GRANGE RESOURCES LIMITED. — Interim / Quarterly Report 2016

Aug 23, 2016

==> picture [167 x 31] intentionally omitted <==

==> picture [167 x 31] intentionally omitted <==

==> picture [167 x 31] intentionally omitted <==

==> picture [167 x 15] intentionally omitted <==

Grange Resources Limited ABN 80 009 132 405 and Controlled Entities

most experienced magnetite producer

INTERIM FINANCIAL REPORT

For the Half-Year Ended 30 June 2016

Contents

	2
Auditor s Independence Declaration	6
Condensed Consolidated Statement of Comprehensive Income	7
Condensed Consolidated Statement of Financial Position	8
Condensed Consolidated Statement of Changes in Equity	10
Condensed Consolidated Statement of Cash Flows	11
Notes to the Condensed Consolidated Financial Statements	12
n	21
Independent Review Report	22

1

GRANGE RESOURCES LIMITED ABN 80 009 132 405 INTERIM FINANCIAL REPORT

DIRECTORS' REPORT

The 30 June 2016.

half-year ended

Directors

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

Michelle Li Chairperson Honglin Zhao Executive Director Daniel Tenardi Non-Executive Director Yan Jia Non-Executive Director Liming Huang Non-Executive Director

Principal activities

During the six months ended 30 June 2016, the principal activities of the Group were as follows:

• Mining, processing and sale of iron ore from its operations in Tasmania; and

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

Review of operations

Key Highlights

• Achieved over 448 days Lost Time Injury free as mining continued in South Deposit and North Pit.

• Statutory profit after tax of $32.8 million (2015 $79.8 million loss after tax). Net assets were $278.4 million, compared to $245.5 million as at 31 December 2015.

• price. Pellet

• sales of 1.42 million tonnes, an increase of approximately 19% compared to 1.19 million tonnes in the preceding 2015 half year.

• Continued cost control disciplines have reduced C1 cash operating costs to $75.10 per tonne, a decrease of approximately 5% compared to $78.73 per tonne in the preceding 2015 half year.

• Strong cash and cash equivalents and term deposits balance of $150.4 million compared to $138.4 million as at 31 December 2015.

• Maintained focus on mine redevelopment in North Pit and continued production stripping in South Deposit using the waste in the construction of the South Deposit Tailings Storage Facility.

• Pellet production of 1.16 million tonnes compared to 1.25 million tonnes in the preceding 2015 half year.

• Cost reduction focus continues with streamlined workforce.

• South Deposit Tailings Storage Facility construction continues on plan for completion in spite of adverse weather conditions.

2

GRANGE RESOURCES LIMITED ABN 80 009 132 405 INTERIM FINANCIAL REPORT

Review of Results

Statement of Comprehensive Income

Grange achieved a statutory profit after tax of $32.8 million for the half-year ended 30 June 2016 (2015: $79.8 million loss after tax) on revenues from mining operations of $129.9 million (2015: $116.6 million).

Key revenue metrics for the 30 June 2016 half-year and preceding 2015 half-year were as follows:

	6 months to 30 June 2016	6 months to 30 June 2015
Iron Ore Pellet Sales (dmt)	1,414,551	1,187,634
Iron Ore Concentrate Sales (dmt)	41	81
Iron Ore Chip Sales (dmt)	51,587	65,475
TOTAL Iron Ore Product Sales (dmt)	1,466,179	1,253,190
Average Realised Product Price (US$/t FOB Port Latta)*	$63.73	$73.22
Average Realised Exchange Rate (AUD:USD)	$0.7380	$0.7871
Average Realised Product Price (A$/t FOB Port Latta)*	$86.35	$93.03

*In 2016, a portion of sales were made on CFR terms whereby the Group incurred shipping expenses to transport the shipments to the discharge ports. The above FOB Port Latta unit prices realised reflect prices net of shipping expenses. All 2015 sales were made on FOB terms.

The sales for the half-year ended 30 June 2016 totalled 1,466,179 tonnes of high quality, low impurity iron ore products (2015: 1,253,190 tonnes) reflecting

The average pellet price received during the half-year was US$63.73 per tonne of product sold (FOB Port Latta) (2015: US$73.22 per tonne). Despite continued volatility and uncertainty as to the future direction of iron ore prices, the market continues to recognise the quality value in use premium for high quality, low impurity iron ore products sold by Grange.

Grange will continue to deliver into secured term offtake agreements for all products for 2016 and the majority production of 2017.

