine-to-Market quality management processes

• Maintain dividend policy and continue to drive value for shareholders

Steve Margieson (rear) – Process Operator Dallas Charles (front) – Process Operator

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

About the Grange Business

MAGNETITE AND OUR BUSINESS

Magnetite is a naturally occurring mineral commonly refined into an iron ore concentrate and used for steel production. Iron ore makes up about five per cent of the Earth’s crust and most commonly occurs in the form of haematite or magnetite. Most of the magnetite mined now is used as an ore of iron. Iron liberated from magnetite ore is usually used to make concentrate for pellet feed or pellets which are used to make steel.

The Australian iron ore industry has traditionally been based on the mining, production and export of haematite ores, also referred to as ‘Direct Shipping Ore’ (DSO). Approximately 96 per cent of Australian iron ore production comes from DSO. While magnetite is an emerging industry in Australia, globally it accounts for approximately 50 per cent of iron ore production.

refined to produce steel.

Mining magnetite ore is a high volume business. It is capital intensive and requires significant downstream processing infrastructure including a beneficiation plant, a pellet plant and port facilities. As can be seen from the following graphic, magnetite products command a value premium above haematite ore products such as fines and lump. This premium is derived on two fronts, through additional iron content and a quality premium.

Smelting magnetite to iron involves agglomeration or ‘clumping together’ of the magnetite concentrate and thermal treatment to produce iron ore pellets.

The pellets can be used directly in a blast furnace or at direct reduction iron-making plants.

Magnetite concentrate has internal thermal energy meaning less energy is required, compared to haematite, in the pelletising process which in turn results in less carbon dioxide emissions. The blast furnace chemically reduces iron oxide into liquid iron called ‘hot metal’. The iron ore and reducing agents (coke, coal and limestone) are combined. Pre-heated air is blown at the bottom of the combination for up to eight hours. The final product is a liquid which is drained and eventually

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

The growth in Chinese demand and its understanding of the use of magnetite-based iron ore products has seen a significant change in the value accrued to both magnetite concentrate and pellets and the methodology used for determining that value.

As magnetite concentrate is a refined product, it usually has higher iron content and lower impurities. This can have beneficial quality and environmental outcomes for the steel maker.

Until April 2010, iron ore prices were traditionally decided in closed-door negotiations between the small handful of “key” miners and steel makers which dominated both spot and contract markets. Traditionally, the first agreement on price reached between these two groups set a benchmark price that was followed by the rest of the industry for a 12 month period.

This benchmark system broke down in 2010 with pricing moving to short term index-based mechanisms. Given that most other commodities already have a mature market-based pricing system, it was natural for iron ore to follow suit. This has seen magnetite product pricing change so that it is now based on the transparent market based index prices, with premiums being paid for increased iron ore content and pellet manufacture.

life mining asset set to continue operation to beyond 2030. At Port Latta, 70kms northwest of Burnie, is Grange’s wholly owned pellet plant and port facility producing over 2 million tonnes of premium quality iron ore pellets annually with plans to increase annual production in the coming years to over 2.5 million tonnes. Grange holds long term supply contracts for 1 million tonnes of its annual production and offers the balance of its production to market via a spot sales tendering and contracting process. All products are offered FOB and are shipped to major steel producers in the Asia Pacific region.

As well as this profitable magnetite operation, Grange has

the majority interest in the Southdown project near Albany in Western Australia. Grange is actively seeking an equity partner to take a strategic share of the Company’s interest in the project.

Grange is a proven and reliable commercial producer combining both mining and pellet production expertise.

Grange owns and operates Australia’s largest integrated iron ore mining and pellet production business located in the northwest region of Tasmania. The Savage River magnetite iron ore mine, 100km southwest of the city of Burnie, is a long

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Chairperson’s & Chief Executive Officer’s Review

2014 REVIEW

2014 was a challenging year for the iron ore industry. The iron ore price was threatened by a softening of the Chinese economy and there was significant over supply of lower quality iron ore products in the market. As widely reported, this had a dramatic effect on benchmark iron ore prices and a broader impact on the Australian economy.

Significantly, Grange continues to differentiate itself with our high quality products in this difficult market. We are seeing continued demand for our iron ore pellets which have very low impurities and are an important input in the steel making process. Importantly our Asian customers continue to seek out our products. In the current market conditions, we realised a strong pellet premium above the lower quality iron ore products which underwrote our excellent result for 2014.

Grange recorded an underlying profit after tax of $76.4 million after excluding significant non-cash items (2013: $21.8 million), on revenues from mining operations of $297.2 million achieved on sales of 2.5 million tonnes. The Board was pleased to announce a 1.0 cent per share final dividend payable in April 2015 following the announcement of our 2014 full year results.

Access to high grade ore has been maintained despite a major wall failure that occurred in the middle of the year. We achieved all time record production for concentrate exceeding 2.6 million tonnes and improved pellet production of 2.34 million tonnes, an increase of approximately 22% from the preceding 2013 year. Continued cost control disciplines have reduced C1 cash operating costs to $86.51 per tonne, a decrease of approximately 28% from 2013. A number of external factors have also shifted in Grange’s favour, including the exchange rate, lower oil prices and reduced freight cost.

Our sustained strong cash position at $153.7 million after investment in key capital expenditure projects during 2014 has differentiated Grange from other mining companies, which has enabled Grange to reward its shareholders with a high yield dividend return.

Grange continued to maintain our unrelenting and disciplined management of personal safety in operations. This focus is evident in our performance by the continuous reduction in our safety performance statistics with No Lost Time Injuries since July 2010.

A key development in 2014 has been the approval and commencement of construction of the South Deposit Tailings Storage facility. This is integral to our long term Life of Mine Plan strategy.

Grange continued to seek a buyer for its equity interest in the Southdown Joint Venture Project. The on-going strategy is to maintain the currency and good standing of all tenements, permits and project assets.

OUTLOOK

Grange’s prime focus is to remain competitive in a frequently changing iron ore market where iron ore price is currently under pressure. The focus for the management team is to maintain a disciplined approach in managing its day to day activities while at the same time challenging itself to find better ways to do business.

The Board and the management team have a positive outlook for the pellet market and are proactively exploring opportunities for innovation, improvement and productivity growth. The on-going development of the iron ore market and the issues in China of increasing restrictions on environmental noncompliance provide a unique opportunity for Grange. We are very confident of our competitiveness to supply a sustained high quality, low impurity iron ore pellet product. We strive to deliver value to our loyal employees and shareholders.

The Board is also pleased to announce the appointment of Honglin Zhao to the position of Chief Executive Officer from 6 March 2015. Mr Zhao has been a member of the Board of Directors since 2010 and remains an Executive Director of Grange. With an expected seamless transition to the position, we move forward with a strategic focus and experienced management team.

THANK YOU

On behalf of Grange’s Board, we would like to thank all of our employees for their dedication and hard work over the past year. We are proud of our excellent culture, capability and resilience to best place us for a prosperous future.

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Michelle Li Honglin Zhao Chairperson Chief Executive Officer

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Operating and Financial Review

KEY HIGHLIGHTS

• Outstanding safety performance at both our Savage River and Port Latta operations continues with no Lost Time Injuries recorded since July 2010

• Statutory loss after tax of $110.2 million which included significant items of $186.5 million arising from an impairment of the carrying value of Savage River assets ($207.3 million after tax) partially offset by a profit from the successful negotiation and settlement of a pre-merger deferred consideration obligation ($20.8 million after tax)

• Delivered underlying profit after tax of $76.4 million (2013: $21.8 million), on revenues from mining operations of $297.2 million (2013: $281.1 million)

• Grange’s high quality, low impurity iron ore products continue to attract a premium with average product prices of $118.77 per tonne (2013: $147.99) (FOB Port Latta)

• Strong premiums sustained during downward pressures on iron ore prices due to increased supply, a softening of the Chinese market and the discounting of lower quality iron ore products

• Total iron ore product sales of 2.5 million tonnes (2013: 1.9 million)

• Lower realised AUD:USD exchange rates have delivered stronger AUD revenues

• Continued focus on selling cargoes to targeted customers and balancing opportunities in the spot market

• Maintained good access to high grade ore and improved production results

• Average weight recovery of approximately 49% was achieved for the year, a significant improvement from the preceding 2013 year (33.4%) which was impacted by lower grade ore feeds

• Achieved all time record production for concentrate exceeding 2.6 million tonnes

• Pellet production of 2.34 million tonnes, an increase of

• approximately 22% from the preceding 2013 year

• Improved production and continued cost control disciplines have reduced C1 cash operating costs to $86.51 per tonne (2013: $119.94), a decrease of approximately 28% from the preceding 2013 year

• Sustained strong cash position at $153.7 million (2013: $159.9 million), made significant cash payments and invested capital expenditure in key projects including

• Developing the South Deposit Tailings Storage Facility

• Rebuilding of the 789 Truck fleet

• Prepared for the autogenous mill shell change out

• Continued deferred stripping investment in mine development

• Paid $23.1 million of dividends to shareholders during

• 2014 with a further $11.6 million to be paid in April 2015

• Successfully negotiated a settlement of the pre-merger

• deferred consideration obligation of $24.4 million

• Gained all approvals for construction of the South Deposit Tailings Storage Facility which commenced in mid 2014

• North Pit development continues to yield high grade ore from the main ore zone. South Deposit is now in full production, providing an additional ore source for blending

Paul Sturzaker – Manager Downstream Processing

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Operating and Financial Review (Cont.)

SAFETY PERFORMANCE

The exceptional safety performance at Savage River and Port Latta operations continued with no Lost Time Injuries (LTI) recorded since July 2010. This result reflects the robust and effective safety culture and the strong focus by all staff in maintaining a safe and productive workplace. The Total Recordable Injury Frequency Rate (TRIFR) increased from 3.87 per million hours worked at 31 December 2013 to 4.61 per million hours worked at 31 December 2014 due to a number of medical treatment injuries. The medical treatment injuries have been well managed and provided us a firm focus for further improving the safety of our workplace. We continue with the ongoing development of an open and collaborative approach to our safety culture.

FULL YEAR RESULT

Grange recorded a statutory loss after tax of $110.2 million for the year ended 31 December 2014 (2013 restated: $21.8 million profit after tax). This result included the following significant non-cash after tax items which totalled $186.5 million:

• A gain of $20.8 million after tax arising from the successful negotiation and settlement of a pre-merger deferred consideration obligation;

• A non-cash impairment of the carrying value of Savage River assets of $296.1 million ($207.3 million after tax) primarily as a result of lower than forecast iron ore prices arising from recent changes in the supply and demand dynamics of the market.

Underlying profit after tax for the period, after excluding these significant non-cash items, was $76.4 million (2013 restated: $21.8 million profit after tax). A reconciliation of underlying profit to the statutory loss for the year ended 31 December 2014 is set out below:

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2014
$’000
Underlying profit after tax 76,371
Significant items (net of tax)
Settlement of deferred consideration 20,757
Impairment of assets (207,292)
Statutory loss after tax (110,164)
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Total sales for the year ended 31 December 2014 was 2.5 million tonnes of high quality, low impurity iron ore products (2013: 1.9 million tonnes) and reflects stronger production from maintaining access to high grade ore.

The average pellet price received during the year was $119.70 per tonne of product sold (FOB Port Latta) (2013: $149.57 per tonne). The downward movement is consistent with the reduction in benchmark 62% Fe iron ore prices (CFR China) which was driven by the introduction of additional volume from major iron ore producers, ongoing softening in the Chinese market (from lower economic growth rate, higher port stockpiles and tightening of domestic credit availability) and discounting of lower quality iron ore products.

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Top to bottom L-R: Jason Berechree – Fitter Apprentice Damian Thomas – Apprentice Ben Orders – Boilermaker Bert Keeble – Boilermaker Mitchell Oliver – Boilermaker

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

rock-fall occurred in the North Pit during July 2014 following a period of inclement weather. This event was closely monitored and safely controlled. Remediation efforts were completed in Q4 2014 and the Company does not foresee any impact on forecast production of over 2.3 million tonnes of iron ore products in 2015.

The market did however continue to recognise the quality value in use premium for high quality, low impurity iron ore products sold by Grange.

During the year the Company has seen a growing interest from alternative markets such as Japan, Malaysia and Korea. With soft market conditions the Company has made a strategic decision not to place a number of cargoes into a market driven by opportunistic bidders and will continue to supply targeted customers. Our iron ore products continue to enjoy a strong market demand despite current challenging market conditions. Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd (Shanghai) represents 43.6% of total sales for 2014 (2013: 50.5%).

The construction of the South Deposit Tailings Storage Facility (SDTSF) is progressing to plan with all State and Federal approvals obtained in the middle of 2014. This is a significant project in terms of the ongoing viability of the Savage River operations as it will provide sufficient tailings storage capacity for the remaining life of the mine. This facility will also provide the ability for treatment of the legacy environmental issues arising from previous operations at Savage River.

Expenditure on exploration and evaluation activities during the year was $1.9 million (2013: $5.4 million) and has been charged to the income statement following a voluntary change in the Group’s accounting policy. Under the new policy, exploration and evaluation expenditure is charged to the profit and loss as it is incurred. This change reflects the Group’s primary activity which is mining operations and provides a higher degree of confidence as to the probability that future economic benefits will flow to the Group prior to the capitalisation of such costs.

Mining operations continue to be focussed on the North Pit main ore zone as well as production at South Deposit. South Deposit pre-stripping was completed ahead of plan and ore production commenced during Q4 2014.

Overall material movements continue as planned and good access to high grade ore (delivering head grade of approximately 50% DTR) has been sustained. This higher grade material has improved concentrate and pellet production and driven C1 unit operating costs approximately 28% lower to $86.51 per tonne during a period of soft market conditions. A

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Operating and Financial Review (Cont.)

FINANCIAL POSITION

Grange’s net assets decreased during the year to $535.2 million (31 December 2013 restated: $668.5 million) principally as a result of the following:

• A non-cash impairment of the carrying value of Savage River assets of $207.3 million (net of tax) primarily as a result of lower than forecast iron ore prices arising from recent changes in the supply and demand dynamics of the market;

The Group’s market capitalisation as at 26 February 2015 is $113.4 million. As at the reporting date, the Group has conducted a carrying value analysis and assessed the fair value as being greater than its carrying amount as at 31 December 2014. After recognising the asset impairments in respect of Savage River as at 30 June 2014 and based on the impairment tests performed at the end of the year, no further impairment is required for the 2014 financial year. Please refer to Note 30 of the Financial Report for details.

• Completed pre-production stripping in South Deposit of $43.2 million;

• Amortisation of Mine Property and Development assets of $42 million;

• Increased assets under construction of $30.6 million due to the construction of the South Deposit Tailings Storage Facility (SDTSF) and the 789 Truck Rebuild project; and

• The settlement of the pre-merger deferred consideration obligation which reduced liabilities by $43.9 million.

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L-R: Leigh Ferguson – Mechanical Supervisor
Grenville Archer – Maintenance Planner
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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

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STATEMENT OF CASH FLOWS

Net cash flows from operating activities

Net cash inflows from operating activities for the year were $177.1 million (2013: $110.4 million) and reflect higher iron ore product sales and a reduction in unit operating costs principally as a result of improved access to high grade ore.

Interest received of $2.8 million (2013: $4.2 million) was lower than the corresponding period due to lower average cash balances and a reduction in AUD interest rates.

Net cash flows from investing activities

Net cash outflows from investing activities for the period were $145.2 million (2013: $39.2 million) and principally related to the construction of the SDTSF ($20.8 million), 789 Truck Rebuild project ($10.7 million), completed preproduction stripping in South Deposit ($43.2 million) and ongoing mine development in North Pit ($34.5 million) and South Deposit ($15.3 million).

Net cash flows from financing activities

Net cash outflows from financing activities for the period were $50.5 million (2013 outflow: $39.0 million) and principally related to the payment of the final dividend for the year ended 31 December 2013 ($23.1 million) and the settlement of the pre-merger deferred consideration obligation ($24.4 million).

EXPLORATION AND EVALUATION

The development drilling continued on the main lease at Savage River around the Centre Pit area. This delivered an increase in the Mineral Resource to 390.1MT @ 47.7% DTR with an updated estimation around Centre Pit. Design and modelling work on this deposit will continue in 2015, as we seek to build this into the Life of Mine Plan as an addition to the existing Savage River deposits. For details on the Mineral Resource please refer to the ASX release made on 26 February 2015.

PRODUCTION STATISTICS

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12 Months 12 Months
December 2014 December 2013
PRODUCTION STATISTICS
Mine - Volumes (‘000)
Waste Mined (BCM) 15,571 15,689
Ore Mined (BCM) 1,480 1,979
Total Mined (BCM) 17,051 17,668
Strip Ratio (Ore To Waste) 11:19 8:1
Concentrator - Volumes (‘000)
Ore Crushed (t) 5,822 6,410
Ore Milled (t) (wet) 5,665 6,168
Weight Recovery (%) 48.8% 33.4%
Concentrate Produced (t) 2,626 1,955
Pellet Plant - Volumes (‘000)
Pellets Produced (t) 2,341 1,916
Concentrate Stockpile (t) 177 3
Pellet Stockpile (t) 151 232
Sales - Volumes (‘000)
Pellets (t) 2,422 1,815
Concentrate (t) 0 0
Chips (t) 80 84
Total Sales Volume (t) 2,502 1,899
SALES REVENUE,
CASH OPERATING COSTS (C1) AND OPERATING MARGIN
SALES REVENUE
Sales of Iron Ore (A$’000) $297,155 $281,072
Average Realised Product Price $107.34 $141.43
(US$/t FOB Port Latta)
Average Realised Exchange Rate 0.9038 0.9557
(AUD:USD)
Average Product Price Received (A$/t) $118.77 $147.99
CASH OPERATING COSTS (C1)
Cash Operating Costs (C1) (A$/t ) $86.51 $119.94
Operating Margin (A$/t) $32.26 $28.05
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• Cash Operating Costs (C1) are the cash costs associated with producing iron ore products without allowance for mine development, deferred stripping and stockpile movements and also exclude royalties, sustaining capital, depreciation and amortisation costs.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Operating and Financial Review (Cont.)

MINERAL RESOURCES AND ORE RESERVES STATEMENT - SAVAGE RIVER OPERATIONS

The following tables show the Mineral Resources and Ore Reserves for the Savage River operations as at 31 December 2014. The mining of ore throughout the 2014 year focussed on high grade supply from the Stage 2 and 3A area of North Pit. The increase in resources from 2013 is attributable to the updated resource estimation for the Centre Pit (as announced to the ASX on 26 February 2015).

Mineral Resources and Ore Reserves are categorised in accordance with the Australasian Code for Exploration Results, Mineral Resources and Ore Reserves of 2012 (JORC Code, 2012). Estimated Measured and Indicated Mineral Resources include those Mineral Resources modified to produce the estimated Ore Reserves. Mineral Resources which are not included in the Ore Reserves did not meet the required economic viability hurdle at the time of last review.

MINERAL RESOURCES

A summary of the total Mineral Resources for Savage River as at 31 December 2014 is as follows:

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As at December 2014 As at December 2013
Tonnes Grade Tonnes Grade
(Mt) % DTR (Mt) % DTR
Measured 76.1 52.9 71.3 53.5
Indicated 157.4 49.9 148.7 49.9
Inferred 156.6 42.6 166.2 41.7
Total 390.1 47.7 386.2 47.1
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*Davis Tube Recovery – a measure of recoverable magnetite

ORE RESERVE

A summary of the ore reserve for Savage River as at 31 December 2014 is as follows:

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As at December 2014 As at December 2013
Tonnes Grade Tonnes Grade
(Mt) % DTR (Mt) % DTR
Proved 40.7 51.5 41.4 52.6
Probable 59.4 51.6 61.7 52.7
Total 100.1 51.5 103.1 52.6
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*Davis Tube Recovery – a measure of recoverable magnetite

A detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 26 February 2015. Grange confirms in reproducing the Mineral Resources and Ore Reserves in this subsequent report, that it is not aware of any new information or data that materially affects the information included and all the material assumptions and technical parameters underpinning the estimates in this report continue to apply and have not materially changed.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

HEALTH AND SAFETY

OVERVIEW

Grange believes that responsible Occupational Health and Safety (OHS) and sound Environmental and Social Responsibility (ESR) practices are integral to an efficient and successful company. Grange’s OHS & ESR Management Systems have been integrated to form the “Safety and Environment Management System” (SEMS) which supports OHS & ESR policies and defines the required standards to which all Grange facilities must operate.

The SEMS is an integral part of the business, well supported by a management plan for the fifteen major hazards identified in our industry. The implementation and effective management of the SEMS enables compliance with legislation, reduction of risk, increased efficiencies and provides the framework for continuous improvement. The SEMS is aligned to ISO 14001 Environmental & OHSAS 18001 Quality Management Systems and is applicable to any existing and future national or international operation.

MISSION STATEMENT

Our mission is to drive a continuous improvement culture involving all managers, supervisors, employees and contractors. We strive to eliminate injury and minimise loss, create positive environmental outcomes and to add value to the communities in which we operate. This will be achieved through effective management systems, positive management, integrated risk management practices, risk aware culture, demonstrable leadership, maintaining standards, monitoring performance and looking after our people.

Established systems are in place to ensure legislative requirements are tracked, monitored and corrective actions implemented for any instances of non-compliance.

During 2014, the Savage River mine experienced a major rock fall in North Pit. The application of stringent risk management processes ensured the recovery from this rock fall and other failures are safely managed. Potential failures or rock falls are identified well in advance due to a robust Ground Control Principal Hazard Management Plan. This includes radar monitoring, restricted and exclusion zones to ensure plant and people are removed from the hazard areas and a comprehensive consultation and communication process with the workforce which contains safe operating procedures, reports and trigger action responses.

During 2014, we continued to refine and enhance our Safety and Environmental Management System (SEMS) ensuring continuous improvement and the delivery of superior safety performance. A multi-faceted health and safety strategy was adopted during the year and included:

• Forging ahead with our comprehensive governance framework which utilises leading positive performance indicators to assess performance, monitor compliance and identify opportunities for improvement, reinforced by our win for innovation at the Tasmanian Worksafe Awards;

• Continuing the refinement of our robust Safety, Environment and Social Responsibility system which communicates the individual behaviours required at all levels to drive, support and continually improve our overall performance;

SAFETY PERFORMANCE

The Company is committed to providing a safe place of work and safe systems of work for all its workers at every site. We take this commitment seriously and expect those working for us to share the same level of commitment. We want our workers to return home as fit as when they left home each and every day.

In addition Grange is committed to ensuring compliance with legislative requirements for each area of its operations including meeting or exceeding requirements within:

• Federal & State Work Health & Safety Legislation,

• Anti-Discrimination Legislation,

• Fair Work Australia Legislation,

• Adopting accepted industry standards in areas where legislation is deficient,

• Mining specific, OH&S and Environmental Legislation as required, and

• Delivering highly visible safety focused programs in order to reinforce our commitment to safe work practices;

• Providing training and development which focuses on the cultivation of safety leadership skills in addition to ensuring compliance with all statutory requirements; and

• Incorporating risk management processes and systems into our SEMS as part of Grange’s ongoing safety maturity journey.

Grange recognises the importance of our contractors’ safety management systems being aligned with workplace and mine safety regulations as well as being on par with our own safety standards. To this end we have developed and incorporated new OHS & ESR requirements for contractors into our SEMS.

The focus on positive performance (lead) indicators continued in 2014. These were further enhanced through the safety reviews of the various business streams which reinforce accountability for the delivery of safety critical functions and business improvement strategies.

• Environmental licence conditions for existing and new operations.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

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Casey Ferguson – Process Operator
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Operating and Financial Review (Cont.)

HEALTH AND SAFETY (Cont.)

SHARING AND LEARNING

Grange adopts a philosophy of continuous learning and sharing of safety experiences. In addition to its highly successful on-line induction programs, Grange conducts an extensive range of on-site safety training activities including site driving and pit driving permits, simulation training for new operators, fire warden and extinguisher training as well as refreshers on occupational first aid and road accident rescue entrapment release.

During the year Grange worked closely and openly with the Office of the Chief Inspector of Mines (OCIM), inviting them to participate in regular inspections, audits and organising forums sponsored by Grange for improving OHS in operating mines. These forums also have a positive impact on other Tasmanian operations including connected industries.

In addition to training delivered at the operational level, the company rolled out a number of site-wide programs and workshops to ensure the seamless changeover to the new Work Health and Safety Act 2012. The new Act commenced in Tasmania as part of the National Model Workplace Health & Safety regime on 1 January 2013.

Principal Hazard Management Plans and subordinate standards and procedures were also revised or compiled to ensure full compliance with the new legislative requirements. These Plans were presented to the Office of the Chief Inspector of Mines (OCIM) and assessed as being the benchmark for the mining industry.

The Company has a fully functional and qualified emergency response team (“ERT”) providing expert and first response care to our sites and others in need including road accidents in the Savage River and Port Latta areas. During the year a combined Savage River and Port Latta team competed in the Tasmanian Mines Emergency Rescue Committee Mines Rescue Competition 2013 and were successful in winning the Surface Search and Rescue, Safety, Best Captain and Skills events.

Grange also participated in the WorkSafe Tasmania “Safety Week” events and entered the Workplace Safety Awards 2014. The Company received a Finalist Award for Best Workplace Health and Safety Management System - Private Sector.

The Grange mapping program employed to ensure our SEMS aligns with All Work Health & Safety legislation is the guide offered to other Tasmanian mines both by the TMEC & Workplace Standards at joint OH&S committee meetings.

COMMITMENT TO SOCIAL RESPONSIBILITY

Grange continued with its commitment to social responsibility engaging with our stakeholders and communities to help us understand and respond to their interests and concerns. In addition to regular dialogue with neighbours and communities close to our operations, the Company hosts and supports the education sector through tours, school curriculum information, industry links, a graduate program as well as work opportunities at its operations.

