GRANGE RESOURCES LIMITED. — Interim / Quarterly Report 2012

Aug 30, 2012

==> picture [167 x 104] intentionally omitted <==

Grange Resources Limited ABN 80 009 132 405 and Controlled Entities

Australia’s leading magnetite producer

INTERIM FINANCIAL REPORT

For the Six Months Ended 30 June 2012

Contents
Directors’ Report	2
Auditor’s Independence Declaration	5
Statement of Comprehensive Income	6
Statement of Financial Position	7
Statement of Changes in Equity	9
Statement of Cash Flows	10
Notes to the Financial Statements	11
Directors’ Declaration	21
Independent Auditor’s Review Report	22

1

GRANGE RESOURCES LIMITED ABN 80 009 132 405 INTERIM FINANCIAL REPORT

DIRECTORS' REPORT

Your directors present their report on the consolidated entity (the “Group”) consisting of Grange Resources Limited (“Grange” or “the Company”) and the entities it controlled at the end of, or during, the half-year ended 30 June 2012.

Directors

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

Zhiqiang Xi	Non-Executive Chairman
Neil Chatfield	Deputy Non-Executive Chairman
John Hoon	Non-Executive Director
Honglin Zhao	Executive Director
Clement Ko	Non-Executive Director

Russell Clark was the Managing Director and Chief Executive Officer of the Company from the beginning of the year until his resignation on 6 August 2012.

Richard Mehan was appointed Managing Director and Chief Executive Officer of the Company from 6 August 2012.

Principal activities

During the six months ended 30 June 2012, the principal activities of the Group were as follows:

• mining, processing and sale of iron ore; and

• the ongoing exploration, evaluation and development of mineral resources, principally, the Southdown Magnetite Project near Albany, Western Australia.

Review of operations

Grange Resources (“Grange” or “the Company”) has delivered another substantial half year to shareholders. The Savage River operations continued to provide strong cash generation and the Southdown magnetite project near Albany in Western Australia continued to progress on schedule.

Highlights for the half-year ended 30 June 2012 include:

• Continued excellent safety performance at Savage River with no Lost Time Injuries recorded Interim dividend of 1.0 cent per share (unfranked) declared

• Net profit after tax of $55.4 million, on revenues from mining operations of $193.6 million and a gross profit from mining operations of $59.8 million

• Net cash inflow from operating activities of $91.9 million

• Average pellet price of A$157.64 per tonne (US$162.84 per tonne) and C1 cash operating costs of A$102.66 per tonne of pellets produced, supporting continued cash margins

• Cash, term deposits and trade receivables position of $235.0 million as at 30 June 2012. No net debt

• Southdown Project definitive feasibility study completed, showing the project to have robust economics

• Appointment of global specialist, Deutsche Bank, as a corporate advisor to assist in a partial sell down of Grange’s share of Southdown

• Southdown ore reserve restated with improved confidence levels

• Advancement of land purchases to secure the necessary land for the Southdown mine, slurry pipelines and associated infrastructure

• Received the final major environmental permit required for the Southdown Project with the approval of the permit for the desalination plant

2

GRANGE RESOURCES LIMITED ABN 80 009 132 405 INTERIM FINANCIAL REPORT

Safety Performance

Grange’s excellent safety performance was maintained with no Lost Time Injuries (LTI) recorded during the half-year. In the past 24 months the Total Recordable Injury Frequency Rate (TRIFR) has fallen from 22.2 (30 June 2010) to 3.98 (30 June 2012), an 82 per cent reduction.

Review of Results

Grange recorded a consolidated profit after tax of $55.4 million for the half year ended 30 June 2012. The result was achieved on pellet sales of 1.2 million tonnes (2011: 0.7 million tonnes) and revenues from mining operations of $193.6 million (2011: $208.9 million). Prior period revenues included $52.1 million associated with sales made under interim price arrangements during 2010.

The average pellet price received during the half year was US$162.84 per tonne of pellets sold FOB Port Latta (2011: US$221.57 per tonne). The reduction in pellet prices from the preceding 2011 half year were off-set by below budget costs and a weaker AUD:USD exchange rate on sales.

