ANNUAL
REPORT
2018
AUSTRALIA’S MOST EXPERIENCED
MAGNETITE PRODUCER
Grange Resources Limited » 2018 Annual Report
GRANGE RESOURCES LIMITED
BOARD OF DIRECTORS
SHARE REGISTRY
Michelle Li
Non-executive Chairperson
Yan Jia
Non-executive Deputy Chairperson
Daniel Tenardi
Non-executive Director
Michael Dontschuk
Non-executive Director
David Woodall
Non-executive Director – Appointed 1 March 2019
Honglin Zhao
Chief Executive Officer / Managing Director
COMPANY SECRETARY
Piers Lewis
REGISTERED OFFICE
Grange Resources Limited ABN 80 009 132 405
34a Alexander Street, BURNIE, TAS 7320
Telephone: + 61 (3) 6430 0222
Email: GRR.Info@grangeresources.com.au
Advance Share Registry Services Limited
110 Stirling Highway, Nedlands, WA 6009
AUDITORS
PricewaterhouseCoopers
Freshwater Place
2 Southbank Boulevard, SOUTHBANK, VIC 3006
STOCK EXCHANGE
Grange Resources Limited is listed on the ASX Limited
(ASX Code: GRR) and the ‘OTC’ Markets in Berlin, Munich,
Stuttgart and Frankfurt in Germany (Code: WKN. 917447)
WEBSITE
www.grangeresources.com.au
CONTENTS
About Grange
2018 overview
2019 priorities
About the Grange business
Chairperson’s & chief executive officer’s review
Outlook
Operating and financial review
Corporate governance statement
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2018 Annual Report » Grange Resources Limited
at Savage River, at an annual production rate of 10 million
tonnes of premium magnetite concentrate. The Company is
continuing to evaluate options related to a strategic share of
the Company’s interest in the project.
OUR VISION
We will produce high quality steel making raw materials
economically and effectively. Our operations will be efficient,
flexible, and stakeholder focused.
OUR VALUES
At Grange we ALL will...
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Work safely
Lead and act with fairness, integrity, trust and respect
Be responsible and accountable for our actions
Utilise our resources efficiently and effectively
Engage with stakeholders and proactively manage our
impact on their environment
Work together openly and transparently
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• Promote an environment in which our people can develop
and prosper
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ABOUT GRANGE
OUR BUSINESS
Grange Resources Limited (Grange or the Company), ASX
Code: GRR, is Australia’s most experienced magnetite
producer with over 50 years of mining and production from
its Savage River mine and has a projected mine life beyond
2030.
Grange’s operations consist principally of owning and
operating the Savage River integrated iron ore mining and
pellet production business located in the north-west region
of Tasmania. The Savage River magnetite iron ore mine is
a long-life mining asset. At Port Latta, on the north-west
coast of Tasmania, Grange owns a downstream pellet plant
and port facility producing over 2 million tonnes of premium
quality iron ore pellets annually, with plans to increase
annual production. Grange has a combination of spot and
contracted sales arrangements in place to deliver its pellets
to customers throughout the Asia Pacific region.
In addition, Grange is a majority joint venture partner in a
major magnetite development project at Southdown, near
Albany in Western Australia. The Southdown magnetite
project, once developed, is expected to have the capacity
to supply over four times the amount of iron ore produced
FINANCIAL OVERVIEW
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Total iron ore product sales of 2.37 million tonnes (2017:
1.90 million tonnes).
Continued cost control disciplines, although weather
impacted lower production rate resulted in a unit C1 cash
operating cost of $98.10 per tonne (2017: $99.17).
Grange’s high quality, low impurity iron ore products
attracted a high premium with average product prices of
$149.76 per tonne (2017: $127.20) (FOB Port Latta).
Weaker AUD:USD exchange rates have supported AUD
revenues.
Delivered profit after tax of $112.9 million (2017: profit after
tax of $60.7 million), on revenues from mining operations
of $368.2 million (2017: $247.90 million).
Continued focus on selling cargoes to targeted customers
and balancing opportunities in the spot market.
Sustained strong cash and cash equivalents position at
$204.5 million (2017: $168.0 million).
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Grange Resources Limited » 2018 Annual Report
2018 OVERVIEW
The concentrate and pellet plants delivered at high production
levels throughout the first half of 2018. This was a great
achievement as Grange marked over 50 years operation of
the Savage River Project. Production rates were impacted
in the second half of the year due to wet weather conditions
and near record rainfall. Access to ore supply was delayed
as additional dewatering infrastructure was installed. This
was rectified in Q4, supporting the full year production profile
as planned.
OPERATIONAL OVERVIEW
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Achieved over 650 days Lost Time Injury free at the end
of 2018.
Supported full year production despite high rainfall and
flooding hampering mining activity.
Mining movements increased in Q4 after successful
dewatering from the North Pit. Access to main ore zone
restored.
Waste stripping continued on the west wall of North Pit,
with ore accessed from stages under the east wall.
South Deposit Tailings Storage Facility
completed and successfully commissioned.
Cost control disciplines maintained to ensure sustainable
operating costs.
Preserved balance sheet strength with disciplined
operational planning and execution enabling internal
funding of critical mine re-development.
(SDTSF)
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2019 PRIORITIES
Grange is Australia’s proven, safe, reliable, long life producer
of magnetite iron ore and premium quality pellets. Grange is
committed to the local community of North West Tasmania
and makes a significant contribution to the state economy.
2019 PRIORITIES
Last year, the Board defined some key areas of focus to
underpin the development of Grange’s business. The three
main areas cover: maximising the value of our mineral assets
and ensuring a stronger iron ore business; seeking a strategic
partner to develop the Southdown magnetite project; and to
generate, conserve and actively manage our cash reserve for
future mine investment. Grange’s business and operational
planning is directed to deliver into these core strategies.
MAXIMISING THE VALUE OF OUR
MINERAL ASSETS
North Pit is the main source of ore for 2019 and Grange will
continue to invest in stripping the west wall to deliver high
grade ore. For longer term asset development, the focus will
be on the completion of the exploration decline below North
Pit. This will allow further exploration drilling and support
the pre-feasibility study to inform a decision on potential
underground operation. The feasibility study for Centre
Pit is also seeking to support the realisation of additional
resources to reduce risk for the future production profile.
This will alleviate the reliance on North Pit as a sole source
of ore. These resources will feed into the development of the
optimised Life of Mine Plan with a view to maximise recovery
of the existing mineral resource at Savage River.
2018 Annual Report » Grange Resources Limited
DEVELOPMENT OF SOUTHDOWN
PROJECT
With increasing interest in the market, Grange continues
to investigate alternate development models to develop
the world class magnetite deposit at Southdown in WA.
Assessment of different production profiles, development
options and implementation planning is a priority for this year.
The project team will continue to ensure that all tenements,
permits and project assets remain in good standing.
OPTIMISING CAPITAL ALLOCATION
Conservation of cash and build-up of cash reserves is an
important part of Grange’s strategy to enable future mine
investment. The potential underground development, future
pit expansion at Savage River, process improvements at
the Port Latta pelletising facility and the development of
Southdown will require significant capital. In order to position
the business to develop these projects Grange will actively
manage the reserve of cash to enhance returns within
conservative risk parameters, whilst ensuring sufficient
liquidity is available for expected drawdowns. The investment
in the joint venture of Grange ROC Property is also targeted
to maximise returns on capital allocation and is seeking a
balance of feasible property development projects to deliver
short to medium term returns.
Maximise Mineral
Asset Value
Invest in mine development
Complete the exploration decline
below North Pit
Complete the pre-feasibility study
into the potential for underground
mining
Complete Centre Pit feasibility study
Optimise the Life of Mine Plan
Strategic Partnership
Southdown Project
Secure new strategic partner(s) to
develop the project
Continue to investigate alternate
development models to develop the
project
Maintain project in good standing
Optimise Capital Allocation
Plan
Continue to conserve cash and
build up our reserves for future mine
investment and working capital
needs such as may be required for
significant projects
Invest in process infrastructure
Actively manage our reserve of
cash to enhance returns
Support our joint venture in Grange
ROC Property
OTHER AREAS OF MANAGEMENT FOCUS TO SUSTAIN AND ENHANCE
CURRENT OPERATIONS INCLUDE:
• Upgrade our “real time” operational scheduling and management processes to improve daily productivity
• Maintain cost control disciplines and increase efficiencies
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Invest in critical infrastructure at Port Latta to ensure long term sustainability of our assets
• Pursue opportunities to add value to our product and improve and upgrade our pellet making assets
• Deliver into committed sales contracts
• Continue to develop our Mine-to-Market quality management processes
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Grange Resources Limited » 2018 Annual Report
ABOUT THE GRANGE BUSINESS
MAGNETITE
Magnetite is a naturally occurring mineral commonly refined
into an iron ore concentrate and used for steel production.
Iron ore makes up about five per cent of the Earth’s crust
and most commonly occurs in the form of haematite and
magnetite. Most of the magnetite mined is used to make
concentrate for pellet feed or pellets which are used to make
steel.
The Australian iron ore industry has traditionally been based
on the mining, production and export of haematite ores,
also referred to as ‘Direct Shipping Ore’ (DSO). The majority
of Australian iron ore production comes from DSO. While
magnetite is an emerging industry in Australia, globally it
accounts for approximately 50 per cent of iron ore production.
Smelting magnetite to iron involves agglomeration or
‘clumping together’ of the magnetite concentrate, and
thermal treatment to produce haematite iron ore pellets.
The pellets can be used directly in a blast furnace or at direct
reduction iron-making plants.
Magnetite concentrate has internal thermal energy, meaning
less energy is required as the magnetite is converted into
haematite pellets. This results in lower carbon dioxide
emissions. The blast furnace chemically reduces iron oxide
into liquid iron called ‘hot metal’. The iron ore and reducing
agents (coke, coal and limestone) are combined. Pre-heated
air is blown at the bottom of the combination for up to eight
hours. The final product is a liquid which is drained, and
eventually refined to produce steel.
Mining magnetite ore is a high volume business. It is capital
intensive and requires significant downstream processing
infrastructure including a beneficiation plant, a pellet plant
and port facilities. Magnetite products command a value
premium above haematite ore products such as fines
and lump. This premium is derived on two fronts, through
additional iron content, and a quality premium.
The growth in Chinese demand and its understanding of
the use of magnetite-based iron ore products has seen a
significant change in the value accrued to both magnetite
concentrate and pellets, and the methodology used for
determining that value.
As magnetite concentrate is a refined product, it usually
has higher iron content and lower impurities. This can have
beneficial quality and environmental outcomes for the steel
maker.
Until April 2010, iron ore prices were traditionally decided in
closed-door negotiations between the small handful of “key”
miners and steel makers which dominated both spot and
contract markets. Traditionally, the first agreement on price
reached between these two groups set a benchmark price
that was followed by the rest of the industry for a 12-month
period.
This benchmark system broke down in 2010 with pricing
moving to short term index-based mechanisms. Given that
most other commodities already have a mature market-
based pricing system, it was natural for iron ore to follow
suit. This has seen magnetite product pricing change so that
it is now based on transparent market-based index prices,
with premiums being paid for increased iron ore content and
pellet manufacture.
Grange Resources Limited (Grange Resources) owns and
operates Australia’s oldest integrated iron ore mining and
pellet production business located in the northwest region of
Tasmania. The Savage River magnetite iron ore mine, 100km
southwest of the city of Burnie, is a long-life mining asset set
to continue operation to beyond 2030. At Port Latta, 70kms
northwest of Burnie, is Grange Resources’ wholly owned
pellet plant and port facility producing more than 2 million
tonnes of premium quality iron ore pellets annually with
plans to increase annual production. Grange holds long term
supply contracts for 1 million tonnes of its annual production
and offers the balance of its production to market via a spot
sales tendering and contracting process. All products are
shipped to major steel producers in the Asia Pacific region.
As well as this profitable magnetite operation, Grange
Resources has the majority interest in the Southdown
magnetite mining project near Albany in Western Australia.
Grange is actively seeking an equity partner to take a
strategic share of the Company’s interest in the project.
Grange Resources is Australia’s most experienced magnetite
producer. Grange is a proven and reliable commercial
producer combining both mining and pellet production
expertise.
1.4 Products from Tasmanian Operations
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Developing
Fluxed Pellet
Iron Ore Pellet
~65% Fe
Magnetite Concentrate
~67% Fe
Direct Shipping Lump
~63% Fe
Lower
Direct Shipping
Fines
~57% - ~ 61% Fe
Price
Slide 1
Higher
May 2016
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2018 Annual Report » Grange Resources Limited
CHAIRPERSON’S & CHIEF EXECUTIVE OFFICER’S REVIEW
Dear Shareholders,
improvements
Our strong performance in FY2018 was achieved thanks to
the hard work and dedication of our people. Your Company
has delivered strong financial results and has announced
dividends of 2 cents per share fully franked. These results
were achieved through a focused strategy of disciplined
capital expenditure with
in operating
performance and safety, supported by a continued focus
on productivity and high iron ore price. Our balance sheet
remains strong. We have been reviewing our strategy against
changes in the external environment. We have considered
various scenarios, analysed the risks and opportunities we
are facing and optimised our operations with a number of
long-term improvement projects. We believe that the Board’s
approach to strategy and risk management positions us to
manage and respond to changes and capture opportunities
to grow shareholder value over time. We maintain a
relentless focus on the health and safety of our people and
the communities in which we operate.
2018 REVIEW
The 2018 iron ore market remained volatile, and the iron ore
price continued an upward trend from the end of 2017 into
the early part of 2018, with a significant drop-off occurring
in March. The price then recovered throughout the second
half of the year. However, high grade pellet premiums have
remained strong over much of the year, as healthy steel
margins and China’s anti-pollution drive pushes buyers
towards higher quality iron ore. Compared to other base
metals, iron ore has not been majorly impacted by the trade
war between USA and China. The high-grade market has
shown resilience in its performance in 2018, where both its
premium and its price have held fairly steady in the face
of rapidly increasing interest rates and a US and China
trade war. The shift towards larger and more efficient steel
producers with an emphasis on producing higher-quality
steel products meant increased demand for higher quality
iron ore inputs. Also, environmental controls became a
more permanent feature of the policy landscape. The rise in
premiums comes as China cuts pollution, aiding demand for
direct iron charge products, and Brazil’s Samarco remains
idle. The iron ore pellet premium peaked at a record high of
over $US80/dmt in September 2018.
Mining activity in the first six months of the year was strong
despite wet weather conditions. The high level of rainfall
increased in July and August and impacted mining activities
in the main ore zone area. While this affected production rates
through October, mining rates improved on the successful
completion of the dewatering project and access to the main
ore zone was restored in Q4 and supported full year planned
production. Waste stripping continued on the west wall of
North Pit, with ore accessed from stages under the east wall.
The planned common equipment shut was brought forward
to align mill downtime and key maintenance activities.
The concentrate and pellet plants delivered at high
production levels throughout the first half of 2018. Production
rates were impacted in the second half of the year due to
wet weather conditions impacting ore supply. The scheduled
maintenance works at the pellet plant were completed safely
and efficiently. This continues to be a great achievement for
our 50-year-old production plants and demonstrates the
value of the efforts and resources invested in sustaining
maintenance.
South Deposit Tailings Storage Facility (SDTSF) has been
completed and successfully commissioned in November
2018. This is the culmination of many years of design,
construction and approvals. The SDTSF will now provide
tails storage for the next phase of the mine life. The raise
of the Main Creek Tails Dam (MCTD) wall to final height
commenced and will progress over the next 2 years to meet
the requirements for closure of the MCTD.
North pit underground development pre-feasibility study is
advancing, a number of deep holes have been completed.
A tender process is in progress to appoint a contractor to
construct the decline. The feasibility study for Centre Pit is
also continuing.
We delivered profit after tax of $112.9 million, on revenues
from mining operations of $368.2 million with improved iron
ore price and record pellet premium with average product
prices of $149.76 per tonne (FOB Port Latta). Total iron ore
product sales of 2.37 million tonnes. Continued cost control
disciplines, although lower production rate resulted in an
increase in unit C1 cash operating costs to $98.10 per tonne.
Our sustained strong cash equivalents position is at $204.5
million.
We continued to maintain our unrelenting and disciplined
management of personal safety in operations. Our company’s
operations achieved over 650 days Lost Time Injury Free in
2018.
We continued to seek a buyer for an equity interest in the
Southdown joint venture project. The on-going strategy is to
maintain the currency and good standing of all tenements,
permits and project assets.
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Grange Resources Limited » 2018 Annual Report
OUTLOOK
China’s environmental policies are a key uncertainty
around the iron ore price. Having undergone supply-side
structural reforms in previous years, the driving factors
of the steel market in China will shift from the supply side
to the demand side. An investment of 2.3 trillion RMB in
2019 by the Chinese government in transportation and
infrastructure, such as intercity transportation, logistics,
municipal administration, disaster prevention, civil and
general aviation, and strengthening the construction of a
new generation of information infrastructure, should see the
demand for making steel increase.
Following the strong iron ore market throughout most of 2018,
Chinese iron ore imports have started on a positive note for
2019 as well. Iron ore prices soared to a near-two-year high in
February after the second dam disaster at Brazil’s Vale. Vale
announced its decommissioning of dams similar to the one
involved in the fatal accident. The full impact of production
cuts to the iron ore market is not certain. But it is clear that
there will not only be a shortage of high-quality iron ore, but
a shortage of pellets. Currently with high iron ore price, most
Chinese steel mills are only making a small profit and some
are already suffering losses. The premium of pellet has been
decreasing as a result of increasing the use of low-grade
ore in steel mills in order to cut costs. However, the demand
for high grade pellets from Japan and Korea is on the rise
in short to medium term, as tight supply from Brazil and the
pellet premium is expected to remain high for these markets.
In the near term, the significant disruption to Brazilian supply
and the uncertainties associated with it will likely keep iron
ore prices rising and volatile.
Despite the uncertain conditions that we currently face, the long-
term outlook for our sector remains positive. Our strong balance
sheet remains a fundamental. Our strength is demonstrated by
our solid cash flow. We continue to implement measures to
both preserve the balance sheet strength and align our capital
allocation framework with the cyclical nature of the industry. Our
priorities for capital are to maintain safe and stable operations
and a strong balance sheet through the cycle. The strength of
our unique position enables us to take advantage of market
conditions through the cycle.
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Our prime goal is to remain competitive in a frequently
changing iron ore market, where iron ore price is currently
under pressure. The focus for the management team is to
maintain a disciplined approach in managing its day to day
activities while at the same time challenging itself to find
better ways to do business.
The company’s strategic focus is to generate shareholder
value by safely producing high quality iron ore products
from its Savage River and Port Latta operations in Tasmania
and continuing to assess the feasibility of a major iron ore
development project at Southdown, near Albany in Western
Australia.
The Board and the management team have a positive
outlook for the pellet market and are proactively exploring
opportunities for innovation, improvement and productivity
growth. The on-going development of the iron ore market
and the issues in China for increasing restrictions on
environmental noncompliance provide a unique opportunity
for us. We are very confident of our competitiveness to
supply a sustained high quality, low impurity iron ore pellet
product. We strive to deliver value to our loyal employees
and shareholders.
Thank you
On behalf of Grange’s Board, we would like to thank all of our
employees for their dedication and hard work over the past
year. We are proud of our excellent culture, capability and
resilience to best place us for a prosperous future. And to our
shareholders, thank you for your continued support.
Michelle Li
Chairman
Honglin Zhao
Chief Executive Officer
Michelle Li
Chairperson
Honglin Zhao
Chief Executive Officer
2018 Annual Report » Grange Resources Limited
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Grange Resources Limited » 2018 Annual Report
OPERATING AND FINANCIAL REVIEW
PROPERTY DEVELOPMENT
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Grange ROC Property has commenced construction and
pre-sales of Lumley Court and Malvern Road. The units
sold have achieved the budgeted sale price, supporting
our confidence in the market for the entity’s business
model and quality projects. The projects are planned to
be fully constructed and sold in 2019.
SAFETY PERFORMANCE
Grange operations achieved over 650 consecutive days Lost
Time Injury free by year end 2018. Focus on lead indicators,
hazard identification and risk management has helped us
sustain the current long running lost time injury free period.
Unfortunately, there was a slight increase in disabling injuries
and medical treatment injuries in 2018, however all persons
involved were given meaningful work for their respective
periods of incapacity and actively contributed to their return
to work programs.
During the year there was a substantial increase in manning
at our worksites with numerous major projects meaning
additional contractors and short term employees were
trained to work safely on our sites.
KEY HIGHLIGHTS
• Full year production supported despite high rainfall and
flooding hampering mining activity.
• Waste stripping continued on the west wall of North Pit,
•
•
with ore accessed from stages under the east wall.
Delivered profit after tax of $112.9 million (2017: profit after
tax of $60.7 million), on revenues from mining operations
of $368.2 million (2017: $247.9 million).
Grange’s high quality, low impurity iron ore products
attracted a high premium with average product prices of
$149.76 per tonne (2017: $127.20) (FOB Port Latta)
•
Total iron ore product sales of 2.37 million tonnes
(2017: 1.90 million tonnes)
Weaker AUD:USD exchange rates have supported
AUD revenues
Continued focus on selling cargoes to targeted
customers and balancing opportunities in the spot
market
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•
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Continued cost control disciplines resulted in unit C1
cash operating costs of $98.10 per tonne (2017: $99.17).
Sustained strong cash and cash equivalents position at
$204.5 million (2017: $168.0 million).
South Deposit Tailings Storage Facility
completed and successfully commissioned.
(SDTSF)
Lag Indicators
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2018 Annual Report » Grange Resources Limited
FULL YEAR RESULT
Grange recorded a statutory profit after tax of $112.9 million for the year ended 31 December 2018 (2017: $60.7 million).
Key revenue metrics for the year ended 31 December 2018 and the preceding 2017 year were as follows:
Iron Ore Pellet Sales (dmt)
Iron Ore Concentrate Sales (dmt)
Iron Ore Chip Sales (dmt)
Total Iron Ore Product Sales (dmt)
Average Realised Product Price (US$/t FOB Port Latta)
Average Realised Exchange Rate (AUD:USD)
Average Realised Product Price (A$/t FOB Port Latta)
2018
2,258,487
10,042
105,151
2017
1,804,108
134
91,841
2,373,680
1,896,083
111.92
0.7473
149.76
97.84
0.7692
127.20
Total sales for the year ended 31 December 2018 was 2.37 million tonnes of high quality, low impurity iron ore products
(2017: 1.90 million tonnes) and reflects sustained production from maintaining access to high grade ore.
The average iron ore product price received during the year was $149.76 per tonne of product sold (FOB Port Latta) (2017:
$127.20 per tonne). The increase compared to prior year was consistent with the increase in the pellet premium price which
reached record levels before declining to more sustainable levels. This was driven by structural reform in the Chinese steel
industry that resulted in greater demand for higher grade iron ore.
Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales
from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 40.6% of total sales for
2018 (2017: 47.6%).
Key operating metrics for the year ended 31 December 2018 and the preceding 2017 year were as follows:
Total BCM Mined
Total Ore BCM
Concentrate Produced (t)
Weight Recovery (%)
Pellets Produced (t)
Pellet Stockpile (t)
‘C1’ Operating Cost (A$/t Product Produced)(1)
2018
14,730,697
1,050,067
2,275,718
53.2
2017
12,461,515
1,193,821
1,959,604
49.5
2,185,627
1,895,180
189,351
98.10
262,212
99.17
(1)
Note: “C1” costs are the cash costs associated with producing iron ore products without allowance for mine development, deferred stripping and stockpile movements, and
also excludes royalties, sustaining capital, depreciation and amortisation costs.
Mining activity in the first six months of the year were strong despite wet weather conditions. The high level of rainfall
increased in July and August and impacted mining activities in the main ore zone area. While this affected production rates
through October, mining rates improved on the successful completion of the dewatering project and access to the main ore
zone restored in Q4 and supported full year planned production. Waste stripping continued on the west wall of North Pit,
with ore accessed from stages under the east wall.
The planned common equipment shut was brought forward to align mill downtime and key maintenance activities.
The concentrate and pellet plants delivered at high production levels throughout the first half in 2018. Production rates were
impacted in the second half of the year due to wet weather conditions impacting ore supply. The scheduled maintenance
works at the pellet plant were completed safely and efficiently. This continues to be a great achievement for our 50-year-old
production plants and demonstrates the value of the efforts and resources invested in sustaining maintenance.
South Deposit Tailings Storage Facility (SDTSF) has been completed and successfully commissioned during the year. The
final steps in the commissioning of pipe line for tails deposition were completed in Q4 and the SDTSF was commissioned in
November. This is the culmination of many years of design, construction and approvals. The SDTSF will now provide tails
storage for the next phase of the mine life.
The raise of the Main Creek Tails Dam (MCTD) wall to final height commenced and will progress over the next 2 years to
provide adequate water cover along with construction of the final spillway for closure of the MCTD over the next 2 years.
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Grange Resources Limited » 2018 Annual Report
NORTH PIT UNDERGROUND
DEVELOPMENT PROJECT
Phase 1 of the diamond drilling program to investigate the
access of the ore body in North Pit through underground
mining was undertaken. Nine holes were drilled for an
advance of approximately 9,192m. Laboratory testing of
diamond core for geophysical and assay information is
progressing. Phase 2 of the drilling has commenced with
1,980m completed to date. This program comprises nine
holes and focusses on the northern part of the ore body at
depth.
Preliminary works on
the exploration decline have
commenced with 2 diamond holes for an advance of 350m.
These were drilled along the portal alignment to provide
structural information into the east wall. A tender process is
in progress to appoint a contractor to construct the decline.
CENTRE PIT FEASIBILITY STUDY
Work continues on the feasibility study for Centre Pit.
Additional diamond holes are in progress in the north eastern
area of the potential pit to further define structural domains
for modelling and geotechnical slope analysis.
FINANCIAL POSITION
Grange’s net assets increased during the year to $477.8
million (31 December 2017: $387.6 million) principally as a
result of the following:
• A profit after tax of $112.9 million
• A final 2017 dividend payment of $11.6 million
• An interim 2018 dividend payment of $11.6 million
The Group’s market capitalisation as at 31 March 2019 is
$318.27 million.
STATEMENT OF CASH FLOWS
Net cash flows from operating activities
Net cash inflows from operating activities for the year were
$167.4 million (2017: inflows $71.2 million) and reflect higher
iron ore product sales and a decrease in unit operating
costs.
Net cash flows from investing activities
Net cash outflows from investing activities for the period were
$110.1 million (2017: outflows $51.6 million) and principally
related to expenditures for mine properties and development
$54.8 million and property, plant and equipment $35.3 million.
Net cash flows from financing activities
Net cash outflows from financing activities for the period
were $27.6 million (2017 outflow: $10.2 million) and
principally related to the payment of 2017 final dividend
($11.6 million) and 2018 interim dividend ($11.6 million).
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EXPLORATION AND EVALUATION
The resource definition during the last year ending Dec
31, 2018 focussed on the mining lease areas around
North Pit and Centre Pit. The objectives of the programs
were to confirm continuity of the magnetite mineralisation
at depth below North Pit and to improve confidence in the
resource model for Centre Pit. This has included RC and
Diamond holes drilled both into the mineralisation and out
into the surrounding host rocks.
The Mineral Resource stands at 545.2 million tonnes at
46.7% DTR. This significant increase of over 170MT from
the previous statement in 2017 is driven by the deep holes
drilled as part of the underground pre-feasibility study.
Ore Reserves are 94.0MT @ 49.8%DTR, reflecting mine
production during the year and are based on future open
pit extraction. The increase in Ore Reserve is attributed to
increased confidence of material in the ultimate pit shell.
Resource drilling and estimation on the deposit will
continue in 2019, as part of the pre-feasibility studies. For
details on the Mineral Resource please refer to the ASX
release made on 8 April 2019.
2018 Annual Report » Grange Resources Limited
MINERAL RESOURCES AND ORE
RESERVES STATEMENT - SAVAGE
RIVER OPERATIONS
The following tables show the Mineral Resources and Ore
Reserves for the Savage River operations as at 31 December
2018. The mining of ore throughout the year focussed on high
grade supply from South Deposit blended with ore from North
Pit. The Mineral Resource has significantly increased since
the previous estimate dated 31 December 2017 as a result of
the resource drilling and exploration activity. Ore Reserves
have increased with improved confidence in ore defined within
the ultimate North Pit design. The increase also accounts for
ore mined during 2018.
Mineral Resources and Ore Reserves are categorised in
accordance with the Australasian Code for Exploration
Results, Mineral Resources and Ore Reserves of 2012
(JORC Code, 2012). Estimated Measured and Indicated
Mineral Resources
those Mineral Resources
modified to produce the estimated Ore Reserves. Mineral
Resources which are not included in the Ore Reserves did
not meet the required economic viability hurdle at the time
of last review.
include
Mineral Resources
A summary of the total Mineral Resources for Savage River as at 31 December 2018 is as follows:
Measured
Indicated
Inferred
Total
(1)
Davis Tube Recovery – a measure of recoverable magnetite
As at December 2018
Tonnes (Mt) Grade % DTR (1)
55.6
155.0
As at December 2017
Tonnes (Mt) Grade % DTR (1)
53.8
66.2
231.7
158.5
545.2
45.9
39.2
46.7
153.1
155.1
374.4
49.8
42.5
47.6
11
Grange Resources Limited » 2018 Annual Report
Ore Reserve
A summary of the ore reserve for Savage River as at 31 December 2018 is as follows:
Proved
Probable
Total
As at December 2018
Tonnes (Mt) Grade % DTR (1)
54.0
75.9
As at December 2017
Tonnes (Mt) Grade % DTR (1)
54.2
26.8
18.1
94.0
32.3
49.8
56.6
83.4
51.8
52.5
(1)
Davis Tube Recovery – a measure of recoverable magnetite
A detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 8 April
2019. Grange confirms in reproducing the Mineral Resources and Ore Reserves in this subsequent report, that it is not
aware of any new information or data that materially affects the information included and all the material assumptions and
technical parameters underpinning the estimates in this report continue to apply and have not materially changed.
HEALTH AND SAFETY
Safety Performance
Overview
Grange believe that responsible occupational Health and
Safety with sound environmental and social responsibility
(HSE) practices are integral to an efficient and successful
company. Grange’s OHS & ESR Management Systems
have been integrated to form the “Safety and Environment
Management System” (SEMS) which supports OHS & ESR
policies and defines the required standards to which any
Grange facility must operate.
SEMS is an integral part of the Grange Management System
(GMS), it is well supported by a management plan for 16 of
the major hazards identified in our industry. Of the 16 Major
Hazard Standards, 4 are deemed to be Principal Mining
Hazards as outlined in the Tasmanian Mining Legislation. The
implementation and effective management of SEMS enables
compliance with legislation, reduction of risk, increased
efficiencies and provides the framework for continuous
improvement. SEMS is aligned to ISO 14001 Environmental
& OHSAS 18001 Quality Management Systems and is
applicable to any existing and future national or international
operation. SEMS is now integrated into our Certificate IV
Leadership & Management training competency for our
current and aspiring leaders.
Mission Statement
To drive a continuous improvement culture involving everyone
at Grange Resources. We strive to eliminate injury, loss and
waste, and create positive environmental outcomes adding
value to the communities in which we operate.
This will be achieved through effective adherence to
management systems,
risk management
practices, risk aware culture, demonstrable leadership,
maintaining standards, monitoring performance and looking
after our people.
To achieve superior health and safety performance we believe:
• All injuries and loss events are preventable
• All hazards can be identified and their risks managed
• No task is so important that it cannot be done safely
• Every person is accountable for their own and the safety
integrated
of those around them
Safety performance can always be improved
•
12
The Company is committed to providing a safe place of work
and safe systems of work for all its workers at every site. We
take this commitment seriously and expect those working
for us to share the same level of commitment. We want
our workers, both our own employees and our contractors,
to return home in the same or better condition than when
they came to work. The effectiveness of our systems and
safety management in general is well demonstrated by the
considerable measurable improvements in all safety lag
indicators. Targeted improvements in our lag indicators are
reinforced by a regime of measurable lead indicators to help
reduce risk exposures.
In addition, Grange is committed to ensuring compliance
with legislative requirements for each area of its operations
including meeting or exceeding requirements within:
• Federal & State Work Health & Safety Legislation
• Anti-Discrimination Legislation
Fair Work Australia Legislation
•
Rehabilitation & Workers Compensation Legislation
•
Environmental Legislation
•
Codes of Practice nominated in all Federal and State
•
Legislation
Adopting accepted industry standards in areas where
legislation is deficient;
Mining specific, HSE Legislation as required; and
Environmental licence conditions for existing and new
operations.
•
•
•
Established systems are in place to ensure legislative
requirements are tracked, monitored and corrective actions
implemented for any instances of non-compliance.
in-house
During 2018 we continued our focus on reducing costs
without reducing support services via:
for ERT
•
training again saved
Initiatives
considerable costs for external training providers.