Key production metrics for the 30 June 2016 half-year and preceding 2015 half-year were as follows:

	6 months to 30 June 2016	6 months to 30 June 2015
Total BCM Mined	5,367,566	7,794,628
Total Ore BCM	532,003	1,127,249
Concentrate Produced (t)	1,225,578	1,297,832
Weight Recovery (%)	40.6	48.1
Pellets Produced (t)	1,160,042	1,253,090
Pellet Stockpile (t)	175,753	216,887
(A$/tonne Product Produced)1	$75.10	$78.73

products without allowance for mine development, deferred stripping and stockpile movements, and does not include royalties, depreciation and amortisation costs.

3

GRANGE RESOURCES LIMITED ABN 80 009 132 405 INTERIM FINANCIAL REPORT

Grange operations achieved over 448 days lost time injury free as mining continued in South Deposit and North Pit.

Mining operations focused on mining ore from South Deposit and pre-stripping material in the next cutback of North Pit. South Deposit is delivering high quality feed for processing and the cutback in North Pit continues to develop access to the main ore zone for ore supply later in the year. Some remediation work was also required in the cutback to support the wall, causing some delays in bulk mining. Studies are being conducted on short term designs to improve access and working areas to increase movement rates. Severe weather conditions in the second quarter caused flooding in the region and impacted movement in the pits.

Annual planned maintenance was also completed safely in the first half of 2016 with the completion of the common equipment shutdown. This impacted production in the concentrator and pellet plant. A set of plant trials were completed for the fluxed pellet project to improve pellet quality. The analysis of the trials is in progress.

Development continues on construction of the filter face for the South Deposit Tails Storage Facility (SDTSF). This is a significant project for operations at Savage River as the SDTSF will provide sufficient tailings storage capacity for the remaining life of the mine and facilitate the treatment of legacy environmental issues from previous operations at Savage River.

Statement of Financial Position

increased during the half-year period to $278.4 million (31 December 2015 $245.5 million)

principally as a result of the following:

• Increase in cash and cash equivalents of $12.4 million arising from increase in sales revenue;

• Increased assets under construction of $16.6 million due to the construction of the South Deposit Tailings Storage Facility (SDTSF);

• Capitalisation of deferred stripping costs from North Pit has increased capitalised mine development by $21.2 million; and

• Offset by decreased inventory stockpiles of $30.0 million arising from lower stockpiles and decrease in production costs.

Statement of Cash Flows

Net cash flows from operating activities

Net cash inflows from operating activities for the period were $56.1 million (June 2015 inflow $46.2 million) which reflects higher iron ore product sales and income tax payments of $8.4 million (June 2015 $9.2 million).

Net cash flows from investing activities

Net cash outflows from investing activities for the period were $40.3 million (June 2015 outflow $66.9 million) and principally related to significant expenditure of $19.7 million (June 2015 $30.9 million) on property, plant and equipment mainly for the SDTSF, whilst mine development of $21.2 million (June 2015 $26.0 million) reduced as the business finalises ore production from South Pit.

Net cash flows from financing activities

Net cash outflows from financing activities for the period were $2.5 million (June 2015 inflow $2.3 million) and principally related to repayments of the secured loan facility for the rebuild of the 789 Trucks.

4

GRANGE RESOURCES LIMITED ABN 80 009 132 405 INTERIM FINANCIAL REPORT

Dividends

Dividends provided for or paid during the half-year:

Unfranked final dividend for the year ended 31 December 2014 1.0 cents per share	30 June 2016 31 December 2015 - 11,575
	- 11,575

These dividends were declared NIL conduit foreign income.

Since the end of the half-year the directors have recommended the payment of a fully franked dividend of $5.8 million (2015: $Nil). This represents an ordinary interim franked dividend of 0.5 cents per share for the period ended 30 June 2016 (2015: Nil cents per share). The interim dividend was declared NIL conduit foreign income and will be paid on 27 September 2016.

Rounding of amounts

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments 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

dependence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6.

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

==> picture [99 x 37] intentionally omitted <==

Michelle Li Chairperson Perth Western Australia 24 August 2016

5

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

Auditor’s Independence Declaration

As lead auditor for the review of Grange Resources Limited for the half-year ended 30 June 2016, 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 [51 x 55] intentionally omitted <==

John O'Donoghue Partner PricewaterhouseCoopers

Melbourne 24 August 2016

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.