Grange is actively involved in the community in which we operate and regularly supports local events and the region. For example over the past five years, management and workers have rolled up their sleeves and participated in Clean Up Australia Day, covering the long and winding 38 km road between Waratah and the Savage River Township, collecting roadside litter and rubbish to enhance our environment.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

ENVIRONMENTAL

LEGISLATIVE APPROVAL

Grange obtained environmental and planning approval in 1996 and 1997 allowing it to operate under the Tasmanian Land Use Planning and Approvals Act 1993 (LUPA), the Tasmanian Environmental Management and Pollution Control Act 1994 (EMPCA), the Tasmanian Goldamere Pty Ltd (Agreement) Act 1996 (Goldamere Act) and the Tasmanian Mineral Resources Development Act 1995. This approval covers an expected mine and processing life using open-cut mining at Savage River, gangue removal and concentrating at Savage River and pelletising at Port Latta. During 2014 Grange received relevant approvals for the South Deposit Tailings Storage Facility.

GOLDAMERE ACT

The Goldamere Act overrides all other Tasmanian legislation with respect to Grange’s operations. The Goldamere Act limits Grange’s liability for remediation of contamination, under Tasmanian law, to damage caused by Grange’s operations and indemnifies Grange for certain environmental liabilities arising from past operations. Where pollution is caused or might be caused by previous operations and that pollution may be impacting on Grange’s operations or discharges, Grange is indemnified against that pollution. Grange is required to operate to Best Practice Environmental Management (BPEM).

PLANNING APPROVALS

Grange obtained planning approval subject to a series of environmental permit conditions on 29 January 1997. Planning approval was issued by the Waratah Wynyard Council for Savage River and by the Circular Head Council for Port Latta. The approvals were conditional on the provision of an Environmental Management Plan (EMP) incorporating a Rehabilitation Plan (ERP) prior to the commencement of operations. Various other studies were also required. Grange received planning approvals from the Waratah Wynyard Council for the South Deposit Tailings Storage Facility during 2014, construction commenced in July 2014 and is expected to be completed in late 2016.

ENVIRONMENTAL MANAGEMENT PLANS

The EMP incorporating the ERP and study results were approved by the (then) Department of Environment Parks, Heritage and the Arts and operations commenced in October 1997. The latest revision of the approval documents occurred on 6 October 2000 when Environmental Protection Notices (EPN) 248/2 and 302/2 were issued to replace the environmental permit conditions for Savage River and Port Latta respectively.

Approvals are required from the Department of Primary Industries, Parks, Water and the Environment (DPIPWE) and relevant Councils for major infrastructure developments and operational expansions and changes.

These approvals are in the form of approved EMP’s and or amendments and reflect changing operational circumstances, an increasing knowledge base and include approvals designed to extend operations, amend management plans and provide for changes to waste rock dumping plans and any proposed treatment facilities. Such amendments are enacted by the issue of EPN’s or PCE’s.

An amendment to the EMP was approved for an extension of mine and pelletising operations in early 2007 to approve the Mine Life Extension Plan.

EMP and ERP reviews were submitted in December 2013 with the next revision due at the end of 2016. The revised EMPs reflect BPEM and current mine planning and focus on closure requirements and rehabilitation. The development of significant new projects such as a new pit will require additional planning approval and at a minimum an EMP amendment approval followed by issuance of an EPN from the EPA.

GOLDAMERE AGREEMENT

The Goldamere Agreement (which forms part of the Goldamere Act) provides a framework for Grange to repay the Tasmanian Government for the purchase of the mine through remediation works. A significant variation to the Goldamere Agreement was signed on the 19 December 2014 which extends the Agreement until 24 December 2034. This variation also removed a significant number of redundant conditions. The amended Goldamere Agreement provides a framework for Grange to co-manage the Savage River Rehabilitation Project (SRRP) and carry out contracted works in lieu of paying the purchase price of the operation to the Government. The agreement also allows Grange to integrate its rehabilitation obligations with those of the State under the SRRP.

SAVAGE RIVER REHABILITATION PROJECT (“SRRP”)

Grange representatives meet with DPIPWE representatives on a regular basis to develop and implement remediation works at Savage River. Grange has contracted with the SRRP for works including construction, management and development of waste rock dump covers, acid pipelines and other remediation projects. The SRRP objective is to capture and treat 65% of the site’s copper load to remove the possibility of an acutely toxic aquatic environment. The scope of works to meet this objective has been completed and costed to feasibility level.

A strategic plan outlining the works required to achieve the objective and repay Grange’s purchase price debt has been approved by the Tasmanian Environmental Protection Authority and is being implemented by the SRRP Committee. This plan was updated in 2012 to reflect the long term risks and Grange’s latest mining plan.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Operating and Financial Review (Cont.)

ENVIRONMENTAL (Cont.)

PRINCIPAL ENVIRONMENTAL ISSUES

Waste Rock, Tailings and Water Management – Savage River

• Water, tailings and waste rock management at Savage River, including: development of waste rock dumps which exclude oxygen to minimise the formation of acid mine drainage and utilisation of these dumps to form seals on old waste rock dumps; subaqueous tailings deposition and maintenance of saturated tailings; providing a centralised water treatment system using a disused pit to eliminate turbidity from mine runoff. Appropriate management and monitoring systems are in place to ensure regulatory compliance in these areas.

• In 2013 Grange developed a Development and Environmental Management Plan (DPEMP) for the South Deposit Tails Storage Facility (SDTSF). Due to the size and nature of the tails storage facility, the proposal required assessment under LUPA (1993), the State EMPC Act (1994) and the Commonwealth EPBC Act (1999), as the proposal has the potential to impact on matters of national environmental significance (Tasmanian Devil and Spotted Quoll).

• The DPEMP was submitted to the Waratah-Wynyard Council in May 2013 for assessment, the DPEMP was publically advertised through May and June with one submission received in relation to the development. A workshop in July with the Environmental Protection Authority (EPA) highlighted areas that needed further clarification. Toward the end of July the EPA formally requested a Supplementary submission, this submission provided an opportunity to address the issues raised in the public submission. Grange spent a number of months liaising with both the EPA and the Department of Environment in Canberra (DoE) addressing the Supplementary criteria. In early December, 2013 the EPA and the DoE were satisfied that all the required information had been provided which allowed the approvals process to recommence.

• Grange received final council approval under LUPA (1993) on 24 March 2014 for the construction of the South Deposit Tailings Storage Facility. A Permit Conditions Environment (PCE) was issued, outlining the conditions that must be met during construction and operation of the dam.

• Grange received approval from the Federal Environment Minister on 24 April 2014, due to the potential loss of habitat for the Tasmanian Devil and the Spotted Quoll, Grange is required to provide an offset for unavoidable impacts. This offset is in the form of a donation to the Save the Devil Program to a value of $160,000. Grange received further conditions from the Federal approval under the EPBC Act (1999).

• Construction of the dam, including the downstream waste rock dump commenced in early July after a number of the approval conditions had been met. These included approval of a Devil and Quoll Management Plan, a Waste Rock Management Plan and a Water Quality and Remediation Plan. Grange also fulfilled its requirements to establish training and induction packages for threatened species and instigated an EPBC species register for sightings and incidents involving EPBC listed species. The EPBC Register and other relevant documents are available on the Grange Resources Website. By December the waste rock dump was well established and work was commencing on the consolidated section of the dam.

• The SDTSF incorporates the ability to mix and co-treat legacy acid rock drainage (ARD) from the Old Tailings Dam and B-Dump using the excess alkalinity in tailings should Grange and the Crown agree to do so. The potential transfer of the ARD seeps from the Old Tailings Dam will also improve the long term integrity of the Main Creek Tails Dam (MCTD). The co-treatment of the ARD seeps within the SDTSF would improve water quality in Main Creek and the Savage River. Regardless of whether the ARD seeps are treated in the SDTSF, remediation of Main Creek will be further enhanced by the innovative design of the storage facility that will allow water to flow through alkaline rock prior to discharge downstream. The first stage involving the installation of pipework has been completed in 2014, allowing the ARD seeps from the OTD to be gravity feed away from the MCTD.

• Grange continues to improve the performance and utilisation of online data presentation systems for water quality data collection.

Air Emissions Reduction Program – Port Latta

• Work continued in 2014 to maximise the efficiency of the current scrubbers. With work being undertaken to improve pH control and improve the quality of scrubber water to allow finer sprays to be used, improving impaction and collection of particulates and gaseous materials.

• Process improvement and control continued in 2014, with a full time team dedicated to improving furnace operations and performance. There are a number of projects being conducted that will not only aid pellet quality, but stabilise furnace performance and reduce the frequency of severe and moderate blows.

• Late in 2014, a preliminary project scope was drafted looking at means of reducing sulphur prior to it arriving at Port Latta.

REHABILITATION PLANS

Grange continues to plan for closure and departure on completion of the mining plan. Principal issues in respect of closure include maintenance, tailings management, future use of infrastructure and a five year monitoring and maintenance plan.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

SOUTHDOWN MAGNETITE PROJECT

The Southdown Project ultimately aims to export 10 million tonnes per year of premium magnetite concentrate to Asian steel markets. The Southdown Joint Venture (SDJV) is a joint venture between Grange Resources Limited (70%) and SRT Australia Pty Ltd (SRTA) (30%). SRTA is jointly owned by Sojitz Corporation, a Japanese global trading company, and Kobe Steel, Japan’s third largest steel producer. This advanced project has 1.2 billion tonnes of high quality resource, which outcrops at the western end of its 12km strike length and has access to established infrastructure.

2014 PROJECT OVERVIEW

A number of key milestones were achieved through our strategic project development during 2014. These included:

• Existing tenure and approvals have been maintained with notable achievements:

• Securing a 5 year extension of term to November 2019 for Ministerial Statement 816 via issue of Ministerial Statement 987, which incorporates the mine and processing site, slurry pipeline and port facilities,

• Completing a 5 year research program and closing out environmental approval conditions relating to the Declared Rare Flora species Androcalva perlaria. This now allows future clearing of areas previously restricted at the mine site,

• We received confirmation of transfer for port approvals to the new port authority,

• Project security has been enhanced by continuing to build land tenure and access:

• The Community Participation Agreement with the recognised traditional families of the local areas being finalised, paving the way for the lifting of native title objections over parts of the slurry pipeline alignment,

• Negotiations concluding on accessing land for the proposed seawater desalination plant and related infrastructure,

• Progressed studies relating to project engineering and further environmental permitting:

• Groundwater exploration which identified palaeo channels with potential to contribute to construction water supply,

• Progression of the Federal Environmental Approval for

• mine, desalination and pipelines,

• Completed mining study which integrated the Far East Zone into the mine schedule and extended the mine life; and

• Continued to liaise and maintain relationship with key

• government departments.

Grange announced to the market on 29 November 2012 that it would significantly reduce expenditure on its 70% share of the Southdown Magnetite Project. Following this announcement the Project’s team size and scope of work was reduced.

Challenging global economic conditions have resulted in the search for an equity partner continuing throughout the year.

The reduced Project Team has continued to build land tenure and access through negotiations with land holders and government agencies to enhance the ability of the Project to rapidly mobilise in the future.

During 2014, market conditions for securing project investment funding did not improve. The joint venture partners continue to monitor all ongoing project requirements to ensure that the current status of the feasibility studies is such that the project can be fully recommenced as soon as an appropriate opportunity arises. The on-going strategy is to maintain the currency and good standing of all tenements, permits and project assets. This approach will be continued into 2015 and at least until Grange is able to secure an equity partner for a strategic share of the Company’s interest in the project or until a valid alternate development model can be successfully formulated.

• Extensive botanical surveys,

• Ongoing hydrogeological baseline studies,

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Operating and Financial Review (Cont.)

SOUTHDOWN MAGNETITE PROJECT (Cont.)

2015 PROJECT PRIORITIES

• Complete the internal review to determine if there are viable alternative development models for the project

• Continue search for a new equity partner to take a strategic share of the Company’s interest in the Project

• Maintain reduced expenditure for 2015 to approximately $2.5 million (Grange share)

• Maintain all tenements, permits and project assets in good order

• Progress environmental approvals and permits

• Grange has the in house skills, systems, capability and discipline to deliver Southdown’s potential when the time is right

Increasing Albany’s Port Capacity

Subject to a decision to proceed, a concentrate export facility would be built on 7 hectares of reclaimed land at Albany Port, immediately east of the existing wood chip terminal site. The plan incorporates a filtration plant, storage shed, new berth and ship loading facility. Deepening and widening a 9.5 kilometre approach channel will enable 200,000 tonne cape size ships to use the port. Whilst minimal dust generation is expected because of the high moisture content of the concentrate, the shed will be fully enclosed, under negative pressure and fitted with dust extraction equipment.

The development would more than treble Albany’s current port capacity from approximately 4 Mt per annum to 14 Mt per annum. The design has been developed in close consultation with the Southern Ports Authority, Port of Albany (formerly Albany Port Authority) and in line with the Public Environmental Review approved in November 2010.

PROJECT OVERVIEW

A new source of water and power supply

Geology

The plan also envisages that a seawater desalination plant would be constructed 25 km from the mine to supply the plant with 11 GL per annum of water. Power for the mine site would be provided by a new 278 kilometre 330kv transmission line from Muja to Southdown, to be built by Western Power.

The Southdown magnetite deposit is a long, thin, near-surface, continuous ore body. It extends over 12 kilometres, with depths varying from 50 metres in the west to 480 metres in the east. The deposit has been drilled and evaluated since its initial discovery in 1983, including an extensive program of resource drilling during 2011 for the feasibility study.

Operations Planning

The Southdown operation will be modelled on Grange’s existing Savage River operation in Tasmania operating on a 24/7 basis for 365 days per year.

Conventional Mining

Targeted concentrate production rates require a material movement in the mine of up to 132 Mt per annum by conventional drill, blast, load and haul mining methods. The final proposed pit is six kilometres long, one kilometre wide and about 370 metres deep. The mining operation will draw heavily on Grange’s existing capability as Australia’s most experienced commercial producer of magnetite concentrate, to assist with start-up and ongoing operations.

Construction Planning & Schedule

Subject to a decision to proceed, the project will engage an experienced construction management company to coordinate a series of fixed price contracts to minimise risk and the number of interfaces. The Southdown Joint Venture continues to work alongside the community, including traditional owners of the land, to ensure a safe and environmentally responsible project.

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project.
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Ore Crushing and Concentration

The project plan envisages Southdown ore being processed to increase the iron content from around 25% to 69%. Extensive metallurgical test work including pilot plant trials have been conducted since 2004. The process includes crushing, grinding, classification and magnetic separation. The concentrate is further upgraded using hydro separation to remove fine silica and flotation to remove sulphur impurities.

Transporting the Concentrate Slurry 110 km to the Port

Final magnetite concentrate will be thickened and transported through a 110 km pipeline to the Port of Albany, where it will be filtered and stored for loading onto cape size ships. A second pipeline will return the filtered water back to the mine site so it can be used again in the process. Both pipelines will be buried.

L-R: Paul Sturzaker – Manager Downstream Processing, Greg Ling – Mobile Maintenance Manager

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Mineral Resources

The Mineral Resource estimate for the Southdown Project as at 31 December 2014 is as follows:

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As at December 2014
Tonnes (Mt) Grade %DTR
Measured 423.0 37.8
Indicated 86.8 38.7
Inferred 747.1 30.9
Total 1,256.9 33.7
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*Davis Tube Recovery – a measure of recoverable magnetite. Mineral Resources are reported above a cut-off of 10% DTR

Ore Reserves

The current Ore Reserve for the Southdown Project as at 31 December 2014 is based on the pit design and mining schedule developed during the Feasibility Study and includes modifying metallurgical factors and plant recovery.

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As at December 2014
ROM (Mt) DTR Concentrate
(%) Fe (%)
Proven 384.6 35.6 69.6
Probable 3.1 41.7 69.9
Total 387.7 35.6 69.6
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An additional 24.4 Mt of Inferred Resources is included within the designed pit.

A detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 28 February 2014. Grange confirms in reproducing the Mineral Resources and Ore Reserves in this subsequent report, that it is not aware of any new information or data that materially affects the information included and all the material assumptions and technical parameters underpinning the estimates in this report continue to apply and have not materially changed.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Corporate Governance Statement

Grange is committed to creating and building sustainable value for shareholders and protecting stakeholder interests. The Company recognises that high standards of corporate governance are essential to achieving that objective.

The Board has the responsibility for ensuring Grange is properly managed so as to protect and enhance shareholders’ interests in a manner that is consistent with the Company’s responsibility to meet its obligations to all stakeholders. For this reason, the Board is committed to applying appropriate standards of corporate governance across the organisation.

As part of its commitment to enhancing its corporate governance and as a listed company, the Board has adopted relevant practices which are consistent with the Australian Securities Exchange (“ASX”) Corporate Governance Principles.

Details of the Company’s corporate governance practices are included below and also on the Company’s website www. grangeresources.com.au. This facilitates transparency about Grange’s corporate governance practices and assists shareholders and other stakeholders make informed judgments.

Grange considers that its governance practices comply with the majority of the ASX Best Practice Recommendations.

ROLE OF THE BOARD

The Company’s Constitution vests management and control of the business and the Company’s affairs in the Board.

The Board’s primary role is to enhance shareholder value. It is responsible for providing a leadership role and for providing overall stewardship of the organisation. The Board oversees Grange’s strategic direction and the conduct of business activities by the management team for the benefit of Grange shareholders.

BOARD FUNCTIONS

Specific accountabilities and responsibilities of the Board include:

• Developing long-term objectives and strategy in conjunction with management;

• Reviewing and approving plans, new investments, major capital and operating expenditures and major funding activities proposed by management;

• Reviewing and approving policies, goals, targets and budgets;

• Defining and setting performance expectations for the Company and monitoring actual performance;

• Appointing and reviewing the performance of the Managing Director and senior management;

• Assuring itself that there are effective health, safety, environmental and operational procedures in place;

• Ensuring that there is effective budgeting and financial supervision and that appropriate audit arrangements are in place;

• Satisfying itself there are effective reporting systems that will assure the Board that proper financial, operational, compliance, risk management and internal control processes are in place and functioning appropriately;

• Satisfying itself that the annual financial statements of the Company fairly and accurately set out the financial position at year end and the financial performance during the year;

• Assuring itself that the Company has adopted a Code of Corporate Ethics and that Company practice is consistent with that Code;

• Reporting to and advising shareholders;

• Practicing and exhibiting the Company’s values; and

• Having an awareness of the statutory obligations imposed on Board members and ensuring there are appropriate standards of corporate governance.

The Board has a charter, a copy of which is located on the Company’s website.

MANAGEMENT FUNCTIONS

The Company has established the functions that are reserved for management. Management is responsible, on a shared basis with and subject to the approval of the Board, for developing strategy and is directly responsible for implementing the strategies into the Company’s business activities. Management is also responsible for safeguarding the Company’s assets, maximizing the utilization of available resources and for creating wealth for Grange’s shareholders.

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Ian Shepheard – Light Vehicle Fitter
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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

COMPOSITION OF BOARD

The Board aims to have a mix of relevant skills, industry and geographic knowledge together with expertise to carry out its duties and meet its objectives including high levels of

• Finance / accounting / legal expertise,

• Operational and technical expertise,

• Large project management and implementation expertise,

• Australian resources industry expertise, and

• Iron ore marketing and trading expertise.

The Remuneration and Nomination Committee periodically considers the skill and experience mix of the Board and undertakes a gap analysis. Directors are elected for a three year period and retire by rotation in accordance with the Company’s Constitution. Professional intermediaries are used to identify and assess suitable candidates for independent vacancies. New directors are provided with an extensive induction program which includes a range of relevant Company and Board information including company values and culture, meetings with senior management and site visits to familiarise them with the operations of the Company.

The Board has a non-executive Chairperson and the roles of the Chairperson and Managing Director were undertaken by different individuals for part of the year, until the appointment of the Executive Committee (“ExCo”), which upon formation on

18 August 2014, resulted in the Chairperson partially undertaking both roles for the remainder of the year. The Board is comprised of seven Directors – one executive Director and six non-executive Directors.

Whilst it had been noted in previous announcements to the ASX (including Grange’s 2013 Annual Report) that Dr Li was not considered to be independent due to being nominated by Shagang, in 2014 the Board carefully considered all factors outlined in the ASX Corporate Governance Principles and determined Dr Li to be an Independent Director. Accordingly, two of the six non-executive Directors are not considered to be independent. The two non-independent Directors, comprise Clement Ko (representative of substantial shareholder Pacific International Holdings Co. Pty Ltd) and Yan Jia, (representative of substantial shareholder Shagang International Holdings Limited).

The Board is mindful of the Principles and the preference for Boards to have a majority of independent Directors. The Board continues to monitor and review its composition and plans to appoint a further Independent Director in the first half of 2015. The independent status of each director is monitored throughout the year.

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Director Independent Non-Executive Term in Office
Michelle Li Yes – as determined by the Board Yes 14 months
Daniel Tenardi Yes Yes 11 months
Liming Huang Yes Yes 6 months
Yan Jia No – representative of substantial shareholder Yes 9 months
Honglin Zhao No – Executive Director No 4 years & 6 months
Clement Ko No – Substantial shareholder Yes 6 years
John Hoon Yes Yes 4 years & 6 months
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Honglin Zhao was appointed as Chief Executive Officer as from 6 March 2015. Refer to ASX release of 6 March 2015 for further information.

EVALUATION OF THE BOARD, COMMITTEES AND SENIOR MANAGEMENT

The performance of the Board and its Committees is assessed on a periodic basis. Senior management are reviewed and evaluated annually. In particular, the assessment of senior management is conducted by reference to short term and long term key performance indicators which are agreed at the start of each financial year. The evaluation of the Board is overseen by the Remuneration and Nomination Committee and Board members are required to complete questionnaires providing feedback on the Board’s performance. The review process for the Committees is undertaken by way of regular

feedback from the Board during the year. A formal assessment of the Board was last conducted in mid 2014.

The CEO/Managing Director’s performance is evaluated annually by the Remuneration and Nomination Committee against a range of key performance indicators and targets. The Committee makes a recommendation to the Board on the Managing Director’s remuneration which is based on both performance and external market data.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Corporate Governance Statement (Cont.)

BOARD COMMITTEES

AUDIT AND RISK COMMITTEE

The Company has a formally established Audit and Risk Committee with a written charter, a copy of which is available on the Company’s website.

The Audit and Risk Committee consists of Mr Liming Huang (Committee Chairperson), Mr Daniel Tenardi and Ms Michelle Li, all of whom are non-executive Directors. Each member of the Audit and Risk Committee must be appropriately financially literate and at least one member of the Audit and Risk Committee will have extensive financial or accounting expertise.

The Audit and Risk Committee assists the Board to meet its oversight responsibilities in relation to Grange’s financial reporting, legal and regulatory requirements, internal control and risk management systems and internal and external audit functions.

It is responsible for ensuring that the integrity of the Company’s financial records is maintained and that the Company is exposed to minimum financial risk. It reviews;

• Grange’s financial reporting principles and policies, controls and procedures;

• the effectiveness of Grange’s internal control systems; and

• the integrity of Grange’s financial statements and the independent audit thereof and Grange’s compliance with legal and regulatory requirements in relation thereto.

It undertakes a broad review, monitors compliance and makes recommendations to the Board in respect of the Company’s accounting, compliance and risk affairs. It also reviews the appointment and performance of the external auditors.

The Board acknowledges that risk management is a core component of Director and executive duties and an essential element of good governance. The Audit and Risk Committee assists the Board in determining the Company’s risk profile and is responsible for overseeing and approving risk management strategies and policies, internal compliance and internal control. A summary of the Company’s Risk Management Policy is available on the Company’s website.

The Audit and Risk Committee oversees an annual assessment of the effectiveness of risk management and internal compliance and control. The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management. Management is required by the Audit and Risk Committee to assess risk management and associated internal compliance and control procedures and report back on the efficiency and effectiveness of risk management by benchmarking the Company’s performance to the Australia/New Zealand Standard on Risk Management.

The ExCo and Chief Financial Officer have provided a written statement to the Board that:

• their view provided on the Company’s financial report is founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board; and

• the Company’s risk management and internal compliance and control system is operating effectively in all material respects.

REMUNERATION AND NOMINATION COMMITTEE

The Remuneration and Nomination Committee’s overall role is to ensure that Grange’s remuneration policies and practices are consistent with the Company’s goals and objectives.

The Committee is responsible for the oversight of Grange’s remuneration strategy and overall policy. It makes recommendations to the Board on all aspects of appointment, remuneration and termination pertaining to the CEO/Managing Director and reviews the appointment, remuneration or termination of senior executives.

Senior executives’ remuneration packages are in accordance with the ASX’s Corporate Governance Principles and Recommendations containing a balance of fixed and incentive pay reflecting both short term and long term incentives which reflect the Company’s core performance requirements. Further details are contained within the Remuneration Report.

Non-executive Directors are remunerated solely by way of fixed cash fees which are inclusive of the superannuation guarantee. They do not receive bonus payments nor are they provided with retirement benefits other than superannuation. Further details are contained within the Remuneration Report.

In addition to considering the performance of senior management, the Committee monitors external remuneration trends and market conditions and selects and appoints external advisers as required.

The Committee oversees the Company’s diversity policy and corporate governance practices in relation to remuneration. It is also responsible for making recommendations on nonexecutive director remuneration and addressing relevant remuneration issues generally.

In addition to its remuneration responsibilities the Committee undertakes Board nomination and appointment functions. It assesses the skills required by the Board, prepares and reviews the Board’s succession plan and implements processes to identify and recruit suitable candidates for appointment as non-executive directors.

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22 GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

The Remuneration and Nomination Committee has three members and presently comprises Mr Daniel Tenardi (Committee Chairperson), Ms Michelle Li and Ms Yan Jia, all of whom are non-executive Directors. A majority of the Committee (including the Committee Chairperson) is independent.

There are no executive Directors on the Committee. The Committee seeks input from the ExCo and senior executives on selected Company remuneration matters. No senior executive is involved in deciding their own remuneration. Executive remuneration is a mix of fixed and performance based remuneration and external remuneration advisers are consulted by the Committee as required.