ERT training to meet underground requirements was
undertaken at a local mine in order to significantly reduce
travel and accommodation costs.
Vital underground emergency response equipment was
sourced second hand at around one third of the cost of
new equipment.
Managing the emergency response team size while
•
•
•
increasing our general first aid training coverage has
ensured we have competent people where they are
needed, as demonstrated by our win in the Tasmanian
State Mines Rescue Competition for the third year in a
row.
Taking up the challenges required to obtain Federal and
State government training funds continues to reduce
the outlay for training in leadership and continuous
improvement.
Developing a highwall scaling excavator locally promises
to provide a machine capable of restoring lost berm catch
capacity in the mine, cleaning batters and improving
mining safety.
Participating in the Insurance Underwriters safety audit
has provided initiatives to help reduce insurance costs.
Continued investment in Mental Health and Wellbeing
first aid training for Management and Contact Officers
has helped foster an alert and caring worker relationship.
Focus on gender diversity has promoted the role of women
in our workforce and is supporting greater diversity in our
teams.
Initiating training in “Critical Controls” is improving our
risk management focus and initiatives.
•
•
•
•
•
•
Grange recognises the importance of our contractors’ safety
management systems being aligned with WorkSafe Tasmania
and mine safety regulations as well as being on par with our
own safety standards. To this end we have incorporated and
communicated new OHS & ESR requirements for contractors
into our SEMS.
During 2018 further enhancing our Safety Preventative
Maintenance (PM) work orders in lead indicators, dedicated
Area Inspections covering all areas on site, formalising Task
Observations for management and key personnel as Lead
Indicator Key Performance Indicators (KPI’s). Tracking these
has helped reduce risk exposures across all areas. This
was particularly evident by our continued lost time injury free
status.
Sharing and Learning
Grange adopts a philosophy of continuous learning and
sharing of safety experiences. In addition to its highly
successful on-line induction programs, Grange conducts an
extensive range of on-site safety training activities including
extensive work permit training, energy isolations, site driving
and pit driving permits, simulation training for new operators,
fire warden and extinguisher training as well as refreshers on
occupational first aid and road accident rescue entrapment
release. Grange have also added a very effective online
“Isolations” training package allowing our offsite contract
workforce to learn our systems before coming to site.
During the year Grange continued to work closely and openly
with the Office of the Chief inspector of Mines (OCIM), with
our company providing an outlet to GMIRM (Global Mining
Industry Risk Management) training, a risk management
initiative sponsored by the Chief inspector of Mines.
GMIRM has four levels of Risk Management training G1 for
workers, G2 for Supervisors, G3 for Management and G4 for
Directors and Senior Executives. Grange ran two, week long
2018 Annual Report » Grange Resources Limited
G3 forums and two, 2-day G2 forums both with participants
from other local companies.
The company is actively developing its own G1 compliant
training program and working with University of Queensland
to develop an effective G4 program. We aim to ensure
everyone at Grange has an effective understanding of Risk
Management.
These forums have had a positive impact on the Tasmanian
operations involved and received a very positive response
from the Workplace Inspectorate.
Grange continue to represent Tasmanian Mines on a
Mines Legislation Safety Steering Committee (MSSC) that
is reviewing and enhancing the current Tasmanian Mining
Supplementary Safety Act and Regulations.
Principal Hazard Management Plans and subordinate
standards and procedures were also revised and compiled
to ensure full compliance with the legislative requirements.
These Plans were presented to the Office of the Chief
inspector of Mines (OCIM) and assessed as being the
benchmark for the mining industry and are commonly
referenced by the MSSC.
In addition to training delivered at the operational level,
the company continued to reinforce many site-wide health
and safety programs aimed at improving our employee’s
wellbeing,
including cancer awareness, heart safety
awareness, mental health awareness and in 2018 we added
a Motor Neurone Disease awareness campaign.
During 2018 the company invested in new induction videos
that help deliver the safety messages important to reinforce
our culture and to regularly remind our people of the need to
report safety issues and deficiencies.
13
Grange Resources Limited » 2018 Annual Report
The Company has a fully functional and qualified emergency
response team (“ERT”) providing expert first aid and first
response care to our sites and others in need including road
accidents in the Savage River and Port Latta areas. During
the year a combined Savage River and Port Latta team
competed in and won the Tasmanian Mines Emergency
(TMERC) Emergency Rescue
Rescue Committee
Competition for 2018 in a very competitive event.
Commitment to Social Responsibility
Grange continued with its commitment to social responsibility
engaging with our stakeholders and communities to help us
understand and respond to their interests and concerns. In
addition to regular dialogue with neighbours and communities
close to our operations, the Company continues to host
and support the education sector through tours, school
curriculum information, industry links, a graduate program
as well as work opportunities at its operations.
Grange is actively involved in the community in which we
operate and regularly support local events throughout the
region with focus on local schools seeking help with student
work skill development. Grange staff actively participated in
the local school’s student development programs including
mock interviews, conducting site visits and the “careers on
wheels” program.
In 2018 our management and workers have again
participated in 2018 Business Clean Up Australia Day,
covering the long and winding 38 km road between Waratah
and the Savage River Township, collecting roadside litter and
rubbish to enhance our environment, an effort noted by our
local newspaper.
ENVIRONMENTAL
Legislative Approval
Grange obtained environmental and planning approval in
1996 and 1997 allowing it to operate under the Tasmanian
Land Use Planning and Approvals Act 1993 (LUPA), the
Tasmanian Environmental Management and Pollution
Control Act 1994 (EMPCA), the Tasmanian Goldamere
Pty Ltd (Agreement) Act 1996 (Goldamere Act) and the
Tasmanian Mineral Resources Development Act 1995. This
approval covers an expected mine and processing life using
open-cut mining at Savage River, gangue removal and
concentrating at Savage River and pelletising at Port Latta.
During 2014 Grange received relevant approvals for the
South Deposit Tailings Storage Facility.
14
Goldamere Act
The Goldamere Act overrides all other Tasmanian legislation
with respect to Grange’s operations. The Goldamere Act limits
Grange’s liability for remediation of contamination, under
Tasmanian law, to damage caused by Grange’s operations,
and indemnifies Grange for certain environmental liabilities
arising from past operations. Where pollution is caused or
might be caused by previous operations and that pollution
may be impacting on Grange’s operations or discharges,
Grange
that pollution. Grange
is required to operate to Best Practice Environmental
Management (BPEM).
indemnified against
is
Planning Approvals
Grange obtained planning approval subject to a series
of environmental permit conditions on 29 January 1997.
Planning approval was issued by the Waratah Wynyard
Council for Savage River and by the Circular Head Council for
Port Latta. The approvals were conditional on the provision
of an Environmental Management Plan (EMP) incorporating
a Rehabilitation Plan (ERP) prior to the commencement
of operations. Various other studies were also required.
Grange received planning approvals from the Waratah
Wynyard Council for the South Deposit Tailings Storage
Facility (SDTSF) during 2014, construction commenced in
July 2014 and operation commenced in Q4 2018.
Environmental Management Plans
The EMP incorporating the ERP and study results were
approved by the (then) Department of Environment Parks,
Heritage and the Arts and operations commenced in October
1997. The latest revision of the approval documents occurred on
6 October 2000 when Environmental Protection Notices (EPN)
248/2 and 302/2 were issued to replace the environmental
permit conditions for Savage River and Port Latta respectively.
Approvals are required from the Department of Primary
Industries, Parks, Water and the Environment (DPIPWE)
and relevant Councils for major infrastructure developments
and operational expansions and changes. These approvals
are in the form of approved EPN’s and or amendments and
reflect changing operational circumstances, an increasing
knowledge base and include approvals designed to extend
operations, amend management plans and provide for
changes to waste rock dumping plans and any proposed
treatment facilities. Such amendments are enacted by the
issue of EPN’s or Permit Conditions Environmental (PCE)’s.
An amendment to the EMP was approved for an extension of
mine and pelletising operations in early 2007 to approve the
Mine Life Extension Plan.
EMP and ERP reviews are submitted on a 3-yearly basis.
Revised EMPs reflect BPEM and current mine planning
and focus on closure requirements and rehabilitation. The
development of significant new projects such as a new pit
will require additional planning approval and at a minimum
an EMP amendment approval followed by issuance of an
EPN from the EPA.
The Tasmanian EPA issued EPN 10006/1 enabling the
construction of the Exploration Decline for the North Pit
Underground Project in November 2018.
2018 Annual Report » Grange Resources Limited
Goldamere Agreement
Savage River Rehabilitation Project (‘SRRP’)
The Goldamere Agreement (which forms part of the
Goldamere Act) provides a framework for Grange to repay
the Tasmanian Government for the purchase of the mine
through remediation works. A significant variation to the
Goldamere Agreement was signed on the 19 December
2014 which extends the Agreement until 24 December
2034. This variation also removed a significant number of
redundant conditions. The amended Goldamere Agreement
provides a framework for Grange to co-manage the Savage
River Rehabilitation Project (SRRP) and carry out contracted
works in lieu of paying the purchase price of the operation
to the Government. The agreement also allows Grange to
integrate its rehabilitation obligations with those of the State
under the SRRP.
Grange representatives meet with representatives from
DPIPWE on a regular basis to develop and implement
remediation works at Savage River. Grange has contracted
with the SRRP for works including construction, management
and development of waste rock dump covers, acid pipelines
and other remediation projects. The SRRP objective is to
capture and treat 65% of the site’s copper load to remove
the possibility of an acutely toxic aquatic environment. The
scope of works to meet this objective has been completed
and costed to feasibility level.
A strategic plan outlining the works required to achieve
the objective and repay Grange’s purchase price debt has
been approved by the Tasmanian Environmental Protection
Authority and is being implemented by the SRRP Committee.
This plan was updated in 2012 to reflect the long-term risks
and Grange’s latest mining plan.
15
Grange Resources Limited » 2018 Annual Report
Principal Environmental Issues
Waste Rock, Tailings and Water Management – Savage
River
• Water, tailings and waste rock management at Savage River,
including: development of waste rock dumps which exclude
oxygen to minimise the formation of acid mine drainage and
utilisation of these dumps to form seals on old waste rock
dumps; subaqueous tailings deposition and maintenance
of saturated tailings; providing a centralised water treatment
system using a disused pit to eliminate turbidity from mine
runoff. Appropriate management and monitoring systems
are in place to ensure regulatory compliance in these areas.
In 2013 Grange developed a Development and
Environmental Management Plan (DPEMP) for the South
Deposit Tails Storage Facility (SDTSF). Due to the size
and nature of the tails storage facility, the proposal required
assessment under LUPA (1993), the State EMPC Act
(1994) and the Commonwealth EPBC Act (1999), as the
proposal has the potential to impact on matters of national
environmental significance (Tasmanian Devil and Spotted
Quoll).
•
• The DPEMP was submitted to the Waratah-Wynyard
Council in May 2013 for assessment, the DPEMP was
publicly advertised through May and June with one
submission received in relation to the development. A
workshop in July with the Environmental Protection Authority
(EPA) highlighted areas that needed further clarification.
Toward the end of July the EPA formally requested a
Supplementary submission, this submission provided
an opportunity to address the issues raised in the public
submission. Grange spent a number of months liaising
with both the EPA and the Department of Environment in
Canberra (DoE) addressing the Supplementary criteria. In
early December, 2013 the EPA and the DoE were satisfied
that all the required information had been provided which
allowed the approvals process to recommence.
• Grange received final council approval under LUPA (1993)
on 24 March 2014 for the construction of the South Deposit
Tailings Storage Facility. A Permit Conditions Environment
(PCE) was issued, outlining the conditions that must be met
during construction and operation of the dam.
• Grange received approval from the federal Environment
Minister on 24 April 2014, due to the potential loss of habitat
for the Tasmanian Devil and the Spotted Quoll, Grange is
required to provide an offset for unavoidable impacts. This
offset is in the form of a donation to the Save the Devil
Program to a value of $160,000. Grange received further
conditions from the federal approval under the EPBC Act
(1999).
• Construction of the dam, including the downstream waste
rock dump commenced in early July after a number of
the approval conditions had been met. These included
approvals of a Devil and Quoll Management Plan, a
Waste Rock Management Plan and a Water Quality and
Remediation Plan. Grange also fulfilled its requirements to
establish training and induction packages for threatened
species and instigated an EPBC species register for
sightings and incidents involving EPBC listed species. The
EPBC Register and other relevant documents are available
on the Grange Resources Website. By December the waste
16
rock dump was well established and work was commencing
on the consolidated section of the dam.
• The SDTSF incorporates the ability to mix and co-treat
legacy acid rock drainage (ARD) from the Old Tailings
Dam and B-Dump using the excess alkalinity in tailings
should Grange and the Crown agree to do so. The potential
transfer of the ARD seeps from the Old Tailings Dam will
also improve the long term integrity of the Main Creek Tails
Dam (MCTD). The co-treatment of the ARD seeps within
the SDTSF would improve water quality in Main Creek and
the Savage River. Regardless of whether the ARD seeps
are treated in the SDTSF, remediation of Main Creek will be
further enhanced by the innovative design of the storage
facility that will allow water to flow through alkaline rock
prior to discharge downstream. The first stage involving the
installation of pipework was completed in 2014, with the
remaining OTD Collection Bund and associated intake and
discharge works commenced in 2017. Final completion of
the project is expected in Q2 2019.
• Grange requested a variation to conditions 1 and 11 of the
EPBC approval of the SDTSF to allow for a slightly larger
pit perimeter and other minor operational changes. These
variations were approved on the 28th July 2015. No further
offset was required for these variations.
• Grange progressed design and construction work for the
Main Creek Tails Dam closure during 2018. It is expected
that the closure process will take approximately two years.
Air Emissions Reduction Program – Port Latta
• Grange continued to work on quality and measurement
systems to improve performance of the Port Latta
operations especially with regard to air emissions.
In particular, the focus is on the stable operation of
furnaces.
Rehabilitation Plans
Grange continues to plan for closure and departure on
completion of the mining plan. Principal issues in respect
of closure include waste rock dump maintenance, tailings
management, future use of infrastructure and a five-year
monitoring and maintenance plan.
SOUTHDOWN MAGNETITE PROJECT
The Southdown Project ultimately aims to export 10 million
tonnes per year of premium magnetite concentrate to Asian
steel markets. The Southdown Joint Venture (SDJV) is a
joint venture between Grange Resources Limited (70%)
and SRT Australia Pty Ltd (SRTA) (30%). SRTA is jointly
owned by Sojitz Corporation, a Japanese global trading
company, and Kobe Steel, one of Japan’s largest steel
producers.
2018 Project Overview
• The Project continued on reduced expenditure while
Grange seeks an equity partner for a strategic share in
the Project
• Existing tenure and approvals have been maintained
•
Project security has been enhanced by continuing to
build land tenure and access, including progressing
•
negotiations with the State and landowners for access to
key infrastructure areas.
Progressed studies relating to project engineering and
further environmental permitting, including:
•
Progression of the commonwealth environmental
approval for mine, desalination and pipelines.
Groundwater modelling which confirmed deep water-
bearing palaeo channels have some potential to
contribute to construction water supply.
Ongoing hydrogeological baseline studies.
•
•
The joint venture partners continue to monitor all ongoing
project requirements to ensure that the current status of
the feasibility studies is such that the project can be fully
recommenced as soon as an appropriate opportunity arises.
The on-going strategy is to maintain the currency and good
standing of all tenements, permits and project assets. This
approach will be continued into 2019, and at least until
Grange is able to secure an equity partner for a strategic
share of the Company’s interest in the project or until a
valid alternate development model can be successfully
formulated.
2018 Annual Report » Grange Resources Limited
•
2019 Project Priorities
• Continue to investigate alternate development models
which may see the Southdown Project move into
construction and operation
Continue search for new equity partner to take a strategic
share of the Company’s interest in the Project
Maintain reduced expenditure
Maintain all tenements, permits and project assets in
good order
Progress environmental approvals and permits
Grange has the in-house skills, systems, capability and
discipline to deliver Southdown’s potential when the time
is right
•
•
•
•
Project Overview
Geology
The Southdown magnetite deposit is a long, thin, near-
surface, continuous ore body. It extends over 12 kilometres,
with depths varying from 50 metres in the west to 480 metres
in the east. The deposit has been drilled and evaluated since
its initial discovery in 1983, including an extensive program
of resource drilling during 2011 for the feasibility study.
17
Grange Resources Limited » 2018 Annual Report
Conventional Mining
Targeted concentrate production rates require a material
movement in the mine of up to 132 Mt per annum by
conventional drill, blast, load and haul mining methods. The
final proposed pit is six kilometres long, one kilometre wide
and about 370 metres deep. The mining operation will draw
heavily on Grange’s existing capability as Australia’s most
experienced commercial producer of magnetite concentrate,
to assist with start-up and ongoing operations.
Ore Crushing and Concentration
The project plan envisages Southdown ore being processed
to increase the iron content from around 25% to 69%.
Extensive metallurgical test work including pilot plant trials
have been conducted since 2004.
The process includes crushing, grinding, classification and
magnetic separation. The concentrate is further upgraded
using hydro separation to remove fine silica, and flotation to
remove sulphur impurities.
kilometre approach channel will enable 200,000 tonne cape
size ships to use the port. Whilst minimal dust generation
is expected because of the high moisture content of the
concentrate, the shed will be fully enclosed, under negative
pressure and fitted with dust extraction equipment.
The development would more than treble Albany’s current
port capacity from approximately 4 Mt per annum to 14
Mt per annum. The design has been developed in close
consultation with the Southern Ports Authority, Port of Albany
(formerly Albany Port Authority) and in line with the Public
Environmental Review approved in November 2010.
A new source of water and power supply
The plan also envisages that a seawater desalination plant
would be constructed 25 km from the mine to supply the plant
with 11 GL per annum of water. Power for the mine site would
be provided by a new 278 kilometre 330kv transmission line
from Muja to Southdown, to be built by Western Power.
Transporting the Concentrate Slurry 110 km to the Port
Operations Planning
Final magnetite concentrate will be thickened and transported
through a 110 km pipeline to the Port of Albany, where it will be
filtered and stored for loading onto cape size ships. A second
pipeline will return the filtered water back to the mine site so it
can be used again in the process. Both pipelines will be buried.
Increasing Albany’s Port Capacity
Subject to a decision to proceed, a concentrate export facility
would be built on 7 hectares of reclaimed land at Albany Port,
immediately east of the existing wood chip terminal site. The
plan incorporates a filtration plant, storage shed, new berth
and ship loading facility. Deepening and widening a 9.5
The Southdown operation will be modelled on Grange’s
existing Savage River operation in Tasmania operating on a
24/7 basis for 365 days per year.
Construction Planning & Schedule
Subject to a decision to proceed, the project will engage
an experienced construction management company to
coordinate a series of fixed price contracts to minimise
risk and the number of interfaces. The Southdown Joint
Venture continues
the community,
including traditional owners of the land, to ensure a safe and
environmentally responsible project.
to work alongside
MINERAL RESOURCES AND ORE RESERVES – SOUTHDOWN PROJECT
Mineral Resources
The Mineral Resource estimate for the Southdown Project as at 31 December 2018 is as follows:
Measured
Indicated
Inferred
Total
(1)
Davis Tube Recovery – a measure of recoverable magnetite
Mineral Resources are reported above a cut-off of 10% DTR
Ore Reserves
Tonnes (Mt)
423.0
As at December 2018
Grade %DTR (1)
37.8
86.8
747.1
1,256.9
38.7
30.9
33.7
The current Ore Reserve for the Southdown Project as at 31 December 2018 is based on the pit design and mining schedule
developed during the Feasibility Study and includes modifying metallurgical factors and plant recovery.
Proven
Probable
Total
An additional 24.4 Mt of Inferred Resources is included within the designed pit.
ROM (Mt)
384.6
3.1
387.7
DTR* (%)
35.6
41.7
35.6
18
2018 Annual Report » Grange Resources Limited
A detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 28 February
2014. Grange confirms in reproducing the Mineral Resources and Ore Reserves in this subsequent report, that it is not
aware of any new information or data that materially affects the information included, and all the material assumptions and
technical parameters underpinning the estimates in this report continue to apply and have not materially changed. Grange
confirms that all environmental approvals and tenure have been maintained in compliance and terms extended as required
to retain currency.
CORPORATE GOVERNANCE STATEMENT
Grange is committed to creating and building sustainable value for shareholders and protecting stakeholder interests. The
Company recognises that high standards of corporate governance are essential to achieving that objective.
The Board has the responsibility for ensuring Grange is properly managed so as to protect and enhance shareholders’
interests in a manner that is consistent with the Company’s responsibility to meet its obligations to all stakeholders. For this
reason, the Board is committed to applying appropriate standards of corporate governance across the organisation.
As part of its commitment to enhancing its corporate governance, and as a listed company, the Board has adopted relevant
practices which are consistent with the Australian Securities Exchange (“ASX”) Corporate Governance Principles. The 2018
corporate governance statement was approved by the Board on 27 February 2019.
Details of the Company’s corporate governance practices are included in the Corporate Governance Statement and Appendix
4G which have been announced on the ASX and can be located on our Company’s website www.grangeresources.com.au in the
Corporate Governance and Policies section in the About Us area. This facilitates transparency about Grange’s corporate
governance practices and assists shareholders and other stakeholders to make informed judgments.
Grange considers that its governance practices comply with the majority of the ASX Best Practice Recommendations.
ASX BEST PRACTICE RECOMMENDATIONS
The following table lists the departures from the ASX Best Practice Recommendations applicable to the Company as at
the date of its financial year end, being 31 December 2018. Where the Company considers that it is divergent from these
recommendations, or that it is not practical to comply, there is an explanation of the Company’s reasons set out in the
following table.
‘Recommendation’ Ref
(‘Principle No’ Ref followed by
Recommendation Ref)
7.3(a)
Departure
Explanation
A separate internal audit
function has not been formed.
An Internal Audit function has not been established
as per
recommendation 7.3(a), The Board
monitors the need for an internal audit function
having regard to the size, geographic location and
complexity of the Company’s operations.
internal
review of
periodically
The Company’s Management
undertakes an
financial
systems and processes and where systems are
considered to require improvement these systems
are developed. The Board also considers external
the
reviews of specific areas and monitors
implementation of system improvements.
19
Grange Resources Limited » 2018 Annual Report
AUSTRALIA’S MOST EXPERIENCED MAGNETITE PRODUCER
Grange Resources Limited
ABN 80 009 132 405
and Controlled Entities
FINANCIAL REPORT
For the Year Ended 31 December 2018
Contents
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
21
36
37
Directors’ Declaration
Independent Auditor’s Report
72
73
20
PB
2018 Annual Report « Grange Resources Limited
DIRECTORS’ REPORT
The Directors present their report on the consolidated entity (the “Group”) consisting of Grange Resources Limited (“Grange”
or “the Company”) and the entities it controlled at the end of, or during, the year ended 31 December 2018.
The following persons were directors of the Company during the whole year and up to the date of this report:
Michelle Li, PhD, GAICD
Independent Non-executive Chairperson, Member of the Audit and Risk Committee, Member of
the Remuneration and Nomination Committee
Dr Li was appointed as non-executive Chairperson on 29 October 2013. Dr Li is a metallurgical
engineer with over 30 years’ experience in the mining sector. Dr Li’s experience includes senior
roles at CITIC Pacific, Rio Tinto and Iluka Resources, as well as a senior project role on the Grange
Resources Southdown project.
Dr Li has a PhD from the University of Queensland and is currently a non-executive Director of
Ardiden Limited and was previously a non-executive Director of Orion Metals Limited and Sherwin
Iron Limited.
Yan Jia, GAICD
Non-executive Deputy Chairperson and Member of the Remuneration and Nomination Committee
Ms Jia is currently the Director of the Administration Department with the Jiangsu Shagang
International Trade Co Ltd, a subsidiary of Jiangsu Shagang Group, China’s largest private steel
company. Ms Jia has over ten years’ experience of managerial, human resources, intellectual
property and commercial experience in the steel industry and bulk raw material transaction sector.
Honglin Zhao
Executive Director, Chief Executive Officer
Mr Zhao is a former Director of Shagang International (Australia) Pty Ltd, former Director and
General Manager of Shagang (Australia) Pty Ltd, and former Director of Jiangsu Shagang Group,
ultimate shareholder of Shagang International Holdings Limited and China’s largest private steel
company.
Mr Zhao has over 40 years’ experience in the industry and was previously the Commander of
Project Development Headquarters with Shagang. Mr Zhao has extensive project management and
implementation experience and expertise.
Daniel Tenardi
Independent Non-executive Director and Chairperson of the Remuneration and Nomination
Committee and member of Audit and Risk Committee.
Mr Tenardi is an experienced mining executive with over 40 years’ experience in the resources
industry across a range of commodities including iron ore, gold, bauxite, and copper. He has a
wealth of knowledge in managing bulk ore operations and has extensive international networks.
Mr Tenardi was the former CEO of Ngarda Civil & Mining and has also held senior executive and
operational roles at CITIC Pacific, Alcoa, Roche Mining and Rio Tinto. He was the Managing Director
of Bauxite Resources, and is a non-executive Director of Australia Minerals & Mining Group Ltd.
Michael Dontschuk BSc(Hons), FFTP, GAICD
Independent Non-executive Director and Chairperson of the Audit and Risk Committee
Mr Dontschuk is a finance professional with over 35 years’ experience in investment, finance,
treasury and financial risk management. He currently is a professional NED and sits on a number
of company boards including Eticore, Public Trustee (Tasmania), Motor Accidents Insurance Board
(Tasmania) and Australia Ratings.
Previously Mr Dontschuk has been Group Treasurer of Grange Resources, Group Treasurer of ANZ
Bank, Managing Director of Treasury Corporation Victoria, President and Director of the Finance
and Treasury Association of Australia and has worked extensively in corporate financial advisory
and investment banking including with Oakvale Capital and Bankers Trust.
21
PB
Grange Resources Limited » 2018 Annual Report
Company Secretary
Mr Piers Lewis, BComm, CA, AGIA
Mr Lewis has more than 20 years’ global corporate experience and is currently the Company
Secretary for ASX listed companies Cycliq Group Limited and Ultima United Limited. Mr Lewis
also serves as Chairman of Digital Wine Ventures Limited and eSense-Lab Ltd and on the Board
of Cycliq Group Limited.
In 2001 Mr Lewis qualified as a Chartered Accountant with Deloitte (Perth). He has extensive and
diverse financial and corporate experience from previous senior management roles with Credit
Suisse (London), Mizuho International and NAB Capital. Mr Lewis is also a Chartered Company
Secretary.
22
PB
2018 Annual Report « Grange Resources Limited
PRINCIPAL ACTIVITIES
During the period, the principal continuing activities of the Group consisted of:
•
•
the mining, processing and sale of iron ore; and
the ongoing exploration, evaluation and development of mineral resources.
Dividends
Dividends paid to members during the financial year were as follows:
Fully franked interim dividend for half year ended 30 June 2018 - 1.0 cent per
share
Fully franked final dividend for the year ended 31 December 2017 - 1.0 cent per
share
Fully franked final dividend for the year ended 31 December 2016 - 0.5 cent per
share
2018
$’000
11,574
11,574
-
Total dividends paid
23,148
2017
$’000
-
-
5,787
5,787
Since the end of the financial year the directors have recommended the payment of a 1.0 cent final dividend of $11.6
million. This represents a total of $23.1 million (2.0 cents per share) fully franked dividend for the year-end 31 December
2018. The final dividend was declared NIL conduit foreign income and will be paid on 29 March 2019.
OPERATING AND FINANCIAL REVIEW
PROPERTY DEVELOPMENT
Grange ROC Property has commenced construction and
pre-sales of Lumley Court and Malvern Road. The units
sold have achieved the budgeted sale price, supporting our
confidence in the market for the entity’s business model
and quality projects. The projects are planned to be fully
constructed and sold in 2019.
SAFETY PERFORMANCE
A focus on safety has been maintained across the business
with over 650 days Lost Time Injury Free achieved.
Key Highlights
MINING OPERATIONS
• Full year production supported despite high rainfall and
flooding hampering mining activity.
• Waste stripping continued on the west wall of North Pit,
with ore accessed from stages under the east wall.
• Delivered profit after tax of $112.9 million (2017: profit
after tax of $60.7 million), on revenues from mining
operations of $368.2 million (2017: $247.9 million).
• Grange’s high quality, low impurity iron ore products
attracted a high premium with average product prices of
$149.76 per tonne (2017: $127.20) (FOB Port Latta)
• Total iron ore product sales of 2.37 million tonnes
(2017: 1.90 million tonnes)
• Weaker AUD:USD exchange rates have supported
AUD revenues
• Continued focus on selling cargoes to targeted
customers and balancing opportunities in the spot
market
• Continued cost control disciplines resulted in unit C1
cash operating costs of $98.10 per tonne (2017: $99.17).
• Sustained strong cash and cash equivalents position at
$204.5 million (2017: $168.0 million).
• South Deposit Tailings Storage Facility
completed and successfully commissioned.
(SDTSF)
23
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
Key revenue metrics for the year ended 31 December 2018 and the preceding
2017 year:
Iron Ore Pellet Sales (dmt)
Iron Ore Concentrate Sales (dmt)
Iron Ore Chip Sales (dmt)
Total Iron Ore Product Sales (dmt)
Average Realised Product Price (US$/t FOB Port Latta)
Average Realised Exchange Rate (AUD:USD)
Average Realised Product Price (A$/t FOB Port Latta)
2018
2,258,487
10,042
105,151
2017
1,804,108
134
91,841
2,373,680
1,896,083
part of the ore body at depth.
Significant Changes in State of Affairs
111.92
0.7473
149.76
97.84
0.7692
127.20
Preliminary works on the exploration decline have commenced
There was no significant change in the state of affairs of the
with 2 diamond holes for an advance of 350m. These were
Group that occurred during the year ended 31 December 2018.
drilled along the portal alignment to provide structural information
Commentary on the overall state of affairs of the Group is set out
into the east wall. A tender process is in progress to appoint a
in the Operating and Financial Review.
North Pit Underground Development Project
Phase 1 of the diamond drilling program to investigate the
access of the ore body in North Pit through underground mining
was undertaken. Nine holes were drilled for an advance of
approximately 9,192m. Laboratory testing of diamond core for
geophysical and assay information is progressing. Phase 2 of
the drilling has commenced with 1,980m completed to date.
This program comprises nine holes and focuses on the northern
related to expenditures for mine properties and development
$54.8 million and property, plant and equipment $35.3 million.
Net cash flows from financing activities
Net cash outflows from financing activities for the period were
$27.6 million (2017 outflow: $10.2 million) and principally related
to the payment of 2017 final dividend ($11.6 million) and 2018
interim dividend ($11.6 million).
Total sales for the year ended 31 December 2018 was 2.37 million tonnes of high quality, low impurity iron ore products
(2017: 1.90 million tonnes) and reflects sustained production from maintaining access to high grade ore.
The average iron ore product price received during the year was $149.76 per tonne of product sold (FOB Port Latta) (2017:
$127.20 per tonne). The increase compared to prior year was consistent with the increase in the pellet premium price which
reached record levels before declining to more sustainable levels. This was driven by structural reform in the Chinese steel
industry that resulted in greater demand for higher grade iron ore.
Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales
from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 40.6% of total sales for
2018 (2017: 47.6%).
Key operating metrics for the year ended 31 December 2018 and the preceding
2017 year:
Total BCM Mined
Total Ore BCM
Concentrate Produced (t)
Weight Recovery (%)
Pellets Produced (t)
Pellet Stockpile (t)
‘C1’ Operating Cost (A$/t Product Produced)(1)
2018
14,730,697
1,050,067
2,275,718
53.2
2017
12,461,515
1,193,821
1,959,604
49.5
2,185,627
1,895,180
189,351
98.10
262,212
$99.17
(1)
Note: “C1” costs are the cash costs associated with producing iron ore products without allowance for mine development, deferred stripping and stockpile movements, and
also excludes royalties, sustaining capital, depreciation and amortisation costs.
Mining activity in the first six months of the year were strong despite wet weather conditions. The high level of rainfall
increased in July and August and impacted mining activities in the main ore zone area. While this affected production rates
through October, mining rates improved on the successful completion of the dewatering project and access to the main ore
zone restored in Q4 and supported full year planned production. Waste stripping continued on the west wall of North Pit,
with ore accessed from stages under the east wall.
The planned common equipment shut was brought forward to align mill downtime and key maintenance activities.
The concentrate and pellet plants delivered at high production levels throughout the first half in 2018. Production rates were
impacted in the second half of the year due to wet weather conditions impacting ore supply. The scheduled maintenance
works at the pellet plant were completed safely and efficiently. This continues to be a great achievement for our 50-year-old
production plants and demonstrates the value of the efforts and resources invested in sustaining maintenance.
South Deposit Tailings Storage Facility (SDTSF) has been completed and successfully commissioned during the year. The
final steps in the commissioning of pipe line for tails deposition were completed in Q4 and the SDTSF was commissioned in
November. This is the culmination of many years of design, construction and approvals. The SDTSF will now provide tails
storage for the next phase of the mine life.
