GRANGE RESOURCES LIMITED

ABN 80 009 132 405

PROSPECTUS

For a non-renounceable rights issue to Eligible Shareholders of up to 10,821,322 New Shares on the basis of 1 New Share for every 7 Shares held as at 5.00pm (WST) on 5 April 2005 at an issue price of \$1.25 per New Share to raise approximately \$13,526,652.

The Rights Issue is underwritten by

Patersons Securities Limited

Joint Lead Managers:

Patersons Securities Limited ABN 69 008 896 311

BBY Limited ABN 80 006 707 777

This document is important and requires your attention. Carefully read this Prospectus in full and consult your stockbroker, solicitor, accountant or other financial adviser if you are in any doubt as to how to deal with it.

	Summary of Key Dates
	Important Notice
	Letter from the Chairman
1.	Details of the Rights Issue
2.	Action Required by Eligible Shareholders
3.	Effect of the Rights Issue on the Company
4.	Information on the Company and its Activities
5.	Risk Factors
6.	Additional Information
7.	Glossary
Corporate Directory
	Entitlement and Acceptance Form

Summary of Key Dates¹

Lodgement of this Prospectus with the ASIC and ASX	23 March 2005
Shares quoted on an "ex" basis	30 March 2005
Record Date (5.00pm WST) for determining Entitlements to New	5 April 2005
Shares
Despatch of Prospectus and Entitlement and Acceptance Forms	11 April 2005
Closing Date (5.00 pm WST) for acceptances and payment	2 May 2005
Shares quoted on a deferred settlement basis	3 May 2005
Anticipated date for despatch of holding statements for New Shares /	9 May 2005
Deferred settlement trading ends
Anticipated date for commencement of trading of New Shares	10 May 2005

Note 1: Shareholders are advised that these dates and the dates referred to throughout this Prospectus (except the date of this Prospectus) are indicative only and are subject to change without further notice at the discretion of the Directors (in accordance with the Listing Rules).

Important Notice

This Prospectus is dated 23 March 2005. A copy of this Prospectus was lodged with the ASIC on 23 March 2005. The ASIC and ASX take no responsibility for the contents of this Prospectus. No New Shares will be allotted or issued on the basis of this Prospectus later than 13 months after the date of this Prospectus, being the expiry date of this Prospectus.

The Rights Issue is only available to Eligible Shareholders being persons registered as Shareholders in the Company on the Record Date. The Record Date is 5.00 pm WST on 5 April 2005.

Application will be made within 7 days from the date of this Prospectus for quotation of the New Shares on ASX.

Applications for New Shares can only be made by Eligible Shareholders on the original Entitlement and Acceptance Form, which accompanies or forms part of this Prospectus. The Entitlement and Acceptance Form sets out an Eligible Shareholder's entitlement to participate in the Rights Issue. No person is authorised to give any information or to make any representation in connection with the Rights Issue which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Rights Issue.

The distribution of this Prospectus in jurisdictions outside Australia and New Zealand may be restricted by law and therefore persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of those laws. This Prospectus does not constitute an offer of New Shares in any jurisdiction where, or to any person to whom, it would be unlawful to make such an offer.

Definitions and abbreviations used in this Prospectus are explained in Section 7.

The New Shares offered by this Prospectus should be considered speculative. Please refer to Section 5 for details relating to investment risks.

Before deciding whether or not to accept the Offer described in this Prospectus, Eligible Shareholders should read the entire Prospectus. In particular, they should consider the risk factors in light of their personal circumstances (including financial and taxation issues) and seek professional investment advice before deciding whether or not to accept the Offer.

Privacy Disclosure

The Company collects information about each Applicant provided on the Entitlement and Acceptance Form for the purposes of processing the Application, and, if the Applicant is successful, to administer the Applicant's security holding in the Company.

By submitting an Entitlement and Acceptance Form, each Applicant agrees that the Company may use the information provided on the Entitlement and Acceptance Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the Company's share registry, the Company's related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to ASX and regulatory authorities.

The Corporations Act requires the Company to include information about security holders (including name, address and details of the securities held) in its Register. The information contained in the Company's public register must remain there even if that person ceases to be a security holder of the Company. Information contained in the Company's register is also used to facilitate distribution payments and corporate communications (including the Company's financial results, annual reports and other information that the Company may wish to communicate to its security holders) and compliance by the Company with legal and regulatory requirements.

If you do not provide the information required on the Entitlement and Acceptance Form, the Company may not be able to accept or process your Application.

An Applicant has a right to gain access to the information that the Company holds about that person subject to certain exemptions under law. A fee may be charged for access. Access requests must be made in writing to the Company's registered office.

RESOURCES LIMITED A.C.N. 009 132 405

Letter from the Chairman

On behalf of the Board, I am pleased to offer you the opportunity to participate in a pro rata nonrenounceable rights issue of fully paid ordinary shares to raise approximately \$13.5 million before costs ("Rights Issue"). The majority of the funds raised by the Rights Issue will be used for the purchase of land and facilities currently held under option for the Southdown Magnetite Project. Eligible Shareholders will be offered one New Share in Grange for every seven Shares held at the Record Date. The issue price of each New Share will be \$1.25 per New Share.

Over the past 12 months Grange has focused on the possible development of the Southdown Magnetite Project located 90km northeast of the Port of Albany on the south coast of Western Australia. The culmination of this focus was the recent completion of a scoping study, which investigated production of high grade iron ore pellets for direct reduction and blast furnace use. The potential markets for direct reduction pellets would be to consumers in Malaysia and Indonesia and markets further away in the Middle East. The potential markets for blast furnace pellets would be to consumers in China, Japan, Korea and Taiwan. These markets are currently serviced from very distant suppliers in South America and Sweden. Grange plans to produce high quality pellets in Malaysia from magnetite concentrate shipped from the Southdown Magnetite Project.

Based on the results of the scoping study, Grange has commenced a bankable feasibility study on development of the Southdown Magnetite Project to produce high-grade iron ore pellets.

The Southdown Magnetite Project comprises three granted mining leases covering an area of approximately 1700 hectares on freehold farming property. The conceptual development plan is to open pit mine the resource over a period of 25 years to process and produce approximately 6.5 million tonnes per annum of magnetite concentrate grading 69+% Fe. The magnetite concentrate, mixed with water, would be transported to Albany in a buried pipeline, filtered to remove the water, then stored in a shed at Albany Port ready for shipment to a new pelleting plant to be developed by Grange in Malaysia.

The Board is of the view that substantial increases in iron ore pellet prices in Europe should have a positive impact on the economics of the Southdown Magnetite Project.

The Board remains committed to pursuing a strategy that will deliver long-term growth to Shareholders. The Rights Issue will allow Grange to maintain a strong balance sheet, significant cash reserves with no debt, which allows the Company to pursue its ambitions of achieving growth through the development of the Southdown Magnetite Project and future acquisitions in the resources sector including bulk mineral developments in Malaysia.

The Rights Issue is fully underwritten by Patersons Securities Limited, with BBY Limited being appointed to act as joint lead manager with Patersons Securities Limited.

I encourage you to read this Prospectus carefully in its entirety as it contains information about Grange and the risks of the investment. If you have any queries in relation to the Rights Issue, please contact the Company Secretary on (+618) 9321 1118.

The Board would like to thank Shareholders for their continued support and we encourage your participation in this Rights Issue. To that end and as a measure of support for the Rights Issue. I have agreed to sub-underwrite up to 25% of the Shortfall as indicated in Section 6.9 of this Prospectus.

Yours sincerely

Anthony Bohnenn Chairman

$\mathbf{1}$ Details of the Rights Issue

$1.1$ Important note

Section 1 is a summary only and is not intended to provide full information to Eligible Shareholders intending to apply for New Shares offered under this Prospectus. This Prospectus should be read in its entirety.

$1.2$ The Rights Issue

The Company is making a non-renounceable pro-rata offer of New Shares on the basis of one (1) New Share for every seven (7) Shares held at 5.00 pm WST on 5 April 2005 ("Record Date") at an issue price of \$1.25 per New Share payable in full on application.

The maximum number of New Shares to be issued pursuant to this Prospectus is approximately 10,821,322. In determining entitlements under the Rights Issue, fractions will be rounded down to the nearest whole number. The maximum gross proceeds of the Rights Issue will be approximately \$13,526,652 (before expenses).

Please refer to Section 6.1 for a summary of the rights and liabilities attaching to New Shares.

$1.3$ Opening and Closing Date

The Company will accept Entitlement and Acceptance Forms from 11 April 2005 until 5.00 pm (WST) on 2 May 2005 ("Closing Date") or such other date as the Directors shall determine without prior notice, subject to compliance with the ASX Listing Rules.

$1.4$ Purpose of the Rights Issue and use of funds

The maximum amount that can be raised pursuant to this Prospectus is \$13,526,652.

The funds will be used for the following activities:

the proposed acquisition of the freehold farming property covering a total area of approximately 2.200 hectares and is inclusive of the three mining leases covering approximately 1,700 hectares which comprise the Southdown Magnetite Project in accordance with the terms of the Option Agreement;
deposits required in accordance with the Malaysian Port Heads of Agreement for the proposed acquisition of up to a maximum of 60 hectares of land in the Malaysian port of Kemaman as the site for a pellet plant to process magnetite from the Southdown Magnetite Project:
the costs associated with identifying and securing funding for the construction phase of the Southdown Magnetite Project which includes the mine and export facilities and the Kemaman pellet project and port facilities; and
the provision of additional working capital for the Company to fund the identification and assessment of new investment opportunities.

Based on the information now known and current circumstances, the proceeds of the Rights Issue will be applied as follows:

Lsembennes	Æ,
Estimated Costs of Purchasing Freehold Farming Property -
Albany (including duties and taxes)	3,500,000
Option Payments in accordance with the terms of the
Malaysian Port Heads of Agreement ¹	237,000
Contribution to purchase of Kemaman Land in accordance	6,000,000
with the Malaysian Port Heads of Agreement
Bank Guarantee for purchase of Kemaman Land	1,000,000
Costs associated with identifying and securing funding for the
construction phase of the Southdown Magnetite Project	150,000
Additional working capital including identification and
assessment of new investment opportunities	1,871,322
Estimated expenses of the Rights Issue	768,330
Total	13,526,652

Note 1: Assumes an \$US/\$A exchange rate of \$0.79 to convert to the equivalent in \$A.

$1.5$ Your Entitlement to Participate in the Rights Issue

The Record Date for the purpose of the Rights Issue is 5.00 pm (WST) on 5 April 2005. Persons who, on the Record Date, are registered as the holders of Shares, will be entitled to participate in the Rights Issue.

The number of New Shares to which you are entitled is shown on the accompanying Entitlement and Acceptance Form. Fractional Entitlements for New Shares will be rounded down to the nearest whole New Share.

Acceptances must not exceed your Entitlement shown on the Entitlement and Acceptance Form, although you may accept all or only part of your Entitlement. If your acceptance exceeds your Entitlement, acceptance will be deemed to be for your maximum Entitlement and any surplus subscription funds will be returned to you in full without interest.

For further details, please see Section 2.

$1.6$ Entitlement and Acceptance Forms

A completed and lodged Entitlement and Acceptance Form creates a legally binding contract between the Applicant and the Company for the number of New Shares accepted by the Applicant. The Entitlement and Acceptance Form does not need to be signed to be a binding application for New Shares.

If the Entitlement and Acceptance Form is not completed correctly, it may still be treated as valid. The Directors' decision as to whether to treat the acceptance as valid and how to construe or complete the Entitlement and Acceptance Form is final.

For further details, please see Section 2.

$1.7$ No Rights trading

The Rights to the New Shares under the Rights Issue are non-renounceable. Accordingly, there will be no trading of Rights on ASX and you may not dispose of your Rights to any other party. Entitlements to New Shares not accepted will be allocated to the Underwriter in accordance with Section 2.5.

$1.8$ Ranking

The New Shares will be fully paid and, upon issue, will rank equally with existing Shares. A summary of the rights and liabilities attaching to the New Shares is set out in Section 6.1.

1.9 Trading history of Shares

The lowest and highest market sale prices of Shares on ASX during the 3 months immediately preceding the date of this Prospectus, and the respective dates of those sales, were \$0.64 on 30 December 2004 and \$1.89 on 17 March 2005.

The last sale price for Shares on ASX on the day prior to the date of this Prospectus was \$1.67 on 22 March 2005

The issue of New Shares may affect the market price of Shares.

$1.10$ ASX Quotation

The Company will apply for quotation of the New Shares on the official list of ASX within 7 days of the date of this Prospectus.

The fact that ASX may grant official quotation of New Shares is not to be taken in any way as an indication of the merits of the Rights Issue or the New Shares offered by this Prospectus.

If approval is not granted by $\overline{ASK}$ within three (3) months after the date of this Prospectus, the Company will not allot or issue any New Shares and will repay as soon as practicable, without interest, all application monies received pursuant to this Prospectus.

$1.11$ Foreign Shareholders

This Prospectus and the accompanying Entitlement and Acceptance Form do not, and are not intended to, constitute an offer of securities in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. Persons who come into possession of this Prospectus outside Australia and New Zealand and where the securities codes and/or legislation in the relevant jurisdiction prohibits or restricts in any way the offer contemplated by this Prospectus, should seek advice on and observe all applicable restrictions in those jurisdictions. A failure to comply with applicable restrictions may constitute a violation of applicable securities laws.

The Company has decided that it is unreasonable to extend the offer of New Shares to Shareholders having registered addresses outside of Australia, New Zealand, Singapore, Switzerland and the United Kingdom, having regard to the small number of such Shareholders, the number and value of New Shares they would be offered and the costs of ensuring compliance with the legal and regulatory requirements in the places where such Shareholders are located. Accordingly, this Prospectus has not been and will not be registered under the securities laws of those jurisdictions. For that reason, no Entitlement and Acceptance Forms will be sent, and no offer will be made, to Shareholders with registered addresses in those jurisdictions. This Prospectus will be sent to Shareholders in those jurisdictions for information purposes only.