The Committee has adopted the following guidelines for engaging and dealing with remuneration consultants:

• the consultant/consultancy should have a database from which to draw data on market practice in relation to remuneration of key management personnel (“KMP”) in relevant comparator companies;

• the consultant/consultancy should have significant relevant experience in advising on KMP remuneration;

• the individual consultants who are advising the Company should have significant relevant experience in advising on KMP remuneration;

• the consultant/consultancy should be engaged by and report directly to the Board or the Remuneration and Nomination committee;

• any interaction between management and the consultant/ consultancy should be authorised by the Board or Remuneration and Nomination Committee and should be limited to receiving input to allow the consultant to undertake the work commissioned by the Board or Remuneration and Nomination committee; and

INDEPENDENT PROFESSIONAL ADVICE AND ACCESS TO COMPANY INFORMATION

All Directors have the right of access to all relevant Company information, to the Company’s e xecutives and, subject to prior consultation with the Chairperson, may seek independent professional advice concerning any aspect of the Company’s operations or undertakings at the Company’s expense.

CODES OF CONDUCT

The Board acknowledges its responsibility to set the ethical tone and standards of the Company. Accordingly it has clarified the standards of ethical and professional behaviour required of Directors, employees and contractors through the establishment of a Code of Ethics and Conduct Policy.

The Code requires all Directors, employees and contractors to conduct business with the highest ethical standards, including compliance with the law and to report or avoid conflict of interest situations. Compliance with the Code is mandatory with breaches taken seriously.

In addition the Board has a dedicated Code of Conduct which provides Directors with clear and unambiguous guidance as to the minimum standards of behaviour which is required of Grange’s Directors undertaking Grange activities or whenever they are representing Grange.

Copies of the Code of Ethics and Conduct and the Board Code of Conduct are located on the Company’s website.

• If interviews or working sessions involve management then a representative of the Board or Remuneration and Nomination Committee may attend.

Further details are contained in the Remuneration Report section of the Annual Report. The Committee has a written charter, a copy of which is available on the Company’s website.

HEALTH, SAFETY AND ENVIRONMENT COMMITTEE

The Board resolved to disband the dedicated Health, Safety and Environment Committee during the financial year. The Board has taken responsibility to undertake its environmental and workplace health and safety role and obligations.

COMMITTEE OF INDEPENDENT DIRECTORS

The Board resolved to disband the Committee of Independent Directors’ of the Board during the financial year. Independent Directors meet informally as required with respect to transactions which may give rise to a potential conflict of interest for a particular Director, with a view to protect the interests of both the Company and its shareholders.

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23

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Corporate Governance Statement (Cont.)

DIVERSITY

PHILOSOPHY AND POLICY

Grange recognises that our employees are our most valuable resource and the means by which we will achieve safe, sustainable, cost effective production. Diversity is one of many elements which helps create sustainable value for our shareholders. Grange takes a broad and all-encompassing view of diversity. Diversity is about accepting, respecting and understanding that each person is unique.

In late 2011 the Board approved a Diversity Policy. The policy highlights that an individual’s differences can be along the lines of race, cultural background, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs or other ideologies. Diversity can also include an extensive range of individual characteristics and experiences such as communication styles, career path, educational background, family responsibilities and marital status which may influence personal perspectives.

The policy details how Grange supports diversity in its work place. This includes:

• Undertaking recruitment of employees at all levels from as diverse a pool of qualified candidates as reasonably possible;

• Recruiting and selecting on the basis of merit (skills,

• qualifications, abilities and achievements);

• Providing fair and equal access to employees so that no one person or group of people is treated any less favourably or more favourably than others;

• Providing a positive and safe work environment that promotes job satisfaction and one in which all employees feel they are valued, treated fairly and recognised for their contribution;

• Treating all employees fairly and with respect and dignity as detailed in the Company’s values and the Code of Business Ethics and Conduct and Fair Treatment Policy;

• Maintaining a comprehensive range of contemporary policies as part of the Grange Management System covering recruitment, behaviour at work, fair treatment, performance as well as training and personal development;

• Providing training and personal development plans to maximise safety awareness, job performance and productivity and the opportunity for promotion;

• Complying with anti-discrimination and equal employment legislation;

• Initiating and supporting actions in our communities which foster diversity and equal opportunities; and

• Integrating Board approved diversity targets into business and workforce planning.

In addition, the policy also explains how the Board demonstrates its commitment to diversity. This includes:

• Using professional intermediaries to source suitably

• qualified candidates for Board positions;

• Providing translation services and other administrative arrangements to accommodate non-English speaking Board members;

• Assuming responsibility for establishing and reviewing measurable diversity targets (with the assistance of the Remuneration and Nomination Committee);

• Reporting on gender participation in the Annual Report each

• year; and

• Annually reviewing the diversity policy.

A copy of the policy is on the Company’s website.

GENDER PARTICIPATION

The Company has two female Board members, one who is also Chairperson. In 2014 the Grange Board had a cultural diversity with six of the seven directors being of overseas origin.

The Company defines executives as those professional or managerial team members who report directly to the Board. Of the three executives reporting directly to the Board, one (33%) is a woman. The Company conducts performance based reviews at least annually of all employees and monitors the number of women progressing through its professional and technical ranks.

• Reinforcing a performance oriented and merit based organisational culture in which remuneration practices reward and retain employees equally based on performance and potential regardless of gender;

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24

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

The table below indicates the participation of women in the general workforce for the Company as at 31 December 2014:

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----- Start of picture text -----

Workforce % of Total As at 31 Dec As at 31 Dec Measurable
Segment Workforce 2014 % of 2013 % of Diversity Targets
in Women in Women in
Segment Segment Segment
Supervisory / 22% 25% 20%
Administrative No specific target for these individual
categories. Overall target of 10% for all
Operations / 74% 4% 4% three categories by 2018
Maintenance
Professional / 4% 10% 11% 15% by 2018
Managerial
Total workforce 100% 9% 8% 10% by 2018
----- End of picture text -----

As at 31 December 2014 the number of women in the Company’s workforce was 46. This represents an overall participation rate of 9% (2013: 8%). Women comprise 4% of operations and maintenance roles, 25% of administration and supervisory roles and 10% of senior professional and managerial roles.

In early 2012 the Company established measurable diversity objectives. In developing its objectives the Board considered the location and nature of the Company’s operations as well as the potential impact of its major development project.

As a result, for the foreseeable future the Company will be based at Grange’s Tasmanian operations. Both Savage River and Port Latta are mature and established operations and by mining industry standards have a stable workforce with very

low levels of staff turnover. Consequently there are limited opportunities for the Company to improve diversity through recruitment.

In 2014 the Company reviewed its diversity objectives in the light of the changed operational landscape and market conditions. As a result amendments have been made to the timeframe for the attainment of its diversity objectives with 2018 being considered a more realistic target. The Company continues to aim to have women comprising 15% of senior professional / managerial roles and to increase the overall proportion of women in the workforce to 10%. The Board will continue to review progress against these targets at regular intervals.

TRADING IN COMPANY SECURITIES BY DIRECTORS AND SENIOR EXECUTIVES

To safeguard against insider trading, the Company’s Securities Dealing Policy prohibits employees and Directors from trading in any securities of the Company at any time when they are in possession of unpublished, price-sensitive information in relation to those securities.

The policy describes what constitutes insider trading, the penalties for undertaking such activities and makes recommendations on when employees should not trade in the Company’s securities.

Before commencing any trade, a Director must first obtain the written approval of the Chairperson and senior management must advise the Company Secretary.

As required by the ASX Listing Rules, the Company notifies the ASX of any transaction conducted by Directors in the securities of the Company.

During the year the Company also introduced additional internal procedures to provide clarity to employees in relation to information requests from external sources.

The policy also notes designated “blackout” periods during which Directors and employees are not allowed to trade. The Company Secretary advises employees and Directors of the commencement and conclusion of all blackout periods.

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25

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Corporate Governance Statement (Cont.)

CONTINUOUS DISCLOSURE

The Company is committed to providing relevant up-to-date information to its shareholders and the broader investment community in accordance with its continuous disclosure obligations under the ASX Listing Rules and the Corporations Act 2001.

The Board has a Continuous Disclosure and Market Communication Policy to ensure that information considered material by the Company is immediately reported to the ASX. Other information such as Company presentations are also disclosed to the ASX and are on the Company’s website.

Grange applies the following guiding principles for market communications:

• Grange will not disclose price sensitive information to an external party except where that information has previously been disclosed to the market generally.

• Timely and accurate information must be provided equally to all shareholders and market participants.

• Information must be disseminated by channels prescribed by laws and other channels which Grange considers to be fair, timely and cost-efficient.

The Company’s website provides access to all current and historical information, including ASX announcements, financial reports and other releases.

SHAREHOLDER COMMUNICATION

In adopting a Continuous Disclosure and Market Communication Policy, the Board ensures that shareholders are provided with up-to-date information.

Communication to shareholders is facilitated by the production of the annual report, quarterly and half yearly reports, public announcements and the posting of all ASX announcements and other information (including copies of all investor presentations) on the Company’s website. The website contains eleven years of historical ASX announcements to facilitate research by investors and shareholders.

Shareholders are encouraged to attend and participate in the Annual General Meeting (AGM) of the Company. Shareholders may raise questions at the AGM and the external auditor is in attendance at such meetings to address any questions in relation to the conduct of the audit.

ASX BEST PRACTICE

RECOMMENDATIONS

The following table lists each of the ASX Best Practice Recommendations applicable to the Company as at the date of its financial year end, being 31 December 2014 and whether the Company was in compliance with the recommendations at that date. Where the Company considers that it is divergent from these recommendations, or that it is not practical to comply, there is an explanation of the Company’s reasons set out following the table.

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----- Start of picture text -----

Principle / Recommendation Complied Note
1 Lay Solid Foundations for
Management and Oversight
1.1 Establish and disclose the func-
tions reserved to the Board and 3
those delegated to management
1.2 Disclose the process for evalu-
ating the performance of senior 3
executives
2 Structure the Board to Add
Value
2.1 A majority of the Board should
3
be independent directors
2.2 The chair should be an inde-
3
pendent director
2.3 The roles of chair and chief
executive officer should not be 7 1
exercised by the same indi-
vidual
2.4 The Board should establish a
3
nomination committee
2.5 Disclose the process for evalu-
ating the performance of the
3
Board, its committees and indi-
vidual directors
3 Promote Ethical and Respon-
sible Decision Making
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• 3.1 Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to

• the practices necessary to maintain confidence in the Company’s integrity 3

• the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders

• the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

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26

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

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----- Start of picture text -----

Principle / Recommendation Complied Note
3.2 Establish and disclose a policy
3
concerning diversity
3.3 Disclose the measurable objec-
tives for achieving gender diver-
sity set by the Board in accord-
3
ance with the diversity policy
and progress towards achieving
them
3.4 Disclose the proportion of
women employees in the whole
organisation, women in senior 3
executive positions and women
on the board
4 Safeguard Integrity in Finan-
cial Reporting
4.1 The Board should establish an
3
Audit Committee
4.2 The Audit Committee should be
structured so that it
• consists of only non-executive
directors
• consists of a majority of
3
independent directors
• is chaired by an independent
chair, who is not chair of the
Board
• has at least three members
4.3 The Audit Committee should
3
have a formal charter
5 Make Timely and Balanced
Disclosure
5.1 Establish and disclose written
policies designed to ensure
compliance with ASX Listing
Rule disclosure requirements 3
and to ensure accountability at
a senior management level for
that compliance
6 Respect the Rights of Share-
holders
6.1 Design and disclose a commu-
nications strategy to promote
effective communication with
3
shareholders and encourage
effective participation at general
meetings
7 Recognise and Manage Risk
7.1 Establish policies for the over-
sight and management of mate-
3
rial business risks and disclose
a summary of those policies
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----- Start of picture text -----

Principle / Recommendation Complied Note
7.2 The Board should require
management to design and
implement the risk management
and internal control system to
manage the Company’s mate-
rial business risks and report
to it on whether those risks are 3
being managed effectively.
The Board should disclose that
management has reported to
it as to the effectiveness of the
Company’s management of its
material business risks
7.3 The Board should disclose
whether it has received assur-
ance from the chief executive
officer (or equivalent) and the
chief financial officer (or equiva-
lent) that the declaration pro-
vided in accordance with sec-
3
tion 295A of the Corporations
Act 2001 is founded on a sound
system of risk management and
internal control and that the sys-
tem is operating effectively in all
material respects in relation to
financial reporting risks
8 Remunerate Fairly and
Responsibly
8.1 The Board should establish a
3
remuneration committee
8.2 The remuneration committee
should be structured so that it
• consists of a majority of
independent directors 3
• is chaired by an independent
chair
• has at least three members
8.3 Clearly distinguish the struc-
ture of non-executive direc-
tors’ remuneration from that of 3
executive directors and senior
executives
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27

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Corporate Governance Statement (Cont.)

SHAREHOLDER COMMUNICATION (Cont.)

NOTE 1: PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

The Company was not in compliance with recommendation 2.3 of the ASX Best Practice Recommendations for the financial year 2014. In August 2014 the Board appointed an interim Executive Committee (“ExCo”) to manage the Company on an interim basis until Mr Honglin Zhao was appointed as the CEO on 6 March 2014. Dr Li was appointed to ExCo and also holds the position of Chairperson. As a consequence, from August until the end of the financial year 2014 the roles of chair and chief executive officer were in part exercised by the same individual. This was an interim measure until the appointment of Mr Zhao.

Despite the Company not being in compliance with this Best Practice Recommendations, the Board believe that the individuals on the Board can and do make quality and independent judgements in the best interests of the Company and all stakeholders.

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L-R: Brett Quirk – Fitter Jack Robertson – Day Shift

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28

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

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Australia’s most experienced magnetite producer

FINANCIAL REPORT

For the Year Ended 31 December 2014

CONTENTS

• Directors’ Report ...............................................................30

• Auditor’s Independence Declaration ................................45

Financial Statements

• Statement of Comprehensive Income .........................46

• Statement of Financial Position ...................................47

• Statement of Changes in Equity ..................................48

• Statement of Cash Flows ............................................49

• Notes to the Financial Statements ..............................50

• Directors’ Declaration........................................................84

These financial statements are the consolidated financial statement of the consolidated entity consisting of Grange Resources Limited and its subsidiaries. The financial statements are presented in Australian currency.

Grange Resources Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

34A Alexander Street Burnie Tasmania 7320

A description of the nature of the consolidated entity’s operations and its principal activities can be found on pages 1 to 19 of this report.

All press releases, financial reports and other information are available on our website: www.grangeresources.com.au

• Independent Auditor’s Report ...........................................85

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29

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report

The Directors present their report on the consolidated entity (the “Group”) consisting of Grange Resources Limited (“Grange” or “the Company”) and the entities it controlled at the end of, or during, the year ended 31 December 2014.

DIRECTORS

The following persons were Directors of the Company during the whole year and up to the date of this report:

Michelle Li Chairperson Honglin Zhao Executive Director Clement Ko Non-Executive Director

As announced on 18 August 2014, the Board has established an Executive Committee comprising Dr Michelle Li, Mr Honglin Zhao and Mr Daniel Tenardi to manage the Company on an interim basis following Managing Director, Mr Wayne Bould leaving the Company. Until a replacement has been appointed, Grange management will continue with operational responsibilities and will report to the Executive Committee. The Company has commenced a search for a replacement for Mr Bould.

Daniel Tenardi was appointed a non-executive Director of the Company from 31 March 2014.

Wayne Bould was Managing Director of the Company until 18 August 2014. He ceased being a Director of the Company on 22 August 2014.

John Hoon was non-executive Director of the Company until his resignation on 31 December 2014.

Neil Chatfield was non-executive Director and Deputy Chairperson of the Company until his resignation on 15 April 2014.

Yan Jia was appointed a non-executive Director of the Company from 1 June 2014.

Liming Huang was appointed an independent non-executive Director of the Company from 24 September 2014.

INFORMATION ON DIRECTORS

Honglin Zhao,

Executive Director

Mr Zhao is a former Director of Shagang International (Australia) Pty Ltd, former Director and General Manager of Shagang (Australia) Pty Ltd, and former Director of Jiangsu Shagang Group, ultimate shareholder of Shagang International Holdings Limited and China’s largest private steel company.

Mr Zhao has over 39 years’ experience in the industry and was previously the Commander of Project Development Headquarters with Shagang. Mr Zhao has extensive project management and implementation experience and expertise.

Clement Ko, LLB, MBA,

Non-executive Director

Mr Ko is the Chairperson and sole shareholder of Pacific Minerals Limited, the sole member of Pacific International Co Pty Ltd (one of the current shareholders of Grange). Prior to founding Pacific Minerals Limited, Mr Ko worked for BHP Billiton (China) Ltd as a senior regional marketing manager. Mr Ko has more than 20 years of experience in the mining sector with extensive experience in marketing and sales.

Daniel Tenardi,

Non-executive Director and Chairperson of the Remuneration and Nomination Committee

Mr Tenardi is an experienced mining executive with over 40 years’ experience in the resources industry across a range of commodities including iron ore, gold, bauxite and copper. He has a wealth of knowledge in managing bulk ore operations and has extensive international networks.

Mr Tenardi was the former CEO of Ngarda Civil & Mining and has also held senior executive and operational roles at CITIC Pacific, Alcoa, Roche Mining and Rio Tinto. He was the Managing Director of Bauxite Resources and is a non-executive Director of Australia Minerals & Mining Group Ltd.

Michelle Li, PhD, GAICD,

Chairperson, Member of the Audit and Risk Committee, Member of the Remuneration and Nomination Committee

Dr Li was appointed as non-executive Chairperson on 29 October 2013. Dr Li is a mineral processing engineer and metallurgist with over 20 years’ experience in the Australian mining sector. Dr Li’s experience includes senior roles at CITIC Pacific, Rio Tinto and Iluka Resources, as well as a senior project role on the Grange Resources Southdown project.

Dr Li has a PhD from the University of Queensland and is currently non-executive Director of Orion Metals Limited and was previously a non-executive Director of Sherwin Iron Limited from 2012 until 2013.

Yan Jia, JM, GAICD,

Deputy non-executive Chairperson and Member of the Remuneration and Nomination Committee

Ms Jia is currently the Director of the Administration Department with the Jiangsu Shagang International Trade Co Ltd, a subsidiary of Jiangsu Shagang Group, China’s largest private steel company. Ms Jia has over seven years’ experience of managerial, human resources, intellectual property and commercial experience in the steel industry and bulk raw material transaction sector. Ms Jia also has a Masters of Law from Tsinghua University in China.

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30

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Liming Huang , JD, LLM, EMBA,

Non-executive Director and Chairperson of the Audit and Risk Committee

Mr Huang is a corporate and commercial lawyer with 10 years legal experience. He is currently special counsel with Corrs Chambers Westgarth Lawyers. Mr Huang has been extensively involved in a number of iron ore, gold and other resource corporate transactions between Australia and China and provides legal advice to local and international investors and businesses on mergers and acquisitions, joint venture, equity capital market and corporate governance. In addition, Mr Huang is an associate member of CPA Australia.

Mr Huang is a committee member of Australia China Business Council Victoria Branch.

COMPANY SECRETARY

Mr Piers Lewis , BComm, CA, AGIA

Mr Lewis has more than 17 years’ global corporate experience and is currently the Company Secretary and CFO for ASX listed companies Voyager Global Group Limited, Ardiden Limited and Ultima United Limited. Mr Lewis also serves on the board of Ardiden Limited.

Mr Lewis was instrumental in the successful listing of Talga Resources on the ASX. In 2001 Mr Lewis qualified as a Chartered Accountant with Deloitte (Perth), he has extensive and diverse financial and corporate experience from previous senior management roles with Credit Suisse (London), Mizuho International and NAB Capital. Mr Lewis is also a Chartered Company Secretary.

Ms Pauline Carr resigned 8 October 2014.

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Michelle Li

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Clement Ko

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Yan Jia

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Honglin Zhao

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Daniel Tenardi

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Liming Huang

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Piers Lewis

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31

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report (cont.)

PRINCIPAL ACTIVITIES

During the period, the principal continuing activities of the Group consisted of:

• the mining, processing and sale of iron ore; and

• the ongoing exploration, evaluation and development of mineral resources particularly, the Southdown Magnetite and associated Pellet Plant Projects.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

Except as discussed previously, no other matter or circumstance has arisen since 31 December 2014 that has significantly affected, or may significantly affect:

• the Group’s operations in future financial years; or

• the results of those operations in future financial years; or

• the Group’s state of affairs in future financial years.

DIVIDENDS

Dividends paid to members during the financial year were as follows:

follows:
	2014 $’000	2013 $’000
Unfranked interim dividend for the year	-	11,565
ended 31 December 2013 –1.0 cent per
share
Unfranked fnal dividend for the year	23,142	11,564
ended 31 December 2013 – 1.0 cent per
share (2012: 1.0 cent per share) and an additional special dividend of 1.0 cent per share(2012:nil) Total dividendsprovided for orpaid	23,142	23,129

These dividends were declared NIL conduit foreign income.

In addition to the above dividends which were paid during 2014, the directors have recommended the payment of an unfranked dividend of $11.6 million. This represents an ordinary final unfranked dividend of 1.0 cent per share for the year ended 31 December 2014. This final dividend was declared NIL conduit foreign income and will be paid on 2 April 2015.

OPERATING AND FINANCIAL REVIEW

Information on the Company’s operational and financial performance is set out on pages 7 to 19 of this annual report.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Grange’s strategic focus is to generate shareholder value by safely producing high quality iron ore products from its Savage River and Port Latta operations in Tasmania and continuing to assess the feasibility of a major iron ore development project at Southdown, near Albany in Western Australia. The Group’s current strategic priorities include the following.

Savage River and Port Latta Operations

• Securing majority of sales through off take agreements in soft market conditions;

• Broadening our customer base for the longer term to take advantage of market opportunities and to diversify geographic customer risk;

• Maintaining access to high grade ore by continuing to invest

• in mine development;

• Continuing to invest in process infrastructure; and

• Optimising the Life of Mine Plan together with cost reduction strategies and projects.

Southdown Project

• Ensuring that all tenements, permits and project assets remain in good standing;

• Maintaining the currency of all the elements of definitive

• feasibility study;

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Other than the impairment of the Savage River assets at 30 June 2014 (Refer Note 1(t) & 30 of the Financial Report) and the impact of a voluntary change in accounting policy (Refer Note 1(a) & 31 of the Financial Report), there was no significant change in the state of affairs of the Group that occurred during the year ended 31 December 2014. Commentary on the overall state of affairs of the Group is set out in the Operating and Financial Review.

• Continuing review and identifying the potential for alternative development models; and

• Continuing the search for new equity partners to take a strategic share of the Company’s interest in the Project.

Risk Management

The Group continues to assess and manage various business risks that could impact the Group’s operating and financial performance and its ability to successfully deliver strategic priorities including:

• Fluctuations in iron ore prices and movements in foreign

• exchange rates;

• Potential opportunity cost for increased profit from spot sales when a majority of sales are locked through off take agreements;

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32

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

• Geotechnical risks including wall stability;

• Production risks and costs associated with aging infrastructure;

• Project evaluation and development; and

• Health, safety and environment.

Risk mitigation strategies include the following:

• Close monitoring of the fluctuations in iron ore prices and demands from different markets;

• Flexible strategy to determine the volume to be secured through off-take agreements;

• Intense program of geotechnical wall monitoring, modelling and redesign work to mitigate potential stability issues;

• Continue disciplined and rigorous review process regarding budget development and cost control to ensure investment directed to highest priority areas while reducing overall operating costs;

• A well developed tool kit to ensure projects are adequately planned and peer reviewed prior to commitment and execution; and

• Outstanding safety record is supported by comprehensive safety system that enables management to develop a resilient safety culture and ensure our stewardship over the environment.

ENVIRONMENTAL REGULATION

The mining and exploration tenements held by the Group contain environmental requirements and conditions that the Group must comply with in the course of normal operations. These conditions and regulations cover the management of the storage of hazardous materials and rehabilitation of mine sites.

The Group is subject to significant environmental legislation and regulation in respect of its mining, processing and exploration activities as set out below:

During the financial year there were no breaches of licence conditions.

Southdown Joint Venture

The Southdown Joint Venture has not been responsible for any activities which would cause a breach of environmental legislation.

Mount Windsor Joint Venture

The Group is a junior partner (30%) in the Mt Windsor project in North Queensland which is now being rehabilitated for future lease relinquishment. A Transitional Environment Program required by the Queensland Department of Environment and Resource Management has been completed. The Queensland Department of Environment and Heritage Protection has approved the completion of the program. A second Transitional Environment Program has been entered into voluntarily to identify and remediate various sources of pollution on site. A comprehensive plan has been developed and instigated to manage the leases with relinquishment expected in 2025.

National Greenhouse and Energy Reporting Act 2007

The National Greenhouse and Energy Reporting Act 2007 requires the Group to report its annual greenhouse gas emissions and energy use by 31 October each year. The Group has implemented systems and processes for the collection and calculation of the data required and has submitted its annual reports to the Greenhouse and Energy Data Officer by 31 October each year.

Clean Energy Act 2011

The Group has complied with its obligations under the Clean Energy Act and related legislation for the 2013-14 year and received assistance through the Jobs and Competitiveness Program for the emissions-intensive trade-exposed activities of Production of Iron Ore Pellets and Production of Magnetite Concentrate in the moderately emissions-intensive category.

Savage River and Port Latta Operations

The Group obtained approvals to operate in 1996 and 1997 under the Land Use Planning and Approvals Act (LUPA) and the Environmental Management and Pollution Control Act (EMPCA) as well as the Goldamere Act and Mineral Resources Development Act. The land use permit conditions for Savage River and Port Latta are contained in Environmental Protection Notices 248/2 and 302/2 respectively. The currently approved Environmental Management Plans were submitted for Savage River and Port Latta on 21 December 2010. The extension of the project’s life was approved by the Department of Tourism, Arts and the Environment on 12 March 2007 and together with the Goldamere Act and the Environmental Protection Notices, is the basis for the management of all environmental aspects of the mining leases. The Group has been relieved of any environmental obligation in relation to contamination, pollutants or pollution caused by operations prior to the date of the Goldamere Agreement (December 1996).