The raise of the Main Creek Tails Dam (MCTD) wall to final height commenced and will progress over the next 2 years to
provide adequate water cover along with construction of the final spillway for closure of the MCTD over the next 2 years.
24
PB
contractor to construct the decline.
Centre Pit Feasibility Study
Work continues on the feasibility study for Centre Pit. Additional
diamond holes are in progress in the north eastern area of the
potential pit to further define structural domains for modelling
and geotechnical slope analysis.
Southdown Magnetite Project
The Southdown Magnetite Project, situated 90km from the
Grange (70%) and SRT Australia Pty Ltd (SRTA) (30%). SRTA
is jointly owned by Sojitz Corporation, a Japanese global trading
company, and Kobe Steel, the fourth largest Japanese steel
maker. This advanced project has 1.2 billion tonnes of high
quality resource, which outcrops at the western end of its 12km
strike length and has access to established infrastructure.
During 2018, the joint venture partners continue to monitor all
ongoing project requirements to ensure that the current status
Matters Subsequent to the End of the Financial
Year
•
•
•
No matter or circumstance has arisen since 31 December 2018
that has significantly affected, or may significantly affect:
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
Grange’s strategic focus is to generate shareholder value by
safely producing high quality iron ore products from its Savage
River and Port Latta operations in Tasmania and continuing to
assess the feasibility of a major iron ore development project
at Southdown, near Albany in Western Australia. The Group’s
current strategic priorities include:
Savage River and Port Latta Operations
city of Albany in Western Australia, is a joint venture between
Likely Developments and Expected Results of Operations
of the feasibility studies is such that the project can be fully
• Optimising the Life of Mine Plan together with cost reduction
recommenced as soon as an appropriate opportunity arises. The
strategies
on-going strategy is to maintain the currency and good standing
of all tenements, permits and project assets. Compliance with
environmental and tenement conditions was maintained.
This approach will continue into 2019, as we formulate a valid
alternate development model and seek to secure equity partners
for a strategic share of the Company’s interest in the project.
Financial Position
Grange’s net assets increased during the year to $477.8 million
(31 December 2017: $387.6 million) principally as a result of the
following:
• A profit after tax of $112.9 million
• A final 2017 dividend payment of $11.6 million
• An interim 2018 dividend payment of $11.6 million
Statement of Cash Flows
Net cash flows from operating activities
• Completing feasibility study into the ability to access the ore
body in North Pit through underground development
• Reviewing the potential to deliver ore from Centre Pit
• Securing majority of sales through off take agreements
• Broadening our customer base for the longer term to
take advantage of market opportunities and to diversify
geographic customer risk
• Maintaining access to high grade ore by continuing to invest
in mine development
• Continuing to invest in process infrastructure
• Continuing focus on improving productivity and implementing
cost control projects
Southdown Project
• Ensuring that all tenements, permits and project assets
remain in good standing
Net cash inflows from operating activities for the year were
$167.4 million (2017: inflows $71.2 million) and reflect higher iron
ore product sales and a decrease in unit operating costs.
• Secure Commonwealth EPBC approval for the mine site,
slurry pipeline, port facilities and desalination infrastructure
• Maintaining the currency of all the elements of the Definitive
Net cash flows from investing activities
Feasibility Study
Net cash outflows from investing activities for the period were
$110.1 million (2017: outflows $51.6 million) and principally
project development models
• Continuing review and identifying the potential for alternative
PB
Key revenue metrics for the year ended 31 December 2018 and the preceding
North Pit Underground Development Project
Phase 1 of the diamond drilling program to investigate the
access of the ore body in North Pit through underground mining
was undertaken. Nine holes were drilled for an advance of
approximately 9,192m. Laboratory testing of diamond core for
geophysical and assay information is progressing. Phase 2 of
the drilling has commenced with 1,980m completed to date.
This program comprises nine holes and focuses on the northern
part of the ore body at depth.
Preliminary works on the exploration decline have commenced
with 2 diamond holes for an advance of 350m. These were
drilled along the portal alignment to provide structural information
into the east wall. A tender process is in progress to appoint a
contractor to construct the decline.
Centre Pit Feasibility Study
Work continues on the feasibility study for Centre Pit. Additional
diamond holes are in progress in the north eastern area of the
potential pit to further define structural domains for modelling
and geotechnical slope analysis.
Southdown Magnetite Project
The Southdown Magnetite Project, situated 90km from the
city of Albany in Western Australia, is a joint venture between
Grange (70%) and SRT Australia Pty Ltd (SRTA) (30%). SRTA
is jointly owned by Sojitz Corporation, a Japanese global trading
company, and Kobe Steel, the fourth largest Japanese steel
maker. This advanced project has 1.2 billion tonnes of high
quality resource, which outcrops at the western end of its 12km
strike length and has access to established infrastructure.
During 2018, the joint venture partners continue to monitor all
ongoing project requirements to ensure that the current status
of the feasibility studies is such that the project can be fully
recommenced as soon as an appropriate opportunity arises. The
on-going strategy is to maintain the currency and good standing
of all tenements, permits and project assets. Compliance with
environmental and tenement conditions was maintained.
This approach will continue into 2019, as we formulate a valid
alternate development model and seek to secure equity partners
for a strategic share of the Company’s interest in the project.
Financial Position
Grange’s net assets increased during the year to $477.8 million
(31 December 2017: $387.6 million) principally as a result of the
following:
• A profit after tax of $112.9 million
• A final 2017 dividend payment of $11.6 million
• An interim 2018 dividend payment of $11.6 million
Statement of Cash Flows
Net cash flows from operating activities
2018 Annual Report « Grange Resources Limited
related to expenditures for mine properties and development
$54.8 million and property, plant and equipment $35.3 million.
Net cash flows from financing activities
Net cash outflows from financing activities for the period were
$27.6 million (2017 outflow: $10.2 million) and principally related
to the payment of 2017 final dividend ($11.6 million) and 2018
interim dividend ($11.6 million).
Significant Changes in State of Affairs
There was no significant change in the state of affairs of the
Group that occurred during the year ended 31 December 2018.
Commentary on the overall state of affairs of the Group is set out
in the Operating and Financial Review.
Matters Subsequent to the End of the Financial
Year
No matter or circumstance has arisen since 31 December 2018
that has significantly affected, or may significantly affect:
•
•
•
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
Likely Developments and Expected Results of Operations
Grange’s strategic focus is to generate shareholder value by
safely producing high quality iron ore products from its Savage
River and Port Latta operations in Tasmania and continuing to
assess the feasibility of a major iron ore development project
at Southdown, near Albany in Western Australia. The Group’s
current strategic priorities include:
Savage River and Port Latta Operations
• Optimising the Life of Mine Plan together with cost reduction
strategies
• Completing feasibility study into the ability to access the ore
body in North Pit through underground development
• Reviewing the potential to deliver ore from Centre Pit
• Securing majority of sales through off take agreements
• Broadening our customer base for the longer term to
take advantage of market opportunities and to diversify
geographic customer risk
• Maintaining access to high grade ore by continuing to invest
in mine development
• Continuing to invest in process infrastructure
• Continuing focus on improving productivity and implementing
cost control projects
Southdown Project
• Ensuring that all tenements, permits and project assets
remain in good standing
Net cash inflows from operating activities for the year were
$167.4 million (2017: inflows $71.2 million) and reflect higher iron
ore product sales and a decrease in unit operating costs.
• Secure Commonwealth EPBC approval for the mine site,
slurry pipeline, port facilities and desalination infrastructure
• Maintaining the currency of all the elements of the Definitive
Net cash flows from investing activities
Feasibility Study
Net cash outflows from investing activities for the period were
$110.1 million (2017: outflows $51.6 million) and principally
• Continuing review and identifying the potential for alternative
project development models
25
PB
Grange Resources Limited » 2018 Annual Report
2017 year:
Iron Ore Pellet Sales (dmt)
Iron Ore Concentrate Sales (dmt)
Iron Ore Chip Sales (dmt)
Total Iron Ore Product Sales (dmt)
Average Realised Product Price (US$/t FOB Port Latta)
Average Realised Exchange Rate (AUD:USD)
Average Realised Product Price (A$/t FOB Port Latta)
Total sales for the year ended 31 December 2018 was 2.37 million tonnes of high quality, low impurity iron ore products
(2017: 1.90 million tonnes) and reflects sustained production from maintaining access to high grade ore.
The average iron ore product price received during the year was $149.76 per tonne of product sold (FOB Port Latta) (2017:
$127.20 per tonne). The increase compared to prior year was consistent with the increase in the pellet premium price which
reached record levels before declining to more sustainable levels. This was driven by structural reform in the Chinese steel
industry that resulted in greater demand for higher grade iron ore.
Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales
from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 40.6% of total sales for
Key operating metrics for the year ended 31 December 2018 and the preceding
2018
2017
2,258,487
1,804,108
2,373,680
1,896,083
10,042
105,151
111.92
0.7473
149.76
134
91,841
97.84
0.7692
127.20
2018
2017
14,730,697
12,461,515
1,050,067
2,275,718
53.2
189,351
98.10
1,193,821
1,959,604
49.5
262,212
$99.17
2,185,627
1,895,180
‘C1’ Operating Cost (A$/t Product Produced)(1)
(1)
Note: “C1” costs are the cash costs associated with producing iron ore products without allowance for mine development, deferred stripping and stockpile movements, and
also excludes royalties, sustaining capital, depreciation and amortisation costs.
Mining activity in the first six months of the year were strong despite wet weather conditions. The high level of rainfall
increased in July and August and impacted mining activities in the main ore zone area. While this affected production rates
through October, mining rates improved on the successful completion of the dewatering project and access to the main ore
zone restored in Q4 and supported full year planned production. Waste stripping continued on the west wall of North Pit,
with ore accessed from stages under the east wall.
The planned common equipment shut was brought forward to align mill downtime and key maintenance activities.
The concentrate and pellet plants delivered at high production levels throughout the first half in 2018. Production rates were
impacted in the second half of the year due to wet weather conditions impacting ore supply. The scheduled maintenance
works at the pellet plant were completed safely and efficiently. This continues to be a great achievement for our 50-year-old
production plants and demonstrates the value of the efforts and resources invested in sustaining maintenance.
South Deposit Tailings Storage Facility (SDTSF) has been completed and successfully commissioned during the year. The
final steps in the commissioning of pipe line for tails deposition were completed in Q4 and the SDTSF was commissioned in
November. This is the culmination of many years of design, construction and approvals. The SDTSF will now provide tails
storage for the next phase of the mine life.
The raise of the Main Creek Tails Dam (MCTD) wall to final height commenced and will progress over the next 2 years to
provide adequate water cover along with construction of the final spillway for closure of the MCTD over the next 2 years.
2018 (2017: 47.6%).
2017 year:
Total BCM Mined
Total Ore BCM
Concentrate Produced (t)
Weight Recovery (%)
Pellets Produced (t)
Pellet Stockpile (t)
PB
Notices 248/2 and 302/2 respectively. The currently approved
Environmental Management Plans were submitted for Savage
River and Port Latta on 21 December 2010. The extension of
the project’s life was approved by the Department of Tourism,
Arts and the Environment on 12 March 2007 and together with
the Goldamere Act and the Environmental Protection Notices,
is the basis for the management of all environmental aspects
of the mining leases. The Group has been relieved of any
environmental obligation in relation to contamination, pollutants
or pollution caused by operations prior to the date of the
Goldamere Agreement (December 1996).
During the financial year there were no breaches of licence
conditions.
Southdown Joint Venture
The Southdown Joint Venture has not been responsible for
any activities which would cause a breach of environmental
legislation.
Mount Windsor Joint Venture
The Group is a junior partner (30%) in the Mt Windsor project
in North Queensland which is now being rehabilitated for future
lease relinquishment. An ongoing Transitional Environment
Program has been entered into voluntarily to identify and
remediate various sources of pollution on site. A comprehensive
plan has been developed and instigated to manage the leases
with relinquishment expected in 2045.
During the financial year there were no breaches of licence
conditions.
National Greenhouse and Energy Reporting Act 2007
The National Greenhouse and Energy Reporting Act 2007
requires the Group to report its annual greenhouse gas
emissions and energy use by 31 October each year. The Group
has implemented systems and processes for the collection and
calculation of the data required and has submitted its annual
reports to the Greenhouse and Energy Data Officer by 31
October each year.
Clean Energy Act 2011 and the Clean Energy Legislation
(Carbon Tax Repeal) Act 2014
The Group has complied with its obligations under the Clean
Energy Act, the Clean Energy Legislation (Carbon Tax Repeal)
Act and related legislation by completing True-up requirements
with regard to assistance received through the Jobs and
Competitiveness Program for the emissions-intensive trade-
exposed activities of Production of Iron Ore Pellets and Production
of Magnetite Concentrate in the moderately emissions-intensive
category.
Grange Resources Limited » 2018 Annual Report
• Continuing the search for new equity partners to take a
strategic share of the Company’s interest in the Project
Risk Management
The Group continues to assess and manage various business
risks that could impact the Group’s operating and financial
performance and its ability to successfully deliver strategic
priorities including:
• Fluctuations in iron ore market and movements in foreign
exchange rates
• Volatility in the electricity and gas price and availability
• Mitigate market demand risk through securing off-take
agreements
• Geotechnical risks including wall stability
• Production
risks and costs associated with aging
infrastructure
• Project evaluation and development
• Health, safety and environment
Risk mitigation strategies include the following:
• Optimise timing of sales to the fluctuations in iron ore prices
and demands from different markets
• Flexible strategy to determine the volume to be secured
through off-take agreements
•
Intense program of geotechnical wall monitoring, modelling
and redesign work to mitigate potential stability issues
• Continue disciplined and rigorous review process regarding
budget development and cost control to ensure investment
directed to highest priority areas while reducing overall
operating costs
• Hedging strategies for key energy exposures
• A well developed tool kit to ensure projects are adequately
planned and peer reviewed prior to commitment and
execution
• Outstanding safety record is supported by comprehensive
safety system that enables management to develop a
resilient safety culture and ensure our stewardship over the
environment
Environmental Regulation
The mining and exploration tenements held by the Group
contain environmental requirements and conditions that the
Group must comply with in the course of normal operations.
These conditions and regulations cover the management of the
storage of hazardous materials and rehabilitation of mine sites.
The Group is subject to significant environmental legislation and
regulation in respect of its mining, processing and exploration
activities as set out below:
Savage River and Port Latta Operations
The Group obtained approvals to operate in 1996 and 1997
under the Land Use Planning and Approvals Act (LUPA) and
the Environmental Management and Pollution Control Act
(EMPCA) as well as the Goldamere Act and Mineral Resources
Development Act. The land use permit conditions for Savage
River and Port Latta are contained in Environmental Protection
26
PB
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended
31 December 2018, and the numbers of meetings attended by each Director were:
2018 Annual Report « Grange Resources Limited
Directors’ meetings
Audit
Remuneration
Meetings of Committees
A
9
8
9
9
9
B
9
9
9
9
9
A
6
6
6
B
6
6
6
A
4
4
4
B
4
4
4
Name
M Li
Y Jia
D Tenardi
H Zhao
M Dontschuk
A = Number of meetings attended
ended 31 December 2018
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
Interests in the Shares, Rights and Options of the Company
The relevant interest of each Director in the share capital and options of the Company as at the date of this report is:
Director
Number of Fully Paid Ordinary Shares
Rights
Options
13,507
41,500
-
-
-
-
-
-
-
-
-
-
-
-
-
Y Jia is an employee of Jiangsu Shagang International Trade Co. Ltd which is a subsidiary of the Jiangsu Shagang Group, ultimate shareholder of Shagang International
Holdings Limited. Shagang International Holdings Limited and its affiliates hold 540,255,987 ordinary fully paid shares in the Company as at the date of this report.
H Zhao is a former Director on the Board of the Jiangsu Shagang Group, ultimate shareholder of Shagang International Holdings Limited. Shagang International Holdings
Limited and its affiliates hold 540,255,987 ordinary fully paid shares in the Company as at the date of this report.
REMUNERATION REPORT
This remuneration report sets out remuneration information for Non-executive Directors, Executive Directors and other key
management personnel of the Group and the company.
i) Key management personnel disclosed in this report
Non-executive Directors
Executive Directors
Position
M Li
Y Jia(1)
D Tenardi
M Dontschuk
H Zhao(2)
(1)
(2)
Michelle Li
Yan Jia
Daniel Tenardi
Michael Dontschuk
Other key management
Honglin Zhao
personnel
Steven Phan
Ben Maynard
Executive Director
Chief Executive Officer
Position
Chief Financial Officer
General Manager
Operations
ii) Remuneration governance
The Board has an established Remuneration and Nomination
recommendations on the following:
Committee to assist in overseeing the development of policies
and practices which enable the Company to attract and
• Equity based executive and employee incentive plans;
retain capable Directors and employees, reward employees
• Recruitment, retention, succession planning, performance
fairly and responsibly and meet the Board’s oversight
responsibilities in relation to corporate governance practices.
measurement and termination policies and procedures
for Non-executive Directors, Executive Directors and Key
The Remuneration and Nomination Committee is composed
Management Personnel;
of Mr Daniel Tenardi (Committee Chairperson), Ms Yan Jia
• The remuneration of the Chief Executive Officer; Chief
(Non-Executive Deputy Chairperson) and Dr Michelle Li
Financial Officer; and General Manager Operations;
(Chairperson).
The responsibilities and functions for the Remuneration
and Nomination Committee include reviewing and making
• Periodically assessing the skills required by the Board;
• Recommend processes to evaluate the performance of
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Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
• Continuing the search for new equity partners to take a
Notices 248/2 and 302/2 respectively. The currently approved
strategic share of the Company’s interest in the Project
Environmental Management Plans were submitted for Savage
MEETINGS OF DIRECTORS
River and Port Latta on 21 December 2010. The extension of
the project’s life was approved by the Department of Tourism,
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended
31 December 2018, and the numbers of meetings attended by each Director were:
Meetings of Committees
Name
M Li
Y Jia
D Tenardi
H Zhao
M Dontschuk
A = Number of meetings attended
Directors’ meetings
Audit
A
9
8
9
9
9
B
9
9
9
9
9
A
6
6
6
B
6
6
6
Remuneration
B
A
4
4
4
4
4
4
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
ended 31 December 2018
Interests in the Shares, Rights and Options of the Company
The relevant interest of each Director in the share capital and options of the Company as at the date of this report is:
Director
M Li
Y Jia(1)
D Tenardi
M Dontschuk
H Zhao(2)
Number of Fully Paid Ordinary Shares
13,507
-
-
41,500
-
Rights
-
-
-
-
-
Options
-
-
-
-
-
(1)
(2)
Y Jia is an employee of Jiangsu Shagang International Trade Co. Ltd which is a subsidiary of the Jiangsu Shagang Group, ultimate shareholder of Shagang International
Holdings Limited. Shagang International Holdings Limited and its affiliates hold 540,255,987 ordinary fully paid shares in the Company as at the date of this report.
H Zhao is a former Director on the Board of the Jiangsu Shagang Group, ultimate shareholder of Shagang International Holdings Limited. Shagang International Holdings
Limited and its affiliates hold 540,255,987 ordinary fully paid shares in the Company as at the date of this report.
REMUNERATION REPORT
This remuneration report sets out remuneration information for Non-executive Directors, Executive Directors and other key
management personnel of the Group and the company.
i) Key management personnel disclosed in this report
Non-executive Directors
Executive Directors
Michelle Li
Yan Jia
Daniel Tenardi
Michael Dontschuk
Honglin Zhao
Other key management
personnel
Steven Phan
Ben Maynard
Position
Executive Director
Chief Executive Officer
Position
Chief Financial Officer
General Manager
Operations
ii) Remuneration governance
The Board has an established Remuneration and Nomination
Committee to assist in overseeing the development of policies
and practices which enable the Company to attract and
retain capable Directors and employees, reward employees
fairly and responsibly and meet the Board’s oversight
responsibilities in relation to corporate governance practices.
The Remuneration and Nomination Committee is composed
of Mr Daniel Tenardi (Committee Chairperson), Ms Yan Jia
(Non-Executive Deputy Chairperson) and Dr Michelle Li
(Chairperson).
The responsibilities and functions for the Remuneration
and Nomination Committee include reviewing and making
recommendations on the following:
• Equity based executive and employee incentive plans;
• Recruitment, retention, succession planning, performance
measurement and termination policies and procedures
for Non-executive Directors, Executive Directors and Key
Management Personnel;
• The remuneration of the Chief Executive Officer; Chief
Financial Officer; and General Manager Operations;
• Periodically assessing the skills required by the Board;
• Recommend processes to evaluate the performance of
27
PB
Risk Management
priorities including:
exchange rates
agreements
infrastructure
The Group continues to assess and manage various business
Arts and the Environment on 12 March 2007 and together with
risks that could impact the Group’s operating and financial
the Goldamere Act and the Environmental Protection Notices,
performance and its ability to successfully deliver strategic
is the basis for the management of all environmental aspects
• Fluctuations in iron ore market and movements in foreign
• Volatility in the electricity and gas price and availability
• Mitigate market demand risk through securing off-take
conditions.
of the mining leases. The Group has been relieved of any
environmental obligation in relation to contamination, pollutants
or pollution caused by operations prior to the date of the
Goldamere Agreement (December 1996).
During the financial year there were no breaches of licence
• Geotechnical risks including wall stability
• Production
risks and costs associated with aging
The Southdown Joint Venture has not been responsible for
any activities which would cause a breach of environmental
Southdown Joint Venture
legislation.
Mount Windsor Joint Venture
• Project evaluation and development
• Health, safety and environment
Risk mitigation strategies include the following:
• Optimise timing of sales to the fluctuations in iron ore prices
and demands from different markets
• Flexible strategy to determine the volume to be secured
through off-take agreements
•
Intense program of geotechnical wall monitoring, modelling
and redesign work to mitigate potential stability issues
conditions.
• Continue disciplined and rigorous review process regarding
budget development and cost control to ensure investment
directed to highest priority areas while reducing overall
operating costs
• Hedging strategies for key energy exposures
• A well developed tool kit to ensure projects are adequately
planned and peer reviewed prior to commitment and
October each year.
execution
The Group is a junior partner (30%) in the Mt Windsor project
in North Queensland which is now being rehabilitated for future
lease relinquishment. An ongoing Transitional Environment
Program has been entered into voluntarily to identify and
remediate various sources of pollution on site. A comprehensive
plan has been developed and instigated to manage the leases
with relinquishment expected in 2045.
During the financial year there were no breaches of licence
National Greenhouse and Energy Reporting Act 2007
The National Greenhouse and Energy Reporting Act 2007
requires the Group to report its annual greenhouse gas
emissions and energy use by 31 October each year. The Group
has implemented systems and processes for the collection and
calculation of the data required and has submitted its annual
reports to the Greenhouse and Energy Data Officer by 31
Clean Energy Act 2011 and the Clean Energy Legislation
(Carbon Tax Repeal) Act 2014
The Group has complied with its obligations under the Clean
Energy Act, the Clean Energy Legislation (Carbon Tax Repeal)
Act and related legislation by completing True-up requirements
with regard to assistance received through the Jobs and
Competitiveness Program for the emissions-intensive trade-
exposed activities of Production of Iron Ore Pellets and Production
of Magnetite Concentrate in the moderately emissions-intensive
category.
• Outstanding safety record is supported by comprehensive
safety system that enables management to develop a
resilient safety culture and ensure our stewardship over the
environment
Environmental Regulation
The mining and exploration tenements held by the Group
contain environmental requirements and conditions that the
Group must comply with in the course of normal operations.
These conditions and regulations cover the management of the
storage of hazardous materials and rehabilitation of mine sites.
The Group is subject to significant environmental legislation and
regulation in respect of its mining, processing and exploration
activities as set out below:
Savage River and Port Latta Operations
The Group obtained approvals to operate in 1996 and 1997
under the Land Use Planning and Approvals Act (LUPA) and
the Environmental Management and Pollution Control Act
(EMPCA) as well as the Goldamere Act and Mineral Resources
Development Act. The land use permit conditions for Savage
River and Port Latta are contained in Environmental Protection
PB
Grange Resources Limited » 2018 Annual Report
the Board, its Committees and individual Directors; and
• Reviewing governance arrangements pertaining
to
remuneration matters.
The Charter is reviewed annually and remuneration strategies
are reviewed regularly.
is
the Company’s objective
iii) Executive remuneration philosophy and framework
It
to provide maximum
stakeholder benefit from the retention of a small high-quality
executive team by remunerating Executive Directors and
executives fairly and appropriately with reference to relevant
market conditions. To assist in achieving this objective,
the Board attempts to link the nature and amount of
executives’ emoluments to the Company’s performance. The
remuneration framework aims to ensure that remuneration
practices are:
Variable Remuneration - Long Term Incentive (“LTI”)
a) Deferred Cash
The Board determined that it was appropriate to simplify
the Company LTI plan and introduce a 2 year deferred cash
incentive scheme with immediate effect from 1 January 2014.
The objective of this deferred cash scheme is to reward
selected executive directors and senior employees with a
cash payment which is linked to the Company satisfying
financial performance hurdles and subject to ongoing
employment with Grange. The deferred cash component is
determined by measuring the Company’s:
•
•
•
sales volumes (weighting 33.33%) of iron ore products
(pellets, chips and concentrate)
normalised EPS result (weighting 33.33%) (excluding
abnormal items), and
generation of additional free cash flow (mainly operating
and investing cash flows) over Budget (weighting
33.33%) (excluding capital management initiatives i.e.
inflows from debt funding and outflows from dividends
to shareholders).
The deferred cash component is determined based on the
Company’s performance for the year ended 31 December,
with 50% payable on 31 December the following year, and
the balance payable on or about the following 31 December
(i.e. 2 years after the relevant calculation date). Payment
of deferred cash is subject to continuing employment with
Grange at the scheduled date of the payment.
b)
Rights to Grange Shares
The objective for the issue of Rights under the LTI program
was replaced with Deferred Cash from 1 January 2014 as
discussed above. The Company did not issue any Rights to
employees in the 12 months ended 31 December 2018.
•
•
•
acceptable to shareholders, transparent and easily
understood;
competitive and reasonable, enabling the company to
attract and retain key talents who share the same values
with Grange Resources; and
aligned to the Company’s strategic and business
objectives and the creation of shareholder value.
Using external remuneration sector comparative data, the
Group has structured an executive remuneration framework
that is market competitive and complementary to the reward
strategy of the organisation. The framework is reviewed
regularly along with the remuneration strategy review.
The framework provides a mix of fixed and variable pay, and
a blend of short and long term incentives detailed as follows:
Fixed Remuneration
Fixed remuneration is reviewed annually by the Remuneration
and Nomination Committee. The process consists of a
review of Group and individual performance, relevant
comparative remuneration externally and internally and,
where appropriate, external advice on policies and practices.
Executives are given the opportunity to receive their fixed
(primary) remuneration in a variety of forms including cash
and fringe benefits. It is intended that the manner of payment
chosen is optimal for the recipient without creating any undue
cost for the Group.
There are no guaranteed fixed pay increases included in any
executives’ contracts.
Variable Remuneration – Short Term Incentive (“STI”)
The objective of the STI is to link the achievement of the
Company’s annual operational targets (usually reflected in the
approved budgets) and an individual’s personal targets with
the remuneration received by selected executive directors
and senior employees responsible for meeting those targets.
Payments are made as a cash incentive payable after the
financial statements have been audited and released to
the Australian Securities Exchange (“ASX”). 50% of the
STI relates to the achievement of company performance
goals and 50% relates to the attainment of agreed personal
performance goals.
28
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2018 Annual Report « Grange Resources Limited
iv) Relationship between remuneration and Grange Resources performance
The table below shows key performance indicators of Company performance over the past five years.
Revenue from mining operations
Net profit/(loss) after tax
Basic earnings per share
Dividend declared
$ million
$ million
Cents
$ million
2014
297.2
(110.2)
(9.52)
2015
205.6
(277.8)
(24.00)
2016
276.3
92.90
2017
247.9
60.71
2018
368.2
112.94
8.03 5.25
9.79
11.6 -
11.6
11.6
23.1
Share price (last trade day of financial year)
Cents
10.5
9.0
14.0
21.5
20.0
v) Non-executive director remuneration policy
Fees and payments to Non-executive Directors reflect the
responsibilities and demands made on them. Non-executive
Directors’ fees and payments are reviewed periodically by
the Board. The Board also considers comparative market
data and if required the advice of independent remuneration
consultants to ensure Non-executive Directors’ fees and
payments are appropriate and in line with the market. The
Chairperson’s fees are determined independently to the fees
of Non-executive Directors based on comparative roles in
the external market.
The current remuneration was last reviewed with effect
from 1 November 2014. The Chairperson’s remuneration
is inclusive of committee fees while other Non-executive
Directors who chair a Committee receive additional yearly
fees. The Deputy Chairperson is also entitled to receive an
additional yearly fee.
Non-executive Directors’ fees are determined within an
aggregate Directors’ fee pool limit, which is periodically
reviewed for adequacy. Any increase to the aggregate
Directors’ fee pool is submitted to shareholders for approval.
The maximum currently stands at $800,000 per annum
and was approved by shareholders at the Annual General
Meeting on 26 November 2010. Non-executive Directors do
not receive performance-based pay.
The following annual fees (inclusive of superannuation) have
applied:
Board of Directors
Chairperson (1)
Deputy Chairperson
Non-executive Director
Audit and Risk Committee
Chairperson
Committee Member
Remuneration and Nomination Committee
Chairperson
Committee Member
(1)
The Chairperson is not paid any additional amounts for Committee membership.
$170,000
$92,000
$81,000
$15,750
$10,500
$15,750
$7,500
29
PB
Salary &
fees
Non-
monetary
benefits
Short-term employee benefits
Short
term
incentive
(STI) (1)
Post
employment
benefits
Long-
term
benefits
Super-
annuation
Long
service
leave
Long term
incentive (LTI)
Termination
benefits Cash (1) Rights (1)
Total
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
vi) Details of remuneration
Details of the remuneration of the key management personnel of the Group are set out in the following tables.
Table 1: Remuneration for the year ended 31 December 2018
Table 2: Remuneration for the year ended 31 December 2017
Post
employment
Long-
term
Short-term employee benefits
benefits
benefits
Non-
Short
term
Long
Long term
incentive (LTI)
Salary &
monetary
incentive
Super-
service
Termination
fees
benefits
(STI) (3)
annuation
leave
benefits
Cash (3) Rights (3)
Total
$
$
$
$
$
13,665
9,110
4,099
4,420
31,294
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
143,837
96,750
95,890
35,959
46,524
418,960
-
-
Non-
executive
Directors
M Li
Y Jia
D Tenardi
L Huang (1)
M Dontschuk (2)
Sub-total
Non-
executive
Directors
Executive
Directors
H Zhao
Other Key
Management
Personnel
S Phan
B Maynard
Sub-total Key
Personnel
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
157,502
96,750
105,000
40,058
50,944
450,254
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
430,009
55,419
41,195
40,851
29,908
41,477
638,859
280,004
306,005
17,337
48,044
26,600
29,071
2,985
11,393
9,034
30,659
335,960
425,172
TOTAL 1,434,978
55,419 106,576
127,816
44,286
81,170
- 1,850,245
L Huang retired as Non-executive Director on 25 May 2017.
M Dontschuk was appointed Non-executive Director on 6 June 2017.
(1)
(2)
(3)
Nomination Committee approves the remuneration entitlement.
Table 3: Relative proportions linked to performance
Represents short term and long term incentive payments for the year ended 31 December 2016 and 2015 granted on 21 March 2017 and 20 March 2016, respectively.
Variable remuneration amounts awarded to Executive Directors and Other Key Management Personnel are disclosed during the period in which the Remuneration and
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Dec-18
Dec-17
Dec-18
Dec-17
Dec-18
Dec-17
Fixed Remuneration
At Risk - STI
At Risk - LTI
Executive Directors
H Zhao
Other Key Management Personnel
76%
82%
79%
77%
84%
80%
S Phan
B Maynard
14%
8%
12%
14%
8%
12%
10%
10%
9%
9%
8%
8%
Non-executive
Directors
M Li
Y Jia
D Tenardi
M Dontschuk
Sub-total
Non-Executive
Directors
Executive
Directors
H Zhao
Other Key
Management
Personnel
S Phan
B Maynard
Sub-total Key
Management
Personnel
$
155,253
99,502
97,948
88,358
441,061
$
-
-
-
-
$
-
-
-
-
$
14,749
-
9,305
8,394
32,448
$
-
-
-
-
$
-
-
-
-
-
-
-
-
494,509
120,657
73,930
46,978
25,760
-
48,331
319,941
352,003
-
-
27,051
45,100
30,366
33,440
6,905
26,277
-
-
22,318
32,586
$
$
-
-
-
-
-
-
-
170,002
99,502
107,253
96,752
473,509
810,165
406,581
489,406
1,166,453
120,657 146,081
110,784
58,942
- 103,235
- 1,706,152
Management
1,016,018
55,419 106,576
96,522
44,286
81,170
- 1,399,991
TOTAL 1,607,514
120,657 146,081
143,232
58,942
- 103,235
-
2,179,661
(1)
Represents short term and long-term incentive payments for the year ended 31 December 2017 and 2016 granted in February 2018 and 2017, respectively. Variable
remuneration amounts awarded to Executive Directors and Other Key Management Personnel are disclosed during the period in which the Remuneration and Nomination
Committee approves the remuneration entitlement.