Key operating metrics for the 30 June 2012 half year and preceding 2011 half year were as follows:

	6 months to 30 June 2012	6 months to 30 June 2011
Total BCM Mined	7,935,709	8,202,615
Total Ore BCM	965,289	758,767
Concentrate Produced (t)	1,180,554	851,076
Weight Recovery (%)	42.2	34.5
Pellets Produced(t)	1,097,080	840,018
Pellets Shipped (t)	1,162,147	727,202
Concentrate Shipped(t)	23,525	164
Pellet Stockpile (t)	284,613	180,856
Average Pellet Price (US$/tonne Pellet Sold)	162.84	221.57
“C1” Operating Cost **(A$/tonne Pellet Produced)1 **	102.66	132.49

Note: “C1” costs are the cash costs associated with producing iron ore pellets without allowance for deferred mining and stockpile movements, and also exclude royalties, depreciation and amortisation costs. “C1” costs provide an insight to current margins.

Phase One of the East Wall remediation work was completed and access to the main ore zone of the North Pit was re-established during Q4 2011. Re-establishing this access has resulted in a C1 unit cost of $102.66 per tonne for pellets produced during the 30 June 2012 half year (a 22.5 per cent improvement from the preceding 2011 half year) due to improved ore grades and consequent concentrate and pellet production

The rock slide on the eastern wall of the North Pit in July 2012 has bought forward part of the Phase Two remediation works for the East Wall. This remediation work was planned to be completed as part of the 2015 operating plan and is now being rescheduled into the 2013 operating plan. This will require ore to be sourced from other deposits on the mine site on several occasions during the remediation work. It is expected that the redesign and rescheduling plans will be finalised during early September. Grange does not anticipate any material adverse impact on our 2012 production target at this stage.

3

GRANGE RESOURCES LIMITED ABN 80 009 132 405 INTERIM FINANCIAL REPORT

Capital Management

Grange has announced an unfranked interim dividend of 1.0 cent per share as a result of the continued cash generation at its Savage River operations. The reduced dividend amount provides the Company with additional time to assess the business impact of recent reductions in the global price for iron ore, softening demand for iron ore from China and confirm the impact of resequencing of the Life of Mine Plan following the rock slide on the eastern wall of the North Pit in July 2012. Grange’s equity contribution strategy for the Southdown Project is also undergoing detailed review following the appointment of Deutsche Bank as a corporate advisor to assist in the sell down of at least 30 per cent of the project to a strategic partner.

At 30 June 2012, Grange had $235.0 million in cash, term deposits and trade receivables (31 December 2011: $232.9 million) and $39.6 million in debt (31 December 2011: $44.9 million).

The continued cash generation from Savage River allowed the Company to maintain its cash reserves whilst continuing to fund

==> picture [10 x 13] intentionally omitted <==

==> picture [10 x 14] intentionally omitted <==

==> picture [10 x 13] intentionally omitted <==

• sustaining capital expenditure at Savage River and Port Latta ($15.4 million)

• ongoing investment in the Southdown Project feasibility studies ($8.0 million)

• dividend payments to shareholders of $34.6 million (representing 3 cents per share as announced with the full year 2011 results)

With a strong cash position and no net debt, Grange is well positioned with increased production, operating cash inflows and an advanced development project.

Mineral Resources Rent Tax

The Mineral Resources Rent Tax (MRRT) was enacted in the reporting period ended 30 June 2012 and commenced on 1 July 2012. The MRRT represents an additional tax on profits generated from the mining operations of iron ore and coal miners in Australia.

As at 30 June 2012, there is no impact of the MRRT on the Company’s results based on a number of assumptions and estimates including commodity prices, foreign exchange rates, reserves and resources and the future performance of operations.

Rounding of amounts

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

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5.

This report is made in accordance with a resolution of directors.