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2016

Notes	Six months to 30 June 2016 Six months to 30 June 2015
Revenues from mining operations 3 Cost of sales 4 Gross profit / (loss) from mining operations Administration expenses Operating profit / (loss) before other income / (expenses) Other income / (expenses) Exploration and evaluation expenditure Impairment of assets 21 Other income / (expenses) 5 Operating profit / (loss) before finance income / (expenses) Finance income 6 Finance expenses 6 Profit / (loss) before tax Income tax (expense) / benefit 7 Profit / (loss) for the period Total comprehensive income / (loss) for the period Profit / (loss) for the period attributable to - Equity holders of Grange Resources Limited Total comprehensive income / (loss) 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)	129,892 116,579 (96,504) (72,877)
	33,388 43,702 (1,951) (1,360)
	31,437 42,342 (609) (862) - (161,557) 3,166 28
	33,994 (120,049) 1,209 5,969 (1,827) (578)
	33,376 (114,658) (532) 34,866
	32,844 (79,792)
	32,844 (79,792)
	32,844 (79,792)
	32,844 (79,792)
	32,844 (79,792)
	32,844 (79,792)
	2.84 (6.90) 2.84 (6.89)

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

7

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

Notes	30 June 2016 31 December 2015
ASSETS Current assets Cash and cash equivalents 8 Term deposits Trade and other receivables 9 Inventories 10 Current tax assets Derivative financial instruments 22 Total current assets Non-current assets Receivables 11 Property, plant and equipment 12 Mine properties and development 13 Deferred tax assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables 14 Borrowings 15 Current tax liabilities Provisions 16 Total current liabilities	107,113 94,698 43,317 43,732 11,210 9,913 49,093 79,124 3,724 - 4,840 2,055
	219,297 229,522
	7,884 7,848 100,159 83,066 39,309 16,554 4,304 4,304
	151,656 111,772
	370,953 341,294
	16,922 16,072 4,817 4,990 - 4,119 10,815 12,309
	32,554 37,490

8

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

Notes	30 June 2016 31 December 2015
Non-current liabilities Borrowings 17 Provisions 18 Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity 19 Accumulated losses Total equity	5,059 7,393 54,959 50,874
	60,018 58,267
	92,572 95,757
	278,381 245,537
	331,513 331,513 (53,132) (85,976)
	278,381 245,537

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

9

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2016

Notes	Contributed equity Reserves Retained earnings TOTAL
Balance at 1 January 2016 Profit for the period Total comprehensive income for the period Transactions with owners in their capacity as owners Dividends paid 20 Balance at 30 June 2016 Balance at 1 January 2015 Loss for the period Total comprehensive loss for the period Transactions with owners in their capacity as owners Dividends paid 20 Employee share options and rights Balance at 30 June 2015	331,513 - (85,976) 245,537 - - 32,844 32,844
	- - 32,844 32,844
	- - - -
	- - - -
	331,513 - (53,132) 278,381
	331,373 415 203,413 535,201 - - (79,792) (79,792)
	- - (79,792) (79,792)
	- - (11,573) (11,573) 140 (120) - 20
	140 (120) (11,573) (11,553)
	331,513 295 112,048 443,856

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

10

GRANGE RESOURCES LIMITED ABN 80 009 132 405 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE 2016

Notes	Six months to 30 June 2016 Six months to 30 June 2015 $'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) Insurance recovery relating to fire Interest received Interest paid Income taxes paid Net cash inflow / (outflow) from operating activities Cash flows from investing activities Payments for property, plant and equipment Proceeds on sale of property, plant and equipment Payments for mine properties and development Proceeds from / (payments for) term and security deposits Net cash inflow / (outflow) from investing activities Cash flows from financing activities Finance lease payments Proceeds from borrowings Repayment of borrowings 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 period Net foreign exchange differences Cash and cash equivalents at end of the period 8	127,497 121,993 (64,263) (67,954)
	63,234 54,039 345 - 1,254 1,475 (406) (90) (8,375) (9,200)
	56,052 46,224
	(19,696) (30,860) 15 - (21,179) (26,002) 545 (9,996)
	(40,315) (66,858)
	(173) (179) - 14,008 (2,335) - - (11,573)
	(2,508) 2,256
	13,229 (18,378) 94,698 138,650 (814) 4,318
	107,113 124,590

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

11

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation for the interim financial report

This condensed consolidated interim financial report for the half-year reporting period ended 30 June 2016 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

The condensed consolidated 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 year ended 31 December 2015 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 .