This Prospectus does not constitute an offer in any jurisdiction in which, or to any person to whom it would not be lawful to make such an offer.

$1.12$ Rights Issue Underwritten

The Rights Issue is fully underwritten by Patersons Securities Limited subject to certain terms and conditions. A summary of the terms and conditions of the Underwriting Agreement,

including the circumstances in which the Underwriting Agreement can be terminated, is set out in Section $6.2(a)$ .

$1.13$ Allotment and Issue of New Shares

The Company expects to allot and issue the New Shares as soon as practicable after the Closing Date. No allotment of New Shares will be made until the proceeds of the Rights Issue have been received and permission is granted for quotation of the New Shares on ASX.

Holding statements in relation to the New Shares will be despatched within 6 Business Days after the Closing Date.

It is the responsibility of Applicants to determine their allocation prior to trading in the New Shares. Applicants who sell their New Shares before they receive their holding statements do so at their own risk.

$1.14$ Application Monies held on trust

Application monies for the New Shares will be held on trust for Applicants in a subscription account until New Shares are allotted and issued. All application monies will be returned (without interest) if the New Shares are not allotted and issued.

1.15 CHESS

The Company participates in the Clearing House Electronic Subregister System, known as CHESS. ASX Settlement and Transfer Corporation Pty Limited ("ASTC"), a wholly owned subsidiary of ASX, operates CHESS in accordance with the Listing Rules and the ASTC Settlement Rules.

The Company will not issue certificates to successful Applicants. Instead, as soon as is practicable after allotment, successful Applicants will receive a holding statement (similar to a bank account statement) which sets out the number of New Shares allotted to the Applicant.

For investors who elect to hold their New Shares on the CHESS sub-register, the Company will, upon allotment, issue an advice to investors that sets out the number of New Shares allotted to the investor under this Prospectus and at the end of the month following allotment. CHESS (acting on behalf of the Company) will provide investors with a holding statement that confirms the number of New Shares allotted.

A holding statement will also provide details of a Shareholder's Holder Identification Number (in the case of a holding on the CHESS sub-register) or Shareholder Reference Number (in the case of a holding on the issuer sponsored sub-register). Following distribution of these initial holding statements, an updated holding statement will only be provided at the end of any month during which changes occur to the number of Shares held. Shareholders may also request statements at any other time (although the Company may charge an administration fee).

1.16 Risk Factors

An investment in New Shares pursuant to this Prospectus should be regarded as speculative. In addition to the general risks applicable to all investments in securities of a listed company, there are specific risks associated with an investment in the Company which are set out in Section 5.

$1.17$ Taxation

The Directors do not consider that it is appropriate to give investors advice regarding the taxation consequences of subscribing for New Shares under this Prospectus.

The Company, its advisers, and its Officers do not accept any responsibility or liability for any such taxation consequences to Eligible Shareholders. As a result, Eligible Shareholders should consult their professional tax adviser in connection with subscribing for New Shares under this Prospectus.

1.18 Withdrawal of Prospectus

The Directors may at any time decide to withdraw this Prospectus, in which case the Company will repay, as soon as practicable and without interest, all application monies received pursuant to this Prospectus.

1.19 Enquiries

Entitlement

Enquiries concerning your Entitlement should be directed to Computershare Investor Services Pty Limited by telephone on (+618) 9323 2000 or by facsimile on (+618) 9323 2033.

Prospectus

Enquiries in relation to the Prospectus should be directed to the Company on telephone $(+618)$ 9321 1118 or by facsimile on (+618) 9321 1523.

The Prospectus may be viewed, for information purposes only, online at the Company's website at www.grangeresources.com.au or on the Underwriter's website at www.patersonssecurities.com.au. The Corporations Act prohibits any person passing on to another person an Entitlement and Acceptance Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus.

$2₁$ Action Required by Eligible Shareholders

$2.1$ Your Alternatives

The number of New Shares to which you are entitled is shown on the accompanying Entitlement and Acceptance Form. You may take up:

all of your Entitlement;
part of your Entitlement and allow the balance to lapse: or
none of your Entitlement.

$2.2$ If you wish to take up ALL of your Entitlement

Complete the accompanying Entitlement and Acceptance Form in accordance with the instructions set out on the Form. Forward your completed Entitlement and Acceptance Form together with your cheque or bank cheque made out to "Grange Resources Limited - Rights" Issue Trust Account" and crossed "Not Negotiable" for the amount shown on the Form to reach the Company's share registry at the address shown below by no later than 5.00 pm (WST) on the Closing Date. The Closing Date is currently 2 May 2005, but the Directors reserve the right to extend this date, subject to compliance with the ASX Listing Rules and provided that the Company gives ASX notice of such a change at least 6 Business Days prior the Closing Date.

Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St Georges Terrace Perth WA 6000 AUSTRALIA

Computershare Investor Services Pty Limited GPO Box D182 Perth WA 6840 AUSTRALIA

Eligible Shareholders outside Australia should mail their Entitlement and Acceptance Form early to ensure the Computershare Investor Services Pty Limited receives it by the Closing Date. Completed Entitlement and Acceptance Forms and application monies will not be accepted at the Company's registered address.

$2.3$ If you wish to take up PART of your Entitlement and allow the balance to lapse

Complete the section of the accompanying Entitlement and Acceptance Form in respect of the number of New Shares you wish to take up in accordance with the instructions set out on the Form (being less than your Entitlement as specified on the Entitlement and Acceptance Form). Forward your completed Entitlement and Acceptance Form together with your cheque or bank cheque made out to "Grange Resources Limited - Rights Issue Trust Account" and crossed "Not Negotiable" for the amount payable to reach the Company's share registry (at the addresses shown above at Section 2.2) by no later than 5.00 pm (WST) on the Closing Date.

The Rights are non-renounceable, which means that Eligible Shareholders who do not wish to take up some or all of the New Shares will forfeit their Rights.

$2.4$ If you do not wish to take up any of your Entitlement

If you do not wish to accept all or part of your Entitlements, you are not obliged to do anything. The number of Shares you hold as at the Record Date and the rights attached to those Shares will not be affected if you choose not to accept any of your Entitlement.

$2.5$ Entitlements not taken up

Any portion of your Entitlements that you decide not to accept will be allocated to the Underwriter.

$2.6$ Payment

Entitlement and Acceptance Forms must be accompanied by payment in full at the price of \$1.25 per New Share. Payments will only be accepted in Australian dollars and as follows:

۰ bank cheque drawn on and payable at any Australian bank; or
personal cheque drawn on and payable at any Australian bank. $\bullet$

Cheques or bank cheques should be made payable to "Grange Resources Limited Rights" Issue Trust Account" and crossed "Not Negotiable". Cash will not be accepted and receipts will not be issued.

Entitlement and Acceptance Forms are required to be completed in accordance with the instructions on the reverse of the Entitlement and Acceptance Forms.

$3₁$ Effect of the Rights Issue on the Company

$3.1$ Capital Structure

Assuming no RBC Options, Director Options or Plan Options are exercised prior to the Record Date and the Rights Issue is fully subscribed, the effect of the Rights Issue on the Company's issued capital will be as follows:

Example 18 Issued Share Capital
Shares on issue as at the date of this Prospectus
Maximum number of New Shares that will be issued
parsuant to this Prospectus	10.821.322
Maximum number of Shares on issue after the Rights Issue	86,570,581

See Section 6.1 for details of the rights attaching to New Shares.

The Company has granted 7.785.715 Options, comprising 4.285.715 RBC Options, 2,000,000 Director Options and 1,500,000 Plan Options. The holders of the Options have been notified of the Record Date for this Offer. To be able to participate in the Offer these Options must be exercised before the Record Date.

As a result of the Rights Issue, the exercise prices of the Director Options and the Plan Options will be adjusted in accordance with the formula set out in the terms and conditions of the Director Options and the Plan Options. The terms of the RBC Options do not provide for an adjustment to the exercise price in the event they are not exercised prior to the Record Date. For further details relating to the Options, please refer to Sections 6.6 to 6.8.

$3.2$ Pro forma Statement of Financial Position

To illustrate the effect of the Rights Issue on the Company, a pro forma consolidated statement of financial position of the Company and its controlled entities ("Group") has been prepared based on the audited consolidated statement of financial position of the Group as at 31 December 2004.

	Audited Statement of Bhancial Position 31 December 04 \$1000	Pro forma Statement of Financial Position 31 December 04 \$'000
Current Assets
Cash	8,780	22,495
Receivables	607	607
Prepayments	18	18
Inventories	2,012	2,012
Total Current Assets	11,417	25,132

Non-Current Assets
Receivables	304	304
Plant & Equipment	270	270
Deferred Exploration, Evaluation &
Development Costs	2,394	2,394
Other	1,749	1,749
Non-Current Assets	4,717	4,717
Total Assets	16,134	29,849

	Audited Statement of Financial Position 31 December 04 \$'000	Pro forma Statement of Financial Position 31 December 04 \$1000
Current Liabilities
Payables	793	793
Provisions	237	237
Tax Liabilities	34	34
Total Current Liabilities	1,064	1,064

Non-Current Liabilities
Payables
Provisions	1,500	1,500
Total Non-Current Liabilities	1,500	1,500
Total Liabilities	2,564	2,564
Net Assets	13,570	27,285

Equity
Contributed Equity	31,396	45,111
Reserves	5,874	5,874
Accumulated Losses	(23,700)	(23,700)
Total Equity	13,570	27,285

The pro forma statement of financial position illustrates the effect of the Rights Issue as if the issue of New Shares under this Prospectus had occurred on 31 December 2004 and is based on the following assumptions set out below:

1. Grange issues $10,821,322$ New Shares at an issue price of \$1.25 raising the maximum amount of \$13.526,652 pursuant to this Prospectus;
1. Grange incurs transaction costs of \$768,330 for the Rights Issue which are applied against equity;
1. Grange receives \$507,600 from the exercise of 4,230,000 Plan Options;
1. Grange receives \$500,000 from the exercise of 1,000,000 Director Options.

Accounting Policies

The half year financial report is a general purpose report which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements (Urgent Issues Consensus Views).

Grange Resources Limited has commenced the transition of its accounting policies from current Australian Standards to Australian equivalents of International Financial Reporting Standards ("IFRS"). The Company has allocated internal resources and will consult with external consultants to perform diagnostics and conduct impact assessments to identify areas that will be impacted by the transition to IFRS. As the majority of the Company's assets are represented as cash at bank, the impact is unlikely to be significant. Grange Resources Limited has a 30 June year end, therefore priority has been given to considering the preparation of an opening balance sheet in accordance with AASB equivalents to IFRS as at 1 July 2004. This will form the basis of accounting for Australian equivalents of IFRS in the future, and is required when Grange Resources Limited prepares its first fully IFRS compliant financial report for the year ended 30 June 2006. At this stage the Company has not been able to reliably quantify the impacts on the financial report.

The likely impact on the group's existing accounting policies is as follows:

Classification of Financial Instruments

Under AASB 139 Financial Instruments: Recognition and Measurement, financial instruments will be required to be classified into one of five categories which will, in turn determine the accounting treatment of the item. The classifications are loans and receivables – measured at amortised cost, financial assets held to maturity - measured at amortised cost, financial assets held for trading – measured at fair value with fair value changes charged to net profit or loss, financial assets available for sale – measured at fair value with fair value changes taken equity and non-trading liabilities – measured at amortised cost. This will result in a change in the current accounting policy that does not classify financial instruments. Current measurement is at amortised cost, with certain derivative financial instruments not recognised on balance sheet. The future financial effect of this change in accounting policy is not yet known as the classification and measurement process has not yet been fully completed.

Impairment of Assets

Under AASB 136 "Impairment of Assets" the recoverable amount of an asset is determined as the higher of net selling price and value in use. This will result in a change in the group's current accounting policy which determines the recoverable amount of an asset on the basis of undiscounted cash flows. Under the new policy it is likely that impairment of assets will be recognised sooner and that the amount of write-downs will be greater. The impact of the adoption of this standard is yet to be quantified by the Company.

Exploration and evaluation expenditure

AASB 6 "Exploration for and Evaluation of Mineral Resources" will require the Company to apply "area of interest" accounting to exploration and evaluation expenditures, effectively grandfathering the treatment currently used by the Company under AASB 1022 "Accounting for the Extractive Industries". Under AASB 6, if facts and circumstances suggest that the carrying amount of any recognised exploration and evaluation assets may be impaired, the Company must perform impairment tests on those assets in accordance with AASB 136 "Impairment of Assets". Impairment of exploration and evaluation assets is to be assessed as a cash generating unit or group of cash generating units level provided this is no larger than an area of interest. Any impairment loss is to be recognised as an expense in accordance with AASB 136.

The adoption of AASB 6 is not expected to lead to a change in the Company's accounting policy with respect to exploration and evaluation expenditure.

The Company is currently determining the impact of IFRS on the deferred development costs and amortisation of these costs.

$\mathbf{A}$ Information on the Company and its Activities

$4.1$ Overview of the Company's Activities

Grange is a Western Australian based mining and exploration company listed on the Australian Stock Exchange. Grange's objective is to grow through the acquisition, development and exploration of resource projects. Grange's major interest is the development of the Southdown Magnetite Project located 90 kilometres northeast of the Port of Albany on the south coast of Western Australia. Grange is currently in the process of completing a bankable feasibility study on development of the Southdown Magnetite Project to produce high-grade iron ore pellets. Grange's other major projects include a 30% interest in the Reward Deeps underground copper mine in Oueensland and gold rovalties from the Freshwater and Red Hill projects in Western Australia.

Source: Grange Resources Limited

Southdown Magnetite Project (Grange 100%)

The Southdown Magnetite Project comprises three granted mining leases covering an area of approximately 1700 hectares on freehold farming property.

Drilling programs conducted in the 1980's identified a significant resource of magnetite mineralisation grading 37.4% magnetite in the western 2km of the mining leases. This drilling intersected the mineralisation to vertical depths of approximately 170 metres and showed the magnetite deposit dips at 60 to 65 degrees to the south and remained open at depth. The remaining 4kms of the deposit located on Grange's mining leases had only been tested by a few scattered vertical drill holes.