30
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Grange Resources Limited » 2018 Annual Report
vi) Details of remuneration
Details of the remuneration of the key management personnel of the Group are set out in the following tables.
Table 1: Remuneration for the year ended 31 December 2018
Post
employment
Long-
term
Short-term employee benefits
benefits
benefits
Non-
Short
term
Long
Long term
incentive (LTI)
Salary &
monetary
incentive
Super-
service
Termination
fees
benefits
(STI) (1)
annuation
leave
benefits Cash (1) Rights (1)
Total
$
155,253
99,502
97,948
88,358
$
-
-
-
-
$
-
-
-
-
$
-
14,749
9,305
8,394
32,448
$
-
-
-
-
$
-
-
-
-
$
$
170,002
99,502
107,253
96,752
473,509
-
-
-
-
494,509
120,657
73,930
46,978
25,760
-
48,331
810,165
Non-Executive
441,061
Non-executive
Directors
M Li
Y Jia
D Tenardi
M Dontschuk
Sub-total
Directors
Executive
Directors
H Zhao
Other Key
Management
Personnel
S Phan
B Maynard
Sub-total Key
Personnel
319,941
352,003
-
-
27,051
45,100
30,366
33,440
6,905
26,277
-
-
22,318
32,586
406,581
489,406
Management
1,166,453
120,657 146,081
110,784
58,942
- 103,235
- 1,706,152
TOTAL 1,607,514
120,657 146,081
143,232
58,942
- 103,235
-
2,179,661
(1)
Represents short term and long-term incentive payments for the year ended 31 December 2017 and 2016 granted in February 2018 and 2017, respectively. Variable
remuneration amounts awarded to Executive Directors and Other Key Management Personnel are disclosed during the period in which the Remuneration and Nomination
Committee approves the remuneration entitlement.
-
-
-
-
-
-
-
Table 2: Remuneration for the year ended 31 December 2017
2018 Annual Report « Grange Resources Limited
Post
employment
benefits
Long-
term
benefits
Long term
incentive (LTI)
Short-term employee benefits
Short
term
incentive
(STI) (3)
Non-
monetary
benefits
Salary &
fees
Super-
annuation
Long
service
leave
Termination
benefits
Non-
executive
Directors
M Li
Y Jia
D Tenardi
L Huang (1)
M Dontschuk (2)
Sub-total
Non-
executive
Directors
Executive
Directors
H Zhao
Other Key
Management
Personnel
S Phan
B Maynard
Sub-total Key
Management
Personnel
$
$
$
$
143,837
96,750
95,890
35,959
46,524
418,960
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,665
-
9,110
4,099
4,420
31,294
-
$
-
-
-
-
-
-
-
430,009
55,419
41,195
40,851
29,908
-
280,004
306,005
-
-
-
-
-
-
17,337
48,044
26,600
29,071
2,985
11,393
1,016,018
55,419 106,576
96,522
44,286
TOTAL 1,434,978
55,419 106,576
127,816
44,286
L Huang retired as Non-executive Director on 25 May 2017.
M Dontschuk was appointed Non-executive Director on 6 June 2017.
(1)
(2)
(3)
Cash (3) Rights (3)
Total
$
$
-
-
-
-
-
-
-
41,477
-
9,034
30,659
-
-
-
-
-
-
-
-
-
-
-
157,502
96,750
105,000
40,058
50,944
450,254
-
638,859
-
335,960
425,172
81,170
- 1,399,991
81,170
- 1,850,245
$
-
-
-
-
-
-
-
-
-
-
-
-
-
Represents short term and long term incentive payments for the year ended 31 December 2016 and 2015 granted on 21 March 2017 and 20 March 2016, respectively.
Variable remuneration amounts awarded to Executive Directors and Other Key Management Personnel are disclosed during the period in which the Remuneration and
Nomination Committee approves the remuneration entitlement.
Table 3: Relative proportions linked to performance
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Dec-18
Dec-17
Dec-18
Dec-17
Dec-18
Dec-17
Fixed Remuneration
At Risk - STI
At Risk - LTI
Executive Directors
H Zhao
76%
Other Key Management Personnel
S Phan
B Maynard
82%
79%
77%
84%
80%
14%
8%
12%
14%
8%
12%
10%
10%
9%
9%
8%
8%
PB
31
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Grange Resources Limited » 2018 Annual Report
vii) Service agreements
On appointment to the Board, all Non-executive Directors
sign a letter of appointment with the Company. The document
details the term of appointment, the role, duties and obligations
of the Directors as well as the likely time commitment and
performance expectations and review arrangements and
circumstances relating to the vacation of office. In addition,
it also summarises the major Board policies and terms,
including compensation, relevant to the office of Director.
Remuneration and other terms of employment for the
executives are formalised in service agreements. Each
of the agreements provides for the provision of fixed pay,
performance related variable remuneration and other benefits.
The agreements with executives are ongoing and provide for
termination of employment at any time by giving three months’
notice or by the Company paying an amount equivalent to
three months remuneration in lieu of notice.
viii) Details of STI and LTI (including share-based payment) held by key management personnel
Short term incentive
For each short term incentive benefit, the percentage of the available bonus was awarded and will be paid in the early
coming year as follows.
Other Key Management Personnel
At the date of this report, the performance for the 2018 STI program had been approved:
2018 STI Program
Maximum possible
incentive award
Awarded
Amount awarded
$112,086
$40,250
$66,488
91%
92%
91%
$102,286(1)
$37,081(1)
$60,675(1)
Name
Executive Directors
H Zhao
Other Key Management Personnel
S Phan
B Maynard
(1)
Inclusive of superannuation.
Long term incentive
a) Deferred Cash
At the date of this report, the performance for the 2018 LTI program had been approved.
Name
Executive Directors
H Zhao
Other Key Management Personnel
S Phan
B Maynard
(1)
Inclusive of superannuation.
b) Rights to Grange Shares
2018 LTI Program
Maximum possible
incentive award
Awarded
Amount awarded
$71,475
$38,500
$42,398
100%
100%
100%
$71,475(1)
$38,500(1)
$42,398(1)
The Board will review regularly and reserves the right to vary from time to time the appropriate hurdles and vesting periods
for Rights to Grange shares.
The objective for the issue of Rights under the LTI program is to reward selected senior employees in a manner that aligns
this element of their remuneration package with the creation of long term shareholder wealth while at the same time
securing the employee’s tenure with the Company over the longer term. The LTI grants Rights to the Company’s shares to
selected senior employees.
Pellets
Others
There were no Rights to Grange shares issued to directors or senior employees in the years 2018 and 2017.
2018 Annual Report « Grange Resources Limited
Share holdings
31 December 2018
M Li
M Dontschuk
B Maynard
31 December 2017
The number of shares in the Company held during the period by each Director of Grange Resources Limited and other key
management personnel of the Group, including their personally related parties, are set out below:
Balance
On vesting of
1 January 2018
rights
On market
purchases
On market
disposals
Balance
31 December
2018
Other
Directors of Grange Resources Limited
Balance
On vesting of
1 January 2017
rights
On market
purchases
On market
disposals
Balance
31 December
2017
Other
-
-
-
-
-
41,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,507
41,500
68,121
13,507
68,121
13,507
-
68,121
13,507
68,121
Directors of Grange Resources Limited
M Li
B Maynard
Other Key Management Personnel
ix) Loans to key management personnel
There were no loans to key management personnel during the year (December 2017: Nil).
x) Other transactions with key management personnel
A director, Mr Honglin Zhao, is a former director of Jiangsu
International Trade Co. Ltd., which is a wholly owned
Shagang Group (Shagang) to which sales of iron ore
subsidiary of Jiangsu Shagang Group (Shagang) to which
products are made under long-term off-take agreements. As
sales of iron ore products are made under long-term off-take
at 28 February 2019, Shagang holds 46.68% (27 February
agreements. Transactions between Shagang and Grange
2018: 46.68%) of the issued ordinary shares of Grange.
must be approved by non-associated shareholders of
Transactions between Shagang and Grange must be
Shagang, or approved by the Grange independent directors.
approved by non-associated shareholders of Shagang or
approved by the Grange independent directors.
A director, Ms Yan Jia, is an employee of Shagang
Aggregate amounts of each of the above types of other
transactions with key management personnel of Grange:
The following balances are outstanding at the end of the reporting period in relation to the above transactions:
Sales of iron ore products
Pellets
Trade receivables (sales of iron ore products)
2018
2017
149,342,457
117,991,116
2018
2017
(2,772,327)
13,069,589
(57,519)
(2,772,327)
13,012,070
Insurance of Officers
During the financial period, the Company has paid premiums in respect of Directors’ and Officers’ Liability Insurance and
Company Reimbursement policies, which cover all Directors and Officers of the Group to the extent permitted under the
. The policy conditions preclude the Group from any detailed disclosures.
32
PB
PB
2018 Annual Report « Grange Resources Limited
Share holdings
The number of shares in the Company held during the period by each Director of Grange Resources Limited and other key
management personnel of the Group, including their personally related parties, are set out below:
31 December 2018
For each short term incentive benefit, the percentage of the available bonus was awarded and will be paid in the early
Other Key Management Personnel
At the date of this report, the performance for the 2018 STI program had been approved:
B Maynard
68,121
31 December 2017
Directors of Grange Resources Limited
M Li
M Dontschuk
13,507
-
-
-
-
-
41,500
-
-
-
-
Balance
1 January 2018
On vesting of
rights
On market
purchases
On market
disposals
Balance
1 January 2017
On vesting of
rights
On market
purchases
On market
disposals
Directors of Grange Resources Limited
M Li
13,507
Other Key Management Personnel
B Maynard
68,121
-
-
-
-
-
-
ix) Loans to key management personnel
There were no loans to key management personnel during the year (December 2017: Nil).
Balance
31 December
2018
Other
-
-
-
13,507
41,500
68,121
Balance
31 December
2017
Other
-
-
13,507
68,121
Grange Resources Limited » 2018 Annual Report
vii) Service agreements
On appointment to the Board, all Non-executive Directors
Remuneration and other terms of employment for the
sign a letter of appointment with the Company. The document
executives are formalised in service agreements. Each
details the term of appointment, the role, duties and obligations
of the agreements provides for the provision of fixed pay,
of the Directors as well as the likely time commitment and
performance related variable remuneration and other benefits.
performance expectations and review arrangements and
The agreements with executives are ongoing and provide for
circumstances relating to the vacation of office. In addition,
termination of employment at any time by giving three months’
it also summarises the major Board policies and terms,
notice or by the Company paying an amount equivalent to
including compensation, relevant to the office of Director.
three months remuneration in lieu of notice.
viii) Details of STI and LTI (including share-based payment) held by key management personnel
Short term incentive
coming year as follows.
Name
Executive Directors
H Zhao
Other Key Management Personnel
S Phan
B Maynard
(1)
Inclusive of superannuation.
Long term incentive
a) Deferred Cash
Name
Executive Directors
H Zhao
Other Key Management Personnel
S Phan
B Maynard
(1)
Inclusive of superannuation.
b) Rights to Grange Shares
for Rights to Grange shares.
2018 STI Program
Maximum possible
incentive award
Awarded
Amount awarded
$112,086
$40,250
$66,488
$71,475
$38,500
$42,398
91%
92%
91%
100%
100%
100%
$102,286(1)
$37,081(1)
$60,675(1)
$71,475(1)
$38,500(1)
$42,398(1)
At the date of this report, the performance for the 2018 LTI program had been approved.
2018 LTI Program
Maximum possible
incentive award
Awarded
Amount awarded
A director, Ms Yan Jia, is an employee of Shagang
Sales of iron ore products
Pellets
2018
2017
149,342,457
117,991,116
The Board will review regularly and reserves the right to vary from time to time the appropriate hurdles and vesting periods
The following balances are outstanding at the end of the reporting period in relation to the above transactions:
The objective for the issue of Rights under the LTI program is to reward selected senior employees in a manner that aligns
this element of their remuneration package with the creation of long term shareholder wealth while at the same time
securing the employee’s tenure with the Company over the longer term. The LTI grants Rights to the Company’s shares to
selected senior employees.
There were no Rights to Grange shares issued to directors or senior employees in the years 2018 and 2017.
Trade receivables (sales of iron ore products)
Pellets
Others
Insurance of Officers
2018
2017
(2,772,327)
13,069,589
(57,519)
(2,772,327)
13,012,070
During the financial period, the Company has paid premiums in respect of Directors’ and Officers’ Liability Insurance and
Company Reimbursement policies, which cover all Directors and Officers of the Group to the extent permitted under the
. The policy conditions preclude the Group from any detailed disclosures.
PB
33
PB
x) Other transactions with key management personnel
A director, Mr Honglin Zhao, is a former director of Jiangsu
Shagang Group (Shagang) to which sales of iron ore
products are made under long-term off-take agreements. As
at 28 February 2019, Shagang holds 46.68% (27 February
2018: 46.68%) of the issued ordinary shares of Grange.
Transactions between Shagang and Grange must be
approved by non-associated shareholders of Shagang or
approved by the Grange independent directors.
International Trade Co. Ltd., which is a wholly owned
subsidiary of Jiangsu Shagang Group (Shagang) to which
sales of iron ore products are made under long-term off-take
agreements. Transactions between Shagang and Grange
must be approved by non-associated shareholders of
Shagang, or approved by the Grange independent directors.
Aggregate amounts of each of the above types of other
transactions with key management personnel of Grange:
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
Indemnity of Auditors
The Company has entered into an agreement to indemnify its
auditor, PwC, against any claims or liabilities (including legal
costs) asserted by third parties arising out of their services
as auditor of the Company, where the liabilities arise as a
direct result of the Company’s breach of its obligations to
the Auditors, unless prohibited by the Corporations Act 2001.
Audit and Non-audit Services
The Board of Directors has considered the position and, in
accordance with advice received from the Company’s Audit
and Risk Committee, is satisfied that the provision of non-
audit services is compatible with the general standard of
independence for auditors imposed by the Corporations
Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the Audit
and Risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
none of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable
for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
2018
$’000
291
42
23
356
13
5
374
2017
$’000
293
41
5
339
-
-
339
Auditor
PwC continues in office in accordance with section 327 of
the Corporations Act 2001.
The report is made in accordance with a resolution of
Directors.
Michelle Li
Chairperson of the Board of Directors
Perth, Western Australia
28 February 2019
Assurance services
PwC Australia
Audit and review of financial reports
Other assurance services
Network firms of PwC Australia
Total assurance services
Non-assurance services
PwC Australia
Other consulting services
Taxation compliance services
Total remuneration paid
It is the Group’s policy to employ PwC on assignments
additional to their statutory audit duties where PwC’s
expertise and experience with the Group are important.
These assignments are principally tax consulting and advice
or where PwC is awarded assignments on a competitive
basis. It is the Group’s policy to seek competitive tenders on
all major consulting assignments. Group policy also requires
the Chairperson of the Audit and Risk Committee to approve
all individual assignments performed by PwC with total fees
greater than $10,000.
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 36.
Rounding of amounts
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/19, issued by the Australian Securities
and Investments Commission, relating to the “rounding
off” of amounts in the Directors’ Report. Amounts in the
Directors’ Report have been rounded off in accordance with
the instrument to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
34
PB
CORPORATE GOVERNANCE STATEMENT
Grange is committed to creating and building sustainable value for shareholders and protecting stakeholder interests. The
Company recognises that high standards of corporate governance are essential to achieving that objective.
The Board has the responsibility for ensuring Grange is properly managed so as to protect and enhance shareholders’
interests in a manner that is consistent with the Company’s responsibility to meet its obligations to all stakeholders. For this
reason, the Board is committed to applying appropriate standards of corporate governance across the organisation.
As part of its commitment to enhancing its corporate governance, and as a listed company, the Board has adopted relevant
practices which are consistent with the Australian Securities Exchange (“ASX”) Corporate Governance Principles. The 2018
corporate governance statement was approved by the Board on 27 February 2019.
Details of the Company’s corporate governance practices are included in the Corporate Governance Statement and Appendix
4G which have been announced on the ASX and can be located on our Company’s website www.grangeresources.com.au in
the Corporate Governance and Policies section in the About Us area. This facilitates transparency about Grange’s corporate
governance practices and assists shareholders and other stakeholders make informed judgments.
Grange considers that its governance practices comply with the majority of the ASX Best Practice Recommendations.
ASX Best Practice Recommendations
The following table lists the departures from the ASX Best Practice Recommendations applicable to the Company as at
the date of its financial year end, being 31 December 2018. Where the Company considers that it is divergent from these
recommendations, or that it is not practical to comply, there is an explanation of the Company’s reasons set out in the
following table.
“Recommendation” Ref
Recommendation Ref)
7.3(a)
(“Principle No” Ref followed by
Departure
Explanation
A separate internal audit function has
An Internal Audit function has not been
not been formed.
established as per recommendation
7.3(a). The Board monitors the need
for an internal audit function having
regard to the size, geographic location
and complexity of
the Company’s
operations.
The
Company’s
Management
periodically undertakes an
internal
review of
financial systems and
processes and where systems are
considered to require improvement
these systems are developed. The
Board also considers external reviews
of specific areas and monitors
the
implementation
of
system
improvements.
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
CORPORATE GOVERNANCE STATEMENT
Grange is committed to creating and building sustainable value for shareholders and protecting stakeholder interests. The
Company recognises that high standards of corporate governance are essential to achieving that objective.
The Board has the responsibility for ensuring Grange is properly managed so as to protect and enhance shareholders’
interests in a manner that is consistent with the Company’s responsibility to meet its obligations to all stakeholders. For this
reason, the Board is committed to applying appropriate standards of corporate governance across the organisation.
As part of its commitment to enhancing its corporate governance, and as a listed company, the Board has adopted relevant
practices which are consistent with the Australian Securities Exchange (“ASX”) Corporate Governance Principles. The 2018
corporate governance statement was approved by the Board on 27 February 2019.
Details of the Company’s corporate governance practices are included in the Corporate Governance Statement and Appendix
4G which have been announced on the ASX and can be located on our Company’s website www.grangeresources.com.au in
the Corporate Governance and Policies section in the About Us area. This facilitates transparency about Grange’s corporate
governance practices and assists shareholders and other stakeholders make informed judgments.
Grange considers that its governance practices comply with the majority of the ASX Best Practice Recommendations.
ASX Best Practice Recommendations
The following table lists the departures from the ASX Best Practice Recommendations applicable to the Company as at
the date of its financial year end, being 31 December 2018. Where the Company considers that it is divergent from these
recommendations, or that it is not practical to comply, there is an explanation of the Company’s reasons set out in the
following table.
“Recommendation” Ref
(“Principle No” Ref followed by
Recommendation Ref)
7.3(a)
Departure
Explanation
A separate internal audit function has
not been formed.
An Internal Audit function has not been
established as per recommendation
7.3(a). The Board monitors the need
for an internal audit function having
regard to the size, geographic location
the Company’s
and complexity of
operations.
Indemnity of Auditors
The Company has entered into an agreement to indemnify its
auditor, PwC, against any claims or liabilities (including legal
costs) asserted by third parties arising out of their services
as auditor of the Company, where the liabilities arise as a
direct result of the Company’s breach of its obligations to
the Auditors, unless prohibited by the Corporations Act 2001.
Audit and Non-audit Services
The Board of Directors has considered the position and, in
accordance with advice received from the Company’s Audit
and Risk Committee, is satisfied that the provision of non-
audit services is compatible with the general standard of
independence for auditors imposed by the Corporations
Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
•
all non-audit services have been reviewed by the Audit
and Risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
•
none of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable
for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
Assurance services
PwC Australia
Audit and review of financial reports
Other assurance services
Network firms of PwC Australia
Total assurance services
Non-assurance services
PwC Australia
Other consulting services
Taxation compliance services
Total remuneration paid
2018
$’000
291
42
23
356
13
5
374
2017
$’000
293
41
5
339
-
-
339
It is the Group’s policy to employ PwC on assignments
additional to their statutory audit duties where PwC’s
expertise and experience with the Group are important.
These assignments are principally tax consulting and advice
or where PwC is awarded assignments on a competitive
basis. It is the Group’s policy to seek competitive tenders on
all major consulting assignments. Group policy also requires
the Chairperson of the Audit and Risk Committee to approve
all individual assignments performed by PwC with total fees
greater than $10,000.
Auditor
Directors.
PwC continues in office in accordance with section 327 of
the Corporations Act 2001.
The report is made in accordance with a resolution of
Auditor’s independence declaration
Michelle Li
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out
Chairperson of the Board of Directors
on page 36.
Rounding of amounts
Perth, Western Australia
28 February 2019
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/19, issued by the Australian Securities
and Investments Commission, relating to the “rounding
off” of amounts in the Directors’ Report. Amounts in the
Directors’ Report have been rounded off in accordance with
the instrument to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
The
Company’s
Management
periodically undertakes an
internal
financial systems and
review of
processes and where systems are
considered to require improvement
these systems are developed. The
Board also considers external reviews
of specific areas and monitors
the
system
improvements.
implementation
of
PB
35
PB
Grange Resources Limited » 2018 Annual Report
Auditor’s Independence Declaration
As lead auditor for the audit of Grange Resources Limited for the year ended 31 December 2018, I
declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Grange Resources Limited and the entities it controlled during the
period.
Amanda Campbell
Partner
PricewaterhouseCoopers
Melbourne
28 February 2019
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, 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.
36
PB
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018
2018 Annual Report « Grange Resources Limited
Consolidated
Revenues from mining operations
Cost of sales
Gross profit from mining operations
Administration expenses
Operating profit before other income
Exploration and evaluation expenditure
Other income (expenses)
Operating profit before finance costs
Finance income
Finance expenses
Profit before tax
Income tax expense
Profit for the year
Total comprehensive income for the year
Total comprehensive income (loss) for the
period attributable to:
- Equity holders of Grange Resources
Limited
- Non Controlling Interests
NOTES
4, 5
6
7
8
9
9
10
2018
$’000
368,204
(238,938)
129,266
(5,177)
124,089
(822)
281
123,548
13,316
(1,536)
135,328
(22,390)
112,938
112,938
113,325
(387)
112,938
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)
35
35
9.79
9.79
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
2017
$’000
247,877
(173,347)
74,530
(3,534)
70,996
(799)
439
70,636
5,342
(9,228)
66,750
(6,037)
60,713
60,713
60,713
-
60,713
5.25
5.25
37
PB
Grange Resources Limited » 2018 Annual Report
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018
Consolidated
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Total current assets
Non-current assets
Receivables
Inventories
Property, plant and equipment
Mine properties and development
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Retained profits
Capital and reserves attributable to owners
of Grange Resources Limited
Non-Controlling Interests
Total equity
31 December 2018
31 December 2017
NOTES
$’000
$’000
2, 11
12
13
2
14
15
16
17
18
2, 19
2, 20
21
22
23
24
25
27
204,497
31,715
60,730
19,734
316,676
8,654
222
77,345
193,302
12,416
291,939
608,615
45,116
7,126
20,168
72,410
611
57,764
58,375
130,785
477,830
331,513
146,243
477,756
74
477,830
167,989
30,118
63,166
66
261,339
8,030
-
138,389
75,323
6,880
228,622
489,961
23,525
4,830
12,821
41,176
-
61,206
61,206
102,382
387,579
331,513
56,066
387,579
-
387,579
The above statement of financial position should be read in conjunction with the accompanying notes.
38
PB
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018
2018 Annual Report « Grange Resources Limited
Balance at 1 January 2018
Profit for the period attributable to
owners of Grange Resources Limited
Loss attributable to non-controlling
interests
Total comprehensive profit for the
year
Transactions with owners in their
capacity as owners
Dividends paid
Non-controlling interest
Contributed equity
Balance at 31 December 2018
Balance at 1 January 2017
Profit for the year
Total comprehensive income/(loss) for
the year
Transactions with owners in their
capacity as owners
Dividends paid
Contributed
equity
$’000
331,513
Non-
Controlling
Interests
$’000
-
NOTES
Retained
earnings
$’000
56,066
TOTAL
$’000
387,579
-
-
-
-
-
331,513
331,513
-
-
-
-
26
27
26
-
113,325
113,325
(387)
-
(387)
(387)
113,325
112,938
-
(23,148)
(23,148)
461
461
74
-
-
-
-
-
-
-
(23,148)
146,243
1,140
60,713
60,713
461
(22,687)
477,830
332,653
60,713
60,713
(5,787)
(5,787)
56,066
(5,787)
(5,787)
387,579
Balance at 31 December 2017
331,513
The above statements of changes in equity should be read in conjunction with the accompanying notes.
39
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
STATEMENT OF CASHFLOW FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTES
2018
$’000
2017
$’000
The principal accounting policies adopted in the preparation
For the remaining lease commitments, the group expects to
of the consolidated financial statements are set out below.
recognise right-of-use assets of approximately $768,000 on 1
These policies have been consistently applied for all the
January 2019, lease liabilities of $593,000 (after adjustments
376,960
249,301
(207,728)
(183,095)
subsidiaries.
periods presented, unless otherwise stated.
The
financial statements are
for
the consolidated
entity consisting of Grange Resources Limited and its
Consolidated
Cash flows from operating activities
Receipts from customers and other debtors
(inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of
goods and services tax)
Interest received
Interest paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment
Payments for property, plant and equipment
Payments for mine properties and development
(Payments) proceeds for short term managed funds
(Payments) proceeds for term deposits
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Dividends paid to shareholders
Contributed equity - non-controlling interests
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the
year
Net foreign exchange differences
34
16
17
2
26
169,232
6,508
(226)
(8,132)
167,382
2
(35,297)
(54,779)
(20,000)
(25)
(110,099)
(11,395)
6,433
(23,148)
461
(27,649)
29,634
167,989
6,874
204,497
66,206
4,917
(517)
619
71,225
-
(21,749)
(29,730)
-
(117)
(51,596)
(6,535)
2,147
(5,787)
-
(10,175)
9,454
165,958
(7,423)
167,989
Cash and cash equivalents at end of the year
11
The above statement of cash flows should be read in conjunction with accompanying notes.
40
PB
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting
Standards Board and the Corporations Act 2001.
new rules.
Compliance with IFRS
The consolidated financial statements of the Grange
Resources Limited group also comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the
historical costs convention, except for certain assets which,
as noted, are at fair value.
New and amended standards adopted by the group
The group has applied
the
following standards and
amendments for the first time for their annual reporting
period commencing 1 January 2018:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December
2018 reporting periods and have not been early adopted by
the group. The group’s assessment of the impact of these
new standards and interpretations is set out below.
AASB 16 Leases (effective from 1 January 2019)
for prepayments and accrued lease payments recognised as
at 31 December 2018) and deferred tax assets of ($53,000).
Overall net assets will be approximately $228,000 higher,
and net current assets will be $21,000 higher due to the
presentation of a portion of the liability as a current liability.
The group expects that net profit after tax will decrease by
approximately $51,000 for 2019 as a result of adopting the
Operating cash flows will increase, and financing cash flows
decrease by approximately $33,000 as repayment of the
principal portion of the lease liabilities will be classified as
cash flows from financing activities.
The group’s activities as a lessor are not material and hence
the group does not expect any significant impact on the
financial statements. However, some additional disclosures
will be required from next year.
The group will apply the standard from its mandatory
adoption date of 1 January 2019. The group intends to
apply the simplified transition approach and will not restate
comparative amounts for the year prior to first adoption.
Right-of-use assets for property leases will be measured on
transition as if the new rules had always been applied. All
other right-of-use assets will be measured at the amount of
the lease liability on adoption (adjusted for any prepaid or
accrued lease expenses).
There are no other standards that are not yet effective
and that would be expected to have a material impact on
the entity in the current or future reporting periods and on
foreseeable future transactions.
Critical accounting estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
AASB 16 was issued in February 2016. It will result in
almost all leases being recognised on the balance sheet,
statements, are disclosed in Note 3.
as the distinction between operating and finance leases is
removed. Under the new standard, an asset (the right to use
the leased item) and a financial liability to pay rentals are
recognised. The only exceptions are short-term and low-
value leases.
The group has set up a project team which has reviewed all
of the group’s leasing arrangements over the last year in light
of the new lease accounting rules in AASB 16. The standard
will affect primarily the accounting for the group’s operating
leases.
As at the reporting date, the group has non-cancellable
operating lease commitments of $545,000 within 5 years,
see note 30. Of these commitments, none relate to short-
term leases and nil to low value leases which would be
recognised on a straight-line basis as expense in profit or
loss under the new standard.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Grange Resources Limited
as at 31 December 2018 and the results of all subsidiaries
for the year then ended. Grange Resources Limited and its
subsidiaries together are referred to in this financial report as
the Group or the consolidated entity.
Subsidiaries are those entities over which the Group has
control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
STATEMENT OF CASHFLOW FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidated
Cash flows from operating activities
Receipts from customers and other debtors
(inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of
goods and services tax)
Interest received
Interest paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment
Payments for property, plant and equipment
Payments for mine properties and development
(Payments) proceeds for short term managed funds
(Payments) proceeds for term deposits
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Dividends paid to shareholders
Contributed equity - non-controlling interests
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the
year
Net foreign exchange differences
34
16
17
2
26
376,960
249,301
(207,728)
(183,095)
169,232
6,508
(226)
(8,132)
167,382
2
(35,297)
(54,779)
(20,000)
(25)
(110,099)
(11,395)
6,433
(23,148)
461
(27,649)
29,634
167,989
6,874
204,497
66,206
4,917
(517)
619
71,225
-
-
(21,749)
(29,730)
(117)
(51,596)
(6,535)
2,147
(5,787)
-
(10,175)
9,454
165,958
(7,423)
167,989
Cash and cash equivalents at end of the year
11
The above statement of cash flows should be read in conjunction with accompanying notes.
PB
NOTES
2018
$’000
2017
$’000
The principal accounting policies adopted in the preparation
of the consolidated financial statements are set out below.
These policies have been consistently applied for all the
periods presented, unless otherwise stated.
financial statements are
The
the consolidated
entity consisting of Grange Resources Limited and its
subsidiaries.
for
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting
Standards Board and the Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements of the Grange
Resources Limited group also comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the
historical costs convention, except for certain assets which,
as noted, are at fair value.
New and amended standards adopted by the group
The group has applied
following standards and
the
amendments for the first time for their annual reporting
period commencing 1 January 2018:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December
2018 reporting periods and have not been early adopted by
the group. The group’s assessment of the impact of these
new standards and interpretations is set out below.
AASB 16 Leases (effective from 1 January 2019)
AASB 16 was issued in February 2016. It will result in
almost all leases being recognised on the balance sheet,
as the distinction between operating and finance leases is
removed. Under the new standard, an asset (the right to use
the leased item) and a financial liability to pay rentals are
recognised. The only exceptions are short-term and low-
value leases.
The group has set up a project team which has reviewed all
of the group’s leasing arrangements over the last year in light
of the new lease accounting rules in AASB 16. The standard
will affect primarily the accounting for the group’s operating
leases.
As at the reporting date, the group has non-cancellable
operating lease commitments of $545,000 within 5 years,
see note 30. Of these commitments, none relate to short-
term leases and nil to low value leases which would be
recognised on a straight-line basis as expense in profit or
loss under the new standard.
For the remaining lease commitments, the group expects to
recognise right-of-use assets of approximately $768,000 on 1
January 2019, lease liabilities of $593,000 (after adjustments
for prepayments and accrued lease payments recognised as
at 31 December 2018) and deferred tax assets of ($53,000).
Overall net assets will be approximately $228,000 higher,
and net current assets will be $21,000 higher due to the
presentation of a portion of the liability as a current liability.
The group expects that net profit after tax will decrease by
approximately $51,000 for 2019 as a result of adopting the
new rules.
Operating cash flows will increase, and financing cash flows
decrease by approximately $33,000 as repayment of the
principal portion of the lease liabilities will be classified as
cash flows from financing activities.
The group’s activities as a lessor are not material and hence
the group does not expect any significant impact on the
financial statements. However, some additional disclosures
will be required from next year.
The group will apply the standard from its mandatory
adoption date of 1 January 2019. The group intends to
apply the simplified transition approach and will not restate
comparative amounts for the year prior to first adoption.
Right-of-use assets for property leases will be measured on
transition as if the new rules had always been applied. All
other right-of-use assets will be measured at the amount of
the lease liability on adoption (adjusted for any prepaid or
accrued lease expenses).
There are no other standards that are not yet effective
and that would be expected to have a material impact on
the entity in the current or future reporting periods and on
foreseeable future transactions.