==> picture [97 x 45] intentionally omitted <==

Richard Mehan Managing Director & Chief Executive Officer Perth, Western Australia

30 August 2012

4

==> picture [112 x 94] intentionally omitted <==

Auditor’s Independence Declaration

As lead auditor for the review of Grange Resources Limited for the half year ended 30 June 2012, I declare that to the best of my knowledge and belief, there have been:

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

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

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

==> picture [153 x 46] intentionally omitted <==

Debbie Smith Partner PricewaterhouseCoopers

Melbourne 30 August 2012

Liability limited by a scheme approved under Professional Standards Legislation.

PricewaterhouseCoopers, ABN 52 780 433 757

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

5

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2012

NOTES	Six months to 30 June 2012 Six months to 30 June 2011 $’000 $’000
Revenues from mining operations 3 Cost of sales 4 Gross profit from mining operations Administration expenses Operating profit before other income / (expenses) Other income / (expenses) Revaluation of deferred consideration Other income / (expenses) 5 Operating profit before finance costs Finance income 6 Finance expenses 6 Profit before tax Income tax expense 7 Profit for the period Total comprehensive income for period Profit for the period attributable to - Equity holders of Grange Resources Limited Total comprehensive income for the period attributable to - Equity holders of Grange Resources Limited Earnings per share for profit attributable to the ordinary equity holders of Grange Resources Limited - Basic earnings per share (cents per share) - Diluted earnings per share (cents per share)	193,564 208,950 (133,746) (116,480)
	59,818 92,470 (1,812) (2,960)
	58,006 89,510 10,838 (6,007) 906 3,306
	69,750 86,809 7,185 1,453 (4,458) (4,610)
	72,477 83,652 (17,033) (25,581)
	55,444 58,071
	55,444 58,071
	55,444 58,071
	55,444 58,071
	55,444 58,071
	55,444 58,071
	4.80 5.04 4.80 5.04

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

6

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

NOTES	30 June 2012 31 December 2011 $’000 $’000
ASSETS Current assets Cash and cash equivalents 8 Term deposits Trade and other receivables 9 Inventories 10 Total current assets Non-current assets Term deposits Receivables 11 Property, plant and equipment 12 Mine properties and development 13 Exploration and evaluation 14 Deferred tax assets 15 Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables 16 Borrowings 17 Deferred consideration 18 Current tax liabilities Provisions 19 Total current liabilities	101,210 172,269 96,743 10,096 33,716 40,913 84,715 68,178
	316,384 291,456
	11,488 18,318 2,098 2,398 172,090 169,378 367,252 378,520 105,499 96,561 - -
	658,427 665,175
	974,811 956,631
	44,123 49,424 30,898 22,047 7,571 10,387 9,122 4,695 4,529 5,202
	96,243 91,755

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

7

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

NOTES	30 June 2012 31 December 2011 $’000 $’000
Non-current liabilities Borrowings 20 Deferred consideration 21 Deferred tax liabilities 22 Provisions 23 Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity 24 Reserves 25 Retained profits / (losses) Total equity	8,675 22,839 47,203 54,965 21,555 8,948 22,845 20,825
	100,278 107,577
	196,521 199,332
	778,290 757,299
	330,105 329,577 2,703 3,041 445,482 424,681
	778,290 757,299

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

8

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 30 JUNE 2012

Notes	Attributable to owners of Grange Resources Limited Contributed equity Reserves Retained earnings TOTAL $’000 $’000 $’000 $’000
Balance at 1 January 2012 Profit for the period Total comprehensive income for the period Transactions with owners in their capacity as owners Dividends paid 26 Employee share options and rights Balance at 30 June 2012 Balance at 1 January 2011 Profit for the period Total comprehensive income for the period Transactions with owners in their capacity as owners Employee share options and rights Balance at 30 June 2011	329,577 3,041 424,681 757,299 - - 55,444 55,444
	- - 55,444 55,444
	- - (34,643) (34,643) 528 (338) - 190
	528 (338) (34,643) (34,453)
	330,105 2,703 445,482 778,290
	328,912 2,955 231,192 563,059 - - 58,071 58,071
	- - 58,071 58,071
	425 43 - 468
	425 43 - 468
	329,337 2,998 289,263 621,598