The Company has completed detailed ground magnetic and gravity surveys over the mineralisation covered by the Company's mining leases and the results confirm the continuity and structure of the deposit over the total strike length of 6kms within the mining leases. Drill core from the previous drilling has been relogged and a geological model developed. A

mineral resource estimate classified in accordance with the Australian Code for Reporting Identified Mineral Resources and Ore Reserves (JORC, 1999) has been prepared by Golder Associates Pty Ltd for the western portion of the resource and was reported in the September 2004 quarterly report to the ASX. Golder Associates reported an Inferred Resource of 83.3 million tonnes with a mass magnetic recovery of 37.5% magnetite at a grade of 69.1% Fe.

In October 2004, the Company concluded an Option Agreement with the landowner, which provides access to the property for exploration and an option to purchase the farm property that is covered by the mining leases.

Grange initiated a diamond drilling programme in November 2004 and by the date of this Prospectus 32 holes had been completed over the entire length of the mining leases (6,000) metres). Assay results from the recent drilling have not yet been completed. However, magnetic susceptibility measurements, which give an indication of the width and grade of magnetite mineralisation, have been made on the drill core and the interpreted results are provided in Table 1. The Company anticipates being in a position to release the results of the initial diamond drilling programme during the second quarter of 2005.

	TABLE 1
		SOUTHDOWN MAGNETITE PROJECT DRILLING RESULTS
		SIGNIFICANT INTERSECTIONS OF MAGNETITE MINERISATION
Hole No	Easting	Northing	Azimuth	Dip	EoH	From	Tо	Intersect
					$\mathbf{m}$	m	m	m
SDD1	641630	6176952	353	60	303.9	$\overline{27}$	46	19
						85	106	21
						120	141	21
SD _D 2	641831	6176952	353	60	216.7	43	59	16
						68	90	23
						133	148	15
						164	193	29
SDD3	641401	6176900	353	60	210.8	79	104	25
						124	143	19
SD _D 4	641241	6176769	353	60	315.9	181	226	45
						234	258	24
SD _D5	640426	6176742	353	60	200.7	27	55	28
						65	153	88
SD _D6	640523	6176643	353	60	301.7	157	174	17
						190	260	70
SDD7	640641	6176723	353	60	226.9	94	120	26
						128	153	25
						176	204	28
SD _D 8	642047	6176884	353	60	406.7	226	263	37
						279	306	27
						324	363	39
SDD9	641643	6176851	353	60	311.7	140	178	38
						194	268	74
SDD10	640048	6176681	353	60	215	37	113	76
						141	149	8
SDD11	639629	6176732	353	60	237.8	74	135	61
						208	216	8

Hole No	Easting	Northing	Azimuth	Dip	EoH	From	To	Intersect
					$\mathbf{m}$	m	m	m
SDD12	639424	6176728	353	60	237.7	52	82	30
						87	139	52
						165	197	32
SDD13	640259	6176580	353	60	310.2	189	270	81
SDD14	639441	6176578	353	60	402.6	229	353	124
SDD15	639249	6176601	353	60	330.7	161	225	64
						278	288	10
SDD16	639254	6176552	353	60	378.7	217	297	80
						307	330	23
SDD17	639428	6176679	353	60	297.6	113	182	69
						189	220	31
						242	250	8
SDD18	639840	6176692	353	60	331.6	163	217	54
						262	274	12
						283	291	8
SDD19	639637	6176680	353	60	310.6	136	172	36
						181	241	60
						283	296	13
SDD ₂₀	639063	6176512	353	60	372.7	217	315	98
						329	340	11
SDD22	638362	6176601	353	60	408.5	237	351	114
SDD23	638109	6176616	353	60	320.4	169	287	118
SDD24	637874	6176507	353	60	357.2	242	268	26
						274	317	43
SDD26	637626	6176512	353	60	325.6	165	273	108
SDD ₂₇	637631	6176463	353	60	346.8	230	319	89
SDD28	637372	6176451	353	60	322.8	218	290	72
SDD ₂₉	637378	6176401	353	60	394.8	266	325	59
SDD32	636872	6176428	353	60	210.6	147	193	46

The magnetic susceptibility measurements on the drill core indicate that the magnetite resource is continuous over the length of the Company's mining leases, varies in width from 40m to 100m and extends to a vertical depth of at least 270m. Based on these dimensions and specific gravity measurements from drill core, the target mineralisation of magnetite ore within the Company's mining leases is of the order of 400 million tonnes.

Typical cross sections of the resource and locations of the sections are shown in figures 1, 2 and 3. Section 637570 (figure 2) is located within the area drilled during 1987 and section 641640 (figure 3) is located within the area more recently drilled by the Company.

Figure 1

Figure 2

Figure 3

Source of Figures 1 to 3 : Grange Resources Limited

Grange completed a project "scoping study" in January 2005. The study assumed the following project outline:

Mining and Concentration

The magnetite ore would be mined at an annual rate of 17.8 million tonnes per vear with a stripping ratio of about 2.6:1.0. The grade of the magnetite ore was assumed to be $36.6\%$ based on 1986/7 drilling and Davis Tube test work. Annual production of magnetite concentrate at 69% Fe would be 6.5 million tonnes produced via two stages of magnetic separation. Due to the nature of the magnetite mineralisation, recent test work on the 1987 drill core suggest that primary separation can be made at a relatively coarse particle size (0.2mm), which should significantly reduce fine grinding requirements.

Transport

The magnetite concentrate would be transported to the Port of Albany through a buried slurry pipeline. At the Port, the magnetite concentrate would be dewatered and stockpiled in an enclosed shed awaiting shipment overseas. Recovered water would be returned to the mine site through a return water pipe, also laid in the slurry pipeline trench.

Pelletisation

Magnetite concentrate is the most suitable feed for the production of iron ore pellets due to the exothermic properties of magnetite in conversion to hematite during the pelletisation process. Largely due to the absence of competitive energy in the Albany area, the Company has investigated appropriate sites in South East Asia for the location of a large-scale pellet plant to process the Southdown concentrate. This investigation resulted in the Company executing the Malaysian Port Heads of Agreement.

Markets

Both pellets for direct reduction and blast furnace use are planned to be produced. The potential markets for direct reduction pellets would be to consumers in Malaysia and Indonesia and markets further away in the Middle East. The potential markets for blast furnace pellets would be to consumers in China, Japan, Korea and Taiwan. These markets are currently serviced from very distant suppliers in Brazil and Sweden. Having a source of magnetite concentrate from Australia will create comparative shipping freight advantages for the Southdown Project.

Demand for high quality pellets for both the direct reduction market and the blast furnace market are expected to remain strong for the foreseeable future. Pellets for blast furnace use will be required to offset the declining quantity and quality of direct charge natural lump ores.

Economics

Scoping study estimates for operating costs were of the order of US\$32/tonne FOB South East Asia. Project capital was of the order of \$850 million, evenly distributed between the facilities in Australia and South East Asia.

Following the conclusion of the scoping study, on 28 January 2005 Grange announced that it had committed to the expenditure of A\$13 million for a bankable feasibility study that would be undertaken on the development of the Southdown magnetite resource to produce high grade iron ore pellets. Grange anticipates completing the bankable feasibility by the end of December 2005, with statutory approvals targeted for June 2006. It is intended that the bankable feasibility study will be funded from existing cash reserves, the revenue generated by the final shipment of copper concentrate from the Highway Reward mine and royalty income generated from the Red Hill and Freshwater Projects.

On 17 February 2005, Grange announced it had entered into the Malaysian Port Heads of Agreement, to acquire sufficient land in the Malaysian port city of Kemaman to build a magnetite pellet project and secure port facilities. The Malaysian Port Heads of Agreement is conditional on meeting certain project milestones. The Malaysian Port Heads of Agreement essentially provides Grange with the option to acquire up to a maximum of 60 hectares of land and to obtain access to port facilities in Kemaman, which is located in the State of Terengganu. A summary of the Malaysian Port Heads of Agreement is contained in Grange's ASX announcement dated 17 February, 2005.

Map of Kemaman Site

Source: Grange Resource Limited

The Board is of the view that the key advantages of establishing a pellet plant in Malaysia are:

creation of comparative shipping freight advantages due to proximity of potential markets and the source being in Australia;
securing suitable industrial land for the development of a pellet plant;
access to port infrastructure;
potential tax concessions made available by the Malaysian Government for strategic projects; and

access to natural gas and competitive power supplies. $\ddot{\phantom{0}}$

The Board considers that the recent increase in iron ore pellet prices in Europe of around 86% will have a nositive impact on the overall economics of the Southdown Magnetite Project.

Mt Windsor Joint Venture (Grange 30%)

The Mt Windsor Joint Venture is an unincorporated joint venture between BML Holdings Pty Ltd 30% (a wholly owned subsidiary of Grange) and Thalanga Copper Mines Pty Limited 70%, the manager. The joint venture mines and processes copper ore from an underground mine developed to extract ore from the Reward Deeps and Conviction copper deposits and produces copper concentrate for export. The joint venture operated the Reward and Highway open pit mines during 1998-2002 until ore reserves were exhausted.

Based on current ore reserves and mining schedule, Grange expects to export its final shipment of approximately 12,000 tonnes of copper concentrate during July 2005 generating revenue in excess of \$8 million. It is intended that the revenue generated from the shipment of the copper concentrate will be used to fund, in part, the bankable feasibility study on the development of the Southdown Magnetite Project.

The mining contractor at Highway Reward mine, Faminco Mining Services Pty Ltd ("Faminco"), was placed into voluntary administration in February 2005. Operations at the site are continuing in a normal manner. The administrator has advised the joint venture that the mining contractor will continue with operations in an attempt to trade out of financial difficulties. In the event the mining contractor ceases operations, the joint venture has been advised the mining equipment which is leased would be made available to the joint venture to complete the project. The operation is scheduled to close during June 2005 following the exhaustion of ore reserves.

A summary of the production statistics for the Reward Deeps project for the December 2004 quarter and project to 31 December 2004 is presented in table 2.

TABLE 2 MT WINDSOR JOINT VENTURE REWARD DEEPS PROJECT – PRODUCTION STATISTICS
	March 2004 Ouarter	June 2004 Ouarter	Sept 2004 Quarter	Dec. 2004 Ouarter	Project to 31 Dec 04
Ore Mined (tonnes)	187,604	144,058	68,541	72,067	1,294,011
Ore Milled (tonnes)	203,449	153,923	73,717	44,945	1,232,458
Head grade $-(Cu \%)$	2.81	4.61	4.52	4.21	4.24
Copper Recovery (%)	83.46	88.07	90.78	91.54	89.24
Concentrates Produced (tonnes)	19,522	24,585	11,748	6,451	176,686
Concentrate Grade
- Copper $(\%)$	24,71	25.43	25.72	26.89	26.40
- Gold $(g/t)$	0.8	0.8	0.8	0.8	0.8
- Silver $(g/t)$	17	17	17	17	17

Red Hill Project (Grange 4% Gross Revenue Royalty)

Grange holds a 4% gross revenue royalty on all production after the first 85,000 ounces of gold produced from the Red Hill mining lease M27/57, which is located approximately 4 km north east of the Kanowna Belle Gold Mine, 20 km north east of Kalgoorlie. The project is owned and operated by Placer Dome Asia Pacific Limited ("PDAP").

The Red Hill deposit is a large tonnage low grade gold deposit, which PDAP commenced mining in February 2003. During the June 2004 quarter, the 85,000 ounce threshold was reached and rovalty payments commenced at the end of that quarter.

Rovalty income from open pit ore for the period from commencement of operations in February 2003 until 31 December 2004 amounts to \$847,507. Ore treated during this period has been 2.096M tonnes at an average grade of 1.61g/t gold for the recovery of 122,898 ounces. For production above the threshold of 85,000 ounces the royalty has averaged \$22.36 per ounce of gold produced.

PDAP has advised that as at 30 June 2004, mineral resources within M27/57 amounted to 6.3 million tonnes grading $1.80g/t$ gold containing 365,000 ounces of gold. Within these resources PDAP has estimated ore reserves of 4.3 million tonnes grading 1,96g/t gold (272,000) contained ounces) at a cut-off grade of 1.20g/t gold and a gold price of A\$542/ounce.

Ore reserves and mineral resources within Mining Lease M27/57 are summarised in tables 3 and 4. The Measured and Indicated Resources in Table 4 are inclusive of those Mineral Resources modified to produce the Ore Reserves in Table 3.

TABLE 3 REDHILL PROJECT MINING LEASE M27/57 MINING RESERVE AS AT 30 JUNE 2004
Classification	Cut-off Grade $(g/t)$	Tonnes	Grade $(g/t)$	Ounces
Probable	1.20	4,313,633	1.96	271,828
Total	1.20	4,313,633	1.96	271,828

Notes:

Estimation method: Block model, Multiple Indicator Kriging (MIK)
Reserves estimated to a depth of 145 metres
Gold Price \$A542 / oz

This reserve statement has been compiled by Mr Andrew Law of PDAP who is a competent person as defined in 2004 edition of the Australian Code for Reporting on Exploration Results, Mineral Resources and Ore Reserves ("JORC Code"). PDAP has consented in writing to the information being included in the form and context in which it appears.

TABLE 4 REDHILL PROJECT MINING LEASE M27/57 MINERAL RESOURCES AS AT 30 JUNE 2004
Category	Cut-off Grade $(g/t)$	Tonnes	Grade $(g/t)$	Ounces
Inferred	0.90	38,000	1.90	2,345
Indicated	0.90	6,259,000	1.80	362,576
Measured	0.90
Total	0.90	6,298,000	1.80	364,922

Notes:

1. Estimation method: Block model, Multiple Indicator Kriging (MIK)
1. Reserves estimated to a depth of 150 metres
1. Resources rounded to the nearest 1,000 tonnes.

This reserve statement has been compiled by Mr Roger Cooper of PDAP who is a competent person as defined in the JORC Code. PDAP has consented in writing to the information being included in the form and context in which it appears.