(b) Accounting policies

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new and amended standards as set out below:

(i) New accounting standards and interpretations

A number of new or amended standards became applicable for the current reporting period. However, the Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.

• (ii) Impact of accounting standards and interpretations issued but not yet applied by the entity

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2016 out below.

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

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

(ii) AASB 15 Revenue from Contracts with Customers Mandatory Effective Date of AASB 15 (effective from 1 January 2018)

AASB 15 Revenue from Contracts with Customers will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts. The standard is not applicable until 1 January 2018. The Company is assessing the impact of the new rules on t and intends to apply the standard from 1 January 2018.

(iii) IFRS 16 Leases (effective from 1 January 2019)

IFRS 16 Leases will replace the current guidance in IAS 17 and require all operating leases to be recognised on the balance sheet. The Group intends to apply the standard from 1 January 2019. Application of this standard is not expected to have a significant impact on the Group.

(c) Critical accounting estimates and judgements

The preparation of this interim financial report requires the use of estimates and judgements. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within this interim financial report are consistent with those of the previous financial year as disclosed in the Annual Report for the year ended 31 December 2015.

Details in relation to the Gr 6 are disclosed in Note 21 of this interim financial report.

12

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

NOTE 2. SEGMENT INFORMATION

Operating segments are based on the reports reviewed by the Chief Executive Officer, who is the chief operating decision maker in terms of allocating resources and assessing performance.

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

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

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

Segment revenues from sales to external customers Australia China Japan Korea Malaysia TOTAL	Six months to 30 June 2016 Six months to 30 June 2015 12,931 8,771 97,007 84,691 13,595 254 6,359 22,858 - 5
	129,892 116,579

Segment assets and capital are allocated based on where the assets are located. The consolidated assets of the Group were predominately located in Australia as at 30 June 2015 and 30 June 2016. The total costs incurred during the current and comparative periods to acquire segment assets were also predominately incurred in Australia.

NOTE 3. REVENUE

OTE 3. REVENUE
From mining operations Sales of iron ore	Six months to 30 June 2016 Six months to 30 June 2015 129,892 116,579
	129,892 116,579

13

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

NOTE 4. COST OF SALES

Mining costs Production costs Shipping expenses Government royalties Depreciation and amortisation expense Property, plant and equipment - Amounts capitalised during the period Mine properties and development - Amortisation expense Deferred stripping - Amounts capitalised during the period - Amortisation expense Changes in inventories Foreign exchange (gain) / loss NOTE 5. OTHER INCOME / (EXPENSES) Write off of assets destroyed by fire Less insurance recovery Net gain incurred in relation to fire Gain on financial instruments 22 Net gain on the disposal of property, plant and equipment Other income NOTE 6. FINANCE INCOME / (EXPENSES) Finance income Interest income received or receivable - Other entities Exchange gains on foreign currency deposits / borrowings (net)		Six months to 30 June 2016 Six months to 30 June 2015 42,746 58,165 49,400 43,378 3,291 - 4,811 4,173 2,594 4,345 (17,188) (19,058) 1,522 23,109 (21,179) (26,006) 371 12,703 29,082 (25,325) 1,054 (2,607)
		96,504 72,877
		Six months to 30 June 2016 Six months to 30 June 2015 (4) - 345 -
		341 - 2,784 - 15 2 26 26
		3,166 28
		Six months to 30 June 2016 Six months to 30 June 2015 1,209 1,519 - 4,450 1,209 5,969

14

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

NOTE 6. FINANCE INCOME / (EXPENSES) (continued)

Finance expenses Interest charges paid or payable - Other entities Finance lease interest charges paid or payable Exchange loss on foreign currency deposits / borrowings (net) Provisions: unwinding of discount - Decommissioning and restoration NOTE 7. INCOME TAX EXPENSE / (BENEFIT) (a) Income tax expense / (benefit) Current tax Deferred tax Deferred income tax (benefit) / expense included in income tax expense / (benefit) 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 / (loss) from continuing operations before income tax expense Tax at the Australian tax rate of 30% (June 2015: 30%) Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: Sundry items Movement in deferred tax asset not recognized Adjustments to current tax of prior periods Income tax expense / (benefit) (c) Unrecognised taxation losses Unused taxation losses for which no deferred tax asset has been recognised Potential tax benefit @ 30%		Six months to 30 June 2016 Six months to 30 June 2015 (388) (74) (17) (18) (814) - (608) (486) (1,827) (578) Six months to 30 June 2016 Six months to 30 June 2015 532 9,233 - (44,099)
		532 (34,866)
		- (43,980) - (119)
		- (44,099)
		33,376 (114,658)
		10,013 (34,398) 1 (2)
		10,014 (34,400) (9,176) - (306) (466)
		532 (34,866)
		54,104 54,104
		16,231 16,231