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

9

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE 2012

NOTES	Six months to 30 June 2012 Six months to 30 June 2011 $'000 $'000
Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) Interest received Interest paid Income taxes (paid) / received Net cash inflow / (outflow) from operating activities Cash flows from investing activities Payments for exploration and evaluation Payments for property, plant and equipment Payments for mine properties and development Proceeds from disposal of subsidiaries Proceeds from sale of available-for-sale financial assets Payment of term deposits Net cash inflow / (outflow) from investing activities Cash flows from financing activities Finance lease payments Repayment of borrowings Payment of deferred consideration Payment of dividends to shareholders Net cash inflow / (outflow) from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the half year Net foreign exchange differences Cash and cash equivalents at end of the half year 8	200,014 236,806 (111,495) (105,083)
	88,519 131,723 3,712 762 (290) (5) - -
	91,941 132,480
	(8,938) (10,852) (15,397) (21,340) (4,477) (16,371) - 824 - 2,432 (89,268) 732
	(118,080) (44,575)
	(6,453) (4,705) (138) - (2,654) - (34,643) -
	(43,888) (4,705)
	(70,027) 83,200 172,269 91,922 (1,032) (5,078)
	101,210 170,044

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

10

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation for the half-year financial report

This general purpose financial report for the interim half year reporting period ended 30 June 2012 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

The interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the financial period ended 31 December 2011 and any public announcements made by Grange Resources Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim period except for the following:

(i) Mineral Resources Rent Tax

The Mineral Resources Rent Tax (MRRT) was enacted in the reporting period ended 30 June 2012 and commenced on 1 July 2012. The MRRT represents an additional tax on profits generated from the mining operations of iron ore and coal miners in Australia.

The MRRT is considered, for accounting purposes, to be a tax based on income and accordingly current and deferred MRRT expenses will be measured and disclosed on the same basis as income tax expense. Details of the group’s accounting policy in relation to income tax are disclosed in Note 1(l) of the group’s annual report for the financial period ended 31 December 2011.

(b) Critical accounting estimates and judgements

(i) Mineral Resources Rent Tax

The enactment and subsequent commencement of the MRRT requires management judgement in relation to the application of the Mineral Resources Rent Tax 2012.

In assessing the impact of the MRRT on future results, the Company makes a number of assumptions and estimates, including commodity price, foreign exchange rates, reserves and resources for a mining project interest and an expectation regarding future operating performance which is subject to risk and uncertainity. In addition, the Company has also determined a market value of its mining assets as at 1 May 2010. Changes in circumstances and market conditions may affect any of these assumptions and estimates and the impact of the MRRT on the group’s future results. These changes coupled with the impact of the MRRT on the group’s future results will be recognised in the period in which the assessment is made.

(ii) Taxation

On 6 January 2011, the Group merged its multiple income tax consolidated groups into a single group with Grange Resources Limited as the head entity. The impact of this merger on the comparative financial statements, including the statement of comprehensive income and the statement of financial position, was not recognised as at 30 June 2011.

The impact of the merger on the tax consolidated group resulted in the re-measurement of the Group’s current tax liability, deferred tax balances and income tax expense. These impacts were recognised in the Group’s financial statements for the year ended 31 December 2011. The June 2011 comparatives in this interim financial report have not been adjusted to reflect the outcomes of this merger.

11

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SEGMENT INFORMATION

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

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

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

Revenues from the sales of iron ore are predominately made to two major customers, one based in China and the other in Australia. The following table presents revenues from sales of iron ore based on the geographical location of customers.