Freshwater Project (Grange Production Royalty)

The Freshwater project is located adiacent to and to the east of the Plutonic Gold Mine located approximately 180km north east of Meekatharra in Western Australia. The project is owned and operated by Barrick Gold of Australia Limited ("Barrick"). The Company holds a sliding scale royalty based on grade, tonnage and type of ore milled on all production from the Freshwater leases

Royalty income from open pit ore from November 1996 when the royalty was first established, to 31 December 2004, amounts to \$2.606 million. Gold ore treated during this period has been 3.87 million tonnes at an average grade of $2.03g/t$ gold for the recovery of 240.044 ounces. The royalty has averaged \$10.86 per ounce of gold produced.

Royalty income from underground ore from December 2001 when development of the Plutonic East mine commenced, to 31 December 2004 amounts to \$583,929. Gold ore treated during this period has been 179.231 tonnes at an average grade of $6.63g/t$ gold for the recovery of an estimated 35,543 ounces. The royalty has averaged \$16.43 per ounce of gold produced.

Barrick has advised that as at 31 December 2004 the Freshwater ore reserves amounted to 790,000 tonnes grading $4.2g/t$ gold containing 105,800 ounces gold. Of these reserves 360,000 tonnes grading 6.5g/t gold containing 75,600 ounces gold are underground reserves from Plutonic East, 292,000 tonnes grading $2.9g/t$ gold containing 27,000 ounces gold are open pit reserves from Salmon and 138,000 tonnes grading $0.7g/t$ gold containing 3,200 ounces gold are stockpile reserves from Callop and Salmon.

In addition to these reserves, Freshwater mineral resources as at 31 December 2003 amount to approximately 4.2 million tonnes grading $4.8g/t$ gold containing 659,600 ounces gold. The majority of the mineral resources, 3.6 million tonnes grading $5.3g/t$ gold, are present at the Plutonic East Area 4 underground mines with the remaining $600,000$ tonnes grading $2.0g/t$ gold containing 39,400 ounces of gold being open pit resources from Salmon and Barramundi.

Ore reserves and mineral resources are summarised in the tables 5 and 6. The Measured and Indicated Resources in Table 6 are exclusive of those Mineral Resources modified to produce the Ore Reserves in Table 5.

TABLE 5 FRESHWATER PROJECT ORE RESERVERS AS AT 31 DECEMBER 2004
Location	Category	Tonnes	Grade $g/t$ Au	Contained Ounces
UNDERGROUND
Plutonic East	Probable	360,000	6.5	75,600
Total Underground		360,000	6.5	75,600
OPEN PIT
Salmon	Probable	292,000	2.9	27,000
Total Open Pit		292,000	2.9	292,000
STOCKPILES

Location	Category	Tonnes	Grade $g/t$ Au	Contained Ounces

Callop	Proved	20,000	0.7	400
Salmon	Proved	118,000	0.7	2,800
Total Stockpiles		138,000	0.7	3,200
TOTAL FRESHWATER
RESERVES		790,000	4.2	105,800

Assessment Criteria

Underground Reserves:

Plutonic East Model 3
Mining Methods Mechanised room and pillar, Long Hole and Airleg $\bullet$
Mining Recovery Room and Pillar 90%, Long Hole 97%, Airleg 95% $\ddot{\phantom{0}}$
Dilution variable @ 0.1g/t Au $\bullet$
Metallurgical Recoveries Primary 90%
Cut off Grades Lower 3.0g/t Au, Upper 70g/t Au
Estimates at gold price of A\$550
Density Primary 2.8

Open Pit Reserves:

Bench Height 3.0 metres
Mining Method Open Cut
Dilution 5%
Mining Recovery 95%
Minimum Mining Width 2metres
Cut off Grades Salmon Lower 0.9g/t Au, Upper 15 40g/t; Callop
Metallurgical recoveries Laterite, Oxide & Transitional 92%, Primary 88%
Estimates at gold price of A\$550

TABLE 6 FRESHWATER PROJECT MINERAL RESOURCES AS AT 31 DECEMBER 2004

Location	Category	Tonnes	Grade g/t Au	Contained Ounces
UNDERGROUND
Plutonic East	Indicated	564,000	5.2	94,800
	Inferred	3,062,000	5.3	521,600
Area 4	Indicated	12,000	6.8	2,600
	Inferred	6,000	6.3	1,200
Total Underground		3,644,000	5.3	620,200
OPEN PIT
	Indicated		2.6
Salmon Barramundi	Indicated	18,000 494,000	2.0	1,500 32,400
	Inferred	88,000	1.9	5,500
Total Open Pit		600,000	2.0	39,400

TOTAL MINERAL RESOURCES		4,244,000	4.8	659,600

Assessment Criteria

Underground Resources:

Resource Method Sectional Interpretation and $ID²$ grade interpolation constrained inside lodes
Block Model Plutonic East Model 3 and Area 4 Model 1
Drilling up to 30 October 2003
Dilution $-$ no edge and contains up to 2 metres internal dilution
Minimum width 2metres
Cut off Grades Lower 3.0g/t Au, Upper 70g/t Au
Density Primary: 2.8
Search Sphere Indicated: 40m x 40m x 20m; Inferred: 80m x 80m x 40m
Drill spacing partly 10m, 20m x 20m and 20m X 40m:remainder 80m X 80m

Open Pit Resources

Resource Estimation Method Salmon Ordinary Kringing: Barramundi ID3.
Bench Height 3.0 metres
Dilution undiluted
Mining Method Open Cut
Mining Recovery 95%
Minimum Mining Width Salmon 3metres; Barramundi 2metres.
Cut off Grades Salmon Lower 0.9g/t Au, Upper 15, 40g/t; Barramundi Lower 0.9g/t Au, Upper - $10.15e/t$
Densities Salmon Oxide 1.6.1.7. Transitional 1.7.1.8.2.0.2.1.2.3. Primary 2.6: Barramundi Laterite $-2.1$ , Oxide $-1.8$ , Tranisitional 2.2, Primary $-2.4$ , Drill spacing - Salmon 10m X 10m & 20m x 20m; Barramundi 20m X 20m

Note 1. Mineral Resources are exclusive of those Mineral Resources modified to estimate Ore Reserves. Note 2. Open pit mineral resources are quoted as the resources remaining adjacent to mined pits within an A\$600/ounce optimised shell.

These reserve and resource statements have been prepared by Maurice Rowley, Manager Mine Geology for Barrick Gold of Australia Limited, who is a competent person as defined in the JORC Code. Mr Rowley is a full time employee of Barrick Gold of Australia Limited. Barrick Gold of Australia Limited has consented in writing to the information being included in the form and context in which it appears.

$4.2$ Exploration

Wembley (Grange 100%, Gleneagle Gold Limited Earning 80%)

The Wembley Gold Project is located approximately 65km south east of the Fortnum Gold Project and comprises one granted mining lease and a mining lease application. Gleneagle Gold Limited ("Gleneagle") is earning an 80% interest in the tenements by spending \$500,000 on exploration.

The central Mining Lease covers the Durack and Outback mineralised zones, on which Gleneagle completed a program of RC drilling in the June 2004 quarter. Gleneagle has advised the Company that the success of this drilling program has lead to an upgrade of the resource by independent consultants Resource Evaluations Pty Ltd, resulting in a revised resource of 568,000 tonnes at $2.3g/t$ for 42,700 ounces (previous resource 557,000 tonnes at $2.18g/t$ for 39,000 ounces). The resource comprises an indicated resource of 390,000 tonnes at $2.2$ g/t for 27.600 ounces and an inferred resource of 180,000 tonnes at 2.6g/t for 15,100 ounces

Pit optimisations have been completed on the revised resource estimate, indicating the potential to develop relatively shallow modest tonnage medium grade open pits based on the Durack and Outback mineralised zones. Pit design work is progressing to further assess the economics of potential open pits at the Wembley Gold Project.

Horseshoe Lights (Grange 100%)

The Horshoe Lights project is located approximately 140km north of Meekatharra in Western Australia. Substantial resources of low-grade copper bearing material are present at Horseshoe Lights in stockpiles, dumps, tailings and in-situ hard rock resources. Previous work has shown that the tailings and stockpiles are readily amenable to leaching.

The Company has entered into an option to purchase agreement with Murchison Copper Mines Pty Ltd over the Horseshoe Lights project. The option is for a period of six months and expires in April 2005.

Other Exploration

Grange holds interests in several exploration projects in Western Australia and the Northern Territory.

In the Wiluna District of Western Australia, the Company holds a 10% free carried interest to a decision to mine or expenditure of \$2 million in the Abercromby Well Joint Venture with MPI Nickel Pty Ltd. The tenement is prospective for gold mineralisation.

At Thaduna, the Company holds tenements over the old Thaduna and Green Dragon copper mines located approximately 170km north east of Meekatharra in Western Australia. The Company considers the stockpiles and tailings associated with the Thaduna mine represent potential feed to an operation that may be established at the Horseshoe Lights Mine to process low-grade copper resources.

The Company has entered into an option to purchase agreement with Murchison Copper Mines Pty Ltd over the Thaduna and Green Dragon prospects. The options are for periods of 6 months and expire in September 2005.

The Company holds equity in several tenements in the Tennant Creek region in the Northern Territory. The most prospective area with potential to host a high-grade gold, copper, bismuth mineralisation, is the Mt Samuel prospect located approximately 6km south of Tennant Creek. Access to the Mt Samuel property is currently not available due to the presence of an Aboriginal sacred site.

Competent Persons

Unless otherwise stated, technical information in this Prospectus relating to mining activities is based on, and accurately reflects, information compiled by Mr Alex Nutter, a full time employee of the Company who is a member of The Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists with more than 5 years experience in the field of activity in which he is reporting. Mr Nutter is a competent person as defined in the JORC Code

$4.3$ Business Development Projects

Over the past 18 months, the Company has been investigating the potential for bulk mineral developments in Malaysia.

The Malaysian Port Heads of Agreement executed on the 17 February 2005, secured the Company access to port facilities in Kemaman, which supports the prospects for potential other bulk mineral developments in Malaysia in addition to the requirements for the Southdown Magnetite Project.

This includes use of the west wharf at Kemaman and adjacent land for the trans-shipment of bulk commodities (including iron ore, iron ore pellets and coal). The use of the port facilities at Kemaman offers the prospect of unloading large bulk carriers from distant sources and loading of smaller vessles which could effectively bypass the heavily congested large Chinese ports. The smaller vessels could directly service river-based steel producers in China.

Use of this strategic infrastructure could also facilitate the export of iron ore production originating from Malaysia. Grange has been investigating a number of potential projects including mining operations and the benefication of low grade ores and tailings dumps. Proposals have been made to a number of parties in Malaysia which would involve exploration, sampling, metallurgical testwork and plant design by Grange.

$4.4$ Tenement Schedule

PROSPECT	TENEMENT	INTEREST	PROSPECT	TENEMENT	INTEREST
Western Australia			Queensland
Horseshoe Lights	L52/42-45	100% (14)	Mt Windsor JV	ML 1571	$30\%$ (9)
	L52/66	$100\% (14)$		ML 1734	$30\%$ (9)
	M52/743	$100\% (14)$		ML 1739	$30\%$ (9)
	M52/744	$100\%$ $(1)$ $(14)$		ML 10028	$30\%$ (9)
				ML 1758	$30\% (9)$
Thaduna	M52/165	$100\%$ (3) (15)		ML 10295- 10312	$30\%$ (1) (9)
	M52/180	$100\%$ (3) (16)		EPM 14537	$30\%$ (1) (9)

Wembley	M52/801	$100\% (2)(4)$	Northern Territory
	M52/587	$100\%(1)(2)(4)$	Mt Samuel	MLC 49	50% (10) (13)
				MLC 527	$100\%$ (13)
Horseshoe South	M52/558	$100\%$ (1)		MLC 599	85% (11) (13)
	M52/585	$100\%$ (1)		MLC 617	85% (11) (13)
				MLC 678-681	$85\% (11) (1)$
Abercromby Well JV	M53/336	$10\% (5)$		MCC 174	100% (12)
				MCC 212	85% (11) (32)
Red Hill	M27/57	(6)		MCC 287-288	$100\%$ (12)
				MCC 308	$85%$ (11)
Horseshoe South West	M52/651	$100\%$ (1)		MCC 344	$100\%$ (13)

Freshwater	M52/277-281	(7)	The Trump	MCC 316-317	$100\%$ $(13)$
	M52/285	(7)		MCC 340-341	$100\% (13)$
	M52/295-296	(7)
	M52/299-301	(7)	True Blue	MCC 342	100%(13)
	M52/305-306	(7)		MLC 619	85% (11)(13)
	M52/368-370	(7)
			Aga Khan	MLC 522	100%(13)
Southdown	M70/433	$100\% (8)$
	M70/718	$100\% (8)$	Black Cat	MCC 338-339	100%(13)
	M70/719	$100\% (8)$

Notes:

$\mathbf{L}$ Under application.

Subject to option agreement with Gleneagle Gold Limited $\overline{2}$ .
$\overline{3}$ . Subject to 5% Net Smelter Return royalty with Trans-Global Resources NL.
$\overline{4}$ . Subject to 1% Net Smelter Return royalty with Lac Minerals (Australia) NL.
1. Subject to joint venture agreement with MPI Nickel Pty Ltd.
1. Royalty interest with Placer Dome Asia Pacific.
1. Royalty interest with Barrick Gold of Australia Limited.
1. Subject to conditional purchase agreement with Global Doctor Pty Ltd
Subject to joint venture agreement with Thalanga Copper Mines Pty Limited. 9.
$10.$ Subject to joint venture agreement with Santexco Pty Ltd.
Subject to joint venture agreement with W. & L.D.C. Appel. 11.
$12.$ Subject to option agreement with J.L. Love & G.P. Hamilton.
Subject to 2% Net Profit Royalty with Lytton Nominees Pty Ltd and Moublon Pty Ltd. $13.$
Subject to option agreement with Murchison Copper Mines Pty Ltd. $14.$
1. Subject to option agreement with Murchison Copper Mines Pty Ltd.
1. Subject to option agreement with Murchison Copper Mines Pty Ltd.