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33

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report (cont.)

MEETINGS OF DIRECTORS

The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 31 December 2014, and the numbers of meetings attended by each Director were:

							Meetings of Committees	Meetings of Committees
								Health, Safety &		Independent
	Directors’	meetings		Audit		Remuneration		Environment(7)		Directors(8)
Name	A	B	A		B	A	B	A	B	A	B
M Li	10	10	6		7	6	6	2	2	-	-
Y Jia(1)	5	5	-		-	3	3	-	-	-	-
C Ko	8	10	-		-	-	-	-	-	-	-
D Tenardi(2)	7	7	5		6	5	5	2	2	5	6
L Huang(3)	1	1	1		1	-	-	-	-	1	1
H Zhao	10	10	-		-	-	-	-	-	-	-
N Chatfeld(4)	3	3	2		2	1	1	-	-	1	1
W Bould(5)	8	8	-		-	-	-	1	1	3	3
J Hoon(6)	9	10	7		8	4	4	2	2	6	7

• A = Number of meetings attended

• B = Number of meetings held during the time the Director held office or was a member of the committee during the year ended 31 December 2014

• (1) Y Jia was appointed as a Non-executive Director of the Company from 1 June 2014.

• (2) D Tenardi was appointed as a Non-executive Director of the Company from 31 March 2014.

• (3) L Huang was appointed as a Non-executive Director of the Company from 24 September 2014.

• (4) N Chatfield resigned as a Non-executive Director and Deputy Chairperson of the Company from 1 June 2014.

• (5) W Bould resigned as a Managing Director of the Company from 22 August 2014.

• (6) J Hoon resigned as a Non-executive Director of the Company from 31 December 2014.

• (7) On the 30 October 2014, the Board resolved to discontinue the Health, Safety and Environment Committee. The Board is now accountable and responsible for Health, Safety and Environmental matters.

• (8) On the 30 October 2014, the Board resolved to discontinue the Committee of Independent Directors. The Company’s Independent Directors will still be responsible for overseeing transactions which may give rise to potential conflict of interest for a particular Director, consistent with the approach that the Committee of Independent Directors has taken to date in relation to these matters, with a view to protecting the interests of both the Company and its shareholders.

INTERESTS IN THE SHARES, RIGHTS AND OPTIONS OF THE COMPANY

The relevant interest of each Director in the share capital and options of the Company as at the date of this report is:

	Number of Fully Paid Ordinary Shares	Number of Fully Paid Ordinary Shares
Director	Benefcial	Non-Benefcial	Rights	Options
M Li	13,507	-	-	-
Y Jia(1)	-	-	-	-
C Ko(2)	98,154,884	582,717,958	-	-
D Tenardi	-	-	-	-
L Huang	-	-	-	-
H Zhao(3)	-	-	-	-

(1) Y Jia is an employee of Jiangsu Shagang International Trade Co. Ltd which is a subsidiary of the Jiangsu Shagang Group, ultimate shareholder of Shagang International Holdings Limited. Shagang International Holdings Limited and its subsidiaries hold 542,287,267 ordinary fully paid shares in the Company as at the date of this report.

(2) Shagang International Holdings Limited and RGL Holdings Co. Ltd are associates of Pacific International Co. Pty Ltd. Mr Ko owns 100% of Pacific International Business Limited which is the holding company of Pacific International Co. Pty Ltd. The non-beneficial holdings represent those shares held by Shagang International and RGL Holdings.

(3) H Zhao is a former Director on the Board of the Jiangsu Shagang Group, ultimate shareholder of Shagang International Holdings Limited. Shagang International Holdings Limited and its subsidiaries hold 542,287,267 ordinary fully paid shares in the Company as at the date of this report.

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34

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

REMUNERATION REPORT

This remuneration report sets out remuneration information for non-executive Directors, Executive Directors and other key management personnel of the Group and the Company.

(i) Key management personnel disclosed in this report

report
Non-executive Directors Michelle Li Yan Jia Clement Ko Daniel Tenardi	LimingHuang Neil Chatfeld John Hoon
Executive Directors	Position
Honglin Zhao	Executive Director
Wayne Bould	Managing Director
	(until 18 August 2014)

Other Key Management
Personnel	Position
David Corr	Chief Financial Offcer
	(until 19 December 2014)
Bessie Zhang	Chief Financial Offcer
	(from 19 December 2014)
Ben Maynard	General Manager Operations

(ii) Remuneration governance

The Board has an established Remuneration and Nomination Committee to assist in overseeing the development of policies and practices which enables the Company to attract and retain capable Directors and employees, reward employees fairly and responsibly and meet the Board’s oversight responsibilities in relation to corporate governance practices.

The Remuneration and Nomination Committee is composed of Mr Daniel Tenardi (Committee Chairperson), Ms Yan Jia (nonexecutive Deputy Chairperson) and Ms Michelle Li (Chairperson).

The responsibilities and functions for the Remuneration and Nomination Committee include reviewing and making recommendations on the following:

• Equity based executive and employee incentive plans;

• Recruitment, retention, succession planning, performance measurement and termination policies and procedures for non-executive Directors, the Managing Director, other Executive Directors and Key Management Personnel;

• The remuneration of the Managing Director; Managing Director - Southdown; Chief Financial Officer; and General Manager Operations;

• Periodically assessing the skills required by the Board;

• Recommend processes to evaluate the performance of the Board, its Committees and individual Directors; and

• Reviewing governance arrangements pertaining to remuneration matters.

As announced on 18 August 2014, the Board has established an Executive Committee comprising Ms Michelle Li, Mr Honglin Zhao and Mr Daniel Tenardi to manage the Company on an interim basis following the Managing Director, Mr Wayne Bould leaving the Company. Until a replacement has been appointed, Grange management will continue with operational responsibilities and will report to the Executive Committee. The Executive Committee manages the implementation of the approved people and performance strategies and ensures the policies and processes are “alive” in business operations.

The Company did not receive any specific feedback at the annual general meeting or throughout the year on its remuneration practices.

(iii) Executive remuneration philosophy and framework

It is the Company’s objective to provide maximum stakeholder benefit from the retention of a small high quality executive team by remunerating Executive Directors and executives fairly and appropriately with reference to relevant market conditions. To assist in achieving this objective, the Board attempts to link the nature and amount of executives’ emoluments to the Company’s performance. The remuneration framework aims to ensure that remuneration practices are:

• acceptable to shareholders, transparent and easily understood;

• competitive and reasonable, enabling the company to attract and retain key talents who share the same values with Grange; and

• aligned to the Company’s strategic and business objectives

• and the creation of shareholder value.

Using external remuneration sector comparative data, the Group has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation. The framework is reviewed regularly along with the remuneration strategy review. The Board decided it was not necessary to use the services of independent remuneration consultants during the year ended 31 December 2014.

The framework provides a mix of fixed and variable pay and a blend of short and long term incentives detailed as follows:

Fixed Remuneration

Fixed remuneration is reviewed annually by the Remuneration and Nomination Committee. The process consists of a review of Group and individual performance, relevant comparative remuneration externally and internally and, where appropriate, external advice on policies and practices.

Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits. It is intended that the manner of payment chosen is optimal for the recipient without creating any undue cost for the Group.

There are no guaranteed fixed pay increases included in any executives’ contracts.

The Charter is reviewed annually and remuneration strategies are reviewed regularly.

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35

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report (cont.)

Variable Remuneration – Short Term Incentive (“STI”)

The objective of the STI is to link the achievement of the Company’s annual operational targets (usually reflected in the approved budgets) and an individual’s personal targets with the remuneration received by selected Executive Directors and senior employees responsible for meeting those targets. Payments are made as a cash incentive payable after the financial statements have been audited and released to the Australian Securities Exchange (“ASX”). 50% of the STI relates to the achievement of company performance goals and 50% relates to the attainment of agreed personal performance goals.

Variable Remuneration - Long Term Incentive (“LTI”)

a) Deferred Cash

During the year, the Board determined that it was appropriate to simplify the Company LTI plan and introduce a 2 year deferred cash incentive scheme with immediate effect from 1 January 2014.

The objective of this deferred cash scheme is to reward selected Executive Directors and senior employees with a cash payment which is linked to the Company satisfying shareholder value performance hurdles and subject to ongoing employment with Grange. The deferred cash component is determined by measuring the Company’s:

• sales volumes (weighting 33.33%) of iron ore products (pellets, chips and concentrate)

• normalised EPS result (weighting 33.33%) (excluding abnormal items), and

• generation of additional Free Cash Flow over Budget (weighting 33.33%) (excluding capital management initiatives i.e. inflows from debt funding and outflows from dividends to shareholders).

The deferred cash component is determined based on the Company’s performance for the year ended 31 December, with 50% payable on 31 December the following year, and the balance payable on or about the following 31 December (i.e. 2 years after the relevant calculation date). Payment of deferred cash is subject to continuing employment with Grange at the scheduled date of the payment.

attainment of a Total Shareholder Return of 5% per annum compounded over the three year period from 1 January 2013 to 31 December 2015.

The precise vesting date for the Rights is determined once the Board has assessed performance against the TSR target, following the end of the three year vesting period.

The precise number of Rights that will vest is dependent upon the Board assessment of performance against the TSR target.

31 December 2012 Award

For the 31 December 2012 Award, 50% of the LTI for an employee related to Company performance goals and 50% to personal performance goals. Rights were allocated using a share price that was based on the volume weighted average price of the Company’s shares. The share price was based on the volume weighted average price of the Company’s shares for the first two months of the Award performance period (i.e. the volume weighted average price of the Company’s shares from 1 January 2012 to 29 February 2012).

Rights awarded for performance leading up to and inclusive of 31 December 2012 vest in three equal tranches over 24 months, completing on 1 January 2015.

c) Options over Grange Shares

The objective of issuing Options under the LTI program is to provide a mechanism for the Company to selectively reward senior employees for having gone the “extra mile” in dealing with exceptional, unplanned or unexpected issues or circumstances which have impacted the business. The Board of Directors, based on the Managing Director or Executive Committee’s recommendation, may discretionally grant the options via the LTI plan processes, and these options vest over the timeframe stipulated in the LTI Plan from time to time. A maximum number of Options per individual issue has been specified and approved for each job grade in the grade structure matrix. The exercise price of options issued will be equal to a 20% premium on the weighted average price of the Company’s shares in the last three months before the financial period begins. The Company did not issue any options to employees in the 12 months ended 31 December 2014 or 31 December 2013.

b) Rights to Grange Shares

The objective for the issue of Rights under the LTI program was similar to the objective for the issue of Deferred Cash as discussed above. The Company did not issue any Rights to employees in the 12 months ended 31 December 2014.

31 December 2013 Award

In December 2012, the Board determined that the LTI program move to a three year performance period with immediate effect from 1 January 2013 and that Total Shareholder Return (“TSR”) be used as the performance hurdle for the Plan.

Total Shareholder Return is a common measure of value creation for shareholders. It is calculated as the difference in the share price between the beginning and end of the period, divided by the share price at the start of the period. The Board determined that the performance hurdle for the rights be the

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36

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

(iv) Relationship between remuneration and Grange performance

The table below shows key performance indicators of Company performance over the past five years.

		2010(1)	2011	2012	2013	2014
Revenue from miningoperations	$million	193.3	410.4	331.3	281.1	297.2
Netproft /(loss)after tax	$million	85.2	216.6	59.1	21.8	(110.2)
Basic earningsper share	Cents	7.4	18.78	5.12	1.89	(9.52)
Dividend payments	$million	-	57.7	23.1	34.7	-(2)
Shareprice(last trade dayof fnancialyear)	Cents	75.5	56.0	35.0	26.0	10.5

(1) For the 6 month period to 31 December 2010.

(2) The directors have recommended an ordinary final unfranked dividend of 1.0 cent per share for 31 December 2014. This final dividend was declared NIL conduit foreign income and will be paid on 2 April 2015.

(v) Non-executive director remuneration policy

Fees and payments to non-executive Directors reflect the responsibilities and demands made on them. Non-executive Directors’ fees and payments are reviewed annually by the Board. The Board also considers comparative market data and if required the advice of independent remuneration consultants to ensure non-executive Directors’ fees and payments are appropriate and in line with the market. The Chairperson’s fees are determined independently to the fees of non-executive Directors based on comparative roles in the external market.

The current remuneration was last reviewed with effect from 1 November 2014. The Chairperson’s remuneration is inclusive of committee fees while other non-executive Directors who chair a Committee receive additional yearly fees. The Deputy Chairperson is also entitled to receive an additional yearly fee.

Non-executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically reviewed for adequacy. Any increase to the aggregate Directors’ fee pool is submitted to shareholders for approval. The maximum currently stands at $800,000 per annum and was approved by shareholders at the Annual General Meeting on 26 November 2010. Nonexecutive Directors do not receive performance-based pay.

The following annual fees (inclusive of superannuation) have applied:

	From 1 November 2014	From 1 November 2013
Board of Directors
Chairperson(1)	$157,500	$157,500
DeputyChairperson	$89,250	$89,250
Non-executive Director	$78,750	$78,750
Audit Committee
Chairperson	$15,750	$15,750
Committee Member	$10,500	$10,500
Remuneration and Nomination Committee
Chairperson	$15,750	$15,750
Committee Member	$7,500	$7,500
Health, Safety and Environment Committee(2)
Chairperson	-	$15,750
Committee Member	-	$10,500
Independent Directors Committee(3)
Chairperson	-	$15,750
Committee Member	-	$10,500

(1) The Chairperson is not paid any additional amounts for Committee membership.

(2) On the 30 October 2014, the Board resolved to discontinue the Health, Safety and Environment Committee. The Board is now directly accountable and responsible for Health, Safety and Environmental matters.

(3) On the 30 October 2014, the Board resolved to discontinue the Committee of Independent Directors. The Company’s Independent Directors will still be responsible for overseeing transactions which may give rise to potential conflict of interest for a particular Director, consistent with the approach that the Committee of Independent Directors has taken to date in relation to these matters, with a view to protecting the interests of both the Company and its shareholders.

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37

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report (cont.)

(vi) Details of remuneration

Details of the remuneration of the key management personnel of the Group are set out in the following tables.

Amounts of remuneration

Table 1: Remuneration for the year ended 31 December 2014

	Short-term employee benefts	Post employment benefts Long term benefts Long term incentive(LTI)
	Salary & fees Non- monetary benefts Short term incentive (STI) $ $ $	Super- annuation Long service leave Termina- tion benefts Cash(13) Rights(14) Options Total $ $ $ $ $ $ $
Non-Executive Directors
M Li 144,011 - -		13,501 - - - - - 157,512
Y Jia(1) 42,376 - -		- - - - - - 42,376
C Ko 78,751 - -		- - - - - - 78,751
D Tenardi(2) 65,073 - -		6,149 - - - - - 71,222
L Huang(3) 21,760 - -		2,067 - - - - - 23,827
N Chatfeld(4) 49,001 - -		- - - - - - 49,001
J Hoon(5) 119,874 - -		- - - - - - 119,874
Sub-total Non-Executive Directors 520,846 - -		21,717 - - - - - 542,563
Executive Directors
H Zhao 183,071 72,983 48,975(9)		21,693 3,821 - 15,035 - - 345,578
W Bould(6) 315,479 - 37,808(10)		- - 250,000(12) 56,712 - - 659,999
Other Key Management Personnel
D Corr(7) 377,622 - 94,565(11)		31,897 (13,235) - - (15,519) - 475,330
B Zhang(8) 10,753 - - B Maynard 228,836 - 19,185(9)		1,021 - - - - - 11,774 23,228 27,591 - 18,750 8,920 - 326,510
Sub-total Key Management
Personnel 1,115,761 72,983 200,533		77,839 18,177 250,000 90,497 (6,599) - 1,819,191
TOTAL 1,636,607 72,983 200,533		99,556 18,177 250,000 90,497 (6,599) - 2,361,754

(1) Y Jia was appointed as a non-executive Director of the Company from 1 June 2014 and as Deputy Chairperson from 6 November 2014.

(2) D Tenardi was appointed a non-executive Director of the Company from 31 March 2014.

(3) L Huang was appointed an independent non-executive Director of the Company from 24 Sep 2014.

(4) N Chatfield was an independent non-executive Director and Deputy Chairperson of the Company until 15 April 2014.

(5) J Hoon was an independent non-executive Director of the Company until 31 December 2014.

(6) W Bould was Managing Director of the Company until 18 August 2014. He ceased being a Director of the Company on 22 August 2014. (7) D Corr was Chief Financial Officer until 19 December 2014. (8) B Zhang was appointed Chief Financial Officer from 19 December 2014.

(9) Represents short term incentive payments for the year ended 31 December 2013. Variable remuneration amounts awarded to Executive Directors and Other Key Management Personnel are disclosed during the period in which the Remuneration and Nomination Committee approves the remuneration entitlement.

• (10) Represents short term incentive payments for the year ended 31 December 2014 as approved by the Remuneration and Nomination Committee during the year. The variable remuneration payment to W Bould represents a pro-rata amount for the period in which he was contracted by the Company.

(11) Represents short term incentive payments paid to D Corr for the years ended 31 December 2013 and 31 December 2014 for the period in which he was employed by the Company as approved by the Remuneration and Nomination Committee during the year.

• (12) W Bould received a payment of 6 months fees upon ceasing his contract with the Company in accordance with the terms of a Consultancy Agreement.

• (13) Represents amounts expensed through the Company’s income statement for cash issued under the Company’s 2014 Long Term Incentive Scheme. These amounts are recognised in the Company’s income statement over the vesting period in accordance with AASB 137, Provisions, Contingent Liabilities and Contingent Assets. The amount recognised for W Bould represents the pro-rata vesting period expense for the cash that was paid upon ceasing his contract with the Company as approved by the Remuneration and Nomination Committee during the year.

• (14) Represents amounts expensed through the Company’s income statement for rights issued under the Company’s Long Term Incentive Scheme. These amounts are recognised in the Company’s income statement over the vesting period in accordance with AASB 2, Share Based Payments.

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38

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Amounts of remuneration

Table 2: Remuneration for the year ended 31 December 2013

	Short-term employee benefts	Post employment benefts Long term benefts Long term incentive(LTI)	Post employment benefts Long term benefts Long term incentive(LTI)
	Salary & fees Non- monetary benefts Short term incentive (STI) $ $ $	Super- annuation Long service leave Termina- tion benefts Cash Rights(8) $ $ $ $ $	Options Total $ $
Non-Executive Directors
M Li(1) 23,536 - -		2,718 - - -	- 26,254
N Chatfeld 133,876 - -		- - - -	- 133,876
C Ko 78,751 - -		- - - -	- 78,751
J Hoon 107,867 - - X Zhiqiang(2) 131,250 - -		4,552 - - - - - - -	- 112,419 - 131,250
Sub-total Non-Executive Directors 475,280 - -		7,270 - - -	- 482,550
Executive Directors
W Bould(3) 468,749 - -		- - - -	- 468,749
H Zhao 355,165 91,862 45,000(5)		32,337 - - -	- 524,364
R Mehan(4) 233,056 - 100,781(6)		- 178,173(7) 196,612(9)	- 708,622
Other Key Management Personnel
D Corr 277,093 - 31,318(5) B Maynard 174,670 - 14,173(5)		25,284 5,778 - - 43,405 17,258 14,320 - - 9,823	- 382,878 - 230,244
Sub-total Key Management		74,879 20,098 178,173 - 249,840
Personnel 1,508,733 91,862 191,272			- 2,314,857
TOTAL 1,984,013 91,862 191,272		82,149 20,098 178,173 - 249,840	- 2,797,407

(1) M Li was appointed a non-executive Director and Chairperson of the Company from 29 October 2013.

(2) Z Xi resigned as a Director of the Company from 29 October 2013.

(3) W Bould was appointed Managing Director of the Company from 4 June 2013. Remuneration disclosures include consultancy fees earned from 1 January 2013 to 3 June 2013 when he was Chief Operating Officer of the Group.

(4) R Mehan resigned as Managing Director of the Company on 4 June 2013.

(5) Represents short term incentive payments for the year ended 31 December 2012. Variable remuneration amounts awarded to Executive Directors and Other Key Management Personnel are disclosed during the period in which the Remuneration and Nomination Committee approves the remuneration entitlement.

(6) Represents short term incentive payments for the years ended 31 December 2012 and 31 December 2013 as approved by the Remuneration and Nomination Committee during the year. The variable remuneration payment to R Mehan for the year ended 31 December 2013 represents a pro-rata amount for the period in which he was employed by the Company.

(7) R Mehan received a payment of 4 months’ salary upon ceasing employment with the Company in accordance with the terms of his employment contract. The total termination payments to R Mehan did not exceed the statutory limit for such payments.

(8) Represents amounts expensed through the Company’s income statement for rights issued under the Company’s Long Term Incentive Scheme. These amounts are recognised in the Company’s income statement over the vesting period in accordance with AASB 2, Share Based Payments. The amount recognised for R Mehan represents the entire vesting period expense for the rights that were issued upon ceasing employment with the Company.

(9) Represents rights issued to R Mehan for the year ended 31 December 2013 as approved by the Remuneration and Nomination Committee during the year. These rights will vest in accordance with the conditions of the Company’s Long Term Incentive Scheme and the terms of his employment contract.

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39

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report (cont.)

Table 3: Relative proportions linked to performance

The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

	Fixed	Remuneration	At Risk - STI	At Risk - STI	At Risk - LTI	At Risk - LTI
Name	Dec-14	Dec-13	Dec-14	Dec-13	Dec-14	Dec-13
Executive Directors
H Zhao	77%	91%	9%	9%	14%	-
W Bould(1)	77%	100%	9%	-	14%	-
Other Key Management
Personnel
D Corr(2)	74%	74%	11%	11%	15%	15%
B Zhang(3)	83%	-	10%	-	7%	-
B Maynard	77%	80%	9%	10%	14%	10%

(1) W Bould was Managing Director of the Company until 18 August 2014. He ceased being a Director of the Company on 22 August 2014.

(2) D Corr was Chief Financial Officer of the Company until 19 December 2014.

(3) B Zhang was appointed Chief Financial Officer of the Company from 19 December 2014.

(vii) Service agreements

Long term incentive

On appointment to the Board, all non-executive Directors sign a letter of appointment with the Company. The document details the term of appointment, the role, duties and obligations of the Directors as well as the likely time commitment and performance expectations and review arrangements and circumstances relating to the vacation of office. In addition, it also summarises the major Board policies and terms, including compensation, relevant to the office of Director.

a) Deferred Cash

At the date of this report, the performance criteria for the 2014 LTI program had not yet been assessed or awarded, except for the pro-rata % awarded for the period in which W Bould was contracted by the Company in accordance with the terms of a Consultancy agreement.

For the 2014 long term incentive benefit, the percentage of the available cash incentive that was paid, in the current financial year, and the percentage that was forfeited because the service and performance criteria were not met, is set out in the following table:

Remuneration and other terms of employment for the executives are formalised in service agreements. Each of the agreements provide for the provision of fixed pay, performance related variable remuneration and other benefits. The agreements with executives are ongoing and provide for termination of employment at any time by giving three months’ notice or by the Company paying an amount equivalent to three months remuneration in lieu of notice.

Name	2014
	Maximum possible incentive award Awarded Amount of award in cash
Executive Directors
W Bould $90,000 63.0% $56,712

(viii) Details of STI and LTI (including sharebased payment) and equity instruments held by key management personnel

b) Rights to Grange Shares

Short term incentive

For each short term incentive benefit, the percentage of the available bonus that was paid, in the current financial year, and the percentage that was forfeited because the service and performance criteria were not met, is set out in the following table. No part of the incentive is payable in future years.

The Board will review regularly and reserves the right to vary from time to time the appropriate hurdles and vesting periods for Rights to Grange shares.

The objective for the issue of Rights under the LTI program is to reward selected senior employees in a manner that aligns this element of their remuneration package with the creation of long term shareholder wealth while at the same time securing the employee’s tenure with the Company over the longer term. The LTI grants Rights to the Company’s shares to selected senior employees.

Name	2014
	Maximum possible incentive award Awarded Amount of award in cash
Executive Directors
H Zhao	$72,500 73.8% $53,505(1)
W Bould	$60,000 63.0% $37,808
Other Key Management Personnel
D Corr $97,976 96.5% $94,565
B Maynard $23,328 89.8% $20,960(1)

(1) Inclusive of superannuation.

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40

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

The number of rights in shares in the Company offered to each Director of Grange Resources Limited and other key management personnel of the Group including their personally related parties, are set out below:

31 December 2014

31 December 2014
	Balance		Issued on		Balance
	1 January	Granted as	vesting of		31 December
	2014	remuneration	rights	Other	2014	Vested	Unvested
Other Key Management	Personnel
D Corr(1)(2)	23,936	-	-	-	23,936	-	23,936
B Maynard(1)	5,904	-	-	-	5,904	-	5,904

(1) From 1 January 2013, the LTI program adopted a Total Shareholder Return performance hurdle and moved to a three year performance period. Rights awarded to eligible employees will be disclosed in the period in which the Remuneration and Nomination Committee approves the variable remuneration entitlement following the end of the three year performance period.

(2) D Corr resigned as Chief Financial Officer of the Company on 19 December 2014. Unvested rights issued to D Corr will vest in accordance with the conditions of the Company’s Long Term Incentive Scheme, the terms of his employment contract and as approved by the Remuneration and Nomination Committee.