Revenues from sales of iron ore Australia China TOTAL NOTE 3. REVENUES Revenues from mining operations Sales of iron ore NOTE 4. COST OF SALES Mining costs Production costs Government royalties Depreciation and amortisation expense Mine properties and development costs amortised / (capitalised) (net) Changes in inventories Foreign exchange losses NOTE 5. OTHER INCOME / (EXPENSES) Other income / (expenses) Net profit on disposal of available for sale financial assets Net profit on disposal of subsidiaries Net profit / (loss) on the disposal of property, plant and equipment Other income	Six months to 30 June 2012 Six months to 30 June 2011 $’000 $’000 31,044 100,228 162,520 108,722
	193,564 208,950
	193,564 208,950
	193,564 208,950
	66,548 70,816 47,694 41,689 8,287 10,266 20,036 19,737 5,858 (9,121) (14,964) (21,799) 287 4,892
	133,746 116,480
	- 1,474 - 824 1 (6) 905 1,014
	906 3,306

12

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. FINANCE INCOME / (EXPENSES)

Finance income Interest income received or receivable - Other entities Exchange gains on foreign currency borrowings (net) Finance expenses Interest charges paid or payable - Other entities Finance lease interest charges paid or payable Provisions: unwinding of discount - Deferred consideration - Decommissioning and restoration NOTE 7. INCOME TAX EXPENSE A. Income tax expense Current tax Deferred tax Deferred income tax expense included in income tax expense comprises: (Increase)/decrease in deferred tax assets Increase/(decrease) in deferred tax liabilities B. Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax expense Tax at the Australian tax rate of 30% (June 2011: 30%) Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: - Revaluation of deferred consideration - Unwind of discount on deferred consideration - Sundry items Difference in overseas tax rates Adjustments to current / deferred tax of prior periods Income tax expense	Six months to 30 June 2012 Six months to 30 June 2011 $’000 $’000 3,848 761 3,337 692
	7,185 1,453
	(292) (360) (718) (1,010) (2,915) (2,720) (533) (520)
	(4,458) (4,610)
	4,427 8,585 12,606 16,996
	17,033 25,581
	9,091 12,302 3,515 4,694
	12,606 16,996
	72,477 83,652
	21,743 25,096 (3,251) (89) 874 816 (318) 3
	19,048 25,826
	- (245) (2,015) -
	17,033 25,581

13

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. CASH AND CASH EQUIVALENTS

Cash at bank and in hand Term deposits (a) Total cash (current and non-current) Cash at bank and in hand as per statement of cash flows Add: Current term deposits Non-current term deposits NOTE 9. TRADE AND OTHER RECEIVABLES Trade receivables Other receivables Prepayments NOTE 10. INVENTORIES Stores and spares Ore stockpiles - at cost Work-in-progress - at cost Finished goods - at cost NOTE 11. RECEIVABLES Security deposits	30 June 2012 31 December 2011 $’000 $’000 34,241 41,556 66,969 130,713
	101,210 172,269
	101,210 172,269 96,743 10,096 11,488 18,318
	209,441 200,683
	25,574 32,235 4,230 5,017 3,912 3,661 33,716 40,913 21,265 19,692 35,725 11,687 2,790 422 24,935 36,377 84,715 68,178 2,098 2,398 2,098 2,398

14

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. PROPERTY, PLANT AND EQUIPMENT

Land and Buildings - At cost - Accumulated depreciation Plant and Equipment - At cost - Accumulated depreciation Office Equipment - At cost - Accumulated depreciation	30 June 2012 31 December 2011 $’000 $’000 54,186 53,729 (17,822) (16,324)
	36,364 37,405 269,221 254,281 (133,865) (122,828)
	135,356 131,453 2,001 2,001 (1,631) (1,481)
	370 520
	172,090 169,378

(a) Movements in property, plant and equipment

	Land and buildings Plant and equipment Office equipment Total $’000 $’000 $’000 $’000
At 1 January 2012 At cost Accumulated depreciation Net book value Period ended 30 June 2012 Opening net book amount Additions Depreciation charge Transfers Closing net book amount At 30 June 2012 At cost Accumulated depreciation Net book value	53,729 254,281 2,001 310,011 (16,324) (122,828) (1,481) (140,633)
	37,405 131,453 520 169,378
	37,405 131,453 520 169,378 457 15,007 - 15,464 (1,498) (11,037) (150) (12,685) - (67) - (67)
	36,364 135,356 370 172,090
	54,186 269,221 2,001 325,408 (17,822) (133,865) (1,631) (153,318)
	36,364 135,356 370 172,090

15

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. MINE PROPERTIES AND DEVELOPMENT