$\mathbf{5}$ Risk Factors

The business activities of the Company are subject to risks. These risks include those which apply generally to investments in equity markets and those which apply specifically to the Company's business. Some of the specific risks can be mitigated through the use of safeguards and contingency plans. However, many are outside the control of the Company and the Directors and cannot be mitigated.

The following summary describes some of the risks that investors should consider before deciding whether or not to take up their Entitlement under the Rights Issue. However, Eligible Shareholders should nevertheless read this Prospectus in its entirety and consult their professional advisors before applying for New Shares. Any of the factors set out in this Section 5, as well as any other factors identified in this Prospectus, may materially affect the financial performance of the Company and the market price of Shares.

$5.1$ General Investment Risks

Factor such as inflation, currency fluctuation, interest rates, market sentiment and commodity prices may have a significant impact on the Company's future revenues. The impact of those factors on the Company's future profitability is to a large extent beyond the control of the Company.

$5.2$ General Economic Risk

Changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. Factors which contribute to that general economic climate include:

$(a)$ contractions in the world economy or increases in the rate of inflation resulting from domestic or international conditions (including movements in domestic interest rates and reduced economic activity):
$(b)$ the level of direct or indirect competition against the Company;
international currency fluctuations; $\left( c\right)$
new or increased government taxes or duties or changes in taxation laws; and $(d)$
$(e)$ changes in government regulatory policy affecting the industry in which the Company operates and further regulation of the industry generally.

5.3 Exploration and development risk

Income from any of the Company's investments or projects will depend on the performance of existing operations and the establishment of new mining projects. Exploration and development activities of the Company may be affected by factors beyond the Company's control, including geological conditions, mineralisation, consistency and reliability of ore grades and commodity prices.

Risks normally associated with mineral exploration and the economic recovery and treatment of ore, unexpected geological or mining conditions, equipment or service failures and weather conditions are relevant to those investments. Furthermore, any discovery of a mineral deposit does not guarantee that the mining of that deposit would be commercially viable, the size of the deposit, extraction costs and recovery rates all being key factors in determining commercial viability.

The Company may also be exposed to risks associated with the financial failure or default by a participant in any development joint ventures or other contractual relationships to which the Company is, or may become, a party.

5.4 Operating / processing risk

Mechanical failure of the Company's operating plant and equipment, and general unanticipated operational and technical difficulties, may adversely affect the Company's operations.

5.5 Commodity prices

Commodity prices, including the market price of gold, copper, iron ore and other minerals, may substantially impact on the economics of mining projects and hence on exploration and development programs, and consequently on the value of the Company's Share price. Commodity prices react to the economic climate, market forces of supply and demand and other factors beyond the Company's control.

5.6 Production and marketing

No assurance can be given that production of precious metals or other minerals will be achieved or maintained by the Company. No guarantee can be given that the production and marketing (if any) of precious metals or other minerals will prove to be economic.

5.7 Government

The impact of actions by the Australian Federal and State governments may affect the Company's operations, including matters such as land access, compliance with environmental regulation, taxation and royalties. Mining industry activities are subject to discretionary regulations and approvals. The introduction of any new legislation or regulations could have an adverse affect on the Company's operations.

The impact of actions by the Malaysian Federal and State governments may affect the Company's proposed magnetite pellet project at port city of Kemaman, including matters such as land access, compliance with environmental regulation, taxation and royalties. Mining industry activities are subject to discretionary regulations and approvals. The introduction of any new legislation or regulations in Malaysia could have an adverse affect on the Company's operations.

5.8 Statutory and other approvals relating to the Southdown Magnetite Project

Development of the Southdown Magnetite Project will be dependent on a number of regulatory approvals including environmental approvals in Western Australia.

Development of the pellet plant in Kemaman, is dependent on a number of regulatory approvals including environmental approval from the State Authority of Terengganu. The consent of the State Authority of Terengganu to the transfer of the land the subject of the Malaysian Port Heads of Agreement will be required to proceed with the development of the pellet plan in Kemaman.

5.9 Risks associated with land acquisitions

Grange has entered into option agreements to acquire freehold farming property covering a total area of approximately 2,200 hectares located 90 kilometres northeast of the Port of Albany on the south coast of Western Australia and up to a maximum of 60 hectares of land in the Malaysian port city of Kemaman. The agreements specify dates upon which the agreements lapse. If the Company does not pay the agreed consideration in accordance with

the terms of the options agreements, there is a risk the Company may not acquire the land under option.

5.10 Joint Venture

Whilst the Company conducts a bankable feasibility study on development of the Southdown Magnetite Project, it will assess various funding arrangements to meet the cost of project capital estimated to be \$850 million. The Company may seek to introduce a joint venture partner to the Southdown Project to contribute capital to fund its share of project capital.

5.11 Personnel

The success of the Company's existing and proposed operations depends to some extent on the ability of the Company to attract and retain qualified and capable staff and consultants to perform geological, exploration, analytical, geotechnical, engineering, metallurgical and mining work.

5.12 Uncertainties of nature

The Company's activities are subject to uncertainties of nature including natural disasters and extreme weather conditions.

5.13 Native title

The Company's mining titles have been validly granted to it. However, there can be no guarantee that some of those mining titles will not be challenged or impaired, or that claims for compensation will not be made under the Native Title Act 1993 (Cth).

5.14 Insurance

Insurance against all risks associated with mining exploration and development is not always available and the cost can be high. The Company has insurance in place which is, in these circumstances, considered to be acceptable.

5.15 Financing

Securing funding for the Company's projects may be dependent on a number of factors including commodity prices, interest rates, economic conditions and share market conditions. Delays in availability of financing may result in production delays.

5.16 Acts of terrorism and outbreak of international hostilities

Acts of terrorism or an outbreak of international hostilities may adversely affect the operations of the Company or more generally the operation of global markets, including the stock market.

5.17 Environmental risks

The Company is subject to environmental regulations. Non-compliance with these could result in a cessation of production and in substantial liabilities.

5.18 Administration of Faminco Mining Services Pty Ltd

As discussed in Section 4.1, Famineo Mining Services Pty Ltd ("Faminco"), the mining contractor at the Highway Reward mine, which forms part of the Mount Windsor Joint Venture, has been placed into voluntary administration. The administrator has advised the joint venture that Faminco will continue its operations.

If Faminco were to cease its operations at the Highway Reward mine, it may impact adversely on the Company's ability to export the final shipment of approximately 12,000 tonnes of copper concentrate which it is anticipated will generate revenue in excess of \$8 million. As indicated in Section 4.1, the Company intends to use the revenue generated from the final shipment to fund, in part, the bankable feasibility study on the development of the Southdown Project. Consequently, if Famingo ceases operations and the Company is unable to complete the final shipment of copper concentrate, it may be required to consider alternative sources of funding for the bankable feasibility study.

5.19 Industrial capacity constraints

There is a risk the estimated capital and operating costs associated with the Southdown Magnetite Project may increase due to capacity constraints in the general mining industry.

5.20 Litigation

Three mining leases currently held by the Company, M52/165 (Thaduna), M52/180 (Green Dragon) and M52/743 (Horseshoe Lights), are the subject of plaints for forfeiture. It is anticipated that the plaints in respect of each of the three mining leases will be heard together in August, 2005. The forfeiture of these mining leases would not have a significant financial impact on the Company. Legal proceedings may arise from time to time in the course of the Company's business and, depending on the outcome of such proceedings, the Company may be exposed to liabilities.

6. Additional Information

$6.1$ Rights and liabilities attaching to New Shares

The rights and liabilities attaching to the New Shares offered under this Prospectus arise from a combination of the Constitution, statute and general law.

The Constitution may be inspected during normal business hours at the Company's registered office

A summary of the more significant and relevant rights and restrictions attaching to Shares is set out below. The summary is not exhaustive nor does it constitute a definitive statement of the rights and liabilities of the Company's shareholders.

The New Shares, once issued, will have the same rights attaching to them as existing Shares.

$(a)$ General Meetings

Directors may call a general meeting whenever they think fit. Shareholders may call a general meeting as provided by the Corporations Act. The Constitution contains provisions prescribing the content requirements of notices of meetings of Shareholders and all Shareholders are entitled to a notice of meeting. Consistent with the Corporations Act provisions, a meeting may be held in two or more places linked together by audio-visual communication devices. A quorum for a meeting of Shareholders is 3 eligible Shareholders.

$(b)$ Voting at a General Meeting

Resolutions of Shareholders will be decided on a show of hands unless a poll is demanded. On a show of hands, each eligible Shareholder present has one vote. On a poll, each Shareholder has one vote for each Share and a fraction of a vote for each partly paid share determined by the amount paid up on the share.

$(e)$ Dividends

Subject to the Corporations Act and the rights of persons (if any) entitled to shares with special rights to dividend, the Directors may determine that a dividend is payable, fix the amount and the time of payment and all uthorizes the payment or crediting by the Company to, or at the direction of each Shareholder entitled thereto of that dividend.

$(d)$ Transfer of Shares

Subject to the Listing Rules and the Directors power under the Constitution to decline to register a transfer, Shares are freely transferable and a Shareholder may transfer some or all of their Shares:

in the case of CHESS Approved Securities, in accordance with the $(i)$ ASTC Settlement Rules:
$(ii)$ by instrument in writing in any usual or common form or in any other form that the Directors approve; or
(iii) by any other method of transfer of marketable securities which is recognised by the Corporations Act, ASTC and ASX and is approved by the Directors.

The Directors must decline to register any transfer of Shares if:

$(iv)$ Listing Rules require the Company to do so;
$(v)$ the transfer of Shares is in breach of the Listing Rules or a Restriction Agreement.

Issue of Further Shares $(e)$

Subject to the Corporations Act and the Listing Rules, the issue of Shares is under the control of the Directors and the Directors may issue and dispose of Shares to such persons at such times and on such terms and conditions and having attached to them such preferred, deferred or other special rights or such restrictions as the Directors think fit.

Winding Up $(f)$

If the Company is wound up, the liquidator may, with the sanction of a special resolution of the Company, divide among shareholders in kind the whole or any part of the property of the Company and may, for that purpose, set such value as the liquidator considers fair on any property to be so divided and may determine how the division is to be carried out as between the shareholders and any class of shareholders

Remuneration of Directors $(g)$

The Directors are entitled to be paid out of the funds of the Company, as remuneration for their services as Directors, such sum accruing from day to day as the Company in general meeting determines.

$(h)$ Variation of Class Rights

Rights attaching to a particular class of shares may, unless otherwise provided by the terms of issue of the shares of that class, be varied or cancelled in any way with:

$(i)$ the consent in writing of holders of at least 75% of the issued shares of that class: or
$(ii)$ the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class.

$(i)$ Officers indemnities and insurance

Every person who is or has been, a director, secretary or executive officer of the Company is entitled to be indemnified to the maximum extent permitted by law, out of the property of the Company against any liabilities for costs and expenses incurred by that person in his or her capacity as a director provided that the liability does not arise out of conduct involving a lack of good faith. A similar indemnity is provided in relation to legal proceedings. The Company may also pay the premiums on directors and officers liability insurance.

$(i)$ Alteration of Constitution

The Constitution may be modified or repealed by special resolution of Shareholders.

$6.2$ Material Contracts

$(a)$ Underwriting Agreement

The Company has entered into an underwriting agreement with Patersons Securities Limited (the "Underwriter") dated 23 March 2005 under which the Underwriter has agreed to underwrite the subscription of 10.821.322 New Shares or \$13.526.652 ("Underwritten Amount").

The Company will pay to the Underwriter an underwriting fee of 4% of the Underwritten Amount and a management fee of 1% of the Underwritten Amount plus GST and the Underwriter's reasonable expenses incidental to the Rights Issue up to a maximum of \$2,000.

The Underwriting Agreement contains a number of representations and warranties given by the Company in favour of the Underwriters and imposes various obligations on the Company, including ensuring the Prospectus complies with the Corporations Act, the ASX Listing Rules and other legally binding requirements of ASIC or ASX.

The Underwriting Agreement may be terminated by the Underwriter upon the happening of any of the following events:

(Indices): any of the S&P ASX 200 Index or the S&P ASX 200 $(i)$ Materials Index as published by ASX after the date of this Agreement falls 10% or more below its respective levels as at close of business on the Business Day prior to the date of the Underwriting Agreement:
$(ii)$ (Prospectus): the Company does not lodge the Prospectus on 23 March 2005 or the Prospectus or the Rights Issue is withdrawn by the Company;
$(iii)$ (Copies of Prospectus): the Company fails to provide copies of the Prospectus to the Underwriter in accordance with the Underwriting Agreement and the failure is not remedied within 2 days;
$(iv)$ (No Official Ouotation): Official Ouotation has not been granted by the Shortfall Notice Deadline Date or, having been granted, is subsequently withdrawn, withheld or qualified;
$(v)$ (Supplementary Prospectus): the Underwriter forms the view that a supplementary or replacement prospectus should be lodged with ASIC and the Company fails to lodge the prospectus in the form and content and within the time the Underwriter may reasonable require; or the Company lodges a supplementary or replacement prospectus without the prior written agreement of the Underwriter;
$(vi)$ (Misleading Prospectus): if it transpires that the issue of the Prospectus is, or a statement or omission in the Prospectus is, or a statement in the Prospectus becomes, misleading or deceptive or is likely to mislead or deceive:
$(vii)$ (Non-compliance with disclosure requirements): it transpires that the Prospectus does not contain all the information required by section 713 of the Corporations Act:
(Restriction on allotment): the Company is prevented from allotting (viii) the New Shares within the time required by the Underwriting Agreement, the law, the ASX Listing Rules or order of a court of competent jurisdiction by ASIC, ASX, or any governmental or semigovernmental agency or authority;
(Withdrawal of consent to Prospectus): any person (other than the $(ix)$ Underwriter) who has previously consented to the inclusion of the person's name in the Prospectus, withdraws that consent;
(ASIC Application): an application is made by ASIC for an order $(x)$ under the Corporations Act (including section 1324B) in relation to the Prospectus, the Shortfall Notice Deadline Date has arrived and the application has not been withdrawn or dismissed:
(ASIC Hearing): ASIC gives notice of its intention to hold a hearing to $(xi)$ determine if it should make a stop order in relation to the Prospectus under section 739 or any other provision of the Corporations Act or ASIC makes an interim or final stop order in relation to the Prospectus under section 739 or any other provision of the Corporations Act;
$(xii)$ (Takeovers Panel): the Takeover Panel makes a declaration, or an application is made to the Takeovers Panel for a declaration, that the affairs of the Company are unacceptable circumstances under Part 6.10 of the Corporations Act;
$(xiii)$ (Authorisation): any authorisation which is material to anything referred to in the Prospectus is repealed, revoked or terminated or expires, or is modified or amended in a manner unacceptable to the Underwriter; or
$(xiv)$ (Sub-underwriters): any sub-underwriter introduced by the Company threatens to not comply, or does not comply, with its obligations under its sub-underwriting agreement.