All unused taxation losses were incurred by Australian entities that are part of the tax consolidated group. The tax losses as disclosed above have not been recognised as they are not presently available for use. Their

15

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

NOTE 7. INCOME TAX EXPENSE / BENEFIT (continued)

(d) Unrecognised temporary differences Unrecognised temporary differences at the beginning of the period Temporary differences not recognised during the period Unrecognised temporary differences at the end of the period Unrecognised deferred tax asset relating to the above temporary differences NOTE 8. CASH AND CASH EQUIVALENTS Cash at bank and in hand Short term deposits NOTE 9. TRADE AND OTHER RECEIVABLES Trade receivables Security deposits 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	Six months to 30 June 2016 Six months to 30 June 2015 437,550 - (30,587) - 406,963 122,089 - 30 June 2016 31 December 2015 67,113 49,698 40,000 45,000
	107,113 94,698
	30 June 2016 31 December 2015 8,055 4,234 271 402 1,919 3,391 965 1,886
	11,210 9,913
	30 June 2016 31 December 2015 23,791 24,740 5,371 21,209 7,114 7,141 12,817 26,034
	49,093 79,124
	30 June 2016 31 December 2015 7,884 7,848
	7,884 7,848

16

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

NOTE 12. PROPERTY, PLANT AND EQUIPMENT

	Land and buildings Plant and equipment Computer equipment Total
At 1 January 2016 At cost Accumulated depreciation and impairment Net book amount Period ended 30 June 2016 Opening net book amount Additions Disposals Depreciation charge Closing net book amount At 30 June 2016 At cost Accumulated depreciation and impairment Net book amount	44,491 389,863 7,815 442,169 (37,091) (314,323) (7,689) (359,103)
	7,400 75,540 126 83,066
	7,400 75,540 126 83,066 175 19,521 - 19,696 - (9) - (9) (114) (2,425) (55) (2,594)
	7,461 92,627 71 100,159
	44,666 409,290 7,815 461,771 (37,205) (316,663) (7,744) (361,612)
	7,461 92,627 71 100,159

(a) Assets under construction

The carrying amounts of the assets disclosed above includes expenditures of $85.6 million (December 2015: $69.0 million) recognized in relation to property, plant and equipment which is in the course of construction.

NOTE 13. MINE PROPERTIES AND DEVELOPMENT

Mine properties and development (net book amount) Deferred stripping costs (net book amount) Total mine properties and development (a) Movements in mine properties and development: Opening net book amount Amortisation expense Changes in rehabilitation estimate Closing net book amount (b) Movements in deferred stripping costs: Opening net book amount Current period expenditure capitalised Amortisation expense Closing net book amount	30 June 2016 31 December 2015 7,057 5,110 32,252 11,444
	39,309 16,554
	5,110 (1,522) 3,469 7,057 11,444 21,179 (371) 32,252

17

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

NOTE 14. TRADE AND OTHER PAYABLES

Trade payables and accruals Other payables	30 June 2016 31 December 2015 16,578 15,204 344 868 16,922 16,072

NOTE 15. BORROWINGS (CURRENT)

Secured Finance lease liabilities (1) Other borrowings (2)	30 June 2016 31 December 2015 148 321 4,669 4,669 4,817 4,990

(1) Lease liabilities are secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.

(2) Other borrowings represent a multi-advance secured loan facility secured by a charge over the 789 Dump Trucks default.

NOTE 16. PROVISIONS (CURRENT)

Employee benefits Decommissioning and restoration	30 June 2016 31 December 2015 10,239 11,728 576 581
	10,815 12,309

• (a) Movements in each class of provision during the period, other than employee benefits, are set out below:

Balance at the beginning of the period Payments Transfers from non-current provisions Balance at the end of the period NOTE 17. BORROWINGS (NON-CURRENT) Secured Other borrowings (1)	Decommissioning and restoration 581 (123) 118 576 30 June 2016 31 December 2015 5,059 7,393 5,059 7,393

(1) Other borrowings represent a multi-advance secured loan facility secured by a charge over the 789 Dump Trucks upon default.