Mine properties and development (at cost) Accumulated depreciation Net book amount Deferred mining costs (net book amount) Total mine properties and development NOTE 14. EXPLORATION AND EVALUATION Exploration and evaluation properties (at cost)	30 June 2012 31 December 2011 $’000 $’000 344,152 338,520 (97,771) (90,243)
	246,381 248,277 120,871 130,243
	367,252 378,520
	105,499 96,561
	105,499 96,561

The ultimate recoupment of exploration and evaluation expenditure is dependent upon successful development and commercial exploitation or alternatively the sale of the respective areas of interest at an amount at least equal to book value. During the period, the Company announced that it had appointed Deutsche Bank as a corporate advisor to assist Grange develop its equity strategy for the Southdown Magnetite Project by looking to sell at least a 30 per cent stake of Grange’s 70 per cent interest in the project. As at 30 June 2012, there is not sufficient certainty regarding the outcome of this strategy to recognise a stake of the group’s interest in the Southdown project as a non-current asset held for sale.

The Directors have reviewed the carrying values of each area of interest (including Southdown) as at	The Directors have reviewed the carrying values of each area of interest (including Southdown) as at	The Directors have reviewed the carrying values of each area of interest (including Southdown) as at
the balance date and concluded that there is no impairment.
NOTE 15. DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to:
Property, plant and equipment	26,212	31,379
Trade and other payables	420	6,001
Employee benefits	1,807	1,948
Decommissioning and restoration	6,405	5,860
Other	2,709	1,457
Total deferred tax assets	37,553	46,645
Set-off against deferred tax liabilities pursuant to set-
off provisions (Note 22)	(37,553)	(46,645)
Net deferred tax assets	-	-
NOTE 16. TRADE AND OTHER PAYABLES
Trade payables and accruals	35,167	42,183
Other payables	8,956	7,241
	44,123	49,424

16

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. BORROWINGS (CURRENT)

NOTE 17. BORROWINGS (CURRENT)
	30 June	31 December
	2012	2011
	$’000	$’000
Secured
Finance lease liabilities	20,447	11,459
Unsecured
Bank loan	10,000	10,000
Other	451	588
	30,898	22,047
NOTE 18. DEFERRED CONSIDERATION (CURRENT)
Deferred consideration	7,571	10,387
	7,571	10,387
Movements in deferred consideration:
Balance at the beginning of the period	10,387
Payments	(2,654)
Charged / (credited) to profit or loss
- Change in estimate	(4,923)
Transfers from non-current balance	4,761
Balance at the end of the period	7,571
NOTE 19. PROVISIONS (CURRENT)
Employee benefits	4,401	4,967
Decommissioning and restoration	128	235
	4,529	5,202
Movements in each class of provision during the period, other than employee benefits, are set out
below:
Balance at the beginning of the period	235
Transfer to non-current provisions	(107)
Balance at the end of the period	128
NOTE 20. BORROWINGS (NON-CURRENT)
Secured
Finance lease liabilities	-	14,161
Unsecured
Other	8,675	8,678
	8,675	22,839

17

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21. DEFERRED CONSIDERATION (NON-CURRENT)

OTE 21. DEFERRED CONSIDERATION (NON-CURRENT)
Deferred consideration Movements: Balance at the beginning of the period Charged / (credited) to profit or loss - Changes in estimate - Unwinding of discount Transfers to current balance Balance at the end of the period	30 June 2012 31 December 2011 $’000 $’000 47,203 54,965
	47,203 54,965
	54,965 (5,916) 2,915 (4,761) 47,203

The deferred consideration obligation represents a series of payments owing to the previous owners of Grange Resources (Tasmania) Pty Ltd (formerly Australian Bulk Minerals (ABM) and arose from a business combination involving ABM which completed in August 2007. The terms of the obligation entitle the previous owners to 2% of the gross receipts of Grange Resources (Tasmania) Pty Ltd from 2012 to 2023.