31 December 2013

	Balance		Issued on		Balance
	1 January	Granted as	vesting of		31 December
	2013	remuneration	rights	Other	2013	Vested	Unvested
Directors of Grange Resources Limited
W Bould	232,607	-	(232,607)	-	-	-	-
R Mehan(1)	-	614,029(2)	-	(614,029)	-	-	614,029
Other Key Management Personnel
D Corr(3)	59,501	71,807	(107,372)	-	23,936	-	23,936
B Maynard(3)	8,909	17,712	(20,717)	-	5,904	-	5,904

(1) R Mehan resigned as Managing Director of the Company on 4 June 2013. Unvested rights issued to R Mehan will vest in accordance with the conditions of the Company’s Long Term Incentive Scheme and the terms of his employment contract.

(2) Represents rights issued to R Mehan for the year ended 31 December 2013 as approved by the Remuneration and Nomination Committee during the year.

(3) From 1 January 2013, the LTI program adopted a Total Shareholder Return performance hurdle and moved to a three year performance period. Rights awarded to eligible employees will be disclosed in the period in which the Remuneration and Nomination Committee approves the variable remuneration entitlement following the end of the three year performance period.

There were no rights to grants that vested during the financial year.

c) Options to Grange Shares

No options were provided as remuneration or shares issued on exercise of options during the year ended 31 December 2014 and 31 December 2013.

There were no options over ordinary shares in the Company held during the year ended 31 December 2014 (2013: Nil) by any Director of Grange Resources Limited or other key management personnel of the Group, including their personally related entities.

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41

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report (cont.)

Share holdings

The number of shares in the Company held during the period by each Director of Grange Resources Limited and other key management personnel of the Group, including their personally related parties, are set out below:

31 December 2014

31 December 2014
	Balance					Balance
	1 January	On vesting of	On market	On market		31 December
	2014	rights	purchases	disposals	Other	2014
Directors of Grange
Resources Limited
M Li	13,507	-	-	-	-	13,507
C Ko	98,154,884	-	-	-	-	98,154,884
N Chatfeld(1)	140,000	-	-	-	(140,000)	-
W Bould(2)	1,247,343	-	-	-	(1,247,343)	-
Other key management
personnel of the Group
D Corr(3)	247,878	-	-	-	(247,878)	-
B Maynard	62,217	-	-	-	-	62,217

(1) N Chatfield resigned as Director of the Company on 15 April 2014.

(2) W Bould resigned as Managing Director of the Company on 18 August 2014. He ceased being a Director of the Company on 22 August 2014.

(3) D Corr resigned as Chief Financial Officer of the Company on 19 December 2014.

31 December 2013 (Restated)

	Balance					Balance
	1 January	On vesting of	On market	On market		31 December
	2013	rights	purchases	disposals	Other	2013
Directors of Grange
Resources Limited
M Li(1)	10,287	3,220	-	-	-	13,507
N Chatfeld	140,000	-	-	-	-	140,000
W Bould	1,313,204	232,607	-	(298,468)	-	1,247,343
C Ko	90,385,520	-	7,769,364	-	-	98,154,884
R Mehan(2)	100,000	-	-	-	(100,000)	-
Other key management
personnel of the Group
D Corr	140,506	107,372	-	-	-	247,878
B Maynard	41,500	20,717	-	-	-	62,217

(1) Shareholdings of M Li were omitted from the 2013 Annual Report as acknowledged to the ASX on 20 March 2014.

(2) R Mehan resigned as Managing Director of the Company on 4 June 2013.

(ix) Loans to key management personnel

There were no loans to key management personnel during the year (December 2013: Nil).

(x) Other transactions with key management personnel

A Director, Mr Clement Ko, is a Director of Pacific Minerals Limited to which spot sales for pellets were made in 2013. Pacific Minerals Limited also acted as sales agent in regards to sales agency agreements and received agency commissions. All transactions were on terms equivalent to those that prevail in arm’s length transactions and conducted with oversight from the Independent Directors of Grange.

A Director, Mr Honglin Zhao, is a former Director of Jiangsu Shagang Group (Shagang) to which sales of iron ore products are made under long-term off-take agreements. As at 27 February 2015, Shagang holds 46.87% (2013: 46.47%)

of the issued ordinary shares of Grange. Each transaction between Shagang and Grange must be either approved by non-associated Grange shareholders, or approved by the Grange Independent Directors.

A Director, Ms Yan Jia, is an employee of Shagang International Trade Co. Ltd., which is a wholly owned subsidiary of Jiangsu Shagang Group (Shagang) to which sales of iron ore products are made under long-term off-take agreements. As at 27 February 2015, Shagang holds 46.87% (2013: 46.47%) of the issued ordinary shares of Grange. Each transaction between Shagang and Grange must be either approved by non-associated Grange shareholders, or approved by the Grange Independent Directors.

Managing Director (up to 18 August 2014), Mr Wayne Bould, is a Managing Director and Chairperson of the Bonney Group of Companies which includes Lloyds North Pty Ltd. Lloyds

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42

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

North Pty Ltd provide equipment hire and freight services to Grange under a contract based on normal commercial terms and conditions.

Aggregate amounts of each of the above types of other transactions with key management personnel of Grange:

	2014 $	2013 $
Sales of iron oreproducts
Long term off-take agreement - Pellets - Chips Spot sales	129,237,036 2,157,061	142,058,438 7,145,574
- Pellets Agency commissions - Spot sales	- (637,787)	34,082,402 (903,324)
Purchases
- Equipment hire and freight	(682,867) 130,073,443	(446,973) 181,936,117

The following balances are outstanding at the end of the reporting period in relation to the above transactions:

	2014	2013
	$	$
Trade receivables
(sales of iron oreproducts)
Long term off-take agreement
- Pellets	1,949,265	19,836,124
- Chips	(5,594)	1,311,124
- Other	(119,911)	(29,916)
Spot sales	(132,972)	(562,817)
(agency commissions)
- Other	-	10,000
	1,690,788	20,564,515

INSURANCE OF OFFICERS

During the financial period, the Company has paid premiums in respect of Directors’ and Officers’ Liability Insurance and Company Reimbursement policies, which cover all Directors and Officers of the Group to the extent permitted under the Corporations Act 2001. The policy conditions preclude the Group from any detailed disclosures.

INDEMNITY OF AUDITORS

The Company has entered into an agreement to indemnify its auditor, PricewaterhouseCoopers, against any claims or liabilities (including legal costs) asserted by third parties arising out of their services as auditor of the Company, where the liabilities arise as a direct result of the Company’s breach of its obligations to the Auditors, unless prohibited by the Corporations Act 2001.

AUDIT AND NON-AUDIT SERVICES

Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are set out below.

The Board of Directors has considered the position and, in accordance with advice received from the Company’s Audit Committee, is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of the auditor; and

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

		2014	2013
			(Restated)
		$’000	$’000
	(a) PwC - Australia
	Audit and review of fnancial reports	376	279
	Other assurance services	51	15
	Taxation services
	Taxation consultingand advice	49	95
	Total remuneration of PwC - Australia	476	389
	(b) Relatedpractices of PwC - Australia
	Audit and review of fnancial reports	17	23
	Taxation compliance	2	2
	Total remuneration of related practices of PwC - Australia	19	25

It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers expertise and experience with the Group are important. These assignments are principally tax consulting and advice or where PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders on all major consulting assignments. Group policy also requires the Chairperson of the Audit Committee to approve all individual assignments performed by PricewaterhouseCoopers with total fees greater than $10,000.

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43

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Report (cont.)

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 45.

ROUNDING OF AMOUNTS

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

AUDITOR

PwC continues in office in accordance with section 327 of the Corporations Act 2001.

The report is made in accordance with a resolution of Directors.

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Daniel Tenardi Executive Committee Representative

Perth, Western Australia 27 February 2015

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44

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Auditor’s Independence Declaration

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Auditor’s Independence Declaration

As lead auditor for the audit of Grange Resources Limited for the year ended 31 December 2014, I declare that to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Grange Resources Limited and the entities it controlled during the period.

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John O’Donoghue Partner PricewaterhouseCoopers

Melbourne 27 February 2015

PricewaterhouseCoopers, ABN 52 780 433 757

Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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45

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Statement of Comprehensive Income

FOR THE YEAR ENDED 31 DECEMBER 2014

		2014	2013
			(Restated)
Consolidated	Notes	$’000	$’000
Revenues from mining operations	5	297,155	281,072
Cost of sales	6	(186,898)	(251,985)
Grossproft from mining operations		110,257	29,087
Administration expenses		(4,816)	(4,795)
Operating proft before other income /(expense)		105,441	24,292
Other income /(expenses)
Revaluation of deferred consideration	20,23	(134)	5,077
Settlement of deferred consideration	20,23	20,757	-
Exploration and evaluation expenditure		(1,934)	(5,411)
Impairment of assets	30	(296,132)	-
Other income /(expenses)	7	281	1,368
Operating (loss) /proft before fnance costs		(171,721)	25,326
Finance income	8	6,979	10,957
Finance expenses	8	(2,500)	(6,065)
(Loss) /proft before tax		(167,242)	30,218
Income tax beneft/(expense)	9	57,078	(8,388)
(Loss) /proft for theyear		(110,164)	21,830
Total comprehensive(loss) / income for theyear		(110,164)	21,830
Proft /(loss)for theperiod attributable to:
- Equityholders of Grange Resources Limited		(110,164)	21,830
		(110,164)	21,830
Total comprehensive income /(loss)for the period
attributable to:
- Equityholders of Grange Resources Limited		(110,164)	21,830
		(110,164)	21,830
Earnings per share for proft attributable to the
ordinary equity holders of Grange Resources Limited
Basic earningsper share(centsper share)	38	(9.52)	1.89
Diluted earningsper share(centsper share)	38	(9.51)	1.89

The above statement of comprehensive income should be read in conjunction with the accompanying notes

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46 GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Statement of Financial Position

AS AT 31 DECEMBER 2014

AS AT 31 DECEMBER 2014
		31 December	31 December	1 January
		2014	2013	2013
			(Restated)	(Restated)
Consolidated	Notes	$’000	$’000	$’000
ASSETS
Current assets
Cash and cash equivalents	10	138,650	154,881	119,918
Term deposits		15,000	5,000	55,000
Trade and other receivables	11	22,795	29,269	22,397
Inventories	12	54,788	59,981	53,097
Intangible assets	13	-	3,063	5,548
Total current assets		231,233	252,194	255,960
Non-current assets
Receivables	14	7,797	7,747	6,937
Property, plant and equipment	15	106,431	163,747	171,879
Mineproperties and development	16	215,230	369,775	365,281
Deferred tax assets	17	67,558	664	8,385
Total non-current assets		397,016	541,933	552,482
Total assets		628,249	794,127	808,442
LIABILITIES
Current liabilities
Trade and otherpayables	18	24,294	28,171	28,697
Borrowings	19	333	2,852	13,876
Deferred consideration	20	-	8,332	7,559
Current tax liability		10,482	667	-
Provisions	21	12,071	15,366	13,091
Total current liabilities		47,180	55,388	63,223
Non-current liabilities
Borrowings	22	320	680	-
Deferred consideration	23	-	35,536	42,027
Deferred tax liabilities	24	-	-	-
Provisions	25	45,548	34,048	33,737
Total non-current liabilities		45,868	70,264	75,764
Total liabilities		93,048	125,652	138,987
Net assets		535,201	668,475	669,455
EQUITY
Contributed equity	26	331,373	331,373	330,334
Reserves	27	415	383	1,103
Retainedprofts	28	203,413	336,719	338,018
Capital and reserves attributable to owners of
Grange Resources Limited		535,201	668,475	669,455
Total equity		535,201	668,475	669,455

The above statement of financial position should be read in conjunction with the accompanying notes

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47

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Statement of Changes in Equity

FOR THE YEAR ENDED 31 DECEMBER 2014

		Contributed		Retained
		equity	Reserves	earnings	TOTAL
				(Restated)	(Restated)
Consolidated	Notes	$’000	$’000	$’000	$’000
Balance at 1 January 2014		331,373	383	336,719	668,475
Loss for theyear		-	-	(110,164)	(110,164)
Total comprehensive loss for theyear		-	-	(110,164)	(110,164)
Transactions with owners in their capacity as owners
Dividendspaid	29	-	-	(23,142)	(23,142)
Employee share options and rights	27	-	32	-	32
		-	32	(23,142)	(23,110)
Balance at 31 December 2014		331,373	415	203,413	535,201
Balance at 1 January 2013		330,334	1,103	414,832	746,269
Change in accounting policy	31	-	-	(76,814)	(76,814)
Restated balance at 1 January 2013		330,334	1,103	338,018	669,455
Proft for theyear		-	-	25,617	25,617
Change in accounting policy	31	-	-	(3,787)	(3,787)
Total comprehensive income for theyear		-	-	21,830	21,830
Transactions with owners in their capacity as owners
Dividendspaid	29	-	-	(23,129)	(23,129)
Employee share options and rights	27	1,039	(720)	-	319
		1,039	(720)	(23,129)	(22,810)
Balance at 31 December 2013		331,373	383	336,719	668,475

The above statements of changes in equity should be read in conjunction with the accompanying notes

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48

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Statement of Cash Flows

FOR THE YEAR ENDED 31 DECEMBER 2014

FOR THE YEAR ENDED 31 DECEMBER 2014
		2014	2013
			(Restated)
Consolidated	Notes	$’000	$’000
Cash fows from operating activities
Receipts from customers (inclusive of goods and services tax)		305,172	268,298
Payments to suppliers and employees(inclusive ofgoods and services tax)		(130,745)	(162,068)
		174,427	106,230
Interest received		2,794	4,170
Interestpaid		(90)	(9)
Income taxes		-	-
Net cash infow /(outfow) from operating activities	37	177,131	110,391
Cash fows from investing activities
Payments forproperty, plant and equipment		(41,661)	(14,684)
Payments for mineproperties and development		(93,467)	(80,074)
Proceeds from(payments for)term deposits		(10,057)	55,601
Net cash infow /(outfow) from investing activities		(145,185)	(39,157)
Cash fows from fnancing activities
Repayment of borrowings		(2,533)	-
Proceeds from borrowings		-	3,532
Payment of deferred consideration		(24,412)	(5,174)
Dividendspaid to shareholders		(23,142)	(23,129)
Finance leasepayments		(389)	(14,243)
Net cash infow /(outfow) from fnancing activities		(50,476)	(39,014)
Net(decrease) / increase in cash and cash equivalents		(18,530)	32,220
Cash and cash equivalents at beginningof theyear		154,881	119,918
Net foreign exchange differences		2,299	2,743
Cash and cash equivalents at end of theyear	10	138,650	154,881

The above statement of cash flows should be read in conjunction with the accompanying notes

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49

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied for all the periods presented, unless otherwise stated.

The financial statements are for the consolidated entity consisting of Grange Resources Limited and its subsidiaries.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001.

Compliance with IFRS

The consolidated financial statements of the Grange Resources Limited group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Change in accounting policy

The Group has made a voluntary change to its accounting policy relating to exploration and evaluation expenditure. The new accounting policy was adopted for the year ended 31 December 2014 and has been applied retrospectively.

The new exploration and evaluation expenditure accounting policy is to charge exploration and evaluation expenditure against profit and loss as incurred; except for expenditure incurred after a decision to proceed to development is made, in which case the expenditure is capitalised as an asset. The impact on the statement of cash flows is a movement from investing activities to a movement in operating activities.

The previous accounting policy was to capitalise and carry forward exploration and evaluation expenditure as an asset when rights to tenure of the area of interest were current and costs were expected to be recouped through successful development and exploitation of the area of interest or alternatively by its sale.

Management judges that the change in policy will result in the financial report providing more relevant and no less reliable information because the Group’s primary business is mining operations and the Group has a higher degree of confidence as to the probability that future economic benefits will flow to the Group prior to the capitalisation of such costs.

AASB 6 Exploration for and Evaluation of Mineral Resources allows both the previous and new accounting policies of the Group.

Details in relation to the impact of this change in accounting policy on comparative financial information are disclosed in Note 31.

Historical cost convention

These financial statements have been prepared under the historical costs convention, except for certain assets which, as noted, are at fair value.

Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.

Reclassification of Comparative Financial Information

The Group has reclassified financial information for the comparative period to improve the relevance and reliability of information presented. This reclassification within current liabilities has reduced trade and other payables by $7.3 million and $6.3 million and increased current provisions by the same amount at 31 December 2013 and 1 January 2013 respectively. This revised presentation reflects the annual leave obligation as an employee benefits provision. There have been no changes to the comparative income statement, statement of changes in equity or statement of cash flows as a result of this reclassification.

Details in relation to the impact of this reclassification on comparative financial information is disclosed in Note 31.

(b) Principles of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Grange Resources Limited as at 31 December 2014 and the results of all subsidiaries for the year then ended. Grange Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries are those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Details of subsidiaries are set out in Note 35.

The acquisition method of accounting is used to account for business combinations by the Group (refer to note 1(e)).

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in subsidiaries are accounted for at cost in the

individual financial statements of Grange Resources Limited.

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50

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

(ii) Joint arrangements

Joint operations

The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operations are set out in Note 36.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Interim Executive Committee.

Refer to Note 4 for further information on segment descriptions.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Grange Resources Limited’s functional and presentation currency.

(ii) Transactions and balances

All foreign currency transactions during the financial period are translated into the functional currency using the exchange rate prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates on monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Non-monetary items that are measured in terms of historical cost in foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

• income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

• all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are reclassified to the income statement, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate.

(e) Business combinations

The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of acquisition. Acquisition-related costs are expensed as incurred. Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange, unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. In a reverse acquisition, if the fair value of the equity instruments of the legal subsidiary is not otherwise clearly evident, the total fair value of all the issued equity instruments of the legal parent before the business combination shall be used as the basis for determining the cost of the combination. Transaction costs arising on the issue of equity or debt instruments are recognised in accordance with financial instrument standards.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the Group’s incremental borrowing rate, being a proxy for the rate at which a similar borrowing could be obtained from

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51

2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

an independent financier under comparable terms and conditions.

Deferred consideration is measured at the present value of management’s best estimate of expenditure required to settle the obligation at the reporting date. The discount rate used to determine the present value reflects the current assessment of the Group’s incremental borrowing rate. The increase in the provision due to the passage of time or ‘unwinding’ of the discount is recognised as a finance expense. Other movements in deferred consideration, including those from updated short and long-term commodity prices and forward exchange rates are recognised in the income statement to the extent that they do not exceed the discount on acquisition initially recognised.

(g) Government grants

Government grants are recognised at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments.

(h) Leases

(f) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that the economic benefits will flow to the Group and specific criteria have been met for each of the Group’s activities described below. Amounts disclosed as revenue are net of agency commissions and amounts collected on behalf of third parties.

Revenue is recognised for the major business transactions as follows:

Sales of iron ore

Revenues from the sales of iron ore are recognised when the significant risks and rewards of ownership of the goods have passed to the customer and the amount of revenue can be measured reliably. Risks and rewards are considered passed to the buyer at the time when title passes to the customer.

The majority of the Group’s sales arrangements specify that title passes when the product is transferred to the vessel on which the product will be shipped. Revenues are generally recognised on the bill of lading date. Sales arrangements allow for an adjustment to the sales price based on a survey of the goods by the customer (an assay for mineral content). Accordingly, sales revenue is initially recognised on a provisional basis using the most recently determined estimate of the product specifications and subsequently adjusted, if necessary, based on a survey of the goods by the customer.

Interest revenue

Interest revenue is recognised on a time proportion basis using the effective interest method.

Leases are classified as either operating or finance leases at the inception of the leases based on the economic substance of their agreement so as to reflect the risks and rewards incidental to ownership.

Finance leases, which are those leases that transfer substantially all of the risks and rewards incidental to ownership of the leased item to the Group, are capitalised at the present value of the minimum lease payments and disclosed as property, plant and equipment. A lease liability of equal value is also recognised. Each lease payment is allocated between the liability and financing costs. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability over the period. The property, plant and equipment acquired under a finance lease is depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Operating leases are those leases that do not transfer a significant portion of the risks and rewards of ownership to the Group as lessee. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

(i) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to amounts of cash and which are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

(j) Trade and other receivables

Trade receivables are recognised and carried at the original invoice amount less provision for impairment. Trade receivables are generally due for settlement within 14 days.

Collectability of trade receivables are reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the amount directly. An allowance accounts (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the impairment loss is recognised in the income statement within other expenses. When a trade receivable for which an impairment allowance had been recognised become uncollectable in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement.

Term deposits held with financial institutions with maturities of more than three months are presented as receivables. Term deposits with a maturity date of more than 12 months after the reporting date are classified as non-current.

(k) Inventories

Raw materials and stores, ore stockpiles, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost is determined primarily on the basis of weighted average costs and comprises of the cost of direct materials and the costs of production which include:

• labour costs, materials and contractor expenses which are directly attributable to the extraction and processing of ore;

• depreciation of property, plant and equipment used in the extraction and processing of ore; and

• production overheads directly attributable to the extraction and processing of ore.

Stockpiles represent ore that has been extracted and is available for further processing. If there is significant uncertainty as to when the stockpiled ore will be processed it is expensed as incurred. Where the future processing of the ore can be predicted with confidence because it exceeds the mine’s cutoff grade, it is valued at the lower of cost and net realisable value. Work in progress inventory includes partly processed material. Quantities are assessed primarily through surveys and assays.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(l) Income tax

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences, including MRRT allowances and unused tax losses, only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and the tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not revers in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Grange Resources Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, Grange Resources Limited and its subsidiaries are taxed as a single entity and the deferred tax assets and liabilities of the Group are set off in the consolidated financial statements.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

• when GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are presented as operating cash flows.

Commitments and contingencies are presented net of the amount of GST recoverable from, or payable to, the taxation authority.

(n) Mineral Resources Rent Tax (MRRT)

The MRRT was enacted in the reporting period ended 31 December 2012 and commenced on 1 July 2012. The MRRT represents an additional tax on profits generated from mining operations of iron ore and coal miners in Australia.

The MRRT is considered, for accounting purposes, to be a tax based on income and accordingly current and deferred MRRT expenses will be measured and disclosed on the same basis as income tax expense as set out in Note 1(l).

The Mineral Resource Rent Tax Repeal and Other Measures Act 2014 received royal assent on 5 September 2014.

Detail in relation to the impact of this repeal is disclosed in Note 9.

(o) Carbon emissions

Carbon emission units (carbon permits) issued under the Jobs and Competitiveness Program are recognised as a Government grant upon receipt and presented as an intangible asset. Grants from the government are recognised at fair value. The Government grant is initially recognised as deferred income and then subsequently recognised in the income statement systematically over the period based on production from the emissions intensive activity.

Carbon emission liabilities are recognised as the emissions are generated and are measured at the present value of the carbon permits required to extinguish the liability.

Carbon expense and deferred income from carbon permits are recorded as part of the cost of inventory.

Carbon permit assets and carbon emission liabilities are disclosed on a gross basis in the consolidated statement of financial position.

The Carbon Tax repeal received royal assent on 17 July 2014, effective from 1 July 2014. All transactions have been settled and there is no ongoing impact.

(p) Property, plant and equipment

Land and buildings and plant and equipment are measured at cost less, where applicable, any accumulated depreciation, amortisation or impairment in value. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.

Land is not depreciated. Assets under construction are measured at cost and are not depreciated until they are ready and available for use. Depreciation on assets is calculated using either a straight-line or diminishing value method to allocate the cost, net of their residual values, over the estimated useful lives or the life of the mine, whichever is shorter. Leasehold improvements and certain leased plant and equipment are depreciated over the shorter lease term.

Other non-mine plant and equipment typically has the following estimated useful lives:

ing estimated useful lives:
Buildings	10 years
Plant and Equipment	4 to 8 years
Computer Equipment	3 to 5 years

The assets residual values, useful lives and amortisation methods are reviewed and adjusted if appropriate, at each financial period end.

An item of property, plant and equipment is derecognised upon disposal or when no further economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the period the asset is derecognised.

The carrying value of property, plant and equipment is assessed annually for impairment in accordance with Note 1(t).

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

(q) Exploration and evaluation

Exploration and evaluation expenditure comprises costs which are directly attributable to:

• research and analysing exploration data

• conducting geological studies, exploratory drilling and sampling

• examining and testing extraction and treatment methods

• compiling pre-feasibility and definitive feasibility studies

Exploration and evaluation expenditure also includes the costs incurred in acquiring rights, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects.

A change in accounting policy has been adopted for exploration and evaluation expenditure. The new accounting policy was adopted for the year ended 31 December 2014 and has been applied retrospectively.

The new exploration and evaluation expenditure accounting policy is to charge exploration and evaluation expenditure against profit and loss as incurred; except for expenditure incurred after a decision to proceed to development is made, in which case the expenditure is capitalised as an asset. The impact on the statement of cash flows is a movement from investing activities to a movement in operating activities.

The previous accounting policy was to capitalise and carry forward exploration and evaluation expenditure as an asset when rights to tenure of the area of interest were current and costs were expected to recouped through successful development and exploitation of the area of interest or alternatively by its sale.

The Group judges that the change in policy will result in the financial report providing more relevant and no less reliable information because the Group has a higher degree of confidence as to the probability that future economic benefits will flow to the Company prior to the capitalisation of such costs.

AASB 6 Exploration for and Evaluation of Mineral Resources allows both the previous and new accounting policies of the Group.

Details in relation to the impact of this change in accounting policy on comparative financial information are disclosed in Note 31.

Costs on production properties in which the Group has an interest are amortised over the life of the area of interest to which such costs relate on the production output basis. Changes to the life of the area of interest are accounted for prospectively.

The carrying value of each mine property and development are assessed annually for impairment in accordance with Note 1(t).

(s) Deferred stripping costs

Stripping (i.e. overburden and other waste removal) costs incurred in the production phase of a surface mine are capitalised to the extent that they improve access to an identified component of the ore body and are subsequently amortised on a systematic basis over the expected useful life of the identified component of the ore body. Capitalised stripping costs are disclosed as a component of Mine Properties and Development.

Components of an ore body are determined with reference to life of mine plans and take account of factors such as the geographical separation of mining locations and/or the economic status of mine development decisions.