In addition, the Underwriter may also terminate the agreement if any of the following events, or any combination of them, occur at any time after the day of the Underwriting Agreement and the event(s) has a "material adverse impact" (as that term is defined in clause 1.1 of the Underwriting Agreement) or could give rise to a liability of the Underwriter under the Corporations Act or otherwise:

(Default): default or breach by the Company under this Agreement of $(i)$ any terms, condition, covenant or undertaking;
$(ii)$ (Incorrect or untrue representation): any representation, warranty or undertaking given by the Company in this Agreement is or becomes untrue or incorrect;
$(iii)$ (Contravention of Constitution or Act): a contravention by the Company or one of its subsidiaries ("Relevant Company") of their constitution, the Corporations Act, the ASX Listing Rules or any other applicable legislation or any policy or requirement of ASIC or ASX;
$(iv)$ (Adverse Change): an event occurs giving rise to a material adverse effect or adverse change after the date of the Underwriting Agreement in any Relevant Company, including if a forecast in the Prospectus becomes or is likely to become incapable of being met:
$(v)$ (Hostilities): there is an outbreak of hostilities (whether or not war has been declared), or a major escalation in hostilities after the date of this Agreement involving any one or more of Australia, New Zealand, Indonesia, Japan, Russia, the United Kingdom, the United States of America, India, Pakistan, or the Peoples Republic of China, Israel or any member of the European Union other than hostilities involving Afghanistan or Iraq, or a terrorist act is perpetrated on any of those countries or any diplomatic, military, commercial or political establishment of any of those countries anywhere in the world;
$(vi)$ (Error in Due Diligence Results): it transpires that any of the due diligence results or any part of the verification material was false, misleading or deceptive or there was an omission from them:
$(vii)$ (Significant change): a "new circumstance" as referred to in section 719(1) of the Corporations Act arises that is materially adverse from the point of view of an investor;
$(viii)$ (Public statements): a public statement is made by the Company in relation to the Rights Issue or the Prospectus without the prior approval of the Underwriter:
(Misleading information): any information provided to the $(ix)$ Underwriter by or on behalf of the Company in respect of the Rights Issue or the affairs of any Relevant Company is misleading or deceptive or likely to mislead or deceive, and the Company is aware of the information and does not correct it within a reasonable time:
(Official Quotation qualified): the Official Quotation of the New $(x)$ Shares is qualified or conditional other than as set out in the definition of "Official Quotation" in the Listing Rules;
$(xi)$ (Change in Act or policy): there is introduced, or a publicly announced proposal to introduce, into a State, Territory or the Federal Parliament any Act, prospective Act or budget, or the Reserve Bank of Australia or any Commonwealth or State authority adopts or announces a proposal to adopt a new, or major change in, existing monetary, taxation, exchange or fiscal policy (excluding interest rate announcements);
(Prescribed Occurrence): a "Prescribed Occurrence", as that term is $(xii)$ defined in the Underwriting Agreement, occurs;
$(xiii)$ (Suspension of debt payments): the Company suspends payments of its debts generally;
(Event of Insolvency): an "Event of Insolvency", as that term is defined $(xiv)$ in the Underwriting Agreement, occurs in respect of a Relevant Company;
(Judgment against a Relevant Company): a judgement exceeding $\left( xy\right)$ \$25,000 is obtained against a Relevant Company and is not set aside or satisfied within 7 days;
$(xvi)$ (Litigation): any litigation, arbitration, administrative or industrial proceedings are commenced or threatened against any Relevant Company after the date of this Agreement, other than claims foreshadowed in the Prospectus:
$(xvii)$ (Board and senior management composition): a change in the composition of the Board before the date on which the last of the New Shares is issued, without the prior written consent of the Underwriter;
$(xviii)$ (Indictable offence): a director or senior manager of a Relevant Company is charged with an indictable offence;
(Change in shareholdings): in relation to a Relevant Company. a $(xix)$ material change in the major or controlling shareholding, or the public announcement of a takeover offer or scheme of arrangement pursuant to Chapters 5 or 6 of the Corporations Act;
$(xx)$ (Timetable): a delay greater than 2 Business Days in any specified date in the timetable set out in the Underwriting Agreement:
(Force Majeure): a "Force Majeure", as that term is defined in the $(xxi)$ Underwriting Agreement, affecting the Company's business or any obligation under the Agreement lasting in excess of 7 days occurs:
(Certain resolutions passed): a Relevant Company passes or takes $(xxi)$ steps to pass a resolution under section 254N, 257A or 260B of the Corporations Act or to amend its constitution without the Underwriter's prior written consent:
$(xxiii)$ (Capital Structure): any Relevant Company alters its capital structure in any manner not contemplated by the Prospectus;
(Investigation): any person is appointed under any legislation in respect $(xxiv)$ of companies to investigate the affairs of a Related Company; or
(Market Conditions): a suspension or material limitation in trading $(xxv)$ generally on ASX occurs, or any material adverse change or disruption to the existing financial markets, political or economic conditions of Australia, Japan, the United Kingdom, the United States of America or other international financial markets:
(Suspension): the Company is removed from the Official List, or the $(xxvi)$ Shares become suspended from Official Quotation and suspension is not lifted with 24 hours.

The Company agrees to indemnify the Underwriter and its officers, employees, agents and advisors against all prosecutions, losses, penalties, actions, suits, claims, expenses, costs, liabilities, charges, outgoings, payments, demands and proceedings suffered, incurred, paid or liable to be paid in connection with:

$(i)$ the Rights Issue;
non-compliance with or breach of any legal requirement, or of the $(ii)$ Listing Rules in relation to the Prospectus or any accompanying documents in respect of the Rights Issue distributed by or with the consent of the Company;
$(iii)$ any statement, misstatement, misrepresentation, non-disclosure, inaccuracy in or omission from the Prospectus, or any accompanying documents in respect of the Rights Issue distributed by or with the consent of the Company:
$(iv)$ any advertising, publicity, announcements, statements and reports in relation to the Rights Issue made with the agreement of the Company; and
$(v)$ any breach by the Company of the Underwriting Agreement.

The Underwriting Agreement provides for certain situation where the indemnity will not apply including instances of wilful default and fraud.

The Company agrees to reimburse the Underwriter and its officers, employees, agents and advisors for all costs and reasonable expenses incurred by them and pay the Underwriter and each of its officers, employees, agents and advisors, in connection with:

investigating, preparing, or defending any claim or potential claim $(i)$ arising in connection to the Prospectus, or the Rights Issue; or
$60$ preparing for or being involved in or otherwise relating to any investigations, enquiries, hearings, prosecutions or legal proceedings by ASIC, ASX or any governmental authority or agency in connection to the Prospectus, or the Rights Issue.

The above description of the Underwriting Agreement is a summary only and is not intended to set out in detail all of its provisions.

$(b)$ Option Agreement

The Company entered the Option Agreement with Peter Morrell Diprose and Marlene Diprose ("Owner") in October 2004 in respect of:

$(i)$ Lot 6832 on Deposited Plan 209203, being the whole of the land the subject of certificate of title volume 1704 folio 659; and
$(ii)$ Lot 6833 on Deposited Plan 209203, being the whole of the land the subject of certificate of title volume 1471 folio 179,

(collectively, the "Land") upon which the Southdown Magnetite Deposit and mining leases M70/433, M70/718 and M70/719 held by the Company ("Southdown Mining Leases") are located.

The Owner owns and occupies the Land. Under the terms of the Option Agreement, the Owner has agreed to:

$(i)$ the Southdown Mining Leases being granted over the whole of the Land including parts of the Land that are less than 30 metres below the natural surface: and
$(ii)$ the Company exercising its rights as the holder of the Southdown Mining Leases, including to enter upon the Land with workmen, vehicles, plant and equipment reasonably necessary for the exercise of those rights.

The Company has a number of obligations when exercising its rights under the Option Agreement to minimise the interference with the Owner's farming

operations and avoid causing loss or damage to the Owner (including damage to the Owner's property).

Pursuant to the terms of the Option Agreement, the Company is required to compensate the Owner in respect of:

$(i)$ exploration activities it conducts on the Land on a per drill hole basis;
$(ii)$ reasonable costs incurred by the Owner repairing damage to the surface of, and to improvements on, the Land; and
$(iii)$ any area of the Land which is unable to be used productively for agricultural purposes in a calendar year due to the Company's explorations activities.

If the Company wishes to commence developmental or productive mining on the Land, it must negotiate a reasonable basis of compensation with the Owner.

In addition, the Owner has agreed to grant the Company an option to purchase the Land ("Call Option"). The Call Option is open for 18 months from the date of the Option Agreement. However, the Company can extend that period for a further 12 months.

In consideration of the Owner entering into the Option Agreement, the Company has agreed to grant the Owner the option to require the Company to purchase the Land ("Put Option"). The Put Option can be exercised any time after the Company notifies the Owner of its intention to commence developmental or productive mining operations.

If either the Call Option or the Put Option is exercised, the purchase of the Land will be upon the terms contained in the Option Agreement.

Upon sale of the Land under either the Call Option or the Put Option, the Company agrees to lease to the Owner for agricultural purposes those parts of the Land which it does not require for its operations.

The Company has also agreed to grant the Owner an option to purchase the Land back from the Company following the completion of the Company's mining operations on the Land ("Owner's Option"). The Owner's Option is exercisable for up to one year after the Company notifies the Owner that it has completed mining operations on the Land.

The Option Agreement continues until the earlier of:

$(i)$ the date on which the last of the Southdown Mining Leases expires or is surrendered: or
$(ii)$ the settlement of sale of the Land pursuant to the exercise of the Put Option or the Call Option.

$\left( c\right)$ Malaysian Port Heads of Agreement

For a summary of the Malaysian Port Heads of Agreement, please refer to the Company's ASX announcement dated 17 February 2005.

6.3 Disclosing Entity

The Company is a "disclosing entity" for the purposes of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. These obligations include compliance with the requirements of the ASX Listing Rules and the Corporations Act concerning notification of information to ASX.

Copies of documents lodged at the ASIC in relation to the Company may be obtained from, or inspected at, an office of the ASIC.

Nature of this Prospectus 6.4

This Prospectus has been prepared on the basis of section 713 of the Corporations Act which allows disclosing entities such as the Company to issue a "reduced content" prospectus for securities in a class of securities that have been continuously quoted on ASX at all times in the 12 months prior to the issue of the prospectus.

In addition to specific formal matters, a "reduced content" prospectus needs to contain information relating to the terms and conditions of the offer, the effect of the offer on the Company and the rights and liabilities attaching to the securities being offered.

A "reduced content" prospectus must also include information that has been excluded from a continuous disclosure notice where that information had not been disclosed due to the operation of Listing Rule 3.1A. However, such information is only required where it is information that investors and their professional advisers would reasonably require for the purpose of making an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of an entity and the rights and liabilities attaching to the securities being offered by the entity. Further, such a prospectus must contain this information only to the extent to which it is reasonable for investors and their professional advisers to expect to find this information in the prospectus.

Other general information is not required to be included by a disclosing entity as the periodic reporting and continuous disclosure requirements applicable to disclosing entities mean that all this information should have previously been released to the market. This Prospectus does not contain all of the information which the Company has previously disclosed to ASX. Shareholders should have regard to such information in relation to the Company before making a decision whether or not to invest in New Shares.

6.5 Inspection and copies of documents

The Company will provide a copy of any of the following documents free of charge to any person who requires a copy during the Offer period in relation to this Prospectus:

the annual report dated 30 September 2004 for the financial year ended 30 June $(a)$ 2004, being the annual report most recently lodged with the ASIC by the Company;
the financial statement of the Company for the half-year ended 31 December 2004 $(b)$ (being the last financial statement lodged with the ASIC by the Company after the lodgment of that annual report and before lodgment of this Prospectus with the ASIC):
the following continuous disclosure notices given by the Company to ASX after $\left( c\right)$ lodgment of the annual report referred to in Section 6.5(a) and before the date of lodgment of this Prospectus:

Date	Headline
15/10/2004	Becoming a substantial holder
29/10/2004	First Quarter Activities & Cashflow Report
29/10/2004	Notice of Annual General Meeting
05/11/2004	Appendix 3B – Exercise of Options
08/11/2004	Change of Directors Interest Notice
09/11/2004	Change of Directors Interest Notice
25/11/2004	Change of Directors Interest Notice
30/11/2004	Chairman's AGM Address to Shareholders
30/11/2004	Results of Annual General Meeting
10/01/2005	Change of Directors Interest Notice
17/01/2005	Change of Directors Interest Notice
20/01/2005	Change of Directors Interest Notice
28/01/2005	Second Quarter Activities & Cashflow Report
01/02/2005	Bankable Feasibility Study on Southdown Magnetite Project
04/02/2005	Change of Directors Interest Notice x 2
04/02/2005	Appendix 3B
04/02/2005	Change in substantial holding
10/02/2005	Investor Presentation
17/02/2005	Trading Halt
17/02/2005	Malaysian Port Agreement accelerates Magnetite Pellet Project
23/02/2005	Appointment of New Managing Director
28/02/2005	Half Yearly Report & Half Year Accounts
08/03/2005	Trading Halt
11/03/2005	Pro Rata Non-Renounceable Rights Issue
21/03/2005	Notice of Ceasing to be a Substantial Holder
22/03/2005	Appendix 3B - Exercise of Unlisted Options
22/03/2005	Change of Directors Interest Notice
23/03/2005	Notice of General Meeting
23/03/2005	Appendix 3B - Exercise of Unlisted Options
23/03/2005	Appendix 3Y - Change of Directors' Interest

The documents referred to in paragraphs (a) to (c) above are not included and do not accompany this Prospectus.