Critical accounting estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in Note 3.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Grange Resources Limited
as at 31 December 2018 and the results of all subsidiaries
for the year then ended. Grange Resources Limited and its
subsidiaries together are referred to in this financial report as
the Group or the consolidated entity.
Subsidiaries are those entities over which the Group has
control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
41
PB
Grange Resources Limited » 2018 Annual Report
from the date that control ceases. Details of subsidiaries are
set out in note 32.
The acquisition method of accounting is used to account for
business combinations by the Group (refer to note 1(e)).
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
(ii) Joint arrangements
Joint operations
The Group recognises its direct right to the assets, liabilities,
revenues and expenses of joint operations and its share of
any jointly held or incurred assets, liabilities, revenues and
expenses. These have been incorporated in the financial
statements under the appropriate headings. Details of the
joint operations are set out in note 33.
(c) Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who
is responsible for allocating resources and assessing
performance of the operating segments, has been identified
as the Chief Executive Officer.
Refer to note 4 for further information on segment descriptions.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘the
financial
statements are presented in Australian dollars, which is
Grange Resources Limited’s functional and presentation
currency.
functional currency’). The consolidated
(ii) Transactions and balances
the
foreign currency
transactions during
All
financial
period are translated into the functional currency using the
exchange rate prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
profit and loss, except when they are deferred in equity as
qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a
foreign operation.
Non-monetary items that are measured in terms of historical
cost in foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value was determined.
42
PB
(iii) Group companies
•
acquisition-date fair value of any previous equity interest
unperformed freight services. Cash received before control
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
•
•
assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet,
income and expenses for each income statement are
translated at average exchange rates (unless this is not
a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates
of the transactions), and
•
all resulting exchange differences are recognised in
other comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated
as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold
or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences
are reclassified to the income statement, as part of the gain
or loss on sale where applicable. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entities and
translated at the closing rate.
(e) Business combinations
The acquisition method of accounting is used to account
for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration
transferred for the acquisition of a subsidiary comprises the
•
•
•
•
•
fair values of the assets transferred
liabilities incurred to the former owners of the acquired
business
equity interests issued by the Group
fair value of any asset or liability resulting from a
contingent consideration arrangement, and
fair value of any pre-existing equity interest in the
subsidiary.
Identifiable assets acquired, and liabilities and contingent
liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling
interest in the acquired entity on an acquisition-by-acquisition
basis either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable
assets. Acquisition-related costs are expensed as incurred.
The excess of the
•
•
consideration transferred,
amount of any non-controlling interest in the acquired
entity, and
2018 Annual Report « Grange Resources Limited
in the acquired entity
over the fair value of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the
fair value of the net identifiable assets of the subsidiary
Interest revenue
passes is recognised as a contract liability. The amount
of consideration does not contain a significant financing
component as payment terms are less than one year.
acquired, the difference is recognised directly in profit or
loss as a bargain purchase. Where settlement of any part of
cash consideration is deferred, the amounts payable in the
Interest revenue is recognised on a time proportion basis
using the effective interest method.
future are discounted to their present value as at the date of
Sale of apartments
exchange. The discount rate used is the entity’s incremental
borrowing rate, being the rate at which a similar borrowing
could be obtained from an independent financier under
comparable terms and conditions.
The new standard is based on the principle that revenue
is recognised when control of a good or service transfers
to a customer therefore the notion of control replaces the
existing notion of risks and rewards. In most instances,
Contingent consideration is classified either as equity or a
control passes, and sales revenue is recognised when legal
financial liability. Amounts classified as a financial liability are
title of the property is transferred to the buyer. There may be
subsequently remeasured to fair value with changes in fair
circumstances when judgment is required based on the five
value recognised in profit or loss.
indicators of control below:
If the business combination is achieved in stages, the
i. The buyer has the significant risks and rewards of
acquisition date carrying value of the acquirer’s previously
held equity interest in the acquire is remeasured to fair value
ownership and has the ability to direct the use of, and
obtain substantially all of the remaining benefits from the
at the acquisition date. Any gains or losses arising from such
good or service;
remeasurement are recognised in profit or loss.
(f)
Revenue recognition
Revenue is recognised for the major business transactions
as follows:
Sale of ore and the related freight revenue
Sales revenue is recognised on individual sales when
control transfers to the customer. In most instances, control
passes and sales revenue is recognised when the product is
delivered to the vessel on which it will be transported. There
may be circumstances when judgment is required when
recognising revenue based on the five-step model below:
i.
Identify the contract(s) with a customer
ii.
Identify the performance obligations in the contact
iii. Determine the transaction price
iv. Allocate the transactions price to the performance of
obligations in the contract.
v. Recognise revenue when (or as) the entity satisfies the
performance obligation.
The Group sells a portion of its product on Cost and
Freight (CFR). This means that the Group is responsible
for providing shipping services. Using the 5-step model
above, the Group has determined that freight services is a
separate performance obligation. Therefore, the revenue for
ii. The buyer has a present obligation to pay in accordance
with the terms of the sales contract. For property disposed
of, this is generally on transfer of legal title, at which time
settlement of the remaining contract price occurs;
iii. The buyer has accepted the asset;
iv. The buyer has legal title to the asset; and
v. The buyer has physical possession of the asset
AASB 15 required the Group to identify deliverables in
contracts with customers that qualify as ‘performance
obligations’. The transaction price receivable from customers
must be allocated between the Group’s performance
obligations under the contracts on a relative stand-alone
selling price basis. Revenue will be recognised at a point in
time when the performance obligations are met.
The Group has assessed the impact of the application of
AASB 15. There was no revenue from the sale of property for
the period ended 31 December 2018. Therefore, the adoption
of this standard has no impact on the financial statements.
Distribution Income
Distribution income from short term managed funds is
recognised when the right to receive the income has been
established.
(g) Government Grants
shipping services is recognised as the Group satisfies the
Government grants are recognised at their fair value when
performance obligation over time rather than at point when
there is reasonable assurance that the grant will be received,
product is transferred to the vessel on which the product will
and all attaching conditions will be complied with.
be shipped.
When the grant relates to an expense item, it is recognised
Application of the new accounting standard AASB 15 did not
as income over the periods necessary to match the grant
have a significant impact on the financial statements in the
on a systematic basis to the costs that it is intended to
comparative period as all shipments with CFR terms arrived
compensate.
at the port of destinations before 31 December 2017.
Typically, the Group has a right to payment at the point
to a deferred income account and is released to the income
that control of the goods passes including a right, where
statement over the expected useful life of the relevant asset
applicable, to payment for provisionally priced products and
by equal annual instalments.
When the grant relates to an asset, the fair value is credited
PB
Grange Resources Limited » 2018 Annual Report
from the date that control ceases. Details of subsidiaries are
(iii) Group companies
set out in note 32.
The acquisition method of accounting is used to account for
(none of which has the currency of a hyperinflationary
business combinations by the Group (refer to note 1(e)).
economy) that have a functional currency different from the
The results and financial position of all the Group entities
presentation currency are translated into the presentation
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
currency as follows:
Unrealised losses are also eliminated unless the transaction
•
assets and liabilities for each balance sheet presented
provides evidence of the impairment of the asset transferred.
are translated at the closing rate at the date of that
Accounting policies of subsidiaries have been changed
balance sheet,
where necessary to ensure consistency with the policies
adopted by the Group.
(ii) Joint arrangements
Joint operations
•
income and expenses for each income statement are
translated at average exchange rates (unless this is not
a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates
The Group recognises its direct right to the assets, liabilities,
of the transactions), and
revenues and expenses of joint operations and its share of
any jointly held or incurred assets, liabilities, revenues and
expenses. These have been incorporated in the financial
•
all resulting exchange differences are recognised in
other comprehensive income.
statements under the appropriate headings. Details of the
On consolidation, exchange differences arising from the
joint operations are set out in note 33.
(c) Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who
is responsible for allocating resources and assessing
performance of the operating segments, has been identified
as the Chief Executive Officer.
translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated
as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold
or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences
are reclassified to the income statement, as part of the gain
or loss on sale where applicable. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entities and
Refer to note 4 for further information on segment descriptions.
translated at the closing rate.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘the
functional currency’). The consolidated
financial
statements are presented in Australian dollars, which is
Grange Resources Limited’s functional and presentation
currency.
(ii) Transactions and balances
All
foreign currency
transactions during
the
financial
period are translated into the functional currency using the
exchange rate prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
profit and loss, except when they are deferred in equity as
qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a
foreign operation.
Non-monetary items that are measured in terms of historical
cost in foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value was determined.
•
•
•
•
•
•
(e) Business combinations
The acquisition method of accounting is used to account
for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration
transferred for the acquisition of a subsidiary comprises the
fair values of the assets transferred
liabilities incurred to the former owners of the acquired
business
equity interests issued by the Group
fair value of any asset or liability resulting from a
contingent consideration arrangement, and
•
fair value of any pre-existing equity interest in the
subsidiary.
Identifiable assets acquired, and liabilities and contingent
liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling
interest in the acquired entity on an acquisition-by-acquisition
basis either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable
assets. Acquisition-related costs are expensed as incurred.
The excess of the
consideration transferred,
amount of any non-controlling interest in the acquired
entity, and
PB
•
acquisition-date fair value of any previous equity interest
in the acquired entity
over the fair value of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the
fair value of the net identifiable assets of the subsidiary
acquired, the difference is recognised directly in profit or
loss as a bargain purchase. Where settlement of any part of
cash consideration is deferred, the amounts payable in the
future are discounted to their present value as at the date of
exchange. The discount rate used is the entity’s incremental
borrowing rate, being the rate at which a similar borrowing
could be obtained from an independent financier under
comparable terms and conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair
value recognised in profit or loss.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer’s previously
held equity interest in the acquire is remeasured to fair value
at the acquisition date. Any gains or losses arising from such
remeasurement are recognised in profit or loss.
(f)
Revenue recognition
Revenue is recognised for the major business transactions
as follows:
Sale of ore and the related freight revenue
Sales revenue is recognised on individual sales when
control transfers to the customer. In most instances, control
passes and sales revenue is recognised when the product is
delivered to the vessel on which it will be transported. There
may be circumstances when judgment is required when
recognising revenue based on the five-step model below:
i.
Identify the contract(s) with a customer
ii.
Identify the performance obligations in the contact
iii. Determine the transaction price
iv. Allocate the transactions price to the performance of
obligations in the contract.
v. Recognise revenue when (or as) the entity satisfies the
performance obligation.
The Group sells a portion of its product on Cost and
Freight (CFR). This means that the Group is responsible
for providing shipping services. Using the 5-step model
above, the Group has determined that freight services is a
separate performance obligation. Therefore, the revenue for
shipping services is recognised as the Group satisfies the
performance obligation over time rather than at point when
product is transferred to the vessel on which the product will
be shipped.
Application of the new accounting standard AASB 15 did not
have a significant impact on the financial statements in the
comparative period as all shipments with CFR terms arrived
at the port of destinations before 31 December 2017.
Typically, the Group has a right to payment at the point
that control of the goods passes including a right, where
applicable, to payment for provisionally priced products and
2018 Annual Report « Grange Resources Limited
unperformed freight services. Cash received before control
passes is recognised as a contract liability. The amount
of consideration does not contain a significant financing
component as payment terms are less than one year.
Interest revenue
Interest revenue is recognised on a time proportion basis
using the effective interest method.
Sale of apartments
The new standard is based on the principle that revenue
is recognised when control of a good or service transfers
to a customer therefore the notion of control replaces the
existing notion of risks and rewards. In most instances,
control passes, and sales revenue is recognised when legal
title of the property is transferred to the buyer. There may be
circumstances when judgment is required based on the five
indicators of control below:
i. The buyer has the significant risks and rewards of
ownership and has the ability to direct the use of, and
obtain substantially all of the remaining benefits from the
good or service;
ii. The buyer has a present obligation to pay in accordance
with the terms of the sales contract. For property disposed
of, this is generally on transfer of legal title, at which time
settlement of the remaining contract price occurs;
iii. The buyer has accepted the asset;
iv. The buyer has legal title to the asset; and
v. The buyer has physical possession of the asset
AASB 15 required the Group to identify deliverables in
contracts with customers that qualify as ‘performance
obligations’. The transaction price receivable from customers
must be allocated between the Group’s performance
obligations under the contracts on a relative stand-alone
selling price basis. Revenue will be recognised at a point in
time when the performance obligations are met.
The Group has assessed the impact of the application of
AASB 15. There was no revenue from the sale of property for
the period ended 31 December 2018. Therefore, the adoption
of this standard has no impact on the financial statements.
Distribution Income
Distribution income from short term managed funds is
recognised when the right to receive the income has been
established.
(g) Government Grants
Government grants are recognised at their fair value when
there is reasonable assurance that the grant will be received,
and all attaching conditions will be complied with.
When the grant relates to an expense item, it is recognised
as income over the periods necessary to match the grant
on a systematic basis to the costs that it is intended to
compensate.
When the grant relates to an asset, the fair value is credited
to a deferred income account and is released to the income
statement over the expected useful life of the relevant asset
by equal annual instalments.
43
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Grange Resources Limited » 2018 Annual Report
(h) Leases
Leases are classified as either operating or finance leases
at the inception of the leases based on the economic
substance of their agreement so as to reflect the risks and
rewards incidental to ownership.
Finance leases, which are those leases that transfer
substantially all of the risks and rewards incidental to
ownership of the leased item to the Group, are capitalised
at the present value of the minimum lease payments and
disclosed as property, plant and equipment. A lease liability
of equal value is also recognised. Each lease payment is
allocated between the liability and financing costs. The
finance cost is charged to the income statement over the
lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability over the
period. The property, plant and equipment acquired under
a finance lease is depreciated over the asset’s useful life or
over the shorter of the asset’s useful life and the lease term
if there is no reasonable certainty that the Group will obtain
ownership at the end of the lease term.
Operating leases are those leases that do not transfer a
significant portion of the risks and rewards of ownership
to the Group as lessee. Payments made under operating
leases are charged to the income statement on a straight-
line basis over the period of the lease.
materials and the costs of production which include:
•
•
•
labour costs, materials and contractor expenses which
are directly attributable to the extraction and processing
of ore;
depreciation of property, plant and equipment used in
the extraction and processing of ore; and
production overheads directly attributable
extraction and processing of ore.
to
the
Stockpiles represent ore that has been extracted and
is available for further processing. If there is significant
uncertainty as to when the stockpiled ore will be processed
it is expensed as incurred. Where the future processing of
the ore can be predicted with confidence because it exceeds
the mine’s cut-off grade, it is valued at the lower of cost and
net realisable value. Work in progress inventory includes
partly processed material. Quantities are assessed primarily
through surveys and assays.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the
sale.
Development work in progress pertains to development and
construction of housing units and comprises expenditures
relating to:
(i)
Cash and cash equivalents
• Cost of acquisition
Cash and cash equivalents comprise cash on hand, deposits
held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months
or less that are readily convertible to amounts of cash and
which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current
liabilities on the balance sheet.
(j)
Trade and other receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less loss allowance.
As permitted by IFRS 9, the Group applies the ‘simplified
approach’ to trade receivable balances and the ‘general
approach’ to all other financial assets. The simplified
approach requires expected lifetime credit losses to be
recognised from initial recognition of the receivables. The
general approach incorporates a review for any significant
increase in counterparty credit risk since inception.
The expected credit losses (ECL) review include assumptions
about the risk of default and expected credit loss rates. In
determining the recoverability of a trade or other receivable
using the ECL model, the Group performs a risk analysis
considering the type and age of the outstanding receivables,
the creditworthiness of the counterparty, contract provisions,
letter of credit and timing of payment.
(k)
Inventories
Raw materials and stores, ore stockpiles, work in progress
and finished goods are stated at the lower of cost and net
realisable value. Cost is determined primarily on the basis of
weighted average costs and comprises of the cost of direct
The cost of acquisition comprises the purchase price of
the land along with any direct costs incurred as part of
the acquisition including legal, valuation and stamp duty
costs.
• Development and other costs
Cost includes variable and fixed costs directly related
to specific contracts, costs related to general contract
activity which can be allocated to specific projects on a
reasonable basis, and other costs specifically chargeable
under the contract.
•
Interest capitalised
Financing costs on the purchase and development of
housing units are also included in the cost of inventory.
(l)
Income tax
The income tax expense or benefit for the period is the tax
payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the
Group’s subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
44
PB
bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not
accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and
are expected to apply when the related deferred income tax
asset is realised, or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses, only if it is probable
that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
the tax bases of investments in foreign operations where
the Group is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Grange Resources Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation
legislation. As a consequence, Grange Resources Limited
and its subsidiaries are taxed as a single entity and the
deferred tax assets and liabilities of the Group are set off in
the consolidated financial statements.
(m) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST except:
• when GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense item
as applicable; and
•
receivables and payables, which are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the balance sheet.
Cash flows are included in the Statement of Cash Flows on
a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable
from, or payable to, the taxation authority, are presented as
operating cash flows.
Commitments and contingencies are presented net of the
2018 Annual Report « Grange Resources Limited
(n) Property, plant and equipment
Land and buildings and plant and equipment are measured at
cost less, where applicable, any accumulated depreciation,
amortisation or
impairment
in value. Cost
includes
expenditure that is directly attributable to the acquisition
of the item. In the event that all or part of the purchase
consideration is deferred, cost is determined by discounting
the amounts payable in the future to their present value as at
the date of acquisition.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to
the income statement during the reporting period in which
they are incurred.
Land is not depreciated. Assets under construction are
measured at cost and are not depreciated until they are
ready and available for use. Depreciation on assets is
calculated using either a straight-line or diminishing value
method to allocate the cost, net of their residual values, over
the estimated useful lives or the life of the mine, whichever is
shorter. Leasehold improvements and certain leased plant
and equipment are depreciated over the shorter lease term.
Other non-mine plant and equipment typically has the
following estimated useful lives:
Buildings
Plant and Equipment
Computer Equipment
10 years
4 to 8 years
3 to 5 years
The assets residual values, useful lives and amortisation
methods are reviewed and adjusted if appropriate, at each
financial period end.
An item of property, plant and equipment is derecognised
upon disposal or when no further economic benefits are
expected from its use or disposal.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in
the income statement in the period the asset is derecognised.
The carrying value of property, plant and equipment is
assessed annually for impairment in accordance with note
(o) Exploration and evaluation
Exploration and evaluation expenditure comprise costs
which are directly attributable to:
research and analysing exploration data
conducting geological studies, exploratory drilling and
sampling
examining and testing extraction and treatment methods
1(r).
•
•
•
•
Exploration and evaluation expenditure also include the
costs incurred in acquiring rights, the entry premiums paid to
PB
amount of GST recoverable from, or payable to, the taxation
compiling pre-feasibility and definitive feasibility studies
authority.
Grange Resources Limited » 2018 Annual Report
(h) Leases
Leases are classified as either operating or finance leases
at the inception of the leases based on the economic
substance of their agreement so as to reflect the risks and
of ore;
rewards incidental to ownership.
Finance leases, which are those leases that transfer
substantially all of the risks and rewards incidental to
ownership of the leased item to the Group, are capitalised
at the present value of the minimum lease payments and
disclosed as property, plant and equipment. A lease liability
of equal value is also recognised. Each lease payment is
allocated between the liability and financing costs. The
finance cost is charged to the income statement over the
lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability over the
period. The property, plant and equipment acquired under
a finance lease is depreciated over the asset’s useful life or
over the shorter of the asset’s useful life and the lease term
if there is no reasonable certainty that the Group will obtain
ownership at the end of the lease term.
Operating leases are those leases that do not transfer a
significant portion of the risks and rewards of ownership
to the Group as lessee. Payments made under operating
leases are charged to the income statement on a straight-
sale.
line basis over the period of the lease.
relating to:
materials and the costs of production which include:
•
labour costs, materials and contractor expenses which
are directly attributable to the extraction and processing
•
depreciation of property, plant and equipment used in
the extraction and processing of ore; and
•
production overheads directly attributable
to
the
extraction and processing of ore.
Stockpiles represent ore that has been extracted and
is available for further processing. If there is significant
uncertainty as to when the stockpiled ore will be processed
it is expensed as incurred. Where the future processing of
the ore can be predicted with confidence because it exceeds
the mine’s cut-off grade, it is valued at the lower of cost and
net realisable value. Work in progress inventory includes
partly processed material. Quantities are assessed primarily
through surveys and assays.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the
Development work in progress pertains to development and
construction of housing units and comprises expenditures
(i)
Cash and cash equivalents
• Cost of acquisition
Cash and cash equivalents comprise cash on hand, deposits
held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months
The cost of acquisition comprises the purchase price of
the land along with any direct costs incurred as part of
the acquisition including legal, valuation and stamp duty
or less that are readily convertible to amounts of cash and
costs.
which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current
• Development and other costs
liabilities on the balance sheet.
(j)
Trade and other receivables
Cost includes variable and fixed costs directly related
to specific contracts, costs related to general contract
activity which can be allocated to specific projects on a
reasonable basis, and other costs specifically chargeable
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less loss allowance.
under the contract.
•
Interest capitalised
As permitted by IFRS 9, the Group applies the ‘simplified
approach’ to trade receivable balances and the ‘general
approach’ to all other financial assets. The simplified
approach requires expected lifetime credit losses to be
recognised from initial recognition of the receivables. The
general approach incorporates a review for any significant
increase in counterparty credit risk since inception.
The expected credit losses (ECL) review include assumptions
about the risk of default and expected credit loss rates. In
determining the recoverability of a trade or other receivable
using the ECL model, the Group performs a risk analysis
considering the type and age of the outstanding receivables,
the creditworthiness of the counterparty, contract provisions,
letter of credit and timing of payment.
(k)
Inventories
Raw materials and stores, ore stockpiles, work in progress
and finished goods are stated at the lower of cost and net
realisable value. Cost is determined primarily on the basis of
weighted average costs and comprises of the cost of direct
Financing costs on the purchase and development of
housing units are also included in the cost of inventory.
(l)
Income tax
The income tax expense or benefit for the period is the tax
payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the
Group’s subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
PB
bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not
accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and
are expected to apply when the related deferred income tax
asset is realised, or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses, only if it is probable
that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
the tax bases of investments in foreign operations where
the Group is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Grange Resources Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation
legislation. As a consequence, Grange Resources Limited
and its subsidiaries are taxed as a single entity and the
deferred tax assets and liabilities of the Group are set off in
the consolidated financial statements.
(m) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST except:
• when GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense item
as applicable; and
•
receivables and payables, which are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the balance sheet.
Cash flows are included in the Statement of Cash Flows on
a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable
from, or payable to, the taxation authority, are presented as
operating cash flows.
Commitments and contingencies are presented net of the
amount of GST recoverable from, or payable to, the taxation
authority.
2018 Annual Report « Grange Resources Limited
(n) Property, plant and equipment
impairment
Land and buildings and plant and equipment are measured at
cost less, where applicable, any accumulated depreciation,
amortisation or
includes
expenditure that is directly attributable to the acquisition
of the item. In the event that all or part of the purchase
consideration is deferred, cost is determined by discounting
the amounts payable in the future to their present value as at
the date of acquisition.
in value. Cost
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to
the income statement during the reporting period in which
they are incurred.
Land is not depreciated. Assets under construction are
measured at cost and are not depreciated until they are
ready and available for use. Depreciation on assets is
calculated using either a straight-line or diminishing value
method to allocate the cost, net of their residual values, over
the estimated useful lives or the life of the mine, whichever is
shorter. Leasehold improvements and certain leased plant
and equipment are depreciated over the shorter lease term.
Other non-mine plant and equipment typically has the
following estimated useful lives:
Buildings
Plant and Equipment
Computer Equipment
10 years
4 to 8 years
3 to 5 years
The assets residual values, useful lives and amortisation
methods are reviewed and adjusted if appropriate, at each
financial period end.
An item of property, plant and equipment is derecognised
upon disposal or when no further economic benefits are
expected from its use or disposal.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in
the income statement in the period the asset is derecognised.
The carrying value of property, plant and equipment is
assessed annually for impairment in accordance with note
1(r).
(o) Exploration and evaluation
Exploration and evaluation expenditure comprise costs
which are directly attributable to:
•
•
•
•
research and analysing exploration data
conducting geological studies, exploratory drilling and
sampling
examining and testing extraction and treatment methods
compiling pre-feasibility and definitive feasibility studies
Exploration and evaluation expenditure also include the
costs incurred in acquiring rights, the entry premiums paid to
45
PB
Grange Resources Limited » 2018 Annual Report
gain access to areas of interest and amounts payable to third
parties to acquire interests in existing projects.
Exploration and evaluation expenditure is charged against
profit and loss as incurred; except for expenditure incurred
after a decision to proceed to development is made, in which
case the expenditure is capitalised as an asset.
(p) Mine properties and development
Mine properties and development represent the accumulation
of all exploration, evaluation and development expenditure
incurred by, not on behalf of, the entity in relation to areas
of interest in which mining of a mineral resource has
commenced.
Where further development expenditure is incurred in
respect of a production property after the commencement
of production, such expenditure is carried forward as part of
the cost of that production property only when substantial
future economic benefits arise, otherwise such expenditure
is classified as part of the cost of production.
Costs on production properties in which the Group has an
interest are amortised over the life of the area of interest
to which such costs relate on the production output basis.
Changes to the life of the area of interest are accounted for
prospectively.
The carrying value of each mine property and development
are assessed annually for impairment in accordance with
note 1(r).
(q) Deferred stripping costs
Stripping (i.e. overburden and other waste removal) costs
incurred in the production phase of a surface mine are
capitalised to the extent that they improve access to an
identified component of the ore body and are subsequently
amortised on a systematic basis over the expected useful
life of the identified component of the ore body. Capitalised
stripping costs are disclosed as a component of Mine
Properties and Development.
Components of an ore body are determined with reference
to life of mine plans and take account of factors such as
the geographical separation of mining locations and/or the
economic status of mine development decisions.
Capitalised stripping costs are initially measured at cost
and represent an accumulation of costs directly incurred in
performing the stripping activity that improves access to the
identified component of the ore body, plus an allocation of
directly attributable overhead costs. The amount of stripping
costs deferred is based on a relevant production measure
which uses a ratio obtained by dividing the tonnage of
waste mined by the quantity of ore mined for an identified
component of the ore body. Stripping costs incurred in
the period for an identified component of the ore body are
deferred to the extent that the current period ratio exceeds
the expected ratio for the life of the identified component of
the ore body. Such deferred costs are then charged against
the income statement on a systematic units of production
basis over the expected useful life of an identified component
of the ore body.
Changes to the life of mine plan, identified components of an
ore body, stripping ratios, units of production and expected
46
PB
useful life are accounted for prospectively.
for managing the financial assets and the contractual terms
income from these financial assets is included in finance
Deferred stripping costs form part of the total investment in
a cash generating unit, which is reviewed for impairment if
events or changes in circumstances indicate that the carrying
value may not be recoverable.
(r)
Impairment of assets
At each reporting date, the Group assesses whether
there is any indication that an asset, including capitalised
development expenditure, may be impaired. Where an
indicator of impairment exists, the Group makes a formal
estimate of the recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount the asset
is considered impaired and is written down to its recoverable
amount. Impairment losses are recognised in the income
statement.
Recoverable amount is the greater of fair value less costs
of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets
or groups of assets (cash generating units).
Where there is no binding sale agreement or active
market, fair value less costs of disposal is based on the
best information available to reflect the amount the Group
could receive for the cash generating unit in an arm’s length
transaction. In assessing fair value, the estimated future cash
flows are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset.
An assessment is also made at each reporting date as to
whether there is any indication that previously recognised
impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable amount
is estimated. A previously recognised impairment loss is
reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the
last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the pre-
impairment value, adjusted for any depreciation that would
have been recognised on the asset had the initial impairment
loss not occurred. Such reversal is recognised in profit or
loss.
After such a reversal the depreciation charge is adjusted
in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over
its remaining useful life.
(s)
(i)
Investments and other financial assets
• FVOCI: Assets that are held for collection of contractual
Classification
From 1 January 2018, the group classifies its financial assets
in the following measurement categories:
•
those to be measured subsequently at fair value (either
through other comprehensive income (OCI) or through
profit or loss), and
•
those to be measured at amortised cost.
The classification depends on the entity’s business model
2018 Annual Report « Grange Resources Limited
of the cash flows.
For assets measured at fair value, gains and losses will
either be recorded in profit or loss or OCI. For investments
in equity instruments that are not held for trading, this will
income using the effective interest rate method. Foreign
exchange gains and losses are presented in other gains/
(losses) and impairment expenses are presented as
separate line item in the statement of profit or loss.
depend on whether the group has made an irrevocable
• FVPL: Assets that do not meet the criteria for amortised
election at the time of initial recognition to account for the
cost or FVOCI are measured at FVPL. A gain or loss on a
equity investment at fair value through other comprehensive
debt investment that is subsequently measured at FVPL
income (FVOCI).
(ii) Recognition
The group reclassifies debt investments when and only when
its business model for managing those assets changes.
Equity instruments
is recognised in profit or loss and presented net within
other gains/(losses) in the period in which it arises.
The group subsequently measures all equity investments at
fair value. Where the group’s management has elected to
present fair value gains and losses on equity investments
in OCI, there is no subsequent reclassification of fair value
gains and losses to profit or loss following the derecognition
of the investment. Dividends from such investments continue
to be recognised in profit or loss as other income when the
group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are
recognised in other gains/(losses) in the statement of profit
Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the group
commits to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred
and the group has transferred substantially all the risks and
rewards of ownership.
(iii) Measurement
At initial recognition, the group measures a financial asset at
or loss as applicable. Impairment losses (and reversal of
its fair value plus, in the case of a financial asset not at fair
impairment losses) on equity investments measured at
value through profit or loss (FVPL), transaction costs that are
FVOCI are not reported separately from other changes in
directly attributable to the acquisition of the financial asset.
fair value.
Transaction costs of financial assets carried at FVPL are
(iv) Impairment
expensed in profit or loss.
Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Debt instruments
From 1 January 2018, the group assesses on a forward-
looking basis, the expected credit losses associated with its
debt instruments carried at amortised cost and FVOCI. The
impairment methodology applied depends on whether there
has been a significant increase in credit risk.
Subsequent measurement of debt instruments depends
Based on the risk analysis above, the Group has determined
on the group’s business model for managing the asset and
that the expected provision for credit losses is not material
the cash flow characteristics of the asset. There are three
at transition date.
measurement categories into which the group classifies its
debt instruments:
• Amortised cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest are
measured at amortised cost. Interest income from these
financial assets is included in finance income using the
on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with
foreign exchange gains and losses. Impairment losses
are presented as separate line item in the statement of
profit or loss.
effective interest rate method. Any gain or loss arising
Classification
cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal
and interest, are measured at FVOCI. Movements in
the carrying amount are taken through OCI, except for
the recognition of impairment gains or losses, interest
income and foreign exchange gains and losses which
are recognised in profit or loss. When the financial asset
is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit
or loss and recognised in other gains/(losses). Interest
(v) Accounting policies applied until 31 December 2017
The group has applied AASB 9 retrospectively but has
elected not to restate comparative information. As a result,
the comparative information provided continues to be
accounted for in accordance with the group’s previous
accounting policy.
Until 31 December 2017, the group classified its financial
assets in the following categories:
financial assets at fair value through profit or loss,
•
•
loans and receivables,
The classification depended on the purpose for which the
investments were acquired. Management determined the
classification of its investments at initial recognition and, in
the case of assets classified as held-to-maturity, re-evaluated
this designation at the end of each reporting period.
Reclassification
The group could choose to reclassify a non-derivative
trading financial asset out of the held for trading category
if the financial asset was no longer held for the purpose of
selling it in the near term. Financial assets other than loans
PB
Grange Resources Limited » 2018 Annual Report
gain access to areas of interest and amounts payable to third
useful life are accounted for prospectively.
parties to acquire interests in existing projects.
Deferred stripping costs form part of the total investment in
Exploration and evaluation expenditure is charged against
a cash generating unit, which is reviewed for impairment if
profit and loss as incurred; except for expenditure incurred
events or changes in circumstances indicate that the carrying
after a decision to proceed to development is made, in which
value may not be recoverable.
case the expenditure is capitalised as an asset.
(p) Mine properties and development
(r)
Impairment of assets
At each reporting date, the Group assesses whether
Mine properties and development represent the accumulation
there is any indication that an asset, including capitalised
of all exploration, evaluation and development expenditure
development expenditure, may be impaired. Where an
incurred by, not on behalf of, the entity in relation to areas
indicator of impairment exists, the Group makes a formal
of interest in which mining of a mineral resource has
estimate of the recoverable amount. Where the carrying
commenced.
Where further development expenditure is incurred in
respect of a production property after the commencement
of production, such expenditure is carried forward as part of
statement.
amount of an asset exceeds its recoverable amount the asset
is considered impaired and is written down to its recoverable
amount. Impairment losses are recognised in the income
the cost of that production property only when substantial
Recoverable amount is the greater of fair value less costs
future economic benefits arise, otherwise such expenditure
of disposal and value in use. For the purposes of assessing
is classified as part of the cost of production.