Capitalised stripping costs are initially measured at cost and represent an accumulation of costs directly incurred in performing the stripping activity that improves access to the identified component of the ore body, plus an allocation of directly attributable overhead costs. The amount of stripping costs deferred is based on a relevant production measure which uses a ratio obtained by dividing the tonnage of waste mined by the quantity of ore mined for an identified component of the ore body. Stripping costs incurred in the period for an identified component of the ore body are deferred to the extent that the current period ratio exceeds the expected ratio for the life of the identified component of the ore body. Such deferred costs are then charged against the income statement on a systematic units of production basis over the expected useful life of an identified component of the ore body.

Changes to the life of mine plan, identified components of an ore body, stripping ratios, units of production and expected useful life are accounted for prospectively.

Deferred stripping costs form part of the total investment in a cash generating unit, which is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.

(r) Mine properties & development

Mine properties and development represent the accumulation of all exploration, evaluation and development expenditure incurred by, not on behalf of, the entity in relation to areas of interest in which mining of a mineral resource has commenced.

Where further development expenditure is incurred in respect of a production property after the commencement of production, such expenditure is carried forward as part of the cost of that production property only when substantial future economic benefits arise, otherwise such expenditure is classified as part of the cost of production.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(t) Impairment of assets

At each reporting date, the Group assesses whether there is any indication that an asset, including capitalised development expenditure, may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of the recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement.

Recoverable amount is the greater of fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units).

Where there is no binding sale agreement or active market, fair value less costs of disposal is based on the best information available to reflect the amount the Group could receive for the cash generating unit in an arm’s length transaction. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the pre-impairment value, adjusted for any depreciation that would have been recognised on the asset had the initial impairment loss not occurred. Such reversal is recognised in profit or loss.

After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(u) Investments and other financial assets

Classification

The Group classifies its financial assets in the following categories: financial assets at fair value through profit and loss, loans and receivables, held-to-maturity financial assets and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition, and in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value. For the majority of the non-current receivables, the fair values are also not significantly different to their carrying amounts. The fair values were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

(v) Financial instruments issued by the company

Transaction costs on the issue of equity instruments

Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.

Interest and dividends

Interest and dividends are classified as expenses or as distributions of profit consistent with the balance sheet classification of the related debt or equity instruments or component parts of compound instruments.

(w) Non-current assets held for sale

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. The sale of the asset (or disposal group) is expected to be completed within one year from the date of classification.

An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group are held for sale are presented separately from other liabilities in the balance sheet.

(x) Ore reserves

The Company estimates its mineral resources and ore reserves based on information compiled by Competent Persons as defined in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves of December 2012 (the JORC 2012 code). Reserves, and for certain mineral resources, determined in this way are used in the calculation of depreciation, amortisation and impairment charges, the assessment of life of mine stripping ratios and for forecasting the timing of the payment of close down and restoration costs.

In assessing the life of a mine for accounting purposes, mineral resources are only taken into account where there is a high degree of confidence of economic extraction.

(y) Trade and other payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(z) Borrowings

All borrowings are initially recognised at the fair value of the consideration received, less transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(aa) Provisions

Provisions are recognised when the Group has a present obligation, it is probable that there will be a future sacrifice of economic benefits and a reliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to be recovered from a third party, for example under an insurance contract, the receivable is recognised as a separate asset but only when the reimbursement is virtually certain and it can be measured reliably. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a pre-tax rate that reflects the current market assessment of the time value of money. Where this is the case, its carrying amount is the present value of these estimated future cash flows. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Decommissioning and restoration

Decommissioning and restoration provisions include the dismantling and demolition of infrastructure and the removal of residual materials and remediation of disturbed areas. The provision is recognised in the accounting period when the obligation arising from the related disturbance occurs, whether this occurs during the mine development or during the production phase, based on the net present value of estimated future costs. The costs are estimated on the basis of a closure plan. The cost estimates are calculated annually during the life of the operation to reflect known developments and are subject to formal review at regular intervals.

The amortisation or ‘unwinding’ of the discount applied in establishing the net present value of provisions is charged to the income statement in each accounting period. The amortisation of the discount is shown as a financing cost, rather than as an operating cost. Other movements in the provisions for close down and restoration costs, including those resulting from new disturbance, updated cost estimates, changes to the lives of operations and revisions to discount rates are capitalised within mine properties and development, to the extent that any amount of deduction does not exceed the carrying amount of the asset. Any deduction in excess of the carrying amount is recognised in the income statement immediately. If an adjustment results in an addition to the cost of the related asset, consideration will be given to whether an indication of impairment exists and the impairment policy will apply. These costs are then depreciated over the life of the area of interest to which they relate.

Borrowing costs

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Onerous contracts

An onerous contract is considered to exist where the Company has a contract under which the unavoidable cost of meeting the contractual obligations exceed the economic benefits estimated to be received. Present obligations arising under onerous contracts are recognised as a provision to the extent that the present obligation exceeds the economic benefits estimated to be received.

Restructuring

A provision for restructuring is recognised when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by:

• starting to implement the plan; or

• announcing its main features to those affected by it.

(ab) Employee entitlements

Wages, salaries and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Annual leave

Liabilities for annual leave expected to be settled within 12 months of the reporting date are recognised in the provision for employee benefits in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method.

Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation funds

Contributions to defined contribution funds are recognised as an expense in the income statement as they become payable.

The fair value of rights granted under the plans is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at the grant date and recognised over the period during which the Director or eligible employee become unconditionally entitled to the rights.

The fair value of rights is determined with reference to the fair value of rights issued, which includes the volume weighted average price of the Company’s shares.

Non-market vesting conditions are included in the assumptions about the number of rights that are expected to be exercisable. At each reporting date, the entity revises its estimate of the number of rights that are expected to vest or become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

Where an equity-settled award is modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modifications, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

(ac) Contributed equity

Ordinary share capital is recognised at the fair value of the consideration received by the Company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction, net of tax, of the share proceeds received.

(ad) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial period but not distributed at balance date.

Share-based payment transactions

Share based compensation benefits are provided to Directors and eligible employees under various plans. Information relating to the plans operated by the Company is set out in Note 39.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

(ae) Earnings per share (EPS)

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares;

• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the period and excluding treasury shares.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

(af) Parent entity financial information

The financial information for the parent entity, Grange Resources Limited, disclosed in Note 40 has been prepared on the same basis as the consolidated financial statements, except as set out below.

Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of Grange Resources Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.

Financial guarantees

Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.

(ag) Rounding of amounts

The Group is a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(ah) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2014 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.

• (i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures (effective from 1 January 2018)

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2018 but is available for early adoption. The Company intends to apply the standard from 1 January 2018. Application of this standard will not have a significant impact on the Group.

• (ii) AASB 15 Revenue from Contracts with Customers – Mandatory Effective Date of AASB 15

• (effective from 1 January 2017)

AASB 15 Revenue from Contracts with Customers will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts. The Company is still assessing the impact of the new rules on the Group’s financial statements. The standard is not applicable until 1 January 2017. The Company intends to apply the standard from 1 January 2017.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 2. FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group has previously used derivative financial instruments such as foreign exchange contracts to manage certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risks to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and commodity price risks and aging analysis for credit risk.

Risk management is carried out by a Treasury Committee under a policy approved by the Board of Directors. The Treasury Committee identifies, evaluates and manages financial risks according to parameters outlined in an approved Treasury policy. The Treasury policy provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

The Group holds the following financial instruments:

	2014 $’000	2013 (Restated) $’000
Financial Assets Cash and cash equivalents	138,650	154,881
Term deposits	15,000	5,000
Trade and other receivables	28,030	33,679
Financial Liabilities	181,680	193,560
Trade and otherpayables Borrowings	24,294 653	28,171 3,532
Deferred consideration	-	43,868
	24,947	75,571

(a) Market Risk

(i) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar.

Foreign exchange risk arises from commercial transactions, given that the Group’s sales revenues are denominated in US dollars and the majority of its operating costs are denominated in Australian dollars, and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

At this time the Group does not manage its prospective foreign exchange risk with currency hedges.

The Group’s exposure to US dollar denominated foreign currency risk at the reporting date, expressed in Australian dollars, was as follows:

	Cash and cash equivalents	2014 $’000 58,842	2013 $’000 73,427
	Trade and other receivables	16,348	21,522
	Trade and otherpayables Deferred consideration Net US dollar surplus	(726) - 74,464	(573) (43,868) 50,508

Group sensitivity

Based on the financial instruments held at 31 December 2014, had the Australian dollar weakened/strengthened by 10% against the US dollar with all other variables held constant, the Group’s post tax profit for the financial period would have been $5.8 million higher / $4.7 million lower (2013: $5.4 million higher / $2.0 million lower), mainly as a result of foreign exchange gains/losses on US dollar denominated cash and cash equivalents and receivables as detailed in the above table.

(ii) Price risk

The Group is exposed to commodity price risk. During prior years, the Group agreed with its customers to price its iron ore pellets at index based market prices. At this time, the Group does not manage its iron ore price risk with financial instruments.

Going forward, the Group may consider using financial instruments to manage commodity price risk given exposures to market prices arising from the adoption of index based market pricing mechanisms.

(iii) Cash flow and fair value interest rate risk

The Group’s main interest rate risk arises from cash and cash equivalents.

As at the reporting date, the Group has no variable rate borrowings outstanding. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk if the borrowings are carried at fair value. The Group’s fixed rate borrowings are carried at amortised cost. As they are fixed rate borrowings, they are not subject to interest rate risk as defined by AASB 7, Financial Instruments: Disclosures.

The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. No financial instruments are used to manage interest rate risk.

Group sensitivity

The Group’s fixed rate borrowings are carried at amortised cost. As they are fixed rate borrowings, they are not subject to interest rate risk and are excluded from the interest rate sensitivity analysis.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

At 31 December 2014, if interest rates had increased by 50 basis points (bps) or decreased by 50 basis points from the period end rates with all other variables held constant, post tax profit for the period would have been $0.7 million higher / $0.7 million lower (December 2013 changes of 50 bps / 50 bps: $0.8 million higher / $0.8 million lower).

(b) Credit Risk

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

The Group is exposed to a concentration of risk with sales of iron ore being made to a limited number of customers. The maximum exposure to credit risk at the reporting date is limited to the carrying value of trade receivables, cash and cash equivalents and deposits with banks and financial institutions.

As at 31 December 2014, trade receivables of $1.1m (2013 Nil) were past due but not impaired. At the date of this report, all past due trade receivables had been received except for $342k, with full settlement expected during March 2015. The other classes within trade and other receivables do not contain impaired assets and are not past due.

			2014	2013
			$’000	$’000
Upto	12	months	1,097	-

(c) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Maturities of financial liabilities

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period as at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

						Total	Carrying
	Less than 6		Between 1	Between 2		contractual	amount
	months	6-12 months	and 2 years	and 5 years	Over 5 years	cash fows	liabilities
2014 – Consolidated	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Non derivatives
Non-interest bearing
Trade and other payables	24,294	-	-	-	-	24,294	24,294
Fixed rate borrowings	179	180	329	-	-	688	653
Total non derivatives	24,473	180	329	-	-	24,982	24,947
2013(Restated) - Consolidated
Non derivatives
Non-interest bearing
Trade and otherpayables	28,171	-	-	-	-	28,171	28,171
Deferred consideration	4,815	3,878	6,126	18,963	34,669	68,451	43,868
Fixed rate borrowings	2,380	541	359	329	-	3,609	3,532
Total non derivatives	35,366	4,419	6,485	19,292	34,669	100,231	75,571

(d) Capital Risk Management

When managing capital, the Group’s objective is to safeguard the ability to continue as a going concern so that the Group continues to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

Management is constantly reviewing and adjusting, where necessary, the capital structure. This involves the use of corporate forecasting models which enable analysis of the Group’s financial position including cash flow forecasts to determine future capital management requirements. To ensure sufficient funding, a range of assumptions are modeled.

The Group had access to the following undrawn borrowing facility at the end of the reporting period:

	2014	2013
Secured and foating rate	$’000	$’000
Expiringwithin oneyear(1)	14,220	-

(1) The Group entered into a multi-advance secured loan facility agreement to finance the re-build program for the Dump Trucks located at the Savage River Mine in December 2014. A specific security deed granted security interest in the equipment and all parts, improvements and replacements thereof, to secure all amounts payable by the Group under the Facility. Maximum term is four years for the Facility (including the Availability Period of first twelve months after the date of execution or, if earlier, the date the Facility Limit is fully utilised).

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Net realisable value of inventories

The Group reviews the carrying value of its inventories at each reporting date to ensure that the cost does not exceed net realisable value. Estimates of net realisable value includes a number of assumptions, including commodity price expectations, foreign exchange rates and costs to complete inventories to a saleable product.

(b) Impairment of property, plant and equipment and mine properties and development

The Group performs an impairment assessment where there is an indication of possible impairment. Where there is an indication of a possible impairment, a formal estimate of the recoverable amount of each Cash Generating Unit (CGU) is made, which is deemed to be the higher of a cash generating unit’s fair value less costs of disposal and its value in use.

Details in relation to the Group’s impairment assessment are disclosed at Note 30.

(c) Stripping costs in the production phase of a surface mine (Interpretation 20)

The application of Interpretation 20 requires management judgement in determining whether a surface mine is in the production phase and whether the benefits of production stripping activities will be realised in the form of inventory produced through improved access to ore.

Judgement is also applied in identifying the component of the ore body and the manner in which stripping costs are capitalised and amortised. There are a number of uncertainties inherent in identifying components of the ore body and the inputs to the relevant production methods for capitalising and amortising stripping costs and these assumptions may change significantly when new information becomes available. Such changes could impact on capitalisation and amortisation rates for capitalised stripping costs and deferred stripping asset values.

(d) Determination of mineral resources and ore reserves

Mineral resources and ore reserves are based on information compiled by a Competent Person as defined in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC 2012 code). There are numerous uncertainties inherent in estimating ore reserves and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of ore reserves and may, ultimately, result in the reserves being restated. Such changes in reserves could impact on depreciation and amortisation rates, asset carrying values and provisions for rehabilitation.

(e) Taxation

The Group’s accounting policy for taxation requires management judgment in relation to the application of income tax legislation. There are many transactions and calculations undertaken during the ordinary course of business where the ultimate tax determination is uncertain. The Group recognises liabilities for tax, and if appropriate taxation investigation or audit issues, based on whether tax will be due and payable. Where the taxation outcome of such matters is different from the amount initially recorded, such difference will impact the current and deferred tax positions in the period in which the assessment is made.

The Group merged its multiple tax consolidated groups on 6 January 2011 which has impacted the carrying amount of deferred tax assets and deferred tax liabilities recognised on the balance sheet. Management has used judgment in the application of income tax legislation on accounting for this tax consolidation. These judgments are based on management’s interpretation of the income tax legislation applicable at the time of the consolidation.

In addition, certain deferred tax assets for deductible temporary differences have been recognised. In recognising these deferred tax assets assumptions have been made regarding the Group’s ability to generate future taxable profits. Utilisation of the tax losses also depends on the ability of the tax consolidated entities to satisfy certain tests at the time the losses are recouped. There is an inherent risk and uncertainty in applying these judgments and a possibility that changes in legislation will impact upon the carrying amount of deferred tax assets and deferred tax liabilities recognised on the balance sheet.

(f) Provision for decommissioning and restoration costs

Decommissioning and restoration costs are a normal consequence of mining, and the majority of this expenditure is incurred at the end of a mine’s life. In determining an appropriate level of provision, consideration is given to the expected future costs to be incurred, the timing of these expected future

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

costs (largely dependent on the life of the mine), and the estimated future level of inflation.

The ultimate cost of decommissioning and restoration is uncertain and costs can vary in response to many factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other mine sites. The expected timing of expenditure can also change, for example in response to changes in reserves or to production rates.

Changes to any of the estimates could result in significant changes to the level of provisioning required, which would in turn impact future financial results. These estimates are reviewed annually and adjusted where necessary to ensure that the most up to date data is used.

(g) Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value for shares issued is determined by the volume weighted average trading price over a specified number of days.

(h) Revenue recognition - Provisional pricing

The Group has recognised revenues amounting to $1.5 million for the year ended 31 December 2014 (31 December 2013: $9.5 million) from the sale of iron ore products which requires quantity and quality verification by the customer. The Group is confident that the quantity and quality of the iron ore pellets is such that it is appropriate to recognise the provisional pricing revenues during the year ended 31 December 2014.

NOTE 4. SEGMENT INFORMATION

(a) Description of segments

Management has determined and presented operating segments based on the reports reviewed by the Executive Committee, who is the Group’s chief operating decision maker in terms of allocating resources and assessing performance.

As announced on 18 August 2014, the Board has established an Executive Committee comprising Ms Michelle Li, Mr Honglin Zhao and Mr Daniel Tenardi to manage the Company on an interim basis following the Managing Director, Mr Wayne Bould leaving the Company. Until a replacement has been appointed, Grange management will continue with operational responsibilities and will report to the Executive Committee. The Company has commenced a search for a replacement for Mr Bould.

The Group has one reportable segment, being the exploration, evaluation and development of mineral resources and iron ore mining operations. The Executive Committee allocates resources and assesses performance, in terms of revenues earned, expenses incurred and assets employed, on a consolidated basis in a manner consistent with that of the measurement and presentation in the financial statements.

The following table presents revenues from sales of iron ore based on the geographical location of the port of discharge.

Segment revenues from sales to external customers

	Segment revenues from	sales to external customers
	Australia China	2014 $’000 21,974 157,265	2013 $’000 6,725 206,487
	India	9,425	12,761
	Japan	38,144	30,582
	Korea	55,638	21,684
	Malaysia Philippines	14,709 -	- 2,833
	TOTAL	297,155	281,072

Segment assets and capital are allocated based on where the assets are located. The consolidated assets of the Group were predominately located in Australia as at 31 December 2014 and 31 December 2013. The total costs incurred during the current and comparative periods to acquire segment assets were also predominately incurred in Australia.

Exploration, evaluation and development projects (including the Southdown project) are not deemed reportable operating segments at this time as the financial performance of these operations is not separately included in the reports provided to the Executive Committee. These projects may become segments in the future.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 5. REVENUE

NOTE 7. OTHER INCOME/(EXPENSES)

NOTE 5. REVENUE
	2014	2013
	$’000	$’000
From mining operations
Sales of iron oreproducts	297,155	281,072
	297,155	281,072

	2014	2013
	$’000	$’000
Other income /(expenses)
Net loss on the disposal of property, plant	-	(28)
and equipment
Other income	281	1,396
	281	1,368

NOTE 6. COST OF SALES

NOTE 6. COST OF SALES
	2014	2013
	$’000	$’000
Miningcosts	132,295	142,472
Production costs	94,873	92,577
Government royalties	7,171	9,702
Depreciation and amortisation expense	17,280	22,723
Property,Plant and Equipment
- Amounts capitalised duringtheyear	(18,886)	-
Mineproperties and development
- Amounts capitalised duringtheyear	(43,750)	(50,906)
- Amortisation expense	12,951	15,643
Deferred stripping
- Amounts capitalised duringtheyear	(49,717)	(29,168)
- Amortisation expense	29,066	59,487
Changes in inventories	8,164	(7,881)
Foreign exchangegain	(2,549)	(2,664)
	186,898	251,985
Depreciation and amortisation
Land and buildings	1,204	1,516
Plant and equipment	14,902	20,668
Computer equipment	1,174	539
	17,280	22,723

NOTE 8. FINANCE INCOME/(EXPENSES)

	2014	2013
	$’000	$’000
Finance income
Interest income received or receivable
- Other entities	2,838	4,334
Exchange gains on foreign currency deposits
/ borrowings(net)	4,141	6,623
	6,979	10,957
Finance expenses
Interest chargespaid orpayable
- Other entities	(198)	(206)
Finance lease interest charges paid or
payable	(90)	(290)
Provisions: unwindingof discount
- Deferred consideration
(Note 20 and Note 23)	(1,167)	(4,533)
- Decommissioning and restoration
(Note 25)	(1,045)	(1,036)
	(2,500)	(6,065)

Profit before income tax includes the following specific expenses:

Employee benefts expense	57,854	61,274
Defned contribution superannuation
expense	5,238	5,071

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

NOTE 9. INCOME TAX EXPENSE

2014	2013
	(Restated)
$’000	$’000

(a) Income tax ( ) / expense benefit

Current tax	9,816	667
Deferred tax	(66,894)	7,721
	(57,078)	8,388
Deferred income tax included in
income tax (beneft) / expense comprises:
(Increase)/decrease in deferred
tax assets	(36,543)	1,953
Increase/(decrease) in deferred
tax liabilities	(30,351)	5,768
	(66,894)	7,721

All unused taxation losses were incurred by Australian entities that are part of the tax consolidated group. The tax losses as disclosed above have not been recognised as they are not presently available for use. Their availability is subject to the satisfaction of the same business test under Australia’s tax loss integrity rules.

(d) Mineral Resources Rent Tax (MRRT)

The Mineral Resource Rent Tax Repeal and Other Measures Act received royal assent on 5 September 2014. As at 5 September 2014, the Group had unused MRRT royalty credits and starting base allowances for which no deferred tax asset had been recognised. There has been no financial impact as a result of the repeal.

(b) Numerical reconciliation of income tax (benefit) / expense to prima facie tax payable

tax (beneft) / expense taxpayable	to prima	facie
(Loss) / proft from continuing
operations before income tax
(beneft)/ expense	(167,242)	30,218
Tax (credit) / expense at the
Australian tax rate of 30% (2013:
30%)	(50,173)	9,065
Tax effect of amounts which
are not deductible / (taxable) in
calculatingtaxable income:
Revaluation of deferred
consideration	6	(1,523)
Settlement of deferred considera-
tion	(6,227)	-
Unwind of discount on deferred
consideration	350	1,360
Share based payments expense	10	96
Sundryitems	(394)	277
	(56,428)	9,275
Adjustments to current / deferred
tax ofpriorperiods	(650)	(887)
Income tax expense	(57,078)	8,388

(c) Taxation Losses

Taxation Losses
Unused taxation losses for which
no deferred tax asset has been
recognised	54,104	54,104
Potential tax beneft @ 30%	16,231	16,231

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 10. CASH AND CASH EQUIVALENTS

		2014	2013
Cash	at bank and in hand	$’000 63,971	$’000 31,223
Term	deposits	74,679	123,658
		138,650	154,881

(c) Fair value and credit risk

Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above. Refer to Note 2 for more information on the credit quality of the Group’s trade and other receivables.

(a) Total cash (current and non-current)

Cash at bank and in hand as	138,650	154,881
per statement of cash fows
Add:
Current term deposits	15,000	5,000
	153,650	159,881

Total cash is held in trading accounts or term deposits with major financial institutions under normal terms and conditions appropriate to the operation of the accounts. These deposits earn interest at rates set by these institutions. As at 31 December 2014 the weighted average interest rate on the Australian dollar accounts was 3.36% (31 December 2013: 3.99%) and the weighted average interest rate on the United States dollar accounts was 0.60% (31 December 2013: 0.87%).

(b) Risk exposure

The Group’s exposure to interest rate risk is discussed in Note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.

NOTE 11. TRADE AND OTHER RECEIVABLES

NOTE 12. INVENTORIES

		2014	2013
		$’000	$’000
	Stores and spares	23,814	20,843
	Ore stockpiles	13,408	20,487
	Work-in-progress	6,294	439
	Finishedgoods	11,272 54,788	18,212 59,981

NOTE 13. INTANGIBLE ASSETS

		2014	2013
		$’000	$’000
	Carbon Units(1)	-	3,063
		-	3,063

(1) Represents the fair value of the allocation of free carbon units issued to Grange Resources (Tasmania) Pty Ltd pursuant to the Clean Energy Act 2011 and the Clean Energy Regulations 2011 for the 2014-15 vintage year (2013: 2013-14 vintage year). The Carbon Tax repeal received Royal Assent on 17 July 2014, effective from 1 July 2014, and the buy-back of carbon units by the Clean Energy Regulator under s.116(2) was finalised on 18 December 2014.

	2014	2013
	$’000	$’000
Trade receivables	16,753	21,696
Securitydeposits(1)	401	394
Other receivables	3,079	3,842
Prepayments	2,562	3,337
	22,795	29,269

(1) Security deposits comprises of restricted deposits that are used for monetary backing for performance guarantees.

(a) Impaired trade receivables

Information regarding the impairment of trade and other receivables is provided in Note 2. The Group has trade receivables past due but not impaired as at 31 December 2014.

NOTE 14. RECEIVABLES

	2014	2013
	$’000	$’000
Securitydeposits(1)	7,797	7,747
	7,797	7,747

(1) Non-current security deposits comprises of restricted deposits that are used for monetary backing for performance guarantees.

(a) Risk exposure

Information about the Group’s exposure to credit risk, foreign exchange and interest rate risk is provided in Note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above.

(b) Foreign exchange and interest rate risk

Information about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in Note 2.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

NOTE 15. PROPERTY, PLANT AND EQUIPMENT

	Land	Plant and	Computer
	and buildings	equipment	equipment	Total
	$’000	$’000	$’000	$’000
At 1 January 2014
Cost	38,485	300,448	6,883	345,816
Accumulated depreciation	(13,136)	(165,907)	(3,026)	(182,069)
Net book amount	25,349	134,541	3,857	163,747
Year ended 31 December 2014
Openingnet book amount	25,349	134,541	3,857	163,747
Additions	3,709	37,860	93	41,662
Disposals	-	-	(1)	(1)
Depreciation charge	(1,219)	(14,908)	(1,213)	(17,340)
Impairment losses(Note 30)	(13,045)	(66,917)	(1,675)	(81,637)
Closingnet book amount	14,794	90,576	1,061	106,431
At 31 December 2014
Cost	42,193	338,266	6,948	387,407
Accumulated depreciation and impairment	(27,399)	(247,690)	(5,887)	(280,976)
Net book amount	14,794	90,576	1,061	106,431
At 1 January 2013
Cost	54,067	281,164	2,377	337,608
Accumulated depreciation	(19,265)	(144,501)	(1,963)	(165,729)
Net book amount	34,802	136,663	414	171,879
Year ended 31 December 2013
Openingnet book amount	34,802	136,663	414	171,879
Additions	909	11,660	2,998	15,567
Disposals	-	(26)	(4)	(30)
Depreciation charge	(1,532)	(21,529)	(608)	(23,669)
Transfers(at net book value)	(8,830)	7,773	1,057	-
Closingnet book amount	25,349	134,541	3,857	163,747
At 31 December 2013
Cost	38,485	300,448	6,883	345,816
Accumulated depreciation	(13,136)	(165,907)	(3,026)	(182,069)
Net book amount	25,349	134,541	3,857	163,747

(a) Assets under construction

The carrying amounts of the assets disclosed above includes expenditure of $54.7 million (2013: $24.1 million) recognised in relation to property, plant and equipment which is in the course of construction.