6.6 RBC Options

A total of 4,285,715 Options have been issued to RBC Global Nominees Pty Limited ("RBC"), which under the terms of their issue may be exercised before the Record Date.

Details of the RBC Options are as follows:

Solution Service Service Expire Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Servi
285.71.	50	28 November 2006

If RBC validly exercises its Options and becomes a registered holder of Shares at the Record Date, it will be entitled to participate in the Rights Issue. Options not exercised will have no Entitlement to participate in the Rights Issue. The terms of the Options do not provide for an adjustment to the exercise price in the event they are not exercised prior to the Record Date.

6.7 Director Options

A total of 2,000,000 Director Options remain on issue, which under the terms of their issue may be exercised before the Record Date.

Details of the Director Options which may be exercised before the Record Date are as follows:

. .	,,,,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,, ,,,,,,,,,,,,,,,,,,,, President to a second EU Was applied. *RECOMMENDATION* ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	.
		⊿∩∩‴

If the holder of the Director Options exercises his Director Options and becomes a registered holder of Shares at the Record Date, he will be entitled to participate in the Rights Issue. Director Options not exercised will have no Entitlement to participate in the Rights Issue. However, the terms of issue of the Director Options provide for an adjustment of the exercise price of those Plan Options not exercised in accordance with the formula set out in the Listing Rules.

6.8 Plan Options

A total of 1,500,000 Plan Options remain on issue pursuant to the Directors' and Officers' Option Plan, which under the terms of their issue may be exercised before the Record Date.

Details of the Plan Options which may be exercised before the Record Date are as follows:

Sumber 2006	Exercise Price Figure 2.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1.1 Figure 1 .
500 MM	30 June 2007

If the holder of the Plan Options exercises his Plan Options and becomes a registered holder of Shares at the Record Date, he will be entitled to participate in the Rights Issue. Plan Options not exercised will have no Entitlement to participate in the Rights Issue. However, the terms of issue of the Plan Options provide for an adjustment of the exercise price of those Plan Options not exercised in accordance with the formula set out in the Listing Rules.

The Company will hold a general meeting of Shareholders on 26 April 2005 seeking approval for the grant of 4.000,000 Plan Options to Mr Geoffrey Wedlock (or his permitted nominees) to be issued under the Directors' and Officer's Option Plan. If approved, the Plan Options will be issued after the Record Date and will not be entitled to participate in the Rights Issue.

6.9 Mr Anthony Bohnenn

As at the date of this Prospectus, Mr Anthony Bohnenn, a Director and Chairman of the Company, has a Relevant Interest in 15.69% of the issued Shares in the Company. Mr Bohnenn has entered into an agreement with the Underwriter to sub-underwrite up to 25% of the Shortfall which amounts to a maximum of 2,705,330 New Shares. Mr Bohnenn has indicated that he intends to participate in the Rights Issue in respect of all the Shares he presently has a Relevant Interest in.

The following tables set out the Relevant Interest Anthony Bohnenn may have following the completion of the Rights Issue based on the assumptions that:

(a)	all Shareholders, including Mr Bohnenn take up their full Entitlements:
-----	-------------------------------------------------------------------------

Solution Issued Capital Anthony Bohnenn's Percentage of Issued Shares	Shareholdin	$\mathbf{I}$ . The contract of the contract of $\mathbf{I}$
	13.385.306	' S 69%.

$(b)$ Mr Bohnenn takes up his Entitlement in full and only 75% of remaining Shareholders take up their full Entitlement:

	1 - Starchol	Issued Capital Tanthony Bohnenn's Percentage of Issued Shares
80.570.	14.261.832	16.47%

Mr Bohnenn takes up his full Entitlement and only 50% of remaining $(c)$ Shareholders take up their full Entitlement:

Mr Bohnenn takes up his full Entitlement and only 25% of remaining $(d)$ Shareholders take up their full Entitlement:

Canitation Canital	Anthony Bohnenn's Percentage of Issued Shares Sharehol	------
86.570.	-15.614.497	18.04%

$(e)$ Mr Bohnenn takes up his full Entitlement and none of the remaining Shareholders take up any of their Entitlement:

Issued Capital Anthony Bohnenn's Percentage of Issued Shares
86.570.	16.290.830

6.10 Directors' Interests

As at the date of this Prospectus, each of the Directors has a Relevant Interest in Shares and Options as set out below:

Director	Relevant Interest in Shares	Relevant Interest in Options
Anthony Bohnenn	11,887,313	Nil
Geoffrey Wedlock	94,000	1,500,000
Hans-Rudolf Moser	4,310,450	Nil
Alexander Nutter	874.999	Nil
Adam Rankine-Wilson	3,023,606	2,000,000

Note 1: The Company will hold a general meeting of Shareholders on 26 April 2005 seeking approval for the grant of 4,000,000 Options to Mr Geoffrey Wedlock (or his permitted nominees) to be issued under the Directors' and Officer's Option Plan. If approved, the Plan Options will be issued after the Record Date and will not be entiltled to participate in the Offer.

The Directors that are entitled to participate in the Rights Issue currently intend to subscribe for their respective Entitlements.

As at the date of this Prospectus there are no proposed Directors.

Except as disclosed in this Prospectus, no Director, and no firm in which a Director is a partner has any interest nor has had any interest in the last two years prior to the date of this Prospectus:

in the formation or promotion of the Company;
in any property acquired or proposed to be acquired by the Company in connection with the Rights Issue; or
in the Rights Issue.

Other than as set out in this Prospectus, no amounts have been paid or agreed to be paid and no benefit has been given or agreed to be given to any Director either to induce him to become, or to qualify him as, a Director, or otherwise for services rendered by him in connection with the promotion or formation of the Company or in connection with the Rights Issue.

6.11 Remuneration of Directors

Details of Directors' remuneration which has accrued since 1 March 2003 to 18 March 2005 is as follows:

Director	Base Salary / Fees ß.	Superann- uation ÷.	Equity Based s.	Other $\mathbf{R}$	Total W
Anthony Bohnenn ¹	95,834	Nil	258,250	120,000	474,084
Geoffrey Wedlock ²	186,307	16,767	201,750	37,540	442,364
Hans-Rudolf Moser	46,001	Nil	82,500	Nil	128,501
Alexander Nutter	170,955	214,904	82,500	Nil	468,359
Adam Rankine-
Wilson	485,518	77,997	434,000	Nil	997,515

Note 1: Other includes fees of \$120,000 paid to Hendygwyn Holding & Beheer b.v., of which Mr Bohnenn is a director and shareholder, under a marketing and public relations services agreement.

Note 2: Other includes fees of \$37,540 (GST exclusive) paid to Keypalm Pty Ltd, of which Mr Wedlock is a director and shareholder, under a consultancy agreement prior to his appointment as an executive director.

Details of Directors' expected remuneration for the period 19 March 2005 to 30 June 2005 is as follows:

Director	Base Salary / Fees S.	Superann- uation K.	Equity Based K.	Other ЗŚ,	Total S.
Anthony Bohnenn ¹	23,333	Nil	Nil	20,000	43,333
Geoffrey Wedlock ²	89,230	8,030	Nil	Nil	97,260
Hans-Rudolf Moser	7,666	Nil	Nil	Nil	7,666
Alexander Nutter	29,828	33,256	Nil	Nil	63,084
Adam Rankine-
Wilson	73,846	6,646	Nil	Nil	80,492

Note 1: Other includes fees of \$20,000 to be paid to Hendygwyn Holding & Beheer b.v., of which Mr Bohnenn is a director and shareholder, under a marketing and public relations services agreement.

Note 2: No allowance has been made for the proposed grant of 4,000,000 Plan Options to Mr Wedlock which are subject to shareholder approval at a general meeting to be held on 26 April 2005.

6.12 Expenses

Assuming the Rights Issue is fully subscribed, the total expenses are expected to be as follows:

ASIC lodgement fee	2,010
Prospectus printing and mailing	7,950
Legal and professional fees	75,000
Underwriting Fee	676,333
ASX fees	7,037
	768,330 Total

All fees referred to in this Prospectus are exclusive of GST.

6.13 Interests of Other Persons

Except as disclosed in this Prospectus, no expert, promoter or other person named in this Prospectus as performing a function in a professional, advisory or other capacity:

has any interest nor has had any interest in the last two years prior to the date of this $(a)$ Prospectus in the formation or promotion of the Company, the Rights Issue or property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Rights Issue; or
has been paid or given or will be paid or given any amount or benefit in connection $(b)$ with the formation of the Company or the Rights Issue.

Over the last 2 years, \$246,445 has been paid to Clayton Utz for legal services provided to the Company. Clayton Utz will be paid approximately \$75,000 in fees for professional services in connection with the Rights Issue up to the date of this Prospectus. From the date of this Prospectus, Clayton Utz will receive fees for professional services in connection with the Rights Issue and for other services provided to the Company in accordance with Clayton Utz's normal time-based charge out rates.

Over the last 2 years, a total of \$232,871 has been paid to Ernst & Young for auditing the Company's accounts and providing accounting and tax services to the Company. Ernst $\&$ Young will be paid \$1,000 in fees for professional services in connection with the Rights Issue up to the date of this Prospectus. Ernst & Young may continue to receive fees for other services provided to the Company in accordance with Ernst & Young's normal time-based charge out rates.

Over the last 2 years, a total of \$30,000 has been paid to Patersons Securities Limited in respect of services it has provided to the Company. Patersons Securities Limited have agreed to act as Underwriter and Joint Lead Manager to the Rights Issue and will be paid an underwriting fee of \$541,066 (being 4% of the Underwritten Amount) and a management fee of \$135,267 (being 1% of the Underwritten Amount) in accordance with the terms of the Underwriting Agreement as set out in Section 6.2(a).

An entity associated with a director of Patersons Securities Limited holds a beneficial interest in 25,000 Shares in the Company.

Over the last 2 years, Grange has not made any payments to BBY Limited in respect of services provided to the Company. BBY Limited have agreed to act as Joint Lead Manager to the Rights Issue and will be paid a Lead Manager fee of \$152,175 (being 4.50% of the subunderwritten amount) by the Underwriter in accordance with its mandate letter.

Computershare Investor Services Pty Limited has acted as share registry to the Company in relation to the Rights Issue and this Prospectus. Over the last two years, Computershare Investor Services Pty Limited has received fees of \$25.948 from the Company. Computershare Investor Services Ptv Limited may continue to receive fees for other services provided to the Company from time to time on normal commercial rates.

6.14 Consents

The following consents have been given in accordance with the Corporations Act:

Computershare Investor Services Pty Limited has given and has not withdrawn its written consent to be named as Share Registrar in the form and context in which it is named. Computershare Investor Services Pty Limited has had no involvement in the preparation of any part of the Prospectus other than being named as Share Registrar of the Company. Computershare Investor Services Pty Limited has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for any part of, this Prospectus.

Ernst $\&$ Young have given their written consent to being named as auditor to the Company and have not withdrawn their consent prior to lodgement with the ASIC. With the exception of the consent as stated above. Ernst & Young have not authorised the issue of this Prospectus. Accordingly, Ernst & Young makes no representations regarding and take no responsibility for any other statement or material in or omissions from, this Prospectus.

Clayton Utz have given and have not, before lodgment of this Prospectus withdrawn their written consent to be named as lawyers to the Company in the form and context in which they are named. Clayton Utz were not involved in the preparation of this Prospectus, did not authorise or cause the issue of this Prospectus and take no responsibility for any material in, or omission from this Prospectus other than references to their name.

Patersons Securities Limited has given and has not withdrawn its written consent to be named as Underwriter and Joint Lead Manager to the Rights Issue in the form and context in which it is named. Patersons Securities Limited has had no involvement in the preparation of any part of the Prospectus other than being named as Underwriter and Joint Lead Manager to the Rights Issue. Patersons Securities Limited has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for any part of, this Prospectus.

BBY Limited has given and has not withdrawn its written consent to be named as Joint Lead Manager to the Rights Issue in the form and context in which it is named. BBY Limited has had no involvement in the preparation of any part of the Prospectus other than being named as Joint Lead Manager to the Rights Issue. BBY Limited has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for any part of, this Prospectus.

Alexander Nutter has given and, at the time of lodgement, has not withdrawn, his consent to be named as a competent person (within the meaning of the JORC Code) who contributed to the information relating to the Mineral Resource and Ore Reserve estimates contained in the Prospectus and the inclusion of that information in the form and context in which it appears.

Placer Dome Asia Pacific Limited has consented to being named in Section 4.1 and to the inclusion of the information relating to the Mineral Resource and Ore Reserve estimates contained in the Prospectus in the form and context in which it appears.

Barrick Gold of Australia Limited has consented to being named in Section 4.1 and to the inclusion of the information relating to the Mineral Resource and Ore Reserve estimates contained in the Prospectus in the form and context in which it appears.

Golder Associates Pty Ltd has consented to being named in Section 4.1 and to the inclusion of the information relating to the Mineral Resource and Ore Reserve estimates contained in the Prospectus in the form and context in which it appears.

Resource Evaluations Pty Ltd has consented to being named in Section 4.2 and to the inclusion of the information relating to the Mineral Resource and Ore Reserve estimates contained in the Prospectus in the form and context in which it appears.

Gleneagle Gold Limited has consented to being named in Section 4.2 and to the inclusion of the information relating to the Mineral Resource and Ore Reserve estimates contained in the Prospectus in the form and context in which it appears.

No Prospective Financial Information 6.15

Other than the financial information set out in Section 3.2, no prospective financial information is contained in this Prospectus as the Directors do not consider there to be reasonable grounds to include such information given the speculative nature of the Company as described in Section 5.