NOTE 22. DEFERRED TAX LIABILITIES

The balance comprises temporary differences attributable to: Inventory Trade and other receivables Receivables Mine properties and development Exploration and evaluation Borrowings Total deferred tax liabilities Set-off against deferred tax assets pursuant to set-off provisions (Note 15) Net deferred tax liabilities	2,488 - 15 277 5 11 25,510 25,655 30,523 28,968 567 682
	59,108 55,593
	(37,553) (46,645)
	21,555 8,948

18

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 23. PROVISIONS (NON-CURRENT)

30 June 2012 31 December 2012 $’000 $’000 Employee benefits 1,623 1,527 Decommissioning and restoration 21,222 19,298 22,845 20,825 Movements in each class of provision during the period, other than employee benefits, are set out below: Balance at the beginning of the period 19,298 Changes in estimate 1,284 Unwinding of discount 533 Transfer from current provisions 107 Balance at the end of the period 21,222 OTE 24. CONTRIBUTED EQUITY (a) Movements in consolidated share capital Number of Shares $’000 1 January 2012 – Opening balance 1,153,937,134 329,577 5 January 2012 – Issue of shares under long term incentive plan (i) 422,593 229 27 March 2012 – Issue of shares under long term incentive plan (ii) 406,865 299 30 June 2012 – Closing balance 1,154,766,592 330,105	30 June 2012 31 December 2012 $’000 $’000 1,623 1,527 21,222 19,298	30 June 2012 31 December 2012 $’000 $’000 1,623 1,527 21,222 19,298
	22,845 20,825
	(i) (ii)
		1,153,937,134 329,577 422,593 229 406,865 299
		1,154,766,592 330,105

NOTE 24. CONTRIBUTED EQUITY

• (i) In January 2012, the Company issued 422,593 ordinary shares to eligible employees in accordance with the terms of the Company’s Long Term Incentive Plan.

• (ii) In March 2012, the Company issued 406,865 ordinary shares to eligible employees in accordance with the terms of the Company’s Long Term Incentive Plan.

NOTE 25. RESERVES Share-based payments reserve NOTE 26. DIVIDENDS	30 June 2012 31 December 2011 $’000 $’000 2,703 3,041
	2,703 3,041

The Company has declared an interim dividend for the period ended 30 June 2012 of A$0.01 per share (unfranked). The Record Date for the interim dividend will be 17 September 2012.

An interim dividend for the year ended 31 December 2011 of A$0.02 per share was paid on 13 October 2011.

A final dividend for the year ended 31 December 2011 of A$0.03 per share was paid on 27 April 2012.

19

GRANGE RESOURCES LIMITED ABN 80 009 132 405 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 27. CONTINGENT LIABILITIES

There is no other significant change to the contingent liabilities previously disclosed in the Annual Report for the year ended 31 December 2011.

NOTE 28. EVENTS OCCURRING AFTER THE REPORTING PERIOD

Except as disclosed in Note 26, no other matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect:

• the Group’s operations in future financial periods; or - the results of those operations in future financial periods; or

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

20

DIRECTORS’ DECLARATION

In the directors’ opinion:

• (a) the financial statements and notes set out on pages 6 to 20 are in accordance with the Corporations Act 2001 , including:

• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

• (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the half year ended on that date, and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable, and

This declaration is made in accordance with a resolution of the directors.

==> picture [98 x 44] intentionally omitted <==

Richard Mehan Managing Director & Chief Executive Officer Perth, Western Australia 30 August 2012

21

==> picture [77 x 59] intentionally omitted <==

Independent auditor’s review report to the members of Grange Resources Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Grange Resources Limited, which comprises the statement of financial position as at 30 June 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors’ declaration for Grange Resources Limited (the consolidated entity). The consolidated entity comprises both Grange Resources Limited (the company) and the entities it controlled during that half-year.

Directors’ responsibility for the half-year financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Grange Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

PricewaterhouseCoopers, ABN 52 780 433 757

Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001

T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

22

==> picture [77 x 59] intentionally omitted <==

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Grange Resources Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

==> picture [188 x 35] intentionally omitted <==

PricewaterhouseCoopers

==> picture [160 x 48] intentionally omitted <==

Debbie Smith Partner

Melbourne 30 August 2012

23