Costs on production properties in which the Group has an
interest are amortised over the life of the area of interest
to which such costs relate on the production output basis.
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets
or groups of assets (cash generating units).
Changes to the life of the area of interest are accounted for
Where there is no binding sale agreement or active
prospectively.
note 1(r).
The carrying value of each mine property and development
are assessed annually for impairment in accordance with
(q) Deferred stripping costs
Stripping (i.e. overburden and other waste removal) costs
incurred in the production phase of a surface mine are
capitalised to the extent that they improve access to an
identified component of the ore body and are subsequently
amortised on a systematic basis over the expected useful
life of the identified component of the ore body. Capitalised
stripping costs are disclosed as a component of Mine
Properties and Development.
Components of an ore body are determined with reference
to life of mine plans and take account of factors such as
the geographical separation of mining locations and/or the
economic status of mine development decisions.
Capitalised stripping costs are initially measured at cost
and represent an accumulation of costs directly incurred in
performing the stripping activity that improves access to the
identified component of the ore body, plus an allocation of
directly attributable overhead costs. The amount of stripping
costs deferred is based on a relevant production measure
which uses a ratio obtained by dividing the tonnage of
waste mined by the quantity of ore mined for an identified
component of the ore body. Stripping costs incurred in
the period for an identified component of the ore body are
loss.
(s)
(i)
market, fair value less costs of disposal is based on the
best information available to reflect the amount the Group
could receive for the cash generating unit in an arm’s length
transaction. In assessing fair value, the estimated future cash
flows are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset.
An assessment is also made at each reporting date as to
whether there is any indication that previously recognised
impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable amount
is estimated. A previously recognised impairment loss is
reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the
last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the pre-
impairment value, adjusted for any depreciation that would
have been recognised on the asset had the initial impairment
loss not occurred. Such reversal is recognised in profit or
After such a reversal the depreciation charge is adjusted
in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over
its remaining useful life.
Investments and other financial assets
Classification
deferred to the extent that the current period ratio exceeds
From 1 January 2018, the group classifies its financial assets
the expected ratio for the life of the identified component of
in the following measurement categories:
the ore body. Such deferred costs are then charged against
the income statement on a systematic units of production
basis over the expected useful life of an identified component
of the ore body.
Changes to the life of mine plan, identified components of an
•
those to be measured subsequently at fair value (either
through other comprehensive income (OCI) or through
profit or loss), and
•
those to be measured at amortised cost.
ore body, stripping ratios, units of production and expected
The classification depends on the entity’s business model
PB
for managing the financial assets and the contractual terms
of the cash flows.
For assets measured at fair value, gains and losses will
either be recorded in profit or loss or OCI. For investments
in equity instruments that are not held for trading, this will
depend on whether the group has made an irrevocable
election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive
income (FVOCI).
The group reclassifies debt investments when and only when
its business model for managing those assets changes.
(ii) Recognition
Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the group
commits to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred
and the group has transferred substantially all the risks and
rewards of ownership.
(iii) Measurement
At initial recognition, the group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends
on the group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three
measurement categories into which the group classifies its
debt instruments:
• Amortised cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest are
measured at amortised cost. Interest income from these
financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising
on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with
foreign exchange gains and losses. Impairment losses
are presented as separate line item in the statement of
profit or loss.
• FVOCI: Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal
and interest, are measured at FVOCI. Movements in
the carrying amount are taken through OCI, except for
the recognition of impairment gains or losses, interest
income and foreign exchange gains and losses which
are recognised in profit or loss. When the financial asset
is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit
or loss and recognised in other gains/(losses). Interest
2018 Annual Report « Grange Resources Limited
income from these financial assets is included in finance
income using the effective interest rate method. Foreign
exchange gains and losses are presented in other gains/
(losses) and impairment expenses are presented as
separate line item in the statement of profit or loss.
• FVPL: Assets that do not meet the criteria for amortised
cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL
is recognised in profit or loss and presented net within
other gains/(losses) in the period in which it arises.
Equity instruments
The group subsequently measures all equity investments at
fair value. Where the group’s management has elected to
present fair value gains and losses on equity investments
in OCI, there is no subsequent reclassification of fair value
gains and losses to profit or loss following the derecognition
of the investment. Dividends from such investments continue
to be recognised in profit or loss as other income when the
group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are
recognised in other gains/(losses) in the statement of profit
or loss as applicable. Impairment losses (and reversal of
impairment losses) on equity investments measured at
FVOCI are not reported separately from other changes in
fair value.
(iv) Impairment
From 1 January 2018, the group assesses on a forward-
looking basis, the expected credit losses associated with its
debt instruments carried at amortised cost and FVOCI. The
impairment methodology applied depends on whether there
has been a significant increase in credit risk.
Based on the risk analysis above, the Group has determined
that the expected provision for credit losses is not material
at transition date.
(v) Accounting policies applied until 31 December 2017
The group has applied AASB 9 retrospectively but has
elected not to restate comparative information. As a result,
the comparative information provided continues to be
accounted for in accordance with the group’s previous
accounting policy.
Classification
Until 31 December 2017, the group classified its financial
assets in the following categories:
•
•
financial assets at fair value through profit or loss,
loans and receivables,
The classification depended on the purpose for which the
investments were acquired. Management determined the
classification of its investments at initial recognition and, in
the case of assets classified as held-to-maturity, re-evaluated
this designation at the end of each reporting period.
Reclassification
The group could choose to reclassify a non-derivative
trading financial asset out of the held for trading category
if the financial asset was no longer held for the purpose of
selling it in the near term. Financial assets other than loans
47
PB
Grange Resources Limited » 2018 Annual Report
and receivables were permitted to be reclassified out of the
held for trading category only in rare circumstances arising
from a single event that was unusual and highly unlikely to
recur in the near term. In addition, the group could choose
to reclassify financial assets that would meet the definition of
loans and receivables out of the held for trading or available-
for-sale categories if the group had the intention and ability to
hold these financial assets for the foreseeable future or until
maturity at the date of reclassification.
Reclassifications were made at fair value as of the
reclassification date. Fair value became the new cost or
amortised cost as applicable, and no reversals of fair value
gains or losses recorded before reclassification date were
subsequently made. Effective interest rates for financial
assets reclassified to loans and receivables and held-to-
maturity categories were determined at the reclassification
date. Further increases in estimates of cash flows adjusted
effective interest rates prospectively.
Subsequent Measurement
The measurement at initial recognition did not change on
adoption of AASB 9, see description above.
Subsequent to the initial recognition, loans and receivables
and held-to-maturity investments were carried at amortised
cost using the effective interest method.
Financial assets at FVPL were subsequently carried at fair
value. Gains or losses arising from changes in the fair value
were recognised in profit or loss within other gains/(losses).
Details on how the fair value of financial instruments is
determined are disclosed in note 2(f).
Impairment
The group assessed at the end of each reporting period
whether there was objective evidence that a financial asset
or group of financial assets was impaired. A financial asset
or a group of financial assets was impaired and impairment
losses were incurred only if there was objective evidence of
impairment as a result of one or more events that occurred
after the initial recognition of the asset (a ‘loss event’) and
that loss event (or events) had an impact on the estimated
future cash flows of the financial asset or group of financial
assets that could be reliably estimated.
(u) Ore reserves
The Company estimates its mineral resources and ore
reserves based on information compiled by Competent
Persons as defined in accordance with the Australasian Code
for Reporting of Exploration Results, Mineral Resources and
Ore Reserves of December 2012 (the JORC 2012 code).
Reserves, and certain mineral resources determined in this
way, are used in the calculation of depreciation, amortisation
and impairment charges, the assessment of life of mine
stripping ratios and for forecasting the timing of the payment
of close down and restoration costs.
In assessing the life of a mine for accounting purposes,
mineral resources are only taken into account where there is
a high degree of confidence of economic extraction.
(v)
Trade and other payables
Trade payables and other payables are carried at amortised
cost and represent liabilities for goods and services provided
to the Group prior to the end of the financial period that are
unpaid. Trade payables and other payables arise when
the Group becomes obliged to make future payments in
respect of the purchase of these goods and services. The
amounts are unsecured and are usually paid within 30 days
of recognition.
(w) Borrowings
All borrowings are initially recognised at the fair value of
the consideration received, less transaction costs. After
initial recognition, borrowings are subsequently measured
at amortised cost. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to
the extent that it is probable that some or all of the facility
will be drawn down. In this case the fee is deferred until the
draw down occurs. To the extent there is no evidence that it
is probable that some or all of the facility will be drawn down,
the fee is capitalised as a prepayment for liquidity services
and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled or
expired. Borrowings are classified as current liabilities unless
the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date.
(t)
Derivatives
Borrowing costs
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. The accounting for subsequent changes in fair
value depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item
being hedged. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting 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.
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended
use or sale. Other borrowing costs are expensed.
(x) Provisions
Provisions are recognised when the Group has a present
obligation, it is probable that there will be a future sacrifice
of economic benefits and a reliable estimate can be made of
the amount of the obligation.
When the Group expects some or all of a provision to be
recovered from a third party, for example under an insurance
contract, the receivable is recognised as a separate asset but
only when the reimbursement is virtually certain, and it can
be measured reliably. The expense relating to any provision is
presented in the income statement net of any reimbursement.
48
PB
If the effect of the time value of money is material, provisions
are discounted using a pre-tax rate that reflects the current
market assessment of the time value of money. Where this
is the case, its carrying amount is the present value of these
estimated future cash flows. When discounting is used,
the increase in the provision due to the passage of time is
recognised as a finance cost.
Decommissioning and restoration
Decommissioning and restoration provisions include the
dismantling and demolition of infrastructure and the removal
of residual materials and remediation of disturbed areas.
The provision is recognised in the accounting period when
the obligation arising from the related disturbance occurs,
whether this occurs during the mine development or during
the production phase, based on the net present value of
estimated future costs. The costs are estimated on the basis
of a closure plan. The cost estimates are calculated annually
during the life of the operation to reflect known developments
and are subject to formal review at regular intervals.
The amortisation or ‘unwinding’ of the discount applied in
establishing the net present value of provisions is charged
to the income statement in each accounting period. The
amortisation of the discount is shown as a financing cost,
rather than as an operating cost. Other movements in the
provisions for close down and restoration costs, including
those resulting
from new disturbance, updated cost
estimates, changes to the lives of operations and revisions
to discount rates are capitalised within mine properties and
development, to the extent that any amount of deduction
does not exceed the carrying amount of the asset. Any
deduction in excess of the carrying amount is recognised in
the income statement immediately. If an adjustment results
in an addition to the cost of the related asset, consideration
will be given to whether an indication of impairment exists,
and the impairment policy will apply. These costs are then
depreciated over the life of the area of interest to which they
relate.
(y) Employee entitlements
Wages, salaries and sick leave
Liabilities for wages and salaries, including non-monetary
benefits and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in
other payables in respect of employees’ services up to the
reporting date and are measured at the amounts expected
to be paid when the liabilities are settled.
Annual leave
Liabilities for annual leave expected to be settled within 12
months of the reporting date are recognised in the provision
for employee benefits in respect of employees’ services
up to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the
provision for employee benefits and measured as the present
value of expected future payments to be made in respect
of services provided by employees up to the reporting date
using the projected unit credit method.
2018 Annual Report « Grange Resources Limited
Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of
service. Expected future payments are discounted using
market yields at the reporting date on corporate bonds with
terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Defined contribution superannuation funds
Contributions to defined contribution funds are recognised
as an expense in the income statement as they become
payable.
(z) Contributed equity
Ordinary share capital is recognised at the fair value of the
consideration received by the Company.
Any transaction costs arising on the issue of ordinary shares
are recognised directly in equity as a reduction, net of tax, of
the share proceeds received.
(aa) Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the financial period but
not distributed at balance date.
(ab) Earnings per share (EPS)
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than
ordinary shares;
by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the period
and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take into
account:
•
•
the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares;
and
the weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(ac) Parent entity financial information
The financial information for the parent entity, Grange
Resources Limited, disclosed in note 36 has been prepared
on the same basis as the consolidated financial statements,
except as set out below.
Investments in subsidiaries, associates and joint venture
entities
Investments in subsidiaries and joint venture entities are
accounted for at cost in the financial statements of Grange
Resources Limited. Dividends received from associates
are recognised in the parent entity’s profit or loss, rather
49
PB
Grange Resources Limited » 2018 Annual Report
than being deducted from the carrying amount of these
investments.
Financial guarantees
Where the parent entity has provided financial guarantees
in relation to loans and payables of subsidiaries for no
compensation, the fair values of these guarantees are
accounted for as contributions and recognised as part of the
cost of the investment.
(ad)
Rounding of amounts
issued by
The Group is of a kind referred to in ASIC Legislative
Instrument 2016/191 Class,
the Australian
Securities and Investments Commission, relating to the
“rounding off” of amounts in the financial report. Amounts
in the financial report have been rounded off in accordance
with the instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
NOTE 2. FINANCIAL RISK MANAGEMENT
Financial assets measured at FVPL include the following:
2018 Annual Report « Grange Resources Limited
The Group’s activities expose it to a variety of financial risks:
market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall
risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The Group
has used derivative financial instruments such as foreign
exchange contracts and forward commodity contracts to
manage certain risk exposures. Derivatives are exclusively
used for hedging purposes, i.e. not as trading or other
speculative instruments. The Group uses different methods
to measure different types of risks to which it is exposed.
These methods include sensitivity analysis in the case of
interest rate, foreign exchange and commodity price risks
and aging analysis for credit risk.
Risk management is carried out by the management
team following guidance received from the Audit and Risk
Committee.
The Group holds the following financial instruments:
Current Assets
Short Term Managed Funds
Derivative financial instruments
Amounts recognised in profit or loss
During the year, the following gains/(losses) were recognised in profit or loss:
Current Assets
Fair value gain(loss) on short term managed funds held at
FVPL recognised in Gain/(loss) on financial instruments
Fair value gain(loss) on derivative financial instruments at
FVPL recognised in Gain/(loss) on financial instruments
2017
$’000
167,989
-
36,233
66
204,288
23,525
4,830
28,355
2017
$’000
-
-
-
-
-
Financial Assets
Cash and cash equivalents
Short Term Managed Funds
Trade and other receivables
Derivative financial instruments
Financial Liabilities
Trade and other payables
Borrowings
2018
$’000
204,497
19,988
36,566
(254)
260,797
45,116
7,738
52,854
The carrying amount and movement in Short Term Managed Funds are set out below:
Short Term Managed Funds
Units in unlisted securities
Carrying amount at the end of the year
Movements in Short Term Managed Funds
Balance at the beginning of the year
Movement in Short Term Managed Funds
2018
$’000
19,988
19,988
-
19,988
19,988
Financial assets at fair value through profit or loss
Classification
The group classifies the following financial assets at fair value through profit or loss (FVPL)
short term managed funds
derivative financial instruments
•
•
50
PB
a) Market Risk
i) Foreign exchange risk
primarily with respect to the US dollar.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
Foreign exchange risk arises from commercial transactions, given that the Group’s sales revenues are denominated in US
dollars and the majority of its operating costs are denominated in Australian dollars, and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and
The Group’s exposure to US dollar denominated foreign currency risk at the reporting date, expressed in Australian dollars,
cash flow forecasting.
was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Net US dollar surplus
2018
$’000
19,988
(254)
19,734
2018
$’000
(12)
(320)
(332)
2018
$’000
65,431
17,645
(66)
83,010
2017
$’000
-
66
66
2017
$’000
-
46
46
2017
$’000
75,080
24,752
(126)
99,706
PB
than being deducted from the carrying amount of these
NOTE 2. FINANCIAL RISK MANAGEMENT
Financial assets measured at FVPL include the following:
2018 Annual Report « Grange Resources Limited
Current Assets
Short Term Managed Funds
Derivative financial instruments
2018
$’000
19,988
(254)
19,734
Amounts recognised in profit or loss
During the year, the following gains/(losses) were recognised in profit or loss:
Current Assets
Fair value gain(loss) on short term managed funds held at
FVPL recognised in Gain/(loss) on financial instruments
Fair value gain(loss) on derivative financial instruments at
FVPL recognised in Gain/(loss) on financial instruments
a) Market Risk
i) Foreign exchange risk
2018
$’000
(12)
(320)
(332)
2017
$’000
-
66
66
2017
$’000
-
46
46
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US dollar.
Foreign exchange risk arises from commercial transactions, given that the Group’s sales revenues are denominated in US
dollars and the majority of its operating costs are denominated in Australian dollars, and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
The Group’s exposure to US dollar denominated foreign currency risk at the reporting date, expressed in Australian dollars,
was as follows:
The carrying amount and movement in Short Term Managed Funds are set out below:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Net US dollar surplus
2018
$’000
65,431
17,645
(66)
83,010
2017
$’000
75,080
24,752
(126)
99,706
51
PB
Grange Resources Limited » 2018 Annual Report
investments.
Financial guarantees
Where the parent entity has provided financial guarantees
in relation to loans and payables of subsidiaries for no
compensation, the fair values of these guarantees are
accounted for as contributions and recognised as part of the
cost of the investment.
(ad)
Rounding of amounts
The Group is of a kind referred to in ASIC Legislative
Instrument 2016/191 Class,
issued by
the Australian
Securities and Investments Commission, relating to the
“rounding off” of amounts in the financial report. Amounts
in the financial report have been rounded off in accordance
with the instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
The Group’s activities expose it to a variety of financial risks:
market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall
risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The Group
has used derivative financial instruments such as foreign
exchange contracts and forward commodity contracts to
manage certain risk exposures. Derivatives are exclusively
used for hedging purposes, i.e. not as trading or other
speculative instruments. The Group uses different methods
to measure different types of risks to which it is exposed.
These methods include sensitivity analysis in the case of
interest rate, foreign exchange and commodity price risks
and aging analysis for credit risk.
Risk management is carried out by the management
team following guidance received from the Audit and Risk
Committee.
The Group holds the following financial instruments:
2017
$’000
167,989
36,233
-
66
204,288
23,525
4,830
28,355
2017
$’000
-
-
-
-
-
Financial Assets
Cash and cash equivalents
Short Term Managed Funds
Trade and other receivables
Derivative financial instruments
Financial Liabilities
Trade and other payables
Borrowings
Short Term Managed Funds
Units in unlisted securities
Carrying amount at the end of the year
Movements in Short Term Managed Funds
Balance at the beginning of the year
Movement in Short Term Managed Funds
2018
$’000
204,497
19,988
36,566
(254)
260,797
45,116
7,738
52,854
2018
$’000
19,988
19,988
-
19,988
19,988
Financial assets at fair value through profit or loss
Classification
The group classifies the following financial assets at fair value through profit or loss (FVPL)
•
•
short term managed funds
derivative financial instruments
PB
Grange Resources Limited » 2018 Annual Report
Group sensitivity
Based on the financial instruments held at 31 December
2018, had the Australian dollar weakened/strengthened
by 10% against the US dollar with all other variables held
constant, the Group’s post tax profit for the financial period
would have been $5.3 million higher / $6.4 million lower (2017:
$6.3 million higher / $7.7 million lower), mainly as a result of
foreign exchange gains/losses on US dollar denominated
cash and cash equivalents, term deposits and receivables
as detailed in the above table.
issued at fixed rates expose the Group to fair value interest
rate risk if the borrowings are carried at fair value. The
Group’s fixed rate borrowings are carried at amortised cost.
The Group analyses its interest rate exposure on a
dynamic basis. Various scenarios are simulated taking into
consideration refinancing, renewal of existing positions,
alternative financing and hedging.
Based on these scenarios, the Group calculates the impact
on profit and loss of a defined interest rate shift. No financial
instruments are used to manage interest rate risk.
ii) Price risk
The Group is exposed to commodity price risk. During prior
years, the Group agreed with its customers to price its iron ore
pellets at index based market prices. At this time, the Group
does not manage its iron ore price risk with financial instruments.
Going forward, the Group may consider using financial
instruments to manage commodity price risk given exposures
to market prices arising from the adoption of index based
market pricing mechanisms.
Short term managed funds are exposed to price risk arising
from investments held by the fund for which the future prices
are uncertain. The investment manager moderates this risk
through a careful selection of securities within specified limits.
The fund actively maintains a high level of diversification in its
holdings, thus potentially reducing the amount of risk in the
fund.
iii) Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from cash and
cash equivalents, term deposits and short term managed
funds.
For short term managed funds, the interest-bearing financial
assets in each of the Funds expose it to risks associated with
the effects of fluctuations in the prevailing levels of market
interest rates on its financial position and cash flows. The
main interest rate risk arises from the Fund’s investments in
bonds.
As at the reporting date, the Group has no variable rate
borrowings outstanding. Borrowings issued at variable rates
expose the Group to cash flow interest rate risk. Borrowings
b) Credit Risk
Credit risk is managed on a Group basis. Credit risk arises
from cash and cash equivalents and deposits with banks
and financial institutions, as well as credit exposures to
customers, including outstanding receivables and committed
transactions.
The Group is exposed to a concentration of risk with sales
of iron ore being made to a limited number of customers.
The maximum exposure to credit risk at the reporting date
is limited to the carrying value of trade receivables, cash
and cash equivalents and deposits with banks and financial
institutions. As at 31 December 2018, there were no trade
receivables (2017 nil) that are past due. The other classes
within trade and other receivables do not contain impaired
assets and are not past due.
c) Liquidity Risk
Prudent liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability of
funding through an adequate amount of committed credit
facilities and the ability to close out market positions. The
Group manages liquidity risk by continuously monitoring
forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities
into relevant maturity groupings based on the remaining
period as at the reporting date to the contractual maturity
date. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Less than 6
months 6-12 months
$’000
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years Over 5 years
$’000
$’000
Total
contractual
cash flows
$’000
Carrying
amount
liabilities
$’000
45,116
-
1,349
6,184
-
739
-
-
-
45,116
45,116
-
8,272
7,738
46,465
6,184
739
-
-
53,388
52,854
2018 - Consolidated
Non-derivatives
Trade and other
payables
Fixed rate
borrowings
Total non-
derivatives
52
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2018 Annual Report « Grange Resources Limited
Less than 6
months 6-12 months
$’000
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years Over 5 years
$’000
$’000
Total
contractual
cash flows
$’000
Carrying
amount
liabilities
$’000
23,525
-
-
-
-
23,525
23,525
3,267
1,604
-
-
-
4,871
4,830
26,792
1,604
-
-
-
28,396
28,355
2017 - Consolidated
Non-derivatives
Trade and other
payables
Fixed rate
borrowings
Total non-
derivatives
d) Capital Risk Management
When managing capital, the Group’s objective is to safeguard
the ability to continue as a going concern so that the Group
continues to provide returns for shareholders and benefits
for other stakeholders, and to maintain an optimal capital
structure to reduce the cost of capital.
Management is constantly reviewing and adjusting, where
necessary, the capital structure. This involves the use of
corporate forecasting models which enable analysis of the
Group’s financial position including cash flow forecasts to
determine future capital management requirements. To ensure
sufficient funding, a range of assumptions are modeled.
e) Derivatives
Derivatives are only used for economic hedging purposes
and not as speculative investments.
(i) Classification of derivatives
Derivatives are classified as held for trading and
accounted for at fair value through profit or loss. They
are presented as current assets or liabilities if they are
expected to be settled within 12 months after the end
of the reporting period.
f) Recognised fair value measurements
This section explains the judgements and estimates made
in determining the fair values of the financial instruments
that are recognised and measured at fair value in the
financial statements. To provide an indication about the
reliability of the inputs used in determining fair value, the
Group has classified its financial instruments into the
three levels prescribed under the accounting standards.
Level 1: The fair value of financial instruments traded in
active markets (such as publicly traded derivatives and
equity securities) is based on quoted market prices at the
end of the reporting period. The quoted market price used
for financial assets held by the group is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not
traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques
which maximise the use of observable market data and
rely as little as possible on entity-specific estimates. If all
significant inputs required to fair value an instrument are
observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based
on observable market data, the instrument is included in
level 3.
Specific valuation techniques used to value the derivative
financial instruments mainly include determining the fair
value of forward contracts using forward rates at the
balance sheet date provided by the dealers.
The following table presents the group’s assets and
liabilities measured and recognised at fair value at 31
December 2018 and 31 December 2017.
2018
Financial Assets
Short Term Managed Funds
Derivative financial instruments
Total Financial Assets
2017
Financial Assets
Derivative financial instruments
Total Financial Assets
Level 1
$’000
823
-
823
Level 1
$’000
-
-
Level 2
$’000
18,763
(254)
18,509
Level 2
$’000
66
66
Level 3
$’000
402
-
402
Level 3
$’000
-
-
Total
$’000
19,988
(254)
19,734
Total
$’000
66
66
53
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Grange Resources Limited » 2018 Annual Report
NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and
are based on historical experience and other factors,
including expectations of future events that may have a
financial impact on the entity and that are believed to be
reasonable under the circumstances.
The Group makes estimates and assumptions concerning
the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The
estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are
discussed below.
a) Net realisable value of inventories
include a number of assumptions,
The Group reviews the carrying value of its inventories
at each reporting date to ensure that the cost does not
exceed net realisable value. Estimates of net realisable
including
value
commodity price expectations, foreign exchange rates and
costs to complete inventories to a saleable product. As at
31 December 2018 the net realisable value exceeded cost
for all significant inventory balances.
Development Properties
Property acquired for development and sale in the
ordinary course of business is carried at the lower of cost
and Net Realisable Value (NRV). The cost of development
properties includes expenditure incurred in acquiring
the property, preparing it for sale and borrowing costs
incurred,
The NRV is the estimated selling price, less the estimated
costs of completion and selling expenses. Management
considers the estimation of both selling prices and costs
of completion to be an area of estimation uncertainty,
as these estimations take into consideration market
conditions affecting each property and the underlying
strategy for selling the property.
The recoverable amount of each property is assessed at
each balance date and accounting judgement is required
to assess whether a provision is raised where cost
(including costs to complete) exceeds NRV.
b)
Impairment of property, plant and equipment and
mine properties and development
Where there is an indication of a possible impairment, a
formal estimate of the recoverable amount of each Cash
Generating Unit (CGU) is made, which is deemed to be
the higher of a cash generating unit’s fair value less costs
of disposal and its value in use.
Details in relation to the Group’s impairment assessment
are disclosed at note 28.
c) Stripping costs in the production phase of a
surface mine (Interpretation 20)
The application of Interpretation 20 requires management
judgement in determining whether a surface mine is in the
production phase and whether the benefits of production
stripping activities will be realised in the form of inventory
produced through improved access to ore.
54
PB
Judgement is also applied in identifying the component
of the ore body and the manner in which stripping costs
are capitalised and amortised. There are a number
of uncertainties inherent in identifying components of
the ore body and the inputs to the relevant production
methods for capitalising and amortising stripping costs
and these assumptions may change significantly when
new information becomes available. Such changes
could impact on capitalisation and amortisation rates for
capitalised stripping costs and deferred stripping asset
values.
d) Determination of mineral resources and ore reserves
Mineral resources and ore reserves are based on information
compiled by a Competent Person as defined in accordance
with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the JORC
2012 code). There are numerous uncertainties inherent in
estimating ore reserves and assumptions that are valid at
the time of estimation may change significantly when new
information becomes available. Changes in forecast prices of
commodities, exchange rates, production costs or recovery
rates may change the economic status of ore reserves and
may, ultimately, result in the reserves being restated. Such
changes in reserves could impact on depreciation and
amortisation rates, asset carrying values and provisions for
rehabilitation.
e) Taxation
for
taxation
The Group’s accounting policy
requires
management judgment in relation to the application of income
tax legislation. There are many transactions and calculations
undertaken during the ordinary course of business where the
ultimate tax determination is uncertain. The Group recognises
liabilities for tax, and if appropriate taxation investigation or
audit issues, based on whether tax will be due and payable.
Where the taxation outcome of such matters is different from
the amount initially recorded, such difference will impact the
current and deferred tax positions in the period in which the
assessment is made.
The Group merged its multiple tax consolidated groups on
6 January 2011 which has impacted the carrying amount of
deferred tax assets and deferred tax liabilities recognised on
the balance sheet. Management has used judgment in the
application of income tax legislation on accounting for this tax
consolidation. These judgments are based on management’s
interpretation of the income tax legislation applicable at the
time of the consolidation.
In addition, certain deferred tax assets for deductible
temporary differences have been recognised. In recognising
these deferred tax assets assumptions have been made
regarding the Group’s ability to generate future taxable profits.
Utilization of the tax losses also depends on the ability of the
tax consolidated entities to satisfy certain tests at the time the
losses are recouped. There is an inherent risk and uncertainty
in applying these judgments and a possibility that changes in
legislation or forecasts will impact upon the carrying amount
of deferred tax assets and deferred tax liabilities recognised
on the balance sheet.
2018 Annual Report « Grange Resources Limited
f) Provision for decommissioning and restoration costs
NOTE 4.
SEGMENT INFORMATION
Decommissioning and restoration costs are a normal
consequence of mining, and the majority of this expenditure
is incurred at the end of a mine’s life. In determining an
appropriate level of provision, consideration is given to the
expected future costs to be incurred, the timing of these
expected future costs (largely dependent on the life of the
mine), and the estimated future level of inflation.
The ultimate cost of decommissioning and restoration is
uncertain and costs can vary in response to many factors
including changes to the relevant legal requirements,
changes to mine plan, and the emergence of new restoration
techniques or experience at other mine sites. The expected
timing of expenditure can also change, for example in
response to changes in reserves or to production rates.
Certain rehabilitation activities are undertaken as part of the
mining operations included in the life of mine plan. Should
the life of mine plan be amended in the future to exclude
these activities, the provision for rehabilitation would increase
correspondingly.
Changes to any of the estimates could result in significant
changes to the level of provisioning required, which would
in turn impact future financial results. These estimates are
reviewed annually and adjusted where necessary to ensure
that the most up to date data is used.
a) Description of segments
Operating segments are determined based on the reports
reviewed by the Chief Executive Officer, who is the Group’s
chief operating decision maker in terms of allocating
resources and assessing performance.
The Group has two reportable segments:
i. Exploration, evaluation, and development of mineral
resources and iron ore mining operations; and
ii. Development and construction of housing units
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.
Segment information
Revenue
Total Assets
Total Liabilites
2018
$’000
368,204
2018
$’000
590,462
124,946
Ore Mining
2017
$’000
247,877
Property Development
2017
$’000
-
2018
$’000
-
2017
$’000
489,961
102,382
2018
$’000
18,153
5,839
2017
$’000
-
-
The Group holds 51% ownership of the property development segment and is fully consolidated (refer to note 27).
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
Philippines
TOTAL
2018
$’000
47,493
224,179
11,876
46,506
22,914
15,236
2017
$’000
36,715
189,017
21,293
852
-
-
368,204
247,877
Segment assets and capital are allocated based on where the assets are located. The consolidated assets of the Group
were predominately located in Australia as at 31 December 2018 and 31 December 2017. The total costs incurred during the
current and comparative periods to acquire segment assets were also predominately incurred in Australia.
55
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Grange Resources Limited » 2018 Annual Report
NOTE 5. REVENUE
Disaggregation of revenue from contracts with customers
From mining operations
Sales of iron ore products
2018
2017
Revenue from
Contracts with
Customers
$’000
Other Revenue
(Loss)
$’000
Consolidated
Revenues
$’000
Consolidated
Revenues
$’000
370,596
370,596
(2,392)
(2,392)
368,204
368,204
247,877
247,877
Revenue from contracts with provisional pricing is recognised based on the estimated forward prices which the Group
expects to receive at the end of the quotation period. The quotation period exposure is considered to be an embedded
derivative and forms part of trade receivables. The subsequent changes in the fair value were recognised in the statement of
profit or loss and other comprehensive income as other revenue (loss). Changes in fair value over, and until the end of the
quotation period, are estimated by reference to updated forward market prices.