(b) Leased assets

Plant and equipment includes the following amounts where the Group is a lessee under a finance lease. The lessor is secured over the leased assets.

	2014	2013
	$’000	$’000
Cost	999	999
Accumulated depreciation	(633)	-
Net book amount	366	999

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 16. MINE PROPERTIES AND DEVELOPMENT

DEVELOPMENT
	2014	2013
	$’000	$’000
Mineproperties and development(at cost)	463,680	411,431
Accumulated amortisation and impairment	(348,397)	(120,952)
Net book amount	115,283	290,479
Deferred stripping costs (net book	99,947	79,296
amount)
Total mineproperties and development	215,230	369,775

Movements in mine properties and development are set out below:

NOTE 18. TRADE AND OTHER PAYABLES

	2014	2013
		(Restated)
	$’000	$’000
Tradepayables and accruals	23,317	24,157
Otherpayables	977	4,014
	24,294	28,171

(a) Risk exposure

Trade payables are non-interest bearing and are normally settled on repayment terms between 7 and 30 days. Information about the Group’s exposure to foreign exchange risk is provided in Note 2.

Mine properties and development

Mineproperties and development
Openingnet book amount	290,479	255,666
Currentyear expenditure capitalised	43,750	50,906
Change in rehabilitation estimate	8,499	(450)
Amortisation expense	(12,951)	(15,643)
Impairment losses(Refer Note 30)	(214,494)	-
Closingnet book amount	115,283	290,479
Deferred stripping costs
Openingnet book amount	79,296	109,615
Currentyear expenditure capitalised	49,717	29,168
Amortisation expense	(29,066)	(59,487)
Closingnet book amount	99,947	79,296

NOTE 17. DEFERRED TAX ASSETS

	2014	2013
		(Restated)
	$’000	$’000
The balance comprises temporary
differences attributable to:
Property, plant and equipment	41,422	21,263
Mineproperties and development	13,931	-
Trade and otherpayables	66	112
Employee benefts	4,430	4,753
Decommissioningand restoration	10,214	7,369
Other	826	849
Total deferred tax assets	70,889	34,346
Set-off against deferred tax liabilities	(3,331)	(33,682)
pursuant to set-off provisions(Note 24)
Net deferred tax assets	67,558	664
Deferred tax assets expected to be	3,555	4,657
recovered within 12 months
Deferred tax assets expected to be	67,334	29,689
recovered after more than 12 months
	70,889	34,346

NOTE 19. BORROWINGS (CURRENT)

	2014	2013
	$’000	$’000
Secured
Finance lease liabilities(1)	333	319
Other borrowings	-	2,533
	333	2,852

(1) Lease liabilities are secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.

NOTE 20. DEFERRED CONSIDERATION (CURRENT)

	2014	2013
	$’000	$’000
Deferred consideration	-	8,332
	-	8,332

(a) Movements in deferred consideration

Movements in deferred consideration are set out below:

Balance at beginningof theyear	8,332	7,559
Payments	(24,412)	(5,174)
Changes in estimate	134	(1,148)
Unwindingof discount	165	776
Gain on settlement	(20,757)	-
Transfers from non-current balance	36,538	6,319
Balance at end of theyear	-	8,332

Refer to Note 23 for further details on deferred consideration.

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68 GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Notes to the Financial Statements (cont.)

NOTE 21. PROVISIONS (CURRENT)

	2014	2013
		(Restated)
	$’000	$’000
Employee benefts	11,276	14,629
Decommissioningand restoration	585	535
Other	210	202
	12,071	15,366

Movements in each class of provision, other than employee benefits, are set out below:

Decommissioning	Decommissioning
and	restoration	Other	Total
Balance at beginning of the	535	202	737
year
Payments	(744)	(202)	(946)
Transfers from	794	210	1,004
non-currentprovisions
Balance at the end of theyear	585	210	795

NOTE 22. BORROWINGS

(NON-CURRENT)

	2014	2013
	$’000	$’000
Secured
Finance lease liabilities(1)	320	680
	320	680

(1) Lease liabilities are secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.

ness combination which completed in August 2007. The terms of the obligation entitled the previous owners to 2% of the gross receipts of Grange Resources (Tasmania) Pty Ltd from 1 January 2013 to 31 December 2023. The Company successfully negotiated a settlement of the deferred consideration obligation for an immediate cash payment of US$21 million (A$22.4 million) in April 2014.

NOTE 24. DEFERRED TAX LIABILITIES (NON-CURRENT)

	2014	2013
		(Restated)
	$’000	$’000
The balance comprises temporary
differences attributable to:
Trade and other receivables	46	39
Inventories	3,285	2,651
Mineproperties and development	-	30,992
Total deferred tax liabilities	3,331	33,682
Set-off of deferred tax assets pursuant	(3,331)	(33,682)
to set-offprovisions(Note 17)
Net deferred tax liabilities	-	-
Deferred tax liabilities expected to be	3,331	2,690
settled within 12 months
Deferred tax liabilities expected to be	-	30,992
settled after more than 12 months
	3,331	33,682

NOTE 23. DEFERRED CONSIDERATION (NON-CURRENT)

	2014	2013
	$’000	$’000
Deferred consideration	-	35,536
	-	35,536

(a) Movements in deferred consideration

Movements in deferred consideration are set out below:

NOTE 25. PROVISIONS (NON-CURRENT)

	2014	2013
	$’000	$’000
Employee benefts	3,492	1,225
Decommissioningand restoration	42,038	32,595
Other	18	228
	45,548	34,048

Movements in each class of provision, other than employee benefits are set out below:

Balance at beginningofyear	35,536	42,027
Changes in estimate	-	(3,929)
Unwindingof discount	1,002	3,757
Transfers to current balance	(36,538)	(6,319)
Balance at end ofyear	-	35,536

The deferred consideration obligation represents a series of payments owing to the previous owners of Grange Resources (Tasmania) Pty Ltd and arose from a busi-

	Decommissioning	Decommissioning	Other	Total
	and	restoration
	Balance at beginning of the	32,595	228	32,823
	year
	Change in estimate	9,192	-	9,192
	Unwindingof discount Transfers to currentprovisions Balance at the end of theyear	1,045 (794) 42,038	- (210) 18	1,045 (1,004) 42,056

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 26. CONTRIBUTED EQUITY

	2014	2013	2014	2013
	Shares	Shares	$’000	$’000
Issued and fully paid ordinaryshares	1,157,097,869	1,157,097,869	331,373	331,373
	1,157,097,869	1,157,097,869	331,373	331,373

(a) Movements in ordinary share capital

(a) Movements in ordinary share capital
	Number of Shares	$’000
1 January 2013 – Opening balance	1,155,487,102	330,334
8 January2013 – Issue of shares under longterm incentiveplan	314,298	170
8 January2013 – Issue of shares under longterm incentiveplan	364,842	269
10 January2013 – Issue of shares under longterm incentiveplan	15,540	11
7 March 2013 – Issue of shares under longterm incentiveplan	310,413	181
31 December 2013 – Issue of shares under longterm incentiveplan	240,829	140
31 December 2013 – Issue of shares under longterm incentiveplan	364,845	268
31 December 2013 – Closing balance	1,157,097,869	331,373
31 December 2014 – Closing balance	1,157,097,869	331,373

(b) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.

Ordinary shares entitle their holder to one vote per share, either in person or by proxy, at a meeting of the Company.

Ordinary shares have no par value and the Company does not have a limited amount of authorised share capital.

(c) Share options and rights

The Company has share based payment schemes under which rights for the Company’s shares have been granted to certain executives and eligible employees (refer to Note 39).

NOTE 27. RESERVES

NOTE 28. RETAINED PROFITS

NOTE 27. RESERVES
	2014	2013
	$’000	$’000
Share-basedpayments reserve	415	383
	415	383

(a) Movements in share-based payments reserves

payments reserves
	2014	2013
	$’000	$’000
Balance at beginningof theyear	383	1,103
Share basedpayments expense	32	319
Issue of shares to employees	-	(1,039)
Balance at end of theyear	415	383

	2014	2013
		(Restated)
	$’000	$’000
Retainedprofts
Movements in retained profts were as
follows:
Balance at the beginningof theyear	336,719	338,018
(Loss)/proft for theyear	(110,164)	21,830
Dividendspaid	(23,142)	(23,129)
Balance at the end of theyear	203,413	336,719

(b) Nature and purpose of

share-based payment reserve

The share based payments reserve is used to recognise the fair value of equity benefits issued by the Company.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

NOTE 29. DIVIDENDS

NOTE 29. DIVIDENDS
	2014	2013
	$’000	$’000
Unfranked interim dividend for the year ended 31 December 2013 – 1.0 centper share Unfranked fnal dividend for the year ended 31 December 2013 – 1.0 cent per share (2012: 1.0 cent per share) and an additional special	- 23,142	11,565 11,564
dividend of 1.0 centper share(2012:nil)
Total dividendsprovided for orpaid	23,142	23,129

(a) Ordinary shares

A final dividend for the year ended 31 December 2013 of 1.0 cent per fully paid share (2012:1.0 cent per share) and an additional special dividend of 1.0 cent per share (2012:nil) was paid on 4 April 2014. This final and special dividend was declared NIL conduit foreign income.

There was no interim dividend for the year ended 31 December 2014 paid during the year (2013: 1.0 cent per fully paid share).

(b) Dividends not recognised at the end of the reporting period

In addition to the above dividends which were paid during 2014, the directors have recommended the payment of an unfranked dividend of $11.6 million. This represents an ordinary final unfranked dividend of 1.0 cent per share for the year ended 31 December 2014. This final dividend was declared NIL conduit foreign income and will be paid on 2 April 2015.

NOTE 30. IMPAIRMENT OF NON-CURRENT ASSETS

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. The Company considers the relationship between its market capitalisation and its book value, among other factors, when reviewing for indicators of impairment. As at 31 December 2014, the market capitalisation of the Company was below the book value of its net assets, indicating a potential trigger for impairment of assets.

(a) Impairment Testing

(i) Methodology

An impairment loss is recognised for a Cash Generating Unit (CGU) when the recoverable amount is less than the carrying amount. The recoverable amount of each CGU has been estimated using a fair value less costs of disposal basis. The costs of disposal have been estimated by management based on prevailing market conditions.

Fair value is estimated based on the net present value of estimated future cash flows for a CGU. Future cash flows are based on a number of assumptions, including commodity price expectations, foreign exchange rates, reserves and resources and expectations regarding future operating performance and capital requirements which are subject to risk and

uncertainty. An adverse change in one or more of the assumptions used to estimate fair value could result in a reduction of the CGU’s fair value.

(ii) Key assumptions

At the end of the reporting period the key assumptions used by the Directors in determining the recoverable amount for the Group’s Savage River CGU were in the following ranges and for comparison purposes also provides the equivalent assumptions used as at 31 December 2013:

At the end of the reporting period the key assumptions used by the Directors in determining the recoverable amount for the Group’s Savage River CGU were in the following ranges and for comparison purposes also provides the equivalent assumptions used as at 31 December 2013:	At the end of the reporting period the key assumptions used by the Directors in determining the recoverable amount for the Group’s Savage River CGU were in the following ranges and for comparison purposes also provides the equivalent assumptions used as at 31 December 2013:
31 December 2014
Assumptions 2015 – 2023	Long Term 2024+
Iron ore pellets (FOB Port Latta) (US$per DMT) US$84/t – US$98/t	US$98/t
AUD:USD exchange rate $0.75	$0.75
Post-tax real discount rate 9.5%
31 December 2013
Assumptions 2014 – 2022	Long Term 2023+
Iron ore pellets (FOB Port Latta) (US$per DMT) US$140/t – US$105/t	US$105/t
AUD:USD exchange rate $0.90 declining to $0.81	$0.81
Post-tax real discount rate 10%

Commodity prices and foreign exchange rates

Commodity prices and foreign exchange rates are estimated with reference to analysis performed by an external party and are updated at least once every six months, in-line with the Group’s reporting dates. The rates applied for the period to 2019 are based upon analysis performed by an external party which then transition to a long term market based assumption over a five year period from 2019.

Operating performance (production, operating costs and capital costs)

Life of mine production, operating cost and capital cost assumptions are based on the Group’s most recent life of mine plan and budget. The assumptions include expected improvements reflecting the Group’s objective of maximising free cash flow by optimising production and improving productivity. Mineral resources and ore reserves not in the most recent life of mine plan are not included in the determination of recoverable amount.

Discount rate

To determine the recoverable amount, the estimated future cash flows have been discounted to their present value using a post-tax real discount rate that reflects a current market assessment of the time value of money and risks specific to the asset.

(iii) Impacts

As at the reporting date, the Group has conducted a carrying value analysis and assessed the fair value as being greater than its carrying amount as at 31 December 2014. As at 30 June 2014, the Group recognised non-current asset impairments of the carrying value of Savage River assets of $207.3 million after tax, as summarised in the table below:

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 30. IMPAIRMENT OF NON-CURRENT ASSETS (cont.)

	Total
	$’000
Impairments
Property plant and equipment	81,637
Mineproperties and development	214,495
Total asset impairments	296,132
Tax effect	(88,840)
Total asset impairments after tax	207,292

The key driver of the impairment is lower than forecast iron ore prices arising from recent changes in the supply and demand dynamics of the market.

(iv) Sensitivity analysis

After recognising the asset impairments in respect of Savage River as at 30 June 2014, and based on the impairment tests performed at the end of the year, no further impairment is required for the 2014 financial year.

Any variation in the key assumptions used to determine fair value will result in a change of the estimated fair value. If the variation in assumption has a negative impact on fair value it could indicate a requirement for an additional impairment to non-current assets.

It is estimated that changes in the following key assumptions would have the following approximate impact on the fair value of the Savage River CGU that has been subject to impairment as at 31 December 2014:

Decrease in fair value resulting from:

	US$1 per dmt decrease in iron ore pellet prices	$21.3 million
	(FOB Port Latta)
	$0.01 increase in the AUD:USD exchange rate	$28.3 million
	1% increase in estimated operatingcosts	$14.5 million
	25 bps increase in the discount rate	$9.8 million

Reasonably possible changes in circumstances may affect these key assumptions and therefore the fair value. In reality, a change in any one of the aforementioned assumptions (including operating performance) would usually be accompanied by a change in another assumption which may have an off-setting impact. Action is usually taken to respond to adverse changes in assumptions to mitigate the impact of any such change. If the carrying amount is assessed to be impaired, the impairment charge is recognised in profit or loss.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

NOTE 31. IMPACTS ARISING FROM A CHANGE IN ACCOUNTING POLICY AND THE RECLASSIFICATION OF COMPARATIVE FINANCIAL INFORMATION

(a) Statement of Financial Position – 1 January 2013

31 December 2012 $’000	Increase /(Decrease) 1 January 2013 (Restated) $’000 Accounting Policy $’000 Reclassifcation $’000
ASSETS Current assets
Cash and cash equivalents 119,918	- - 119,918
Term deposits 55,000	- - 55,000
Trade and other receivables 22,397	- - 22,397
Inventories 53,097	- - 53,097
Intangible assets 5,548	- - 5,548
Total current assets 255,960	- - 255,960
Non-current assets
Receivables 6,937	- - 6,937
Property, plant and equipment 171,879	- - 171,879
Mineproperties and development 365,281	- - 365,281
Exploration and evaluation 109,734	(109,734) - -
Deferred tax assets -	8,385 - 8,385
Total non-current assets 653,831	(101,349) - 552,482
Total assets 909,791	(101,349) - 808,442
LIABILITIES Current liabilities
Trade and otherpayables 34,982	- (6,285) 28,697
Borrowings 13,876	- - 13,876
Deferred consideration 7,559	- - 7,559
Provisions 6,806	- 6,285 13,091
Total current liabilities 63,223	- - 63,223
Non-current liabilities
Deferred consideration 42,027	- - 42,027
Deferred tax liabilities 24,535	(24,535) - -
Provisions 33,737	- - 33,737
Total non-current liabilities 100,299	(24,535) - 75,764
Total liabilities 163,522	(24,535) - 138,987
Net assets 746,269	(76,814) - 669,455
EQUITY
Contributed equity 330,334	- - 330,334
Reserves 1,103	- - 1,103
Retained 414,832	(76,814) - 338,018
Total equity 746,269	(76,814) - 669,455

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 31. IMPACTS ARISING FROM A CHANGE IN ACCOUNTING POLICY AND THE RECLASSIFICATION OF COMPARATIVE FINANCIAL INFORMATION (cont.)

(b) Statement of Comprehensive Income – 31 December 2013

		Proft
	31 December 2013	Increase / (Decrease)	31 December 2013
			(Restated)
	$’000	$’000	$’000
Revenues from mining operations	281,072	-	281,072
Cost of sales	(251,985)	-	(251,985)
Grossproft from mining operations	29,087	-	29,087
Administration expenses	(4,795)	-	(4,795)
Operating proft before other income /
(expenses)	24,292	-	24,292
Other income /(expenses)
Revaluation of deferred consideration	5,077	-	5,077
Exploration and evaluation expenditure	-	(5,411)	(5,411)
Other income /(expenses)	1,368	-	1,368
Operating proft before fnance income /(expense)	30,737	(5,411)	25,326
Finance income	10,957	-	10,957
Finance expenses	(6,065)	-	(6,065)
Proft /(loss) before tax	35,629	(5,411)	30,218
Income tax beneft /(expense)	(10,012)	1,624	(8,388)
Proft /(loss) for theyear	25,617	(3,787)	21,830
Total comprehensive income for theyear	25,617	(3,787)	21,830
Earnings per share for proft attributable to the
ordinary equity holders of Grange Resources Limited
Basic earningsper share(centsper share)	2.22	(0.33)	1.89
Diluted earningsper share(centsper share)	2.21	(0.32)	1.89

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

NOTE 31. IMPACTS ARISING FROM A CHANGE IN ACCOUNTING POLICY AND THE RECLASSIFICATION OF COMPARATIVE FINANCIAL INFORMATION (cont.)

(c) Statement of Cash Flows – 31 December 2013

	31 December 2013	Increase / (Decrease)	31 December 2013
			(Restated)
	$’000	$’000	$’000
Cash fows from operating activities
Receipts from customers (inclusive of goods and
services tax)	268,298	-	268,298
Payments to suppliers and employees (inclusive of
goods and services tax)	(156,657)	(5,411)	(162,068)
	111,641	(5,411)	106,230
Interest received	4,170	-	4,170
Interestpaid	(9)	-	(9)
Net cash infow /(outfow) from operating activities	115,802	(5,411)	110,391
Cash fows from investing activities
Payments for exploration and evaluation	(5,411)	5,411	-
Payments forproperty, plant and equipment	(14,684)	-	(14,684)
Payments for mineproperties and development	(80,074)	-	(80,074)
Proceeds from term deposits	55,601	-	55,601
Net cash infow /(outfow) from investing activities	(44,568)	5,411	(39,157)
Cash fows from fnancing activities
Proceeds from borrowings	3,532	-	3,532
Payment of deferred consideration	(5,174)	-	(5,174)
Dividendspaid to shareholders	(23,129)	-	(23,129)
Finance leasepayments	(14,243)	-	(14,243)
Net cash infow /(outfow) from fnancing activities	(39,014)	-	(39,014)
Net increase /(decrease) in cash and cash equivalents	32,220	-	32,220
Cash and cash equivalents at beginningof theyear	119,918	-	119,918
Net foreign exchange differences	2,743	-	2,743
Cash and cash equivalents at end of theyear	154,881	-	154,881

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 31. IMPACTS ARISING FROM A CHANGE IN ACCOUNTING POLICY AND THE RECLASSIFICATION OF COMPARATIVE FINANCIAL INFORMATION (cont.)

(d) Statement of Financial Position – 31 December 2013

31 December 2013 $’000	Increase /(Decrease) Accounting Policy $’000 Reclassifcation $’000 31 December 2013 (Restated) $’000
ASSETS
Current assets
Cash and cash equivalents 154,881	- - 154,881
Term deposits 5,000	- - 5,000
Trade and other receivables 29,269	- - 29,269
Inventories 59,981	- - 59,981
Intangible assets 3,063	- - 3,063
Total current assets 252,194	- - 252,194
Non-current assets
Receivables 7,747	- - 7,747
Property, plant and equipment 163,747	- - 163,747
Mineproperties and development 369,775	- - 369,775
Exploration and evaluation 115,145	(115,145) - -
Deferred tax assets -	664 - 664
Total non-current assets 656,414	(114,481) - 541,933
Total assets 908,608	(114,481) - 794,127
LIABILITIES
Current liabilities
Trade and otherpayables 35,443	- (7,272) 28,171
Borrowings 2,852	- - 2,852
Deferred consideration 8,332	- - 8,332
Current tax liabilities 667	- - 667
Provisions 8,094	- 7,272 15,366
Total current liabilities 55,388	- - 55,388
Non-current liabilities
Borrowings 680	- - 680
Deferred consideration 35,536	- - 35,536
Deferred tax liabilities 33,880	(33,880) - -
Provisions 34,048	- - 34,048
Total non-current liabilities 104,144	(33,880) - 70,264
Total liabilities 159,532	(33,880) - 125,652
Net assets 749,076	(80,601) - 668,475
EQUITY
Contributed equity 331,373	- - 331,373
Reserves 383	- - 383
Retained earnings 417,320	(80,601) - 336,719
Total equity 749,076	(80,601) - 668,475

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

NOTE 32. REMUNERATION OF AUDITORS

During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms.

	2014	2013
		(Restated)
	$’000	$’000
(a) PwC - Australia
Audit and review of fnancial reports	376	279
Other assurance services	51	15
Taxation services
Taxation consultingand advice	49	95
Total remuneration of PwC - Australia	476	389
(b) Relatedpractices of PwC - Australia
Audit and review of fnancial reports	17	23
Taxation compliance Total remuneration of related practices of PwC - Australia	2 19	2 25

NOTE 33. COMMITMENTS AND CONTINGENCIES

(c) Tenement expenditure commitments

In order to maintain the mining and exploration tenements in which the Group is involved, the Group is committed to meet conditions under which the tenements were granted. If the Group continues to hold those tenements, the minimum expenditure requirements (including interests in joint venture arrangements) will be approximately:

arrangements) will be approximately:
	2014	2013
		(Restated)
	$’000	$’000
Within oneyear	959	856
After one year but not more than fve	4,524	4,389
years
	5,483	5,245

(d) Operating and capital expenditure commitments

In order to maintain and continue mining and pellet processing operations in Tasmania there are a number of commitments and ongoing orders to various contractors or suppliers going forward, these will be approximately:

forward, these will be approximately:
Within oneyear	43,181	23,197
After one year but not more than fve	20,140	4,577
years
	63,321	27,774

(a) Lease expenditure commitments

The Group leases various offices under non-cancellable operating leases expiring within 2 years. The leases have varying terms, escalation clauses and renewal rights.

Commitments for minimum lease payments in relation to noncancellable operating leases are payable as follows:

Within oneyear After oneyear but not more than fveyears	2014 $’000 210 18	2013 (Restated) $’000 202 228
Minimum leasepayments	228	430

(b) Finance lease expenditure commitments

The finance lease commitments comprise of the leasing of the light vehicles and heavy mining equipment. Commitments for minimum lease payments in relation to the Group’s finance leases are payable as follows:

Within one year	359	389
After oneyear but not more than fveyears Future fnance charges	329 688 (35)	687 1,076 (77)
Recognised as a liability	653	999

(e) Bank Guarantees

Bank guarantees have been provided on the Group’s behalf to secure, on demand by the Minister for Mines and Energy for the State of Queensland, any sum to a maximum aggregate amount of $2,012,963 (2013: $2,012,963), in relation to the rehabilitation of the Highway Reward project.

A Bank guarantee has been provided by Grange Resources (Tasmania) Pty Ltd, held by the Tasmanian Government, as required under Environmental Management and Pollution Control Act 1994 (EMPCA) for the amount of $2,984,234 (December 2013: $2,934,444). This amount is to guarantee the rehabilitation responsibilities under the mining lease at Savage River.

A Bank guarantee has been provided by Grange Resources (Tasmania) Pty Ltd, held by the National Australia Bank, as required under the Goldamere Agreement and applicable Deeds of Variation, for the amount of $2,800,000 (December 2013: $2,800,000). This amount is a guarantee against the purchase price outstanding with the Tasmanian government as specified in the Goldamere Agreement.

Refer to Note 40 for bank guarantees provided by the parent entity. No material losses are anticipated in respect to the above bank guarantees and the rehabilitation provisions include these amounts.

(f) Contingent Assets & Liabilities

The Group did not have any contingent assets or liabilities at the Balance Date.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 34. RELATED PARTY TRANSACTIONS

(a) Ultimate Parent

Grange Resources Limited (Grange) is the ultimate Australian parent company.

(b) Subsidiaries

Interests in subsidiaries are set out in Note 35.

(c) Key management personnel compensation

compensation
	2014	2013
	$	$
Short-term employee benefts	1,910,123	2,267,147
Post-employment benefts	99,556	82,149
Long-term benefts	18,177	20,098
Termination benefts	250,000	178,173
Long-term incentives	83,898	249,840
	2,361,754	2,797,407

Detailed remuneration disclosures are provided in the remuneration report on pages 35 to 43.