18

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

NOTE 18. PROVISIONS (NON-CURRENT)

OTE 18. PROVISIONS (NON-CURRENT)
Employee benefits Decommissioning and restoration	30 June 2016 31 December 2015 4,233 4,245 50,726 46,629
	54,959 50,874

(a) Movements in each class of provision during the period, other than employee benefits, are set out below:

		Decommissioning	Decommissioning
		and	restoration
Balance at the beginning of the period			46,629
Changes in estimate			3,607
Unwinding of discount			608
Transfers to current provisions			(118)
Balance at the end of the period			50,726
OTE 19. CONTRIBUTED EQUITY
	30 June	31 December	30 June	31 December
	2016	2015	2016	2015
	Shares	Shares
Issued and fully paid shares	1,157,338,698	1,157,338,698	331,513	331,513
	1,157,338,698	1,157,338,698	331,513	331,513

NOTE 19. CONTRIBUTED EQUITY

NOTE 20. DIVIDENDS

Dividends provided for or paid during the half-year:

Unfranked final dividend for the year ended 31 December 2014 1.0 cents per share	30 June 2016 31 December 2015 - 11,575
	- 11,575

(a) Ordinary shares

No dividends were paid or proposed for the year ended 31 December 2015 (2014: 1.0 cent per share was paid on 2 April 2015).

(b) Dividends not recognised at the end of the reporting period

Since the end of the half-year the directors have recommended the payment of a fully franked dividend of $5.8 million (2015: $Nil). This represents an ordinary interim franked dividend of 0.5 cents per share for the period ended 30 June 2016 (2015: Nil cents per share). The interim dividend was declared NIL conduit foreign income and will be paid on 27 September 2016.

19

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

NOTE 21. IMPAIRMENT OF NON-CURRENT ASSETS

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. The Group considers both internal and external factors when reviewing for indicators of impairment. The Group continues to improve its production, reduce its cash operating costs and exceeded its revenue target. Although the changes to external or internal factors since its last assessment that may indicate further impairment to its book value of net assets. An impairment of $123.1 million was recognised at 31 December 2015.

The fair value of the Savage River Cash Generating Unit (CGU) is based on a number of significant assumptions as disclosed in the Annual Report for the year ended 31 December 2015. A key assumption is the capital project t to attract a higher premium. Although the Group has deferred the commencement of fluxed pellet production to 2018 compared to the anticipated 2017 start in its last impairment assessment, the impact on the fair value has been more than offset by the improvement in the iron ore price forecast assumption. Should the Group be unable to realise the anticipated higher premium in the future, or should any of the other reasonably possible unfavourable changes described in Note 26 (iv) of the Annual Report for the year ended 31 December 2015 occur, a further impairment would be likely.

NOTE 22. FAIR VALUE MEASUREMENT

Financial instruments are recognised and measured at fair value in the financial statements.

Derivatives

Derivatives are only used for economic hedging purposes and not as speculative investments. The Group has the following derivative financial instruments:

ollowing derivative financial instruments:
Electricity Fixed Forwards Diesel Commodity Swaps Derivative financial instruments	30 June 2016 31 December 2015 4,496 3,035 344 (980)
	4,840 2,055

(i) Classification of derivatives

Derivatives are classified as held for trading. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. Changes in the fair value of derivative instruments are recognised immediately in profit or loss and are included in other income or other expenses. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

In accordance with AASB 13, Fair Value Measurement , the Group did not measure any liabilities at fair value on a non-recurring basis as at 30 June 2016 and did not transfer any fair value amounts between the fair value hierarchy during the period ended 30 June 2016.

Due to their short-term nature, the carrying amounts of current receivables and current payables are assumed to approximate their fair value.

NOTE 23. CONTINGENT LIABILITIES

There were no significant changes to the contingent liabilities previously disclosed in the Annual Report for the year ended 31 December 2015.

NOTE 24. EVENTS OCCURRING AFTER THE REPORTING PERIOD

Refer to note 20 for dividends recommended since the end of the reporting period. No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect:

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

20

• (a) the financial statements and notes set out on pages 7 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 30 June 2016 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.

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

==> picture [100 x 36] intentionally omitted <==

Michelle Li Chairperson Perth Western Australia 24 August 2016

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 (the company), which comprises the condensed consolidated statement of financial position as at 30 June 2016, the condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated 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 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 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 Australian 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 half-year 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 2016 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.

==> 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 2016 and of its performance for the half-year ended on that date;

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

==> picture [127 x 39] intentionally omitted <==

PricewaterhouseCoopers

John O'Donoghue Partner

Melbourne 24 August 2016

23