2018
$’000
123,530
99,802
3,379
12,731
7,725
-
1,230
(45,728)
24,865
12,658
(1,254)
238,938
231
7,391
145
7,767
2017
$’000
100,422
92,633
5,847
6,702
3,560
(1,275)
539
(29,730)
15,750
(23,480)
2,379
173,347
117
3,405
38
3,560
NOTE 6. COST OF SALES
Mining costs
Production costs
Government royalties
Freight
Depreciation and amortisation expense
Property, Plant and Equipment
- Amounts capitalised during the year
Mine properties and development
- Amortisation expense
Deferred stripping
- Amounts capitalised during the year
- Amortisation expense
Changes in inventories
Foreign exchange gain
Depreciation and amortisation
Land and buildings
Plant and equipment
Computer equipment
56
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2018 Annual Report « Grange Resources Limited
NOTE 7. ADMINISTRATIVE EXPENSES
Salaries
Consultancy fees
Other
Provision for rehabilitation - Interest in joint operation
NOTE 8. OTHER INCOME (EXPENSES)
GST refund relating to prior years
Rent income
equipment
Other income (expenses)
Net gain (loss) on the disposal of property, plant and
NOTE 9. FINANCE INCOME (EXPENSES)
Finance Income
Interest income received or receivable
Gain on financial instruments
Exchange gains on foreign currency deposits /
borrowings (net)
Finance expenses
Exchange loss on foreign currency deposits /
borrowings (net)
Provisions: unwinding of discount
- Decommissioning and restoration (Note 22)
2018
$’000
3,096
749
282
1,050
5,177
2018
$’000
-
137
(531)
675
281
2018
$’000
6,774
(332)
6,874
13,316
-
(238)
(1,298)
(1,536)
2017
$’000
2,113
882
154
385
3,534
2017
$’000
397
210
(45)
(123)
439
2017
$’000
5,296
46
-
5,342
(7,423)
(479)
(1,326)
(9,228)
PB
Grange Resources Limited » 2018 Annual Report
NOTE 5. REVENUE
Disaggregation of revenue from contracts with customers
From mining operations
Sales of iron ore products
Revenue from contracts with provisional pricing is recognised based on the estimated forward prices which the Group
expects to receive at the end of the quotation period. The quotation period exposure is considered to be an embedded
derivative and forms part of trade receivables. The subsequent changes in the fair value were recognised in the statement of
profit or loss and other comprehensive income as other revenue (loss). Changes in fair value over, and until the end of the
quotation period, are estimated by reference to updated forward market prices.
NOTE 6. COST OF SALES
Mining costs
Production costs
Government royalties
Freight
Depreciation and amortisation expense
Property, Plant and Equipment
- Amounts capitalised during the year
Mine properties and development
- Amounts capitalised during the year
- Amortisation expense
Deferred stripping
- Amortisation expense
Changes in inventories
Foreign exchange gain
Depreciation and amortisation
Land and buildings
Plant and equipment
Computer equipment
PB
NOTE 7. ADMINISTRATIVE EXPENSES
2018 Annual Report « Grange Resources Limited
Revenue from
2018
2017
Salaries
Contracts with
Other Revenue
Consolidated
Consolidated
Consultancy fees
Customers
$’000
(Loss)
$’000
Revenues
Revenues
$’000
$’000
Provision for rehabilitation - Interest in joint operation
Other
370,596
370,596
(2,392)
(2,392)
368,204
368,204
247,877
247,877
NOTE 8. OTHER INCOME (EXPENSES)
GST refund relating to prior years
Rent income
Net gain (loss) on the disposal of property, plant and
equipment
Other income (expenses)
NOTE 9. FINANCE INCOME (EXPENSES)
Finance Income
Interest income received or receivable
Gain on financial instruments
Exchange gains on foreign currency deposits /
borrowings (net)
Finance expenses
Exchange loss on foreign currency deposits /
borrowings (net)
Provisions: unwinding of discount
- Decommissioning and restoration (Note 22)
2018
$’000
123,530
99,802
3,379
12,731
7,725
-
1,230
(45,728)
24,865
12,658
(1,254)
238,938
231
7,391
145
7,767
2017
$’000
100,422
92,633
5,847
6,702
3,560
(1,275)
539
(29,730)
15,750
(23,480)
2,379
173,347
117
3,405
38
3,560
2018
$’000
3,096
749
282
1,050
5,177
2018
$’000
-
137
(531)
675
281
2018
$’000
6,774
(332)
6,874
13,316
-
(238)
(1,298)
(1,536)
2017
$’000
2,113
882
154
385
3,534
2017
$’000
397
210
(45)
(123)
439
2017
$’000
5,296
46
-
5,342
(7,423)
(479)
(1,326)
(9,228)
57
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Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
NOTE 10. INCOME TAX BENEFIT (EXPENSE)
a) Risk exposure
2018
$’000
2017
$’000
The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date
is the carrying amount of each class of cash and cash equivalents mentioned above.
27,926
4,220
NOTE 12. TRADE AND OTHER RECEIVABLES
(a) Income tax expense (benefit)
Current tax
Deferred tax
Deferred income tax included in income tax expense (benefit)
comprises:
(Increase) decrease in deferred tax assets
(5,536)
22,390
(5,536)
(5,536)
(b) Numerical reconciliation of income tax (benefit) / expense to prima facie tax payable
Profit from continuing operations before income tax (benefit) /
expense
Tax expense (credit) at the Australian tax rate of 30% (2017: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Sundry items
Net movement in previously unrealised deferred tax assets
Adjustments to tax of prior period
Income tax expense
(c) Taxation Losses
135,328
40,598
183
40,781
(17,051)
(1,340)
22,390
Unused taxation losses for which no deferred tax asset has
been recognised
Potential tax benefit @ 30%
54,104
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 availability is subject to
the satisfaction of the same business test under Australia’s tax loss integrity rules.
(d) Unrecognised temporary differences
Temporary difference for which deferred tax assets not
recognised
Potential tax benefit @ 30%
Unrecognised deferred tax assets relating to above temporary
differences
NOTE 11. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash at bank and in hand as per statement of cash
flows
244,179
304,635
73,254
73,254
2018
$’000
7,664
196,833
204,497
2018
$’000
204,497
204,497
91,390
91,390
2017
$’000
5,245
162,744
167,989
2017
$’000
167,989
167,989
Total cash is held in trading accounts or term deposits with major financial institutions under normal terms and conditions
appropriate to the operation of the accounts. These deposits earn interest at rates set by these institutions. As at 31
December 2018 the weighted average interest rate on the Australian dollar accounts was 2.52% (31 December 2017: 2.77%)
and the weighted average interest rate on the United States dollar accounts was 4.16% (31 December 2017: 3.50%).
58
PB
Trade receivables
Security deposits
Loan receivable
Other receivables
Prepayments
1,817
6,037
1,817
1,817
66,750
20,025
(630)
19,395
(13,252)
(106)
6,037
54,104
16,231
2018
$’000
18,220
362
5,372
3,958
3,803
31,715
2018
$’000
24,219
7,327
378
18,159
10,647
60,730
Trade receivables include provisionally priced receivables relating to sales contracts where the selling price is determined
after delivery to the customers, based on the market price at the relevant quotation point stipulated in the contract (note 5
– Revenue). The quotation period exposure is considered to be an embedded derivative and not separated from the entire
balance. The entire balance is accounted for as one instrument and measured at fair value.
Loans receivable, classified as financial asset held at amortised cost, from the other partner in the arrangement of $5.4
million, representing the other partner’s portion of the shareholder loans. This loan is secured, carries an annual interest of
7% to 9% and will be receivable upon completion and subsequent sale of the property development projects.
Security deposits comprises of restricted deposits that are used for monetary backing for performance guarantees.
a)
Impaired trade receivables
c) Fair value and credit risk
Information regarding the impairment of trade and other
Due to the short-term nature of these receivables, their
receivables is provided in note 2.
b) Foreign exchange and interest rate risk
carrying amount is assumed to be their fair value. The
maximum exposure to credit risk at the end of the reporting
period is the carrying amount of each class of receivables
Information about the Group’s exposure to foreign currency
mentioned above. Refer to note 2 for more information on
risk and interest rate risk in relation to trade and other
the credit quality of the Group’s trade and other receivables.
receivables is provided in note 2.
NOTE 13. INVENTORIES
Stores and spares
Ore stockpiles
Work in progress
Finished goods (at lower of cost and net realisable
value)
Development work in progress
Inventories are valued at the lower of weighted average cost and estimated net realisable value. An expense of $12.66
million in 2018 and a credit of $23.48 million in 2017 were recognised for the movements in finished goods inventories (note 6).
Development work in progress pertains to property acquired for development and sale with completion and sale expected
to occur within the next 12 months.
2017
$’000
25,176
362
-
2,665
1,915
30,118
2017
$’000
24,644
15,724
1,001
21,797
-
63,166
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Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
NOTE 10. INCOME TAX BENEFIT (EXPENSE)
a) Risk exposure
The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date
is the carrying amount of each class of cash and cash equivalents mentioned above.
NOTE 12. TRADE AND OTHER RECEIVABLES
Trade receivables
Security deposits
Loan receivable
Other receivables
Prepayments
2018
$’000
18,220
362
5,372
3,958
3,803
31,715
2017
$’000
25,176
362
-
2,665
1,915
30,118
Trade receivables include provisionally priced receivables relating to sales contracts where the selling price is determined
after delivery to the customers, based on the market price at the relevant quotation point stipulated in the contract (note 5
– Revenue). The quotation period exposure is considered to be an embedded derivative and not separated from the entire
balance. The entire balance is accounted for as one instrument and measured at fair value.
Loans receivable, classified as financial asset held at amortised cost, from the other partner in the arrangement of $5.4
million, representing the other partner’s portion of the shareholder loans. This loan is secured, carries an annual interest of
7% to 9% and will be receivable upon completion and subsequent sale of the property development projects.
Security deposits comprises of restricted deposits that are used for monetary backing for performance guarantees.
a)
Impaired trade receivables
c) Fair value and credit risk
Information regarding the impairment of trade and other
receivables is provided in note 2.
b) Foreign exchange and interest rate risk
Information about the Group’s exposure to foreign currency
risk and interest rate risk in relation to trade and other
receivables is provided in note 2.
Due to the short-term nature of these receivables, their
carrying amount is assumed to be their fair value. The
maximum exposure to credit risk at the end of the reporting
period is the carrying amount of each class of receivables
mentioned above. Refer to note 2 for more information on
the credit quality of the Group’s trade and other receivables.
NOTE 13. INVENTORIES
244,179
304,635
91,390
73,254
73,254
Stores and spares
Ore stockpiles
Work in progress
Finished goods (at lower of cost and net realisable
value)
Development work in progress
2018
$’000
24,219
7,327
378
18,159
10,647
60,730
2017
$’000
24,644
15,724
1,001
21,797
-
63,166
Inventories are valued at the lower of weighted average cost and estimated net realisable value. An expense of $12.66
million in 2018 and a credit of $23.48 million in 2017 were recognised for the movements in finished goods inventories (note 6).
Development work in progress pertains to property acquired for development and sale with completion and sale expected
to occur within the next 12 months.
59
PB
27,926
4,220
(5,536)
(b) Numerical reconciliation of income tax (benefit) / expense to prima facie tax payable
(a) Income tax expense (benefit)
Current tax
Deferred tax
comprises:
Deferred income tax included in income tax expense (benefit)
(Increase) decrease in deferred tax assets
Profit from continuing operations before income tax (benefit) /
expense
Tax expense (credit) at the Australian tax rate of 30% (2017: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Sundry items
Net movement in previously unrealised deferred tax assets
Adjustments to tax of prior period
Income tax expense
(c) Taxation Losses
been recognised
Potential tax benefit @ 30%
Unused taxation losses for which no deferred tax asset has
(d) Unrecognised temporary differences
Temporary difference for which deferred tax assets not
recognised
differences
Potential tax benefit @ 30%
Unrecognised deferred tax assets relating to above temporary
NOTE 11. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash at bank and in hand as per statement of cash
flows
2018
$’000
22,390
(5,536)
(5,536)
135,328
40,598
183
40,781
(17,051)
(1,340)
22,390
2018
$’000
7,664
196,833
204,497
2018
$’000
204,497
204,497
2017
$’000
1,817
6,037
1,817
1,817
66,750
20,025
(630)
19,395
(13,252)
(106)
6,037
54,104
16,231
91,390
2017
$’000
5,245
162,744
167,989
2017
$’000
167,989
167,989
All unused taxation losses were incurred by Australian entities that are part of the tax consolidated group. The tax losses
as disclosed above have not been recognised as they are not presently available for use. Their availability is subject to
the satisfaction of the same business test under Australia’s tax loss integrity rules.
54,104
16,231
Total cash is held in trading accounts or term deposits with major financial institutions under normal terms and conditions
appropriate to the operation of the accounts. These deposits earn interest at rates set by these institutions. As at 31
December 2018 the weighted average interest rate on the Australian dollar accounts was 2.52% (31 December 2017: 2.77%)
and the weighted average interest rate on the United States dollar accounts was 4.16% (31 December 2017: 3.50%).
PB
Grange Resources Limited » 2018 Annual Report
NOTE 14. NON-CURRENT RECEIVABLES
Loan Receivables
Security deposits
2018
$’000
611
8,043
8,654
2017
$’000
-
8,030
8,030
Non-current loans receivable, classified as financial asset held at amortised cost, from the other partner in the arrangement
of $0.6 million. This loan is secured, carries an annual interest of 7% to 9% and will be receivable upon completion and
subsequent sale of the property development projects.
Non-current security deposits comprise of restricted deposits that are used for monetary backing for performance guarantees.
a) Risk exposure
Information about the Group’s exposure to credit risk, foreign exchange risk and interest rate risk in relation to security
deposits is provided in note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each
class of receivables mentioned above.
NOTE 15. NON-CURRENT INVENTORIES
Development work in progress
2018
$’000
222
222
2017
$’000
-
-
Non-current development work in progress pertains to property acquired for development and sale. Completion of
development and sale of this property is not expected to occur within the next 12 months.
60
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2018 Annual Report « Grange Resources Limited
NOTE 16. PROPERTY, PLANT AND EQUIPMENT
Land and buildings
$’000
Plant and
equipment
$’000
Computer
equipment
$’000
As at 1 January 2018
Cost
Accumulated depreciation and
impairment
Net book amount
Year ended 31 December 2018
Opening net book amount
Additions
Disposals - net book value
Depreciation charge
Transfer to MP&D
Closing net book amount
As at 31 December 2018
Cost
Accumulated depreciation and
impairment
Net book amount
As at 1 January 2017
Cost
Accumulated depreciation and
impairment
Net book amount
Year ended 31 December 2017
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
As at 31 December 2017
Cost
Accumulated depreciation and
impairment
Net book amount
a) Assets under construction
45,422
450,966
(37,382)
(320,862)
8,040
130,104
8,040
487
-
(231)
-
8,296
130,104
34,513
(533)
(7,391)
(88,041)
68,652
45,908
396,905
(37,612)
(328,253)
8,296
68,652
44,666
(37,264)
430,104
(317,451)
7,402
112,653
7,402
756
-
(118)
8,040
112,653
20,862
-
(3,411)
130,104
45,422
450,966
(37,382)
(320,862)
8,040
130,104
8,055
(7,810)
245
245
297
-
(145)
-
397
8,353
(7,956)
397
7,969
(7,765)
204
204
131
(45)
(45)
245
8,055
(7,810)
245
Total
$’000
504,443
(366,054)
138,389
138,389
35,297
(533)
(7,767)
(88,041)
77,345
451,166
(373,821)
77,345
482,739
(362,480)
120,259
120,259
21,749
(45)
(3,574)
138,389
504,443
(366,054)
138,389
The carrying amounts of the assets disclosed above includes expenditure of $27.66 million (2017: $110.73 million) recognised
in relation to property, plant and equipment which is in the course of construction.
61
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Grange Resources Limited » 2018 Annual Report
NOTE 17. MINE PROPERTIES AND DEVELOPMENT
Mine properties and development (at cost)
Accumulated amortisation and impairment
Net book amount
Deferred stripping costs (net book amount)
Total mine properties and development
Movements in mine properties and development are set out below:
Mine properties and development
Opening net book amount
Current year expenditure capitalised/transfer
Change in rehabilitation estimate
Amortisation expense
Closing net book amount
Deferred stripping costs
Opening net book amount
Current year expenditure capitalised
Amortisation expense
Closing net book amount
NOTE 18. DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to:
Deferred Tax Assets
Property, plant and equipment
Mine properties and development
Trade and other payables
Employee benefits
Decommissioning and restoration
Foreign exchange
Total deferred tax assets
Deferred Tax Liabilities
Inventory
Foreign exchange
Total deferred tax liabilities
Total net deferred tax assets
NOTE 19. TRADE AND OTHER PAYABLES
Trade payables and accruals
Tax payable
Other payables
a) Risk exposure
2018
$’000
569,038
(467,485)
101,553
91,749
193,302
4,437
97,092
1,254
(1,230)
101,553
70,886
45,728
(24,865)
91,749
2018
$’000
5,983
7,493
-
1,031
3,027
-
17,534
(3,916)
(1,202)
(5,118)
12,416
2018
$’000
20,156
23,759
1,201
45,116
2017
$’000
470,692
(466,255)
4,437
70,886
75,323
2,424
-
2,552
(539)
4,437
56,906
29,730
(15,750)
70,886
2017
$’000
2,547
7,821
1
310
1,077
54
11,810
(4,930)
-
(4,930)
6,880
2017
$’000
18,543
3,965
1,017
23,525
Trade payables are non-interest bearing and are normally settled on repayment terms between 7 and 30 days. Information
about the Group’s exposure to foreign exchange risk is provided in note 2.
62
PB
NOTE 20. BORROWINGS (CURRENT)
Insurance premium funding (1)
Other borrowings (2)
2018 Annual Report « Grange Resources Limited
2018
$’000
1,798
5,328
7,126
2017
$’000
1,717
3,113
4,830
(1)
(2)
Insurance premium funding represents an unsecured loan which carries a fixed interest rate of 1.63% and will be fully paid in August 2019.
Loans payable to the other partner in the arrangement of $5.3 million, representing the other partner’s portion of the shareholder loans. This loan is secured, carries an
annual interest of 7% to 9% and will be payable upon completion of the development property projects.
NOTE 21. PROVISIONS (CURRENT)
Leave Obligations
Employee benefits
Decommissioning and restoration
2018
$’000
12,488
2,174
5,506
20,168
2017
$’000
10,446
1,662
713
12,821
The leave obligations cover the group’s liabilities for long service leave and annual leave which are classified as either
current or non-current benefits. The current portion of this liability includes all of the accrued annual leave, the unconditional
entitlements to long service leave where employees have completed the required period of service and also for those
employees that are entitled to pro-rata payments in certain circumstances. The entire amount of the provision of $12.49
million (2017 - $10.45 million) is presented as current, since the group does not have an unconditional right to defer settlement
for any of these obligations. However, based on past experience, the group does not expect all employees to take the full
amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not
expected to be taken or paid within the next 12 months.
Current leave obligations expected to be settled after 12
months
Movements in provision for decommissioning and
restoration are set out below:
Balance at beginning of the year
Payments
Transfers from non-current provisions
Balance at the end of the year
NOTE 22. BORROWINGS (NON-CURRENT)
Secured
Loans Payable
2018
$’000
5,861
713
(419)
5,212
5,506
2018
$’000
611
611
2017
$’000
4,697
680
(327)
360
713
2017
$’000
-
-
Loans payable to the other partner in the arrangement of $0.6 million. This loan is secured, carries an annual interest of 7%
to 9% and will be payable upon completion of the development property projects.
63
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Grange Resources Limited » 2018 Annual Report
NOTE 23. PROVISIONS (NON-CURRENT)
Leave obligations
Employee benefits
Decommissioning and restoration
Movements in provision for decommissioning and restoration are set out below
Balance at beginning of the year
Change in estimate
Unwinding of discount
Transfers to current provisions
Balance at the end of the year
NOTE 24. CONTRIBUTED EQUITY
Ordinary shares
2018
$’000
3,123
77
54,564
57,764
56,795
1,683
1,298
(5,212)
54,564
2017
$’000
4,338
73
56,795
61,206
52,949
2,880
1,326
(360)
56,795
Ordinary shares entitle the holder to participate in dividends and the proceeds of winding up of the Company in proportion
to the number of and amounts paid on the shares held. Ordinary shares entitle their holder to one vote per share, either in
person or by proxy, at a meeting of the Company. Ordinary shares have no par value and the Company does not have a
limited amount of authorised share capital.
NOTE 25. RETAINED PROFITS ATTRIBUTABLE TO OWNERS OF GRANGE RESOURCES
Retained profits
Movements in retained profits were as follows:
Balance at the beginning of the year
Profit for the year
Dividends paid
Balance at the end of the year
NOTE 26. DIVIDENDS
Fully franked interim dividend for half year ended 30
June 2018 - 1.0 cent per share
Fully franked final dividend for the year ended 31
December 2017 - 1.0 cent per share
Fully franked final dividend for the year ended 31
December 2016 - 0.5 cent per share
2018
$’000
56,066
113,325
(23,148)
146,243
2018
$’000
11,574
11,574
-
2017
$’000
1,140
60,713
(5,787)
56,066
2017
$’000
-
-
5,787
Total dividends provided for or paid
23,148
5,787
Since the end of the financial year the directors have recommended the payment of a 1.0 cent final dividend of $11.6 million.
This represents a total of $23.1 million (2.0 cents per share) fully franked dividend for the year-end 31 December 2018. The
final dividend was declared NIL conduit foreign income and will be paid on 29 March 2019.
64
PB
2018 Annual Report « Grange Resources Limited
Franked Dividends
The final dividends recommended after 31 December 2018 will be fully franked out of existing franking credits, or out of
franking credits arising from the payment of income tax in the year ending 31 December 2018.
Franking credits available for subsequent reporting
periods Based on a tax rate of 30% (2017 – 30%)
2018
$’000
12,269
2017
$’000
14,097
The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted
for franking credits and debits that will arise from the settlement of liabilities or receivables for income tax and dividends after
the end of the year.
NOTE 27. NON-CONTROLLING INTEREST
Non-controlling interest pertains to the 49% interest in
Grange ROC Property Pty Ltd. This entity is involved in the
development and construction of apartments.
prestige apartment. Construction has commenced, and
2 units have been pre-sold. The project is planned to be
fully constructed and sold in 2019.
As at 31 December 2018, there are three projects which are
100% owned by Grange ROC Property Pty Ltd :
Grange ROC Property Pty Ltd is a controlled entity and
therefore is fully consolidated as the Group has:
i. Lumley Court which will construct a 3-level, 5 units
prestige apartment. Construction has commenced, and
2 units have been pre-sold. The project is planned to be
fully constructed and sold in 2019.
ii. Brookville Road which will construct a 3-level prestige
residential apartment and is in the planning approval
stage.
iii. GRP Malvern Road which will construct a 3-level, 8 units
i. Exposure, or rights, to variable returns from its involvement
with the other partner in the arrangement;
ii. Power over the entity (i.e., existing rights that give it the
current ability to direct the relevant activities of the entity);
and
iii. The ability to use its powers over the entity to affect its
return.
NOTE 28. IMPAIRMENT OF NON-CURRENT ASSETS
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. The Company
considers the relationship between its market capitalisation and its book value among other factors, when reviewing for
indicators for impairment. During the year and as at 31 December 2018, the market capitalisation of the Company was
below the book value of its net assets indicating a potential trigger for impairment of assets.
(a)
Impairment Testing
(i)
Methodology
An impairment loss is recognised for a Cash Generating Unit (CGU) when the recoverable amount is less than the carrying
amount. The recoverable amount of each CGU has been estimated using a fair value less costs of disposal basis. The
costs of disposal have been estimated by management based on prevailing market conditions. The fair value assessment is
categorised within level 3 in the fair value hierarchy.
Fair value is estimated based on the net present value of estimated future cash flows for a CGU. Future cash flows are based
on a number of assumptions, including commodity price expectations, foreign exchange rates, reserves and resources and
expectations regarding future operating performance and capital requirements which are subject to risk and uncertainty. An
adverse change in one or more of the assumptions used to estimate fair value could result in a reduction of the CGU’s fair
value.
(ii) Key assumptions
The key assumptions which are used by the Directors in determining the recoverable amount for the Group’s Savage River
CGU were in the following ranges at 31 December 2018:
Assumptions
2019
2020 - 2024
Iron ore pellets (FOB Port
Latta) (US$ per DMT)
AUD:USD exchange rate
Post-tax real discount rate
US$115.83
US$98.30 – US$108.77
$0.7375
$0.7730
9.10%
31 December 2018
Long Term 2025+
US$106.95
$0.78
65
PB
2018 Annual Report « Grange Resources Limited
NOTE 30. COMMITMENTS AND CONTINGENCIES
a) Tenement expenditure commitments
In order to maintain the mining and exploration tenements in which the Group is involved, the Group is committed to
meet conditions under which the tenements were granted. If the Group continues to hold those tenements, the minimum
expenditure requirements (including interests in joint venture arrangements) will be approximately:
Grange Resources Limited » 2018 Annual Report
Commodity prices and foreign exchange rates
Commodity prices and foreign exchange rates are estimated with reference to analysis performed by an external party and
are updated at least once every six months, in-line with the Group’s reporting dates.
Operating performance (production, operating costs and capital costs)
Life of mine production, operating cost and capital cost assumptions are based on the Group’s most recent life of mine plan
approved by the Board adjusted for expected improvements reflecting the Group’s objective of maximising free cash flow
(mainly operating and investing cash flows) by optimising production and improving productivity. Mineral resources and ore
reserves not in the most recent life of mine plan are not included in the determination of recoverable amount.
The Board has decided to investigate a capital project – Pit Rim Crushing and Conveying in order to save operating costs. The
capital investment and operating cost offset benefit have been included in the fair value model. Management is continuously
working on different mining and production plans.
Discount rate
To determine the recoverable amount, the estimated future cash flows have been discounted to their present value using
a post-tax real discount rate that reflects a current market assessment of the time value of money and risks specific to the
asset.
(iii)
Impacts
The Group has conducted a carrying value analysis and has not identified further impairment to its net assets carrying value
as at 31 December 2018.
(iv)
Sensitivity analysis
Within one year
After one year but not more than five years
b) Capital expenditure commitments
Within one year
After one year but not more than five years
It is estimated that changes in the following key assumptions would have the following approximate impact on the fair value
of the Savage River CGU as at 31 December 2018:
c) Operating lease expenditure commitments
Decrease in fair value resulting from:
US$1 per dmt decrease in iron ore pellet prices (FOB Port Latta)
$0.01 increase in the AUD:USD exchange rate
1% increase in estimated operating costs
25 bps increase in the discount rate
$16.71 million
$25.38 million
$13.10 million
$10.18 million
Within one year
After one year but not more than five years
Reasonably possible changes in circumstances may affect these key assumptions and therefore the fair value. In reality, a
change in any one of the aforementioned assumptions (including operating performance) would usually be accompanied
by a change in another assumption which may have an off-setting impact. Action is usually taken to respond to adverse
changes in assumptions to mitigate the impact of any such change. If the carrying amount is assessed to be impaired, the
impairment charge is recognised in profit or loss.
NOTE 29. REMUNERATION OF AUDITORS
During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms.
2018
$’000
291
42
23
356
13
5
374
2017
$’000
293
41
5
339
-
-
339
Assurance services
PwC Australia
Audit and review of financial reports
Other assurance services
Network firms of PwC Australia
Total assurance services
Non-assurance services
PwC Australia
Other consulting services
Taxation compliance services
Total remuneration paid
66
PB
2018
$’000
688
2,188
2,876
2018
$’000
15,801
-
15,801
2018
$’000
123
422
545
2017
$’000
689
2,201
2,890
2017
$’000
11,271
-
11,271
2017
$’000
140
381
521
PB
d) Bank Guarantees
Bank guarantees have been provided on the Group’s behalf to secure, on demand by the Minister for Mines and Energy
for the State of Queensland, any sum to a maximum aggregate amount of $2,012,963 (2017: $2,012,963), in relation to the
rehabilitation of the Highway Reward project.
A Bank guarantee has been provided by Grange Resources (Tasmania) Pty Ltd, held by the Tasmanian Government, as
required under Environmental Management and Pollution Control Act 1994 (EMPCA) for the amount of $3,122,535 (2017:
$3,097,941). This amount is to guarantee the rehabilitation responsibilities under the mining lease at Savage River.
A Bank guarantee has been provided by Grange Resources (Tasmania) Pty Ltd, held by the National Australia Bank,
as required under the Goldamere Agreement and applicable Deeds of Variation, for the amount of $2,800,000 (2017:
$2,800,000). This amount is a guarantee against the purchase price outstanding with the Tasmanian government as
No material losses are anticipated in respect to the above bank guarantees and the rehabilitation provisions include these
specified in the Goldamere Agreement.
amounts.
e) Contingent Assets and Liabilities
The Group did not have any contingent assets or liabilities at the Balance Sheet Date.
are updated at least once every six months, in-line with the Group’s reporting dates.
Operating performance (production, operating costs and capital costs)
Life of mine production, operating cost and capital cost assumptions are based on the Group’s most recent life of mine plan
approved by the Board adjusted for expected improvements reflecting the Group’s objective of maximising free cash flow
(mainly operating and investing cash flows) by optimising production and improving productivity. Mineral resources and ore
reserves not in the most recent life of mine plan are not included in the determination of recoverable amount.
The Board has decided to investigate a capital project – Pit Rim Crushing and Conveying in order to save operating costs. The
capital investment and operating cost offset benefit have been included in the fair value model. Management is continuously
working on different mining and production plans.
Grange Resources Limited » 2018 Annual Report
Commodity prices and foreign exchange rates
Commodity prices and foreign exchange rates are estimated with reference to analysis performed by an external party and
a) Tenement expenditure commitments
NOTE 30. COMMITMENTS AND CONTINGENCIES
2018 Annual Report « Grange Resources Limited
In order to maintain the mining and exploration tenements in which the Group is involved, the Group is committed to
meet conditions under which the tenements were granted. If the Group continues to hold those tenements, the minimum
expenditure requirements (including interests in joint venture arrangements) will be approximately:
Within one year
After one year but not more than five years
To determine the recoverable amount, the estimated future cash flows have been discounted to their present value using
a post-tax real discount rate that reflects a current market assessment of the time value of money and risks specific to the
b) Capital expenditure commitments
The Group has conducted a carrying value analysis and has not identified further impairment to its net assets carrying value
After one year but not more than five years
Within one year
Discount rate
asset.
(iii)
Impacts
as at 31 December 2018.
(iv)
Sensitivity analysis
It is estimated that changes in the following key assumptions would have the following approximate impact on the fair value
c) Operating lease expenditure commitments
$16.71 million
$25.38 million
$13.10 million
$10.18 million
Within one year
After one year but not more than five years
2018
$’000
688
2,188
2,876
2018
$’000
15,801
-
15,801
2018
$’000
123
422
545
2017
$’000
689
2,201
2,890
2017
$’000
11,271
-
11,271
2017
$’000
140
381
521
d) Bank Guarantees
Bank guarantees have been provided on the Group’s behalf to secure, on demand by the Minister for Mines and Energy
for the State of Queensland, any sum to a maximum aggregate amount of $2,012,963 (2017: $2,012,963), in relation to the
rehabilitation of the Highway Reward project.
A Bank guarantee has been provided by Grange Resources (Tasmania) Pty Ltd, held by the Tasmanian Government, as
required under Environmental Management and Pollution Control Act 1994 (EMPCA) for the amount of $3,122,535 (2017:
$3,097,941). This amount is to guarantee the rehabilitation responsibilities under the mining lease at Savage River.
A Bank guarantee has been provided by Grange Resources (Tasmania) Pty Ltd, held by the National Australia Bank,
as required under the Goldamere Agreement and applicable Deeds of Variation, for the amount of $2,800,000 (2017:
$2,800,000). This amount is a guarantee against the purchase price outstanding with the Tasmanian government as
specified in the Goldamere Agreement.
No material losses are anticipated in respect to the above bank guarantees and the rehabilitation provisions include these
amounts.
e) Contingent Assets and Liabilities
The Group did not have any contingent assets or liabilities at the Balance Sheet Date.
67
PB
of the Savage River CGU as at 31 December 2018:
Decrease in fair value resulting from:
US$1 per dmt decrease in iron ore pellet prices (FOB Port Latta)
$0.01 increase in the AUD:USD exchange rate
1% increase in estimated operating costs
25 bps increase in the discount rate
Reasonably possible changes in circumstances may affect these key assumptions and therefore the fair value. In reality, a
change in any one of the aforementioned assumptions (including operating performance) would usually be accompanied
by a change in another assumption which may have an off-setting impact. Action is usually taken to respond to adverse
changes in assumptions to mitigate the impact of any such change. If the carrying amount is assessed to be impaired, the
impairment charge is recognised in profit or loss.
NOTE 29. REMUNERATION OF AUDITORS
During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms.
2018
$’000
291
42
23
356
13
5
374
2017
$’000
293
41
5
339
-
-
339
Assurance services
PwC Australia
Audit and review of financial reports
Other assurance services
Network firms of PwC Australia
Total assurance services
Non-assurance services
PwC Australia
Other consulting services
Taxation compliance services
Total remuneration paid
PB
Grange Resources Limited » 2018 Annual Report
NOTE 31. RELATED PARTY TRANSACTIONS
a) Ultimate Parent
Grange Resources Limited (Grange) is the ultimate Australian parent company.
b) Subsidiaries
Interests in subsidiaries are set out in note 32.
c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Long-term incentives
2018
$
1,874,252
143,232
58,942
103,235
2,179,661
Detailed remuneration disclosures are provided in the remuneration report on pages 27 to 34.
d) Transactions with related parties
During the year the following transactions occurred with related parties:
Sales of iron ore products(1)
Agency commissions – Spot Sales
2018
$
149,394,404
(51,947)
2017
$
1,596,973
127,816
44,286
81,170
1,850,245
2017
$
117,991,116
-
(1)
Sales of iron ore products to Jiangsu Shagang International Trade Co., Ltd, a wholly owned subsidiary of Jiangsu Shagang Group, under long-term off-take agreements. During the
year, 1,014,306 dry metric tonnes of iron ore products were sold to Shagang in accordance with the terms of the long term off-take agreements (2017: 935,449 dry metric tonnes)
e) Outstanding balances arising from transactions with related parties
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
2017
$
2018
$
Trade receivables (sales of iron ore products)
Pellets
Others
(2,772,327)
-
(2,772,327)
13,069,589
(57,519)
13,012,070
Amounts outstanding under the long term off-take agreement
with Shagang are unsecured whereas amounts outstanding
in respect of spot sales are secured against an irrecoverable
letter of credit. All outstanding balances will be settled in
cash. The credit balance of the receivables represents the
final price adjustments due to the quotation periods and final
discharge port results.