(d) Transactions with related parties

During the year the following transactions occurred with related parties:

		2014	2013
		$	$
	Sales of iron ore products
	Long term off-take agreement(1)
	- Pellets	129,237,036	142,058,438
	- Chips	2,157,061	7,145,574
	Spot sales(2)
	- Pellets	-	34,082,402
	Agency commissions
	- Spot sales	(637,787)	(903,324)
	Purchases
	- Equipment hire and freight(3)	(682,867)	(446,973)
		130,073,443	181,936,117

• (1) Sales of iron ore products to Jiangsu Shagang International Trade Co., Ltd (Shagang), a wholly owned subsidiary of Jiangsu Shagang Group Co. Ltd, under long-term off-take agreements.

• During the year, 1,098,719 dry metric tonnes of iron ore products were sold to Shagang in accordance with the terms of the long term off-take agreements (2013: 1,008,437 dry metric tonnes).

• (2) Spot sales of iron ore pellets or agency commissions paid to other Director-related entities.

• Grange has successfully negotiated that no commissions will be payable to the related parties for the 12 month sales agency agreements for 2015, resulting in significant savings of commission payable going forward.

• Transactions with related parties are on terms equivalent to those that prevail in arm’s length transactions and conducted with oversight from the Independent Directors of Grange.

• (3) The Group acquired equipment hire and freight services from entities that are controlled by members of the Group’s key management personnel.

(e) Outstanding balances arising from transactions with related parties

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:

	2014	2013
	$	$
Trade receivables
(sales of iron oreproducts)
Long term off-take agreement
- Pellets	1,949,265	19,836,124
- Chips	(5,594)	1,311,124
- Other	(119,911)	(29,916)
Spot sales	(132,972)	(562,817)
(agencycommissions)
- Other	-	10,000
	1,690,788	20,564,515

Amounts outstanding under the long term off-take agreement with Shagang are unsecured whereas amounts outstanding in respect of spot sales are secured against an irrecoverable letter of credit. All outstanding balances will be settled in cash.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

There is no allowance account for impaired receivables in relation to any outstanding balances with related parties, and no expense has been recognised during the year in respect of impaired receivables due from related parties (2013: Nil).

Long term off-take agreement

Grange Resources (Tasmania) Pty Ltd (Grange Tasmania) is party to a long term off-take agreements (Pellets and Chips) with Jiangsu Shagang International Trade Co. Ltd (Shagang), a wholly owned subsidiary of Jiangsu Shagang Group Co. Ltd, who, as at 27 February 2015, holds 46.87% (2013: 46.47%) of the issued ordinary shares of Grange.

Pellets

The key terms of the agreement with Shagang, as advised to the ASX on 19 November 2012, are as follows:

• The sale of 1 million dry metric tonnes of iron ore pellets per annum until 2022.

• The price for the iron ore pellets will be the fair market value as agreed by the parties having regard to:

by non-associated Grange shareholders, or approved by the Grange Independent Directors.

Agency agreements with related parties

Grange sold some product on the spot market through sales agency agreements with sales agents who were related parties of Grange Directors. Any appointment of a related party sales agent was non-exclusive and negotiated and appointed by Grange Directors and management independent of related parties, acting in the best interests of all Grange shareholders.

The commission payable to the related party sales agent was determined on the basis of an amount equal to a marketdetermined percentage of the US dollar price of product sold to the third party, and the sales agency agreement did not confer a right to any other royalty or similar revenue scheme. The appointment of the related party sales agent and the precise percentage of the commission payable was determined by Grange Directors and management independent of related parties on the basis of it comprising reasonable, arm’s length terms.

• seaborne iron ore supply and demand conditions;

• available published price benchmarks for iron ore; and

• product quality differentials and potential freight costs.

Grange Tasmania and Shagang have agreed to adopt a Metal Bulletin Iron Ore Pellet reference price which is published weekly for a 65-66% Fe, iron ore pellet product and is quoted on a US$ per dry metric tonne CFR North China basis. The reference price is converted to an FOB price per dry metric tonne using a freight net-back calculation developed with the assistance of independent advisors. This pricing mechanism has applied to all shipments of iron ore pellets to Shagang since 1 April 2012.

Chips

The key terms of the agreement with Shagang, are as follows:

• The sale of 90 thousand dry metric tonnes of iron ore chips per annum until 2022.

• The price for the iron ore chips will be the fair market value as agreed by the parties having regard to:

• seaborne iron ore supply and demand conditions;

• available published price benchmarks for iron ore; and

• product quality differentials and potential freight costs.

Grange Tasmania and Shagang have agreed to adopt a Platts Iron Ore reference price which is published daily for a 62% Fe, iron ore chip product and is quoted on a US$ per dry metric tonne CFR North China basis. The reference price is adjusted for quality and converted to an FOB price per dry metric tonne using a freight net-back calculation developed with the assistance of independent advisors. This pricing mechanism has applied to all shipments of iron ore chips to Shagang since 1 April 2010.

NOTE 35. SUBSIDIARIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1.

		Percentage of interest held Group	equity by the
	Name	2014 %	2013 %
	Ever Green Resources Co.,Limited(1)	100	100
	Grange Tasmania Holdings PtyLtd	100	100
	Beviron PtyLtd	100	100
	Grange Resources(Tasmania)PtyLtd	100	100
	Grange Capital PtyLtd	100	100
	Grange Administrative Services PtyLtd	100	100
	Barrack Mines PtyLtd Bamine PtyLtd	100 100	100 100
	BML Holdings PtyLtd	100	100
	Horseshoe Gold Mine PtyLtd	100	100
	Grange Resources(Southdown)PtyLtd	100	100
	Southdown Project Management	100	100
	Company Pty Ltd
	Grange Developments Sdn Bhd(2)	100	100

• (1) Ever Green Resources Co., Limited is incorporated in Hong Kong, and registered as a foreign company under the Corporations Act 2001.

• (2) Grange Developments Sdn Bhd is incorporated in Malaysia.

As set out in the Grange Notice of Meeting dated 5 November 2008, each transaction between Shagang and Grange (including the off-take arrangements) must be either approved

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

NOTE 36. INTERESTS IN JOINT OPERATIONS

OPERATIONS
	% Interest	% Interest
Name of Joint Operation	2014	2013
Southdown Magnetite and Associated	70.00	70.00
Pellet Project(s)– Iron Ore
Reward - Copper / Gold	31.15	31.15
Highway– Copper	30.00	30.00
Reward Deeps / Conviction - Copper	30.00	30.00
Mt Windsor Exploration - Gold / Base	30.00	30.00
Metals
Durack / Wembley– Exploration Gold	15.00	15.00

The joint operations are not separate legal entities. They are contractual arrangements between the participants for the sharing of costs and output and do not in themselves generate revenue and profit.

The Southdown Magnetite and Associated Pellet Project(s) is jointly controlled because key decisions over its activities require unanimous consent of the participants.

The Group’s direct interests in joint operations’ net assets, as summarised below, are included in the corresponding balance sheet items in the consolidated financial statements.

	2014	2013
		(Restated)
	$’000	$’000
ASSETS
Current assets
Cash and cash equivalents	9,536	9,329
Trade and other receivables	114	89
Total current assets	9,650	9,418
Non-current assets
Property, plant and equipment	6,469	6,493
Total non-current assets	6,469	6,493
Total assets	16,119	15,911
LIABILITIES
Current liabilities
Trade and otherpayables	88	67
Total current liabilities	88	67
Total liabilities	88	67
Net assets	16,031	15,844

NOTE 37. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES

		2014	2013
			(Restated)
		$’000	$’000
	(Loss)/proft for theyear	(110,164)	21,829
	Revaluation of deferred consideration	134	(5,077)
	Unwindingof discount	2,212	5,569
	Depreciation and amortisation	17,340	23,669
	Mine properties and development	33,518	75,130
	amortisation
	Interest expense on fnance leases	43	290
	Gain on deferred consideration	(20,757)	-
	settlement
	(Proft) / loss on sale of property, plant	-	28
	and equipment
	Share basedpayment expense	32	319
	Impairment of assets Net unrealised foreign exchange (gain)	296,131 (2,299)	- (2,743)
	/ loss
	Change in operatingassets and liabilities
	(Increase) / decrease in trade and other	6,481	(13,283)
	receivables
	(Increase)/ decrease in inventories	5,193	(6,884)
	(Increase) / decrease in intangible	3,063	2,485
	assets
	(Increase) / decrease in deferred tax	(66,894)	7,722
	assets
	Increase / (decrease) in trade and other	(3,877)	107
	payables
	Increase /(decrease)in otherprovisions	7,160	563
	Increase / (decrease) provision for	9,815	667
	income taxpayable
	Net cash infow / (outfow) from
	operatingactivities	177,131	110,391

The net contributions of joint operations (inclusive of resultant revenues) to the Group’s operating profit before income tax was a loss of $1,764,770 (2013 restated: loss $2,078,564).

Contingent liabilities in relation to joint operations are disclosed in Note 33.

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NOTE 38. EARNINGS PER SHARE

	2014	2013
		(Restated)
	Cents	Cents
Basic earnings per share
From continuing operations attributable
to the ordinary equity holders of the
Company	(9.52)	1.89
Total basic earnings per share attribut-
able to the ordinary equity holders of the
Company	(9.52)	1.89
Diluted earnings per share
From continuing operations attributable
to the ordinary equity holders of the
Company	(9.51)	1.89
Total diluted earnings per share attribut-
able to the ordinary equity holders of the
Company	(9.51)	1.89

(a) Reconciliations of earnings used in calculating earnings per share

Basic earnings per share
Proft attributable to the ordinary
equity holders of the Company used in
calculating basic earnings per share from
continuingoperations	(110,164)	21,830
Diluted earnings per share
Proft attributable to the ordinary equity
holders of the company used in calculat-
ing diluted earnings per share from
continuingoperations	(110,164)	21,830

(b) Weighted average number of shares used as the denominator

	2014	2013
	Number	Number
Weighted average number of	1,157,097,869	1,156,425,168
ordinary shares used as the
denominator in calculating basic
earningsper share

Rights

Rights issued to eligible employees under the Long Term Incentive Plan are considered to be potential ordinary shares for the purposes of determining diluted earnings per share. Rights have not been included in the determination of basic earnings per share. Details relating to rights are set out in Note 39.

NOTE 39. SHARE BASED PAYMENTS

(a) Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:

expense were as follows:
	2014	2013
	$’000	$’000
Rights issued to eligible employees	32	319
under the LTIP
	32	319

The types of share-based payments are described below.

(b) Types of share-based payments

(i) Rights to Grange Shares

The Board will review regularly and reserves the right to vary from time to time the appropriate hurdles and vesting periods for Rights to Grange shares.

The objective for the issue of Rights under the LTI program is to reward selected senior employees in a manner that aligns this element of their remuneration package with the creation of long term shareholder wealth while at the same time securing the employee’s tenure with the Company over the longer term. The LTI grants Rights to the Company’s shares to selected senior employees.

31 December 2013 Award

In December 2012, the Board determined that the LTI program move to a three year performance period with immediate effect from 1 January 2013 and that Total Shareholder Return (“TSR”) be used as the performance hurdle for the Plan.

Total Shareholder Return is a common measure of value creation for shareholders. It is calculated as the difference in the share price between the beginning and end of the period, divided by the share price at the start of the period. The Board has determined that the performance hurdle for the rights be the attainment of a Total Shareholder Return of 5% per annum compounded over the three year period from 1 January 2013 to 31 December 2015.

The precise vesting date for the Rights will be determined once the Board has assessed performance against the TSR target, following the end of the three year vesting period.

The precise number of Rights that will vest will be dependent upon the Board assessment of performance against the TSR target.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Notes to the Financial Statements (cont.)

31 December 2012 Award

For the year ending 31 December 2012, 50% of the LTI for an employee relates to Company performance goals and 50% relates to personal performance goals. Rights were allocated using a share price that was based on the volume weighted average price of the Company’s shares.

Rights awarded for performance leading up to and inclusive of 31 December 2012 currently vest in three equal tranches over 24 months, completing on 1 January 2015.

For the 31 December 2012 Award, the share price was based on the volume weighted average price of the Company’s shares for the first two months of the Award performance period (i.e. the volume weighted average price of the Company’s shares from 1 January 2012 to 29 February 2012).

The expense recognised during the year ended 31 December 2014 is for rights to Grange shares issued to eligible employees. These amounts are recognised in the Company’s income statement over the vesting period.

The table below summaries rights issued to eligible employees:

31 December 2014

31 December 2014
	Balance		Issued on	Other	Balance
	1 January	Granted as	vesting of	Changes	31 December
Performance Period	2014	remuneration	rights	(net) (1)	2014	Vested	Unvested
31 December 2012	240,829	-	-	-	240,829	-	240,829
31 December 2013(3)	614,029	-	-	-	614,029	-	614,029
Total	854,858	-	-	-	854,858	-	854,858

31 December 2013

31 December 2013
	Balance		Issued on	Other	Balance
	1 January	Granted as	vesting of	Changes	31 December
Performance Period	2013	remuneration	rights	(net) (1)	2013	Vested	Unvested
31 December 2010	314,298	-	(314,298)	-	-	-	-
31 December 2011	745,227	-	(745,227)	-	-	-	-
31 December 2012	518,927	273,144	(551,242)	-	240,829	-	240,829
31 December 2013(3)	-	614,029(2)	-	-	614,029	-	614,029
Total	1,578,452	887,173	(1,610,767)	-	854,858	-	854,858

(1) Other changes relate to the departure of eligible employees prior to the date of vesting.

(2) Represents rights issued to R Mehan for the year ended 31 December 2013 as approved by the Remuneration and Nomination Committee during the year.

(3) From 1 January 2013, the LTI program adopted a Total Shareholder Return performance hurdle and moved to a three year performance period. Rights awarded to eligible employees will be disclosed in the period in which the Remuneration and Nomination Committee approves the variable remuneration entitlement following the end of the three year performance period.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

NOTE 40. PARENT ENTITY FINANCIAL INFORMATION

NOTE 41. EVENTS OCCURRING AFTER THE REPORTING PERIOD

(a) Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

	2014	2013
		(Restated)
	$’000	$’000
Balance sheet
Current assets	10,491	13,244
Total assets	283,302	279,015
Current liabilities	11,268	4,726
Total liabilities	42,415	35,800
Shareholders’ equity
Contributed equity	392,335	392,335
Reserves
- Share-based payments	31,606	31,574
Retained(losses)	(183,054)	(180,694)
Total equity	240,887	243,215
Proft for theyear	20,782	19,628
Total comprehensive income for
theyear	20,782	19,628

No matter or circumstance has arisen since 31 December 2014 that has significantly affected, or may significantly affect:

• the Group’s operations in future financial years; or

• the results of those operations in future financial years; or

• the Group’s state of affairs in future financial years.

(b) Contingent liabilities of the parent entity

Bank deposits / guarantees

A bank guarantee has been provided by the parent entity, on demand by Charter Hall Funds Management Limited for the amount of $130,470, in accordance with the terms of an office lease agreement dated 19 December 2012 to lease office premises at 225 St Georges Terrace, Perth.

Other contingent liabilities

Pursuant to the terms of an agreement dated 21 November 2003, under which the Company purchased certain tenements comprising the Southdown project, the Company is required to make a further payment of $1,000,000 to MedAire, Inc upon commencement of commercial mining operations from those tenements.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

Directors’ Declaration

In the Directors’ opinion:

• (a) the financial statements and notes set out on pages 46 to 83 are in accordance with the Corporations Act 2001, including:

• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

• (ii) giving true and fair view of the consolidated entity’s financial position as at 31 December 2014 and of its performance for the financial year ended on that date, and

• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, and

Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations of the Interim Executive Committee and Chief Financial Officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Directors.

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Daniel Tenardi Executive Committee Representative

Perth, Western Australia 27 February 2015

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84 GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Independent auditor’s report

TO THE MEMBERS OF GRANGE RESOURCES LIMITED

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Independent auditor’s report to the members of Grange Resources Limited

Report on the financial report

We have audited the accompanying financial report of Grange Resources Limited (the company), which comprises the statement of financial position as at 31 December 2014, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for the Grange Resources Limited Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1 (a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the consolidated entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

PricewaterhouseCoopers, ABN 52 780 433 757

Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

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Auditor’s opinion

In our opinion:

• (a) the financial report of Grange Resources Limited is in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the consolidated entity's financial position as at 31 December 2014 and of its performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 .

• (b) the financial report and notes also comply with International Financial Reporting Standards as disclosed in Note 1 (a).

Report on the Remuneration Report

We have audited the remuneration report included in pages 35 to 43 of the directors’ report for the year ended 31 December 2014. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December 2014 complies with section 300A of the Corporations Act 2001 .

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PricewaterhouseCoopers

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John O’Donoghue Partner

Melbourne 27 February 2015

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86

GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

Tenement Schedule

as at 27 February 2015

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PROSPECT TENEMENT INTEREST
Tasmania
Savage River 2M/2001 100% [(1)]
14M/2007 100% [(1)]
11M/2008 100% [(1)]
EL30/2003 100% [(1)]
EL8/2014 100% [(1)]
Western Australia
Southdown M70/1309 70% [ (3) (4)]
G70/217 70% [ (4)]
G70/245 70% [ (2) (4)]
E70/2512 70% [ (4)]
E70/3073 70% [ (4) ]
E70/3896 70% [ (4)]
Wembley M52/801 15% [ (5) (6)]
P52/1189-1193 15% [ (5) (6)]
Horseshoe Lights M52/743 0% [ (7)]
E52/2042 0% [ (7)]
P52/1203-1206 0% [ (7)]
Abercromby Well M53/336 0% [ (8)]
Red Hill M27/57 0% [ (9)]
Freshwater M52/278,279,299 0% [ (10)]
M52/295-296 0% [ (11)]
M52/300-301 0% [ (11)]
M52/305-306 0% [ (11)]
M52/368-370 0% [ (11)]
Pilbara E47/1846 0% [(12)]
E47/1855 0% [(12)]
E47/2241 0% [(12)]
Queensland
Mt Windsor JV ML 1571 30% [(13)]
ML 1734 30% [(13) (16)]
ML 1739 30% [ (13)]
ML 10028 30% [ (13)]
ML 1758 30% [ (13)]
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PROSPECT TENEMENT INTEREST
Northern Territory
Mt Samuel MLC 49 0% [ (14)]
MLC 527 0% [ (15)]
MLC 599 0% [ (15)]
MLC 617 0% [ (15)]
MCC 174 0% [ (15)]
MCC 212 0% [ (15)]
MCC 287-288 0% [ (15)]
MCC 308 0% [ (15)]
MCC 344 0% [ (15)]
True Blue MCC 342 0% [ (15)]
MLC 619 0% [ (15)]
Aga Khan MLC 522 0% [ (15)]
Black Cat MCC 338-339 0% [ (15)]
MCC316-317 0% [ (15)]
MCC 340-341 0% [ (15)]
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Notes:

1. Held by Grange Resources (Tasmania) Pty Ltd.

2. Under application.

3. Subject to conditional purchase agreement with Medaire Inc.

4. Subject to Joint Venture Implementation Agreement with SRT Australia Pty Ltd

5. Subject to 1% Net Smelter Return royalty with Lac Minerals (Australia) NL

6. Subject to option agreement with Peak Hill Metals Pty Ltd

7. Beneficial holder Horseshoe Gold Mines Pty Ltd, royalty interest with Horseshoe Metals Limited

8. Royalty interest with Nova Energy Pty Ltd

9. Royalty interest with Northern Star (Kanawna) Ltd

10. Royalty interest with Dampier (Plutonic) Pty Ltd

11. Royalty interest with Northern Star Resources Ltd

12. Royalty interest with Fortescue Metals Group Ltd

13. Subject to joint venture agreement with Thalanga Copper Mines Pty Limited

14. Royalty interest with Santexco Pty Ltd

15. Royalty interest with Giants Reef Exploration Pty Ltd

16. Continues by virtue of application for renewal lodged 12/08/2011

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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

ASX Additional Information

Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows.

ORDINARY SHARES

Twenty Largest Shareholders as at 27 January 2015

The twenty largest holders of ordinary fully paid shares are listed below:

listed below:
Name	Number	% of
		Units
ShagangGroup	305,375,639	26.39
ShagangGroup	234,880,348	20.29
Pacifc International Co Realindex Investments RGL Holdings Co	98,154,884 41,301,379 40,430,691	8.48 3.57 3.49
Dimensional Fund Advisors	27,384,046	2.37
Bank Julius Baer	23,798,996	2.06
Norges Bank Investment Mgt	22,864,116	1.98
ABN AMRO Bank	21,642,525	1.87
Invesco Australia Theodoor Gilissen Bankiers	15,857,268 12,513,858	1.37 1.08
Rabobank Nederland	10,850,083	0.94
UBS	9,653,371	0.83
BinckBank	9,534,616	0.82
LSV Asset	8,507,700	0.74
Mr Adam Garrigan	8,000,000	0.69
Mr Hans-Rudolf Moser	6,810,450	0.59
Mr & Mrs Lionel RD Moore	5,018,144	0.43
QS Batterymarch Financial	4,750,267	0.41
Mr RayHislop	3,881,548	0.34
	911,209,929	78.75

Voting Rights

All shares carry one vote per share without restriction.

Substantial Shareholders

An extract of the Company’s Register of Substantial Shareholders as at 27 February 2015 is set out below:

	Number of
	fully paid	Voting
Name	shares	power
Shagang International (Australia) Pty Ltd
Shagang International Holdings Limited
Ever Lucky Developments Limited	681,172,842	58.86
RGL Holdings Co. Ltd
Pacifc International Co. PtyLtd

Securities Subject to Voluntary Escrow

The following securities are subject to voluntary escrow:

	Number of	Escrow
Class of Security	Securities	period ends
FullyPaid OrdinaryShares	Nil	Not applicable

Distribution of Equity Securities

Analysis of number of shareholders by size and holding:

	Ordinary	Director	Employee	Other
	Shares	Options	Options	Options
1 - 1,000	500	-	-	-
1,001 - 10,000	2,043	-	-	-
10,001 - 100,000	1,931	-	-	-
100,001 - 1,000,000	376	-	-	-
1,000,001 - and over	36	-	-	-
Total	4,866	0	0	0

The number of shareholders holding less than a marketable parcel of Ordinary Shares at 27 February 2015 was 1,532.

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GRANGE RESOURCES LIMITED // 2014 ANNUAL REPORT

List of Significant ASX Announcements

From 1 January 2014 through to 27 February 2015

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DATE ANNOUNCEMENT
27/02/2015 Appendix 4E – 31 December 2014
27/02/2015 Full Year Statutory Accounts 12 Months Ended 31 December 2014
26/02/2015 Updated Reserve and Resource Statement – Savage River
19/01/2015 Quarterly Report for 3 Months Ended 31 December 2014
7/01/2015 Appendix 3B
5/01/2015 Final Director’s Interest Notice – J Hoon
25/11/2014 Board Changes
17/10/2014 Quarterly Report for 3 Months Ended 30 September 2014
8/10/2014 Change of Company Secretary
24/09/2014 Initial Director’s Interest Notice – L Huang
18/09/2014 Change in Director’s Remuneration – H Zhao
29/08/2014 Appendix 4D –30 June 2014
29/08/2014 Interim Financial Report – 30 June 2014
28/08/2014 Potential Asset Impairment and Change in Accounting Policy
25/08/2014 Final Director’s Interest Notice – W Bould
18/08/2014 Change of Managing Director – 18 August 2014
18/07/2014 Quarterly Report for 3 Months Ended 30 June 2014
4/07/2014 Investor Presentation – China – 4 July 2014
27/06/2014 Change in Substantial Holding – Associate Notification (PI)
25/06/2014 Change in Substantial Holding
25/06/2014 Change in Substantial Holding – Notification by Shagang
2/06/2014 Appointment of Director – Y Jia
2/06/2014 Initial Director’s Interest Notice – Y Jia
7/05/2014 Chairman’s Address to Shareholders – 2014 AGM
7/05/2014 Managing Director’s Presentation – 2014 AGM
7/05/2014 Results of Meeting – AGM 7 May 2014
29/04/2014 Approval of South Deposit Tailings Storage Facility
17/04/2014 Quarterly Report for 3 Months Ended 31 March 2014
15/04/2014 Final Director’s Interest Notice – N Chatfield
14/04/2014 Change of Director’s Interest Notice – M Li
4/04/2014 Notice of Annual General Meeting/Proxy Form
31/03/2014 Board Changes
31/03/2014 Initial Director’s Interest Notice – D Tenardi
21/03/2014 Annual Report for the Year Ended 31 December 2013
20/03/2014 Change of Director’s Interest Notice – M Li
20/03/2014 Information re 31 December 2013 Financial Report
28/02/2014 Appendix 4E – 31 December 2013
28/02/2014 Full Year Statutory Accounts 12 Months Ended 31 December 2013
28/02/2014 Full Year Financial Results Overview for Year Ended 31 December 2013
28/02/2014 Updated Reserve and Resource Statement – Savage River
28/02/2014 Updated Reserve and Resource Statement – Southdown Project
6/02/2014 Presentation – 6 February 2014 CLSA Iron Ore Day - Sydney
6/02/2014 Investor Presentation – Amsterdam – 6 February 2014
17/01/2014 Quarterly Report for 3 Months Ended 31 December 2013
2/01/2014 Change of Director’s Interest Notice – W Bould
2/01/2014 Appendix 3B – 31 Dec 2013
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2014 ANNUAL REPORT // GRANGE RESOURCES LIMITED

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Burnie Office 34a Alexander Street, BURNIE Tasmania 7320 PO Box 659, BURNIE Tasmania 7320 Telephone: +61 (3) 6430 0222 Facsimile: + 61 (3) 6432 3390 Email: info@grangeresources.com.au