Directors' Responsibility and Consent Statement 6.16

Each Director of the Company has given, and has not withdrawn as at the date of this Prospectus, his consent to the lodgement of this Prospectus with the ASIC in accordance with section 720 of the Corporations Act.

This Prospectus is issued by Grange Resources Limited. Its issue was authorised by resolution of the Directors and is signed by a Director on behalf of all Directors.

Adam Rankine-Wilson Executive Director 23 March 2005

$\overline{7}$ . Glossary

The following terms and abbreviations used in this Prospectus have the following meanings:

Terms	Meaning
"Applicant"	means a person who submits an Entitlement and Acceptance Form.
"ASIC"	means the Australian Securities and Investments Commission.
"ASTC"	means ASX Settlement and Transfer Corporation Pty Ltd ACN 008 504 532.
Rules"	"ASTC Settlement means the operating rules of ASTC.
"Associate"	has the meaning given to that term by Division 2 of Part 1.2 of the Corporations Act.
"ASX"	means Australian Stock Exchange Limited ACN 008 129 164.
"ASX Listing Rules" or "Listing Rules"	means the listing rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the official list of ASX, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX.
"Board"	means the Board of Directors of the Company as at the date of this Prospectus.
"Business Day"	has the meaning given in the Listing Rules.
"CHESS"	means the Clearing House Electronic Subregister System operated by ASTC.
"CHESS Approved Securities"	means securities of the Company which are approved by ASTC in accordance with the ASTC Settlement Rules.
"Closing Date"	means 5:00pm WST on 2 May 2005 or such other date as the Directors may determine without prior notice and in accordance with the Listing Rules.
"Company" or "Grange"	means Grange Resources Limited ABN 80 009 132 405.
"Constitution"	means the constitution of the Company as at the date of this Prospectus.
"Corporations Act"	means Corporations Act 2001 (Cth) as amended from time to time.
"Directors"	means the directors of the Company in office on the date of this Prospectus.
Director Option	means an Option issued to certain Directors of Grange from time to time and approved by Shareholders.
"Directors' and Officers' Option	means the Grange Resources Limited Directors' and Officers' Option Plan.

Plan"

"dollars" or "\$"	means the official currency of the Commonwealth of Australia.
"Eligible Shareholder"	means a person who is registered as the holder of Shares on the Record Date whose registered address is in Australia, New Zealand, Singapore, Switzerland or the United Kingdom.
"Entitlement"	means the entitlement of an Eligible Shareholder to participate in the Rights Issue, as shown on the Entitlement and Acceptance Form.
"Entitlement and Acceptance Form" or "Form"	means the entitlement and acceptance form accompanying this Prospectus.
"GST"	has the meaning given to it by the A New Tax System (Goods and Services Tax) Act 1999 or any replacement or other relevant legislation and regulations.
"Issuer Sponsored"	means securities issued by an issuer that are held in uncertificated form without the holder entering into a sponsorship agreement with a broker without the holder being admitted as an institutional participant in CHESS.
"Malaysian Port Heads of Agreement"	means the Heads of Agreement dated 17 February 2005 between the Company, Pilihan Alam Jaya Sdn Bhd and Sukma Samudra Sdn Bhd.
"Measured and Indicated Resources"	means that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with high and reasonable level of confidence.
"Mineral Resources"	means a concentration or occurrence of material of intrinsic economic interest in or on the earth's crust in such form and quantity that there are reasonable prospects for eventual economic extraction.
"New Shares"	means Shares to be allotted and issued pursuant to this Prospectus.
"Offer"	means the offer of New Shares to Eligible Shareholders pursuant to this Prospectus.
"Officer"	means an officer of the Company as that term is defined in the Corporations Act.
"Option"	means an option to subscribe for a Share subject to its terms and conditions, being either a Director Option, a Linq Option or a Plan Option.
"Option Agreement"	means the Consent and Option Agreement between the Company, Peter Morrell Diprose and Marlene Diprose and summarised in Section 6.2(b).
"Ore Reserves"	means the calculated tonnage and grade of mineralisation which can be extracted profitably; classified as possible, probabale and proven according to the level of confidence that can be placed in the data and is the economically mineable part of a Measured or Indicated Resource.

"Plan Option"	means an Option issued pursuant to the Directors' and Officers' Option Plan.
"Prospectus"	means this Prospectus dated 23 March 2005.
"RBC"	means RBC Global Services Australia Nominees Pty Limited.
"RBC Option"	means an Option issued to RBC.
"Record Date"	means 5.00pm WST on 5 April 2005 being the date for determination of Entitlements of Eligible Shareholders to participate in the Rights Issue.
"Register"	means the Company's register of members.
"Relevant Interest"	has the meaning given in sections 608 and 609 of the Corporations Act.
"Restriction Agreement"	means a restriction agreement within the meaning and for the purposes of the Listing Rules.
"Right"	means the right to subscribe for New Shares pursuant to this Prospectus.
"Rights Issue"	means the non-renounceable issue, pursuant to this Prospectus, of up to 10,821,322 New Shares to Eligible Shareholders on the basis of 1 New Share for every 7 Shares registered on the Record Date.
"Section"	means a section of this Prospectus.
"Share"	means a fully paid ordinary share in the Company.
"Shareholder"	means a person who is registered as the holder of Shares.
"Shortfall"	means the New Shares forming Entitlements not accepted by Eligible Shareholders.
"Shortfall Notice Deadline Date"	means 4 May 2005 or such other date as the Company and Underwriter agree.
"Southdown Magnetite Project" or "Southdown Project"	means the project located 90km northeast of the Port of Albany on the south coast of Western Australia comprising three granted mining leases covering an area of approximately 1700 hectares on freehold farming property.
"Underwritten Amount"	means \$13,526,652.
"Underwriter"	means Patersons Securities Limited ABN 69 008 896 311.
"Underwriting
Agreement"	means the underwriting agreement between the Company and Patersons Securities Limited dated 23 March 2005.

Corporate Directory
BOARD OF DIRECTORS	Anthony Bohnenn (Non-Executive Chairman)
	Geoffrey Lloyd Warburton Wedlock (Managing Director)
	Adam Rankine-Wilson (Executive Director)
	Alexander Henry Nutter (Technical Director)
	Hans-Rudolf Moser (Non-Executive Director)
SENIOR MANAGEMENT	Alec Christopher Pismiris (Company Secretary)
REGISTERED OFFICE	Level 13, The Forrest Centre 221 St George's Terrace Perth WA 6000
	Telephone: (+618) 9321 1118 Facsimile: (+618) 9321 1523
SHARE REGISTRY	Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St George's Terrace Perth WA 6000
AUDITORS	Ernst & Young 11 Mounts Bay Road Perth WA 6000
LAWYERS	Clayton Utz QV1 Building 250 St George's Terrace Perth WA 6000
STOCK EXCHANGE	Grange Resources Limited is listed on the Australian Stock Exchange Limited (ASX Code: GRR) and the "OTC" Markets in Berlin, Munich, Stuttgart and Frankfurt in Germany (Code: WKN. 917447)
WEBSITE	www.grangeresources.com.au

$\ell$ omputershare

Please return completed form to: Computerstrate Investor Services Pty Eimited GPO Box 0182 Perth .
Western Australia 6840 Australia Enguines (within Australia) 1300 557 010 (outside Australia) 61-3 9415 4000 Facsinale 61 6 9323 2033 [email protected] www.computershare.com

11234567890 IND

GRANGE RESOURCES LIMITED

ABN 80 009 132 405

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SAMPLE CUSTOMER SAMPLE STREET SAMPLE STREET SAMPLE STREET SAMPLE STREET SAMPLETOWN TAS 7000

Entitlement and Acceptance Form

Non-Renounceable Entitlement Issue closing 5pm WST on 2 May 2005

Non-Renounceable Eatitement Issue on the basis of One New Share for every Seven Shares entitled to participate at the record date at an issue price of A\$1.25 per New Share.

Important:

This document is of value and requires your immediate attention. If you do not understand it, or are in doubt as to how to deal with it, you should consult your accountant, stockbroker, solicitor or other professional adviser immediately.
This Entitlement and Acceptance Form should not be refed upon as evidence of the current entitlement of the person named in this Entitlement and Acceptance Form. Receipt of this form by 5pm WST on 2 May 2005 with your payment will
constitute acceptance in accordance with the terms of the Prospectus dated 23 March 2005

To be completed by securityholder Number of New Shares Accepted Amount enclosed at A\$4.25 per New Share $\overline{c}$ AG.

I/We enclose mylour payment for the amount shown above being payment of A\$1.25 per New Share. Whe hereby authorise you to register merus as the holder(s) of the New Shares allotted to meltis, and liwe agree to be bound by the Constitution of the Company.

Payment Details D BSB Number Drawer Cheque Number Account Number Ament of change ÀŠ

Make your cheque or bank draft payable to "Grange Resources Limited - Rights issue Trust Account"

Enter your contact details
Contact Name	Teiershone Aluraber - Business Houas / After Hours
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	.
The directors reserve the right to make amendments to this form where appropriate. Please refer to the lodgement instructions overleat

This form may not be used to effect an address change. Please contact Computershare investor Services Pty Limited on 1300 850 505 for an appropriate form, or download a Change of Address Notification form from www.computershare.com. CHESS holders must contact their Controlling Participant.

See back of form for completion quidelines

SAMAD

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How to complete the Entitlement and Acceptance Form

Please complete all relevant sections of the Entitlement and Acceptance Porm using BLOCK LETTERS in black ink. Note that photocopies will not be accepted. These instructions are cross-referenced to each section of the Entitlement and Acceptance Form.

Completed Entitlement and Acceptance Forms must be received at the Perth office of Computershare Investor Services Pty Limited by no later than 5pm WST on 2 May 2005. Return the completed Entitlement and Acceptance Form with cheque(s) attached to:

Computershare investor Services Pty Limited $\bigcirc$ R GPO Box D182 PERTH WA 6840 AUSTRALIA

Computershare Investor Services Pty Limited l avei 2 45 St Georges Terrace PERTH WA 6000 AUSTRALIA

Privacy Statement

Personal information is collected on this form by Computershare investor Services Pty Limited ('CIS"), as registrer for securities issuers ('the issuer"), for the purpose of maintaining registers of security/holders, facilitating distribution payments and other corporate actions and communications. Your personal information may be disclosed to our related bodies corporate, to external service companies such as print or mail service providers, or as otherwise required or permitted by law. If you would like details of your personal information held by CIS, or you would like to correct information that is inaccurate, incorrect or out of date, please contact CIS. In accordance with the Corporations Act 2001, you may be sent material (including marketing material) approved by the issuer in addition to general corporate communications. You may elect not to receive marketing material by contacting CIS. You can contact CIS using the details provided on the front of this form or E-mail [email protected]

If you have any enquiries concerning your entitlement, please contact Computershare investor Services Pty Limited on 1300 557 010.

Please return the completed form in the envelope provided or to the address opposite:

Computershare Investor Services Pty Limited GPO Box D182 PERTH WA 6840 Australia

AI assistant

GRANGE RESOURCES LIMITED. — Capital/Financing Update 2005

65014_rns_2005-03-22_0c0f70bb-2b3e-4c5f-9199-ba61c1423e36.pdf

GRANGE RESOURCES LIMITED

ABN 80 009 132 405

PROSPECTUS

Table of Contents

Summary of Key Dates1

Important Notice

Privacy Disclosure

Letter from the Chairman

$\mathbf{1}$ Details of the Rights Issue

$1.1$ Important note

$1.2$ The Rights Issue

$1.3$ Opening and Closing Date

$1.4$ Purpose of the Rights Issue and use of funds

$1.5$ Your Entitlement to Participate in the Rights Issue

$1.6$ Entitlement and Acceptance Forms

$1.7$ No Rights trading

$1.8$ Ranking

1.9 Trading history of Shares

$1.10$ ASX Quotation

$1.11$ Foreign Shareholders

$1.12$ Rights Issue Underwritten

$1.13$ Allotment and Issue of New Shares

$1.14$ Application Monies held on trust

1.15 CHESS

1.16 Risk Factors

$1.17$ Taxation

1.18 Withdrawal of Prospectus

1.19 Enquiries

Entitlement

Prospectus

$21$ Action Required by Eligible Shareholders

$2.1$ Your Alternatives

$2.2$ If you wish to take up ALL of your Entitlement

$2.3$ If you wish to take up PART of your Entitlement and allow the balance to lapse

$2.4$ If you do not wish to take up any of your Entitlement

$2.5$ Entitlements not taken up

$2.6$ Payment

$31$ Effect of the Rights Issue on the Company

$3.1$ Capital Structure

$3.2$ Pro forma Statement of Financial Position

Accounting Policies

Classification of Financial Instruments

Impairment of Assets

Exploration and evaluation expenditure

$\mathbf{A}$ Information on the Company and its Activities

$4.1$ Overview of the Company's Activities

Southdown Magnetite Project (Grange 100%)

Figure 1

Figure 2

Figure 3

Mining and Concentration

Transport

Pelletisation

Markets

Economics

Map of Kemaman Site

Mt Windsor Joint Venture (Grange 30%)

Red Hill Project (Grange 4% Gross Revenue Royalty)

Freshwater Project (Grange Production Royalty)

Assessment Criteria

Underground Reserves:

Open Pit Reserves:

TABLE 6 FRESHWATER PROJECT MINERAL RESOURCES AS AT 31 DECEMBER 2004

Assessment Criteria

Underground Resources:

Open Pit Resources

$4.2$ Exploration

Wembley (Grange 100%, Gleneagle Gold Limited Earning 80%)

Horseshoe Lights (Grange 100%)

Other Exploration

Competent Persons

$4.3$ Business Development Projects

$4.4$ Tenement Schedule

$\mathbf{5}$ Risk Factors

$5.1$ General Investment Risks

$5.2$ General Economic Risk

5.3 Exploration and development risk

GRANGE RESOURCES LIMITED. Capital/Financing Update 2005

Summary of Key Dates¹

$2₁$ Action Required by Eligible Shareholders

$3₁$ Effect of the Rights Issue on the Company