There is no allowance account for impaired receivables in
relation to any outstanding balances with related parties, and
no expense has been recognised during the year in respect
of impaired receivables due from related parties (2017: Nil).
Long term off-take agreement
Grange Resources (Tasmania) Pty Ltd (Grange Tasmania) is
party to a long term off-take agreements (Pellets and Chips)
with Jiangsu Shagang International Trade Co. Ltd (Shagang),
a wholly owned subsidiary of Jiangsu Shagang Group Co. Ltd,
who, as at 28 February 2019, holds 46.68% (27 February 2018:
46.68%) of the issued ordinary shares of Grange.
Pellets
The key terms of the agreement with Shagang, as advised to
the ASX on 19 November 2012, are as follows:
• The sale of 1 million dry metric tonnes of iron ore pellets
per annum until 2022.
• The price for the iron ore pellets will be the fair market
value as agreed by the parties having regard to:
•
•
•
seaborne iron ore supply and demand conditions;
available published price benchmarks for iron ore;
and
product quality differentials and potential freight
costs.
As set out in the Grange Notice of Meeting dated 5 November
2008, transactions between Shagang and Grange must be
approved by non-associated shareholders of Grange, or
approved by the Grange independent directors.
68
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2018 Annual Report « Grange Resources Limited
• seaborne iron ore supply and demand conditions;
and appointed by Grange directors and management
• available published price benchmarks for iron ore; and
• product quality differentials and potential freight costs.
all Grange shareholders.
independent of related parties, acting in the best interests of
As set out in the Grange Notice of Meeting dated 5 November
2008, transactions between Shagang and Grange must be
approved by non-associated shareholders of Grange, or
approved by the Grange independent directors.
Agency agreements with related parties
Grange sold some product on the spot market through
sales agency agreements with sales agents who were
related parties of Grange directors. Any appointment of a
related party sales agent was non-exclusive and negotiated
The majority of related party sales had nil commission.
Where commission was payable to the related party sales
agent it was determined on the basis of an amount equal
to a market-determined percentage of the US dollar price
of product sold to the third party, and the sales agency
agreement did not confer a right to any other royalty or similar
revenue scheme. The appointment of the related party sales
agent and the precise percentage of the commission payable
was determined by Grange directors and management
independent of related parties on the basis of it comprising
reasonable, arm’s length terms.
NOTE 32. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in Note 1.
Percentage of equity interest held by the Group
Name
Ever Green Resources Co., Limited (1)
Grange Tasmania Holdings Pty Ltd
Beviron Pty Ltd
Grange Resources (Tasmania) Pty Ltd
Grange Capital Pty Ltd
Grange Administrative Services Pty Ltd
Barrack Mines Pty Ltd
Bamine Pty Ltd
BML Holdings Pty Ltd
Horseshoe Gold Mine Pty Ltd
Grange Resources (Southdown) Pty Ltd
Southdown Project Management Company Pty Ltd
Grange Developments Sdn Bhd (2)
Grange Resources Investments Pty Ltd
Grange ROC Property Pty Ltd
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
Ever Green Resources Co., Limited is incorporated in Hong Kong, and registered as a foreign company under the Corporations Act 2001.
(1)
(2)
Grange Developments Sdn Bhd is incorporated in Malaysia.
2017
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
PB
Grange Resources Limited » 2018 Annual Report
NOTE 31. RELATED PARTY TRANSACTIONS
a) Ultimate Parent
b) Subsidiaries
Interests in subsidiaries are set out in note 32.
c) Key management personnel compensation
Grange Resources Limited (Grange) is the ultimate Australian parent company.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Long-term incentives
Detailed remuneration disclosures are provided in the remuneration report on pages 27 to 34.
d) Transactions with related parties
During the year the following transactions occurred with related parties:
2018
$
1,874,252
143,232
58,942
103,235
2,179,661
2018
$
149,394,404
(51,947)
2018
$
(2,772,327)
-
(2,772,327)
2017
$
1,596,973
127,816
44,286
81,170
1,850,245
2017
$
-
117,991,116
2017
$
13,069,589
(57,519)
13,012,070
Sales of iron ore products(1)
Agency commissions – Spot Sales
(1)
Sales of iron ore products to Jiangsu Shagang International Trade Co., Ltd, a wholly owned subsidiary of Jiangsu Shagang Group, under long-term off-take agreements. During the
year, 1,014,306 dry metric tonnes of iron ore products were sold to Shagang in accordance with the terms of the long term off-take agreements (2017: 935,449 dry metric tonnes)
e) Outstanding balances arising from transactions with related parties
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Trade receivables (sales of iron ore products)
Pellets
Others
Amounts outstanding under the long term off-take agreement
Pellets
with Shagang are unsecured whereas amounts outstanding
in respect of spot sales are secured against an irrecoverable
letter of credit. All outstanding balances will be settled in
The key terms of the agreement with Shagang, as advised to
the ASX on 19 November 2012, are as follows:
cash. The credit balance of the receivables represents the
• The sale of 1 million dry metric tonnes of iron ore pellets
final price adjustments due to the quotation periods and final
per annum until 2022.
discharge port results.
There is no allowance account for impaired receivables in
relation to any outstanding balances with related parties, and
no expense has been recognised during the year in respect
of impaired receivables due from related parties (2017: Nil).
•
•
• The price for the iron ore pellets will be the fair market
value as agreed by the parties having regard to:
seaborne iron ore supply and demand conditions;
available published price benchmarks for iron ore;
Long term off-take agreement
Grange Resources (Tasmania) Pty Ltd (Grange Tasmania) is
party to a long term off-take agreements (Pellets and Chips)
with Jiangsu Shagang International Trade Co. Ltd (Shagang),
a wholly owned subsidiary of Jiangsu Shagang Group Co. Ltd,
who, as at 28 February 2019, holds 46.68% (27 February 2018:
46.68%) of the issued ordinary shares of Grange.
and
costs.
•
product quality differentials and potential freight
As set out in the Grange Notice of Meeting dated 5 November
2008, transactions between Shagang and Grange must be
approved by non-associated shareholders of Grange, or
approved by the Grange independent directors.
PB
2018 Annual Report « Grange Resources Limited
• seaborne iron ore supply and demand conditions;
• available published price benchmarks for iron ore; and
• product quality differentials and potential freight costs.
and appointed by Grange directors and management
independent of related parties, acting in the best interests of
all Grange shareholders.
As set out in the Grange Notice of Meeting dated 5 November
2008, transactions between Shagang and Grange must be
approved by non-associated shareholders of Grange, or
approved by the Grange independent directors.
Agency agreements with related parties
Grange sold some product on the spot market through
sales agency agreements with sales agents who were
related parties of Grange directors. Any appointment of a
related party sales agent was non-exclusive and negotiated
The majority of related party sales had nil commission.
Where commission was payable to the related party sales
agent it was determined on the basis of an amount equal
to a market-determined percentage of the US dollar price
of product sold to the third party, and the sales agency
agreement did not confer a right to any other royalty or similar
revenue scheme. The appointment of the related party sales
agent and the precise percentage of the commission payable
was determined by Grange directors and management
independent of related parties on the basis of it comprising
reasonable, arm’s length terms.
NOTE 32. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in Note 1.
Percentage of equity interest held by the Group
Name
Ever Green Resources Co., Limited (1)
Grange Tasmania Holdings Pty Ltd
Beviron Pty Ltd
Grange Resources (Tasmania) Pty Ltd
Grange Capital Pty Ltd
Grange Administrative Services Pty Ltd
Barrack Mines Pty Ltd
Bamine Pty Ltd
BML Holdings Pty Ltd
Horseshoe Gold Mine Pty Ltd
Grange Resources (Southdown) Pty Ltd
Southdown Project Management Company Pty Ltd
Grange Developments Sdn Bhd (2)
Grange Resources Investments Pty Ltd
Grange ROC Property Pty Ltd
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
(1)
(2)
Ever Green Resources Co., Limited is incorporated in Hong Kong, and registered as a foreign company under the Corporations Act 2001.
Grange Developments Sdn Bhd is incorporated in Malaysia.
2017
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
69
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
NOTE 33. INTEREST IN JOINT OPERATIONS
NOTE 35. EARNINGS PER SHARE
Name of Joint Operation
Southdown Magnetite and Associated Pellet Project(s) – Iron Ore
Reward – Copper / Gold
Highway – Copper
Reward Deeps / Conviction – Copper
Mt Windsor Exploration – Gold / Base Metals
Durack / Wembley – Exploration Gold
% Interest
2018
70.00
31.15
30.00
30.00
30.00
15.00
% Interest
2017
70.00
31.15
30.00
30.00
30.00
15.00
The joint operations are not separate legal entities. They are contractual arrangements between the participants for the
sharing of costs and output and do not in themselves generate revenue and profit.
Southdown Magnetite and Associated Pellet Project(s) is a joint venture between Grange Resources Limited and SRT
Australia Pty Ltd. The joint venture proposes to mine and export premium iron ore pellets and concentrates. The principal
place of business of the joint venture is at 34a Alexander Street, Burnie, Tasmania, 7320.
Mt Windsor Exploration is a joint venture between BML Holdings Pty Limited, a subsidiary of Grange Resources Limited,
and Thalanga Copper Mines Pty Ltd. The joint venture was engaged in ore mining and is now being rehabilitated for future
lease relinquishment. The principal place of business of the joint venture is at 1 Penghana Road, Queenstown, Tasmania,
7326.
NOTE 34. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
Profit for the year
Unwinding of discount
Depreciation and amortisation
Mine properties and development amortisation
Interest expense
Loss (profit) on sale of property, plant and equipment
Loss (gain) on derivative financial instruments
Change in operating assets and liabilities
(Increase) decrease in trade and other receivables (excluding
income tax refund)
Decrease (increase) in inventories
Decrease (increase) in deferred tax assets
Increase in trade and other payables (excluding tax payable)
Increase in other provisions
Increase (decrease) provision for income tax payable
Net cash inflow from operating activities
2018
$’000
112,938
1,298
7,767
26,094
531
332
(6,874)
5,573
2,213
(5,536)
1,797
1,455
19,794
167,382
2017
$’000
60,713
1,326
3,574
16,289
45
(46)
7,423
386
(27,625)
1,817
1,694
789
4,841
71,226
70
PB
From continuing operations attributable to the ordinary equity holders
Basic earnings per share
of the Company
Diluted earnings per share
of the Company
From continuing operations attributable to the ordinary equity holders
a) Reconciliations of earnings used in calculating earnings per share
Profit (loss) attributable to the ordinary equity holders of the
Company used in calculating basic earnings per share from
continuing operations
Diluted earnings per share
2018
Cents
9.79
9.79
2018
$’000
113,325
Profit attributable to the ordinary equity holders of the Company used
in calculating diluted earnings per share from continuing operations
113,325
60,713
b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share
NOTE 36. PARENT ENTITY FINANCIAL INFORMATION
a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
2018
2017
1,157,338,698
1,157,338,698
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Reserves
- Share-based payments
Retained losses
Total equity
Profit (loss) for the year
Total comprehensive income (loss) for the year
*Figure includes dividends declared and approved for the corresponding year of $9m.
**Includes final FY 2017 dividend declared March 2018 of $14.6m.
b) Contingent liabilities of the parent entity
Other contingent liabilities
2018
$’000
3,131
316,688
26,495
58,620
392,475
31,191
(165,598)
258,068
37,878**
37,878**
Pursuant to the terms of an agreement dated 21 November 2003, under which the Company purchased certain tenements
comprising the Southdown project, the Company is required to make a further payment of $1,000,000 to MedAire, Inc upon
commencement of commercial mining operations from those tenements.
2017
Cents
5.25
5.25
2017
$’000
60,713
2017
$’000
6,059
277,798*
2,315
34,456
392,475
31,191
(180,324)*
243,342
6,384*
6,384*
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
Name of Joint Operation
Reward – Copper / Gold
Highway – Copper
Reward Deeps / Conviction – Copper
Mt Windsor Exploration – Gold / Base Metals
Durack / Wembley – Exploration Gold
sharing of costs and output and do not in themselves generate revenue and profit.
Southdown Magnetite and Associated Pellet Project(s) is a joint venture between Grange Resources Limited and SRT
Australia Pty Ltd. The joint venture proposes to mine and export premium iron ore pellets and concentrates. The principal
place of business of the joint venture is at 34a Alexander Street, Burnie, Tasmania, 7320.
Mt Windsor Exploration is a joint venture between BML Holdings Pty Limited, a subsidiary of Grange Resources Limited,
and Thalanga Copper Mines Pty Ltd. The joint venture was engaged in ore mining and is now being rehabilitated for future
lease relinquishment. The principal place of business of the joint venture is at 1 Penghana Road, Queenstown, Tasmania,
7326.
NOTE 33. INTEREST IN JOINT OPERATIONS
NOTE 35. EARNINGS PER SHARE
% Interest
% Interest
Southdown Magnetite and Associated Pellet Project(s) – Iron Ore
Basic earnings per share
From continuing operations attributable to the ordinary equity holders
of the Company
Diluted earnings per share
From continuing operations attributable to the ordinary equity holders
of the Company
The joint operations are not separate legal entities. They are contractual arrangements between the participants for the
a) Reconciliations of earnings used in calculating earnings per share
Profit (loss) attributable to the ordinary equity holders of the
Company used in calculating basic earnings per share from
continuing operations
Diluted earnings per share
2018
Cents
9.79
9.79
2018
$’000
113,325
2017
Cents
5.25
5.25
2017
$’000
60,713
NOTE 34. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW
b) Weighted average number of shares used as the denominator
FROM OPERATING ACTIVITIES
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share
NOTE 36. PARENT ENTITY FINANCIAL INFORMATION
a) Summary financial information
2018
2017
1,157,338,698
1,157,338,698
The individual financial statements for the parent entity show the following aggregate amounts:
Profit attributable to the ordinary equity holders of the Company used
in calculating diluted earnings per share from continuing operations
113,325
60,713
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Reserves
- Share-based payments
Retained losses
Total equity
Profit (loss) for the year
Total comprehensive income (loss) for the year
*Figure includes dividends declared and approved for the corresponding year of $9m.
**Includes final FY 2017 dividend declared March 2018 of $14.6m.
b) Contingent liabilities of the parent entity
Other contingent liabilities
2018
$’000
3,131
316,688
26,495
58,620
392,475
31,191
(165,598)
258,068
37,878**
37,878**
2017
$’000
6,059
277,798*
2,315
34,456
392,475
31,191
(180,324)*
243,342
6,384*
6,384*
Pursuant to the terms of an agreement dated 21 November 2003, under which the Company purchased certain tenements
comprising the Southdown project, the Company is required to make a further payment of $1,000,000 to MedAire, Inc upon
commencement of commercial mining operations from those tenements.
71
PB
2018
70.00
31.15
30.00
30.00
30.00
15.00
2018
$’000
112,938
1,298
7,767
26,094
531
332
(6,874)
5,573
2,213
(5,536)
1,797
1,455
19,794
167,382
2017
70.00
31.15
30.00
30.00
30.00
15.00
2017
$’000
60,713
1,326
3,574
16,289
45
(46)
7,423
386
(27,625)
1,817
1,694
789
4,841
71,226
Profit for the year
Unwinding of discount
Depreciation and amortisation
Mine properties and development amortisation
Interest expense
Loss (profit) on sale of property, plant and equipment
Loss (gain) on derivative financial instruments
Change in operating assets and liabilities
(Increase) decrease in trade and other receivables (excluding
income tax refund)
Decrease (increase) in inventories
Decrease (increase) in deferred tax assets
Increase in trade and other payables (excluding tax payable)
Increase in other provisions
Increase (decrease) provision for income tax payable
Net cash inflow from operating activities
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
NOTE 37. EVENTS OCCURRING AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 31 December 2018 that has significantly affected, or may significantly affect:
•
•
•
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
DIRECTORS’ DECLARATION
In the Directors’ opinion:
a)
the financial statements and notes set out on pages 37 to 72 are in accordance with the Corporations Act 2001,
including:
i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
ii) giving true and fair view of the consolidated entity’s financial position as at 31 December 2018 and of its performance
for the financial year ended on that date, and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable, and
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
The Directors have been given the declarations of the Chief Executive Officer and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Michelle Li
Chairperson of the Board of Directors
Perth, Western Australia, 28 February 2019
72
PB
Independent auditor’s report
To the members of Grange Resources Limited
Independent auditor’s report
Report on the audit of the financial report
To the members of Grange Resources Limited
Our opinion
Report on the audit of the financial report
In our opinion:
Our opinion
The accompanying financial report of Grange Resources Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
In our opinion:
(a)
The accompanying financial report of Grange Resources Limited (the Company) and its controlled
giving a true and fair view of the Group's financial position as at 31 December 2018 and of its
entities (together the Group) is in accordance with the Corporations Act 2001, including:
financial performance for the year then ended
(b)
(a)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
What we have audited
the statement of financial position as at 31 December 2018
•
The Group financial report comprises:
the statement of comprehensive income for the year then ended
•
the consolidated statement of financial position as at 31 December 2017
the statement of changes in equity for the year then ended
the consolidated statement of comprehensive income for the year then ended
the statement of cash flows for the year then ended
the consolidated statement of changes in equity for the year then ended
the notes to the financial statements, which include a summary of significant accounting policies
the consolidated statement of cash flows for the year then ended
the directors’ declaration.
the notes to the consolidated financial statements, which include a summary of significant
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
the directors’ declaration.
those standards are further described in the Auditor’s responsibilities for the audit of the financial
•
•
•
•
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Basis for opinion
accounting policies
Basis for opinion
report section of our report.
our opinion.
report section of our report.
Independence
our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
Independence
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
We are independent of the Group in accordance with the auditor independence requirements of the
in accordance with the Code.
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
Our audit approach
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE, VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
T +61 3 8603 1000, F +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
Independent auditor’s report
To the members of Grange Resources Limited
Independent auditor’s report
Report on the audit of the financial report
To the members of Grange Resources Limited
Our opinion
Report on the audit of the financial report
In our opinion:
Our opinion
The accompanying financial report of Grange Resources Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
In our opinion:
(a)
giving a true and fair view of the Group's financial position as at 31 December 2018 and of its
The accompanying financial report of Grange Resources Limited (the Company) and its controlled
financial performance for the year then ended
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(b)
(a)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the Group's financial position as at 31 December 2017 and of its
financial performance for the year then ended
What we have audited
(b)
The Group financial report comprises:
complying with Australian Accounting Standards and the Corporations Regulations 2001.
the statement of financial position as at 31 December 2018
the statement of comprehensive income for the year then ended
the consolidated statement of financial position as at 31 December 2017
the statement of changes in equity for the year then ended
the consolidated statement of comprehensive income for the year then ended
the statement of cash flows for the year then ended
the consolidated statement of changes in equity for the year then ended
the notes to the financial statements, which include a summary of significant accounting policies
the consolidated statement of cash flows for the year then ended
the directors’ declaration.
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
What we have audited
•
The Group financial report comprises:
•
•
•
•
•
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
Basis for opinion
report section of our report.
the directors’ declaration.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
those standards are further described in the Auditor’s responsibilities for the audit of the financial
our opinion.
report section of our report.
Independence
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We are independent of the Group in accordance with the auditor independence requirements of the
our opinion.
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
Independence
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
We are independent of the Group in accordance with the auditor independence requirements of the
in accordance with the Code.
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
Our audit approach
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE, VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
T +61 3 8603 1000, F +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
73
PB
NOTE 37. EVENTS OCCURRING AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 31 December 2018 that has significantly affected, or may significantly affect:
•
•
•
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
DIRECTORS’ DECLARATION
In the Directors’ opinion:
including:
requirements, and
a)
the financial statements and notes set out on pages 37 to 72 are in accordance with the Corporations Act 2001,
i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
ii) giving true and fair view of the consolidated entity’s financial position as at 31 December 2018 and of its performance
for the financial year ended on that date, and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable, and
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
The Directors have been given the declarations of the Chief Executive Officer and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Michelle Li
Chairperson of the Board of Directors
Perth, Western Australia, 28 February 2019
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The Group’s operations consist principally of owning and operating the Savage River integrated iron
ore mining and pellet production business located in the north-west region of Tasmania.
Materiality
Audit scope
Key audit matters
•
•
Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
Our audit mainly consisted of
procedures performed by the
audit engagement team at the
Burnie head office, with site
visits as necessary.
•
•
Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
and Risk Committee:
− Impairment assessment for
the Savage River cash
generating unit (CGU)
− Accounting for the cost of
rehabilitation
These are further described in
the Key audit matters section of
our report.
•
For the purpose of our audit we
used overall Group materiality of
$6.6 million, which represents
approximately 5% of the Group’s
profit before tax.
• We applied this threshold,
together with qualitative
considerations, to determine the
scope of our audit and the
nature, timing and extent of our
audit procedures and to evaluate
the effect of misstatements on
the financial report as a whole.
• We chose group profit before tax
because, in our view, it is the
benchmark against which the
performance of the Group is
most commonly measured. We
utilised a 5% threshold based on
our professional judgement,
noting it is within the range of
commonly acceptable thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit
matter
Impairment assessment for the Savage River cash
We evaluated the cash flow forecasts in the model and
generating unit (CGU)
Refer to Note 28
The impairment assessment of the Savage River CGU,
which consists of the mine and pelletising plant, was a
key audit matter given the significance of the carrying
developed our understanding of the process by which
they were prepared. We satisfied ourselves that the
operating and capital expenditure forecasts were
consistent with the latest Board approved Life of Mine
plan (to 2036) and budget.
amount to the statement of financial position. There were
In order to assess the Group’s ability to make reliable
also a number of factors in the impairment assessment
forecasts, we compared current year (2018) actual
requiring judgement including:
results with the figures included in the prior year
●
●
The pellet (final product) price and the
AUD/USD exchange rate
Estimation uncertainty associated with
forecast operating and capital expenditure for
the period to 2036 (Life of Mine).
During the year ended 31 December 2018, the Group
prepared a discounted cashflow model (the model) to
determine the recoverable amount of the Savage River CGU
balance, which requires a number of assumptions as
described in Note 28.
forecasts (2017).
We also assessed:
● The long term pellet price and AUD/USD
exchange rate in the forecasts by comparing
them to economic and industry forecasts;
● The projected cost savings in future years which
rely on future capital projects;
● The discount rate used by assessing the cost of
capital for the Group, assisted by PwC
valuations experts, and comparing the rate to
market data and industry research.
Accounting for the cost of rehabilitation
We obtained the Group’s calculation of the
Refer to Note 21 and 23 ($60.1 million)
rehabilitation obligation (the model). We checked
The main component of the provision is for the Group’s
obligation to rehabilitate the Savage River and Port Latta
sites for the disturbance caused by its operations. The
rehabilitation provision also includes an obligation under
the Tasmanian Goldamere Pty Ltd Act 1996 to repay the
Tasmanian Government for part of the purchase of the
mine through expenditure on remediation.
The net present value of the cost of rehabilitation is
recorded as a provision of $54.6 million (non-current)
and $5.5 million (current), for a total of $60.1 million.
Given the significance of this balance and the
business.
complexities and uncertainties outlined below, our
examination of the provision for rehabilitation was a
key audit matter.
the timing of the cash flows in the model for
consistency with the current Life of Mine plan.
We compared the discount rate used to market data.
Where external and internal experts were used by
the Group to estimate remediation costs, we
assessed our ability to use their estimates for the
purposes of our audit.
We compared the Group’s assumptions on
rehabilitation costs to other similar costs in the
74
PB
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The Group’s operations consist principally of owning and operating the Savage River integrated iron
ore mining and pellet production business located in the north-west region of Tasmania.
Materiality
Audit scope
Key audit matters
•
Our audit focused on where the
•
Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
Our audit mainly consisted of
procedures performed by the
audit engagement team at the
Burnie head office, with site
visits as necessary.
Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
and Risk Committee:
− Impairment assessment for
the Savage River cash
generating unit (CGU)
− Accounting for the cost of
rehabilitation
•
These are further described in
the Key audit matters section of
our report.
•
For the purpose of our audit we
used overall Group materiality of
$6.6 million, which represents
approximately 5% of the Group’s
profit before tax.
• We applied this threshold,
together with qualitative
considerations, to determine the
•
scope of our audit and the
nature, timing and extent of our
audit procedures and to evaluate
the effect of misstatements on
the financial report as a whole.
• We chose group profit before tax
because, in our view, it is the
benchmark against which the
performance of the Group is
most commonly measured. We
utilised a 5% threshold based on
our professional judgement,
noting it is within the range of
commonly acceptable thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
Impairment assessment for the Savage River cash
generating unit (CGU)
Refer to Note 28
The impairment assessment of the Savage River CGU,
which consists of the mine and pelletising plant, was a
key audit matter given the significance of the carrying
amount to the statement of financial position. There were
also a number of factors in the impairment assessment
requiring judgement including:
●
●
The pellet (final product) price and the
AUD/USD exchange rate
Estimation uncertainty associated with
forecast operating and capital expenditure for
the period to 2036 (Life of Mine).
During the year ended 31 December 2018, the Group
prepared a discounted cashflow model (the model) to
determine the recoverable amount of the Savage River CGU
balance, which requires a number of assumptions as
described in Note 28.
Accounting for the cost of rehabilitation
Refer to Note 21 and 23 ($60.1 million)
The main component of the provision is for the Group’s
obligation to rehabilitate the Savage River and Port Latta
sites for the disturbance caused by its operations. The
rehabilitation provision also includes an obligation under
the Tasmanian Goldamere Pty Ltd Act 1996 to repay the
Tasmanian Government for part of the purchase of the
mine through expenditure on remediation.
The net present value of the cost of rehabilitation is
recorded as a provision of $54.6 million (non-current)
and $5.5 million (current), for a total of $60.1 million.
Given the significance of this balance and the
complexities and uncertainties outlined below, our
examination of the provision for rehabilitation was a
key audit matter.
How our audit addressed the key audit
matter
We evaluated the cash flow forecasts in the model and
developed our understanding of the process by which
they were prepared. We satisfied ourselves that the
operating and capital expenditure forecasts were
consistent with the latest Board approved Life of Mine
plan (to 2036) and budget.
In order to assess the Group’s ability to make reliable
forecasts, we compared current year (2018) actual
results with the figures included in the prior year
forecasts (2017).
We also assessed:
● The long term pellet price and AUD/USD
exchange rate in the forecasts by comparing
them to economic and industry forecasts;
● The projected cost savings in future years which
rely on future capital projects;
● The discount rate used by assessing the cost of
capital for the Group, assisted by PwC
valuations experts, and comparing the rate to
market data and industry research.
We obtained the Group’s calculation of the
rehabilitation obligation (the model). We checked
the timing of the cash flows in the model for
consistency with the current Life of Mine plan.
We compared the discount rate used to market data.
Where external and internal experts were used by
the Group to estimate remediation costs, we
assessed our ability to use their estimates for the
purposes of our audit.
We compared the Group’s assumptions on
rehabilitation costs to other similar costs in the
business.
PB
75
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
Key audit matter
How our audit addressed the key audit
matter
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Calculating the final rehabilitation obligation is challenging
and requires significant estimation and judgement by the
Group, given some of the uncertainties over methods of
rehabilitation, costs and timing. The calculation of the
provision requires significant input from specialists and
experts, both from within and external to the Group.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2018, but does not
include the financial report and our auditor’s report thereon. Prior to the date of this auditor's report,
the other information we obtained included About Grange, 2018 Overview, 2019 Priorities, About the
Grange Business, Chairperson’s and Chief Executive Officer’s Review, Tenement Schedule, ASX
Additional Information and List of Significant ASX Announcements. We expect the remaining other
information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year
ended 31 December 2018.
In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December
2018 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Amanda Campbell
Partner
Melbourne
28 February 2019
76
PB
PB
Grange Resources Limited » 2018 Annual Report
2018 Annual Report « Grange Resources Limited
Key audit matter
How our audit addressed the key audit
matter
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Calculating the final rehabilitation obligation is challenging
and requires significant estimation and judgement by the
Group, given some of the uncertainties over methods of
rehabilitation, costs and timing. The calculation of the
provision requires significant input from specialists and
experts, both from within and external to the Group.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2018, but does not
include the financial report and our auditor’s report thereon. Prior to the date of this auditor's report,
the other information we obtained included About Grange, 2018 Overview, 2019 Priorities, About the
Grange Business, Chairperson’s and Chief Executive Officer’s Review, Tenement Schedule, ASX
Additional Information and List of Significant ASX Announcements. We expect the remaining other
information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year
ended 31 December 2018.
In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December
2018 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Amanda Campbell
Partner
Melbourne
28 February 2019
PB
77
PB
Grange Resources Limited » 2018 Annual Report
TENEMENT SCHEDULE
AS AT 28 FEBRUARY 2019
LIST OF SIGNIFICANT ASX ANNOUNCEMENTS
FROM 1 JANUARY 2018 THROUGH TO 15 MARCH 2019
2018 Annual Report « Grange Resources Limited
TENEMENT
INTEREST
Notes:
Held by Grange Resources (Tasmania) Pty Ltd.
Under application.
Subject to conditional purchase agreement with
Medaire Inc.
Subject
Agreement with SRT Australia Pty Ltd
to Joint Venture
Implementation
Subject to 1% Net Smelter Return royalty with
Lac Minerals (Australia) NL
Subject to joint venture agreement with Aragon
Resources Pty Ltd
Royalty interest with Horseshoe Metals Limited
Royalty interest with Nova Energy Pty Ltd
Royalty interest with Kanowna Mines Pty Ltd
Royalty interest with Dampier (Plutonic) Pty Ltd
Royalty interest with Northern Star Resources
Ltd
Royalty interest with Fortescue Metals Group Ltd
Subject to joint venture agreement with Thalanga
Copper Mines Pty Limited
Royalty interest with Santexco Pty Ltd
Royalty interest with Giants Reef Exploration Pty Ltd
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
2M/2001
14M/2007
11M/2008
EL30/2003
EL8/2014
M70/1309
G70/217
E70/2512
E70/3073
L70/185
L70/186
M52/801
M52/743
E52/2042
M53/336
M27/57
M52/278,279,299
M52/295-296
M52/300-301
M52/305-306
M52/369-370
E47/1846
ML 1571
ML 1734
ML 1739
ML 10028
ML 1758
MLC 49
MLC 527
MLC 599
MLC 617
MCC 174
MCC 212
MCC 287-288
MCC 308
MCC 344
MCC 342
MLC 619
MLC 522
MCC 338-339
MCC 316-317
MCC 340-341
100% (1)
100% (1)
100% (1)
100% (1)
100% (1)
70% (3) (4)
70% (4)
70% (4)
70% (4)
70% (4)
70% (4)
15% (5) (6)
0% (7)
0% (7)
0% (8)
0% (9)
0% (10)
0% (11)
0% (11)
0% (10)
0% (10)
0% (12)
30% (13)
30% (13)
30% (13)
30% (13)
30% (13)
0% (14)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
PROSPECT
TASMANIA
Savage River
WESTERN AUSTRALIA
Southdown
Wembley
Horseshoe Lights
Abercromby Well
Red Hill
Freshwater
Pilbara
QUEENSLAND
Mt Windsor JV
NORTHERN TERRITORY
Mt Samuel
True Blue
Aga Khan
Black Cat
78
PB
Date
Announcement
1/03/2019
Initial Director's Interest Notice
1/03/2019
Director Appointment
28/02/2019 Corporate Governance Statement
28/02/2019 Dividend/Distribution - GRR
28/02/2019
Appendix 4G
28/02/2019 Grange Full Yr Statutory Accts 12 Months Ended 31 Dec 2018
28/02/2019 Grange Resources Limited Appendix 4E - 31 December 2018
23/01/2019 GRR - Quarterly Report for 3 months ended 31 December 2018
24/10/2018 GRR - Quarterly Report for 3 months ended 30 September 2018
28/09/2018 Change in substantial holding
28/08/2018 Dividend/Distribution - GRR
28/08/2018 Half Yearly Report and Accounts
28/08/2018
Appendix 4D - Half Year Ending 30 June 2018
26/07/2018 GRR - Quarterly Report for 3 months ended 30 June 2018
26/06/2018 Corporate Governance Statement
30/05/2018 Results of Meeting
30/05/2018
AGM Presentation
3/05/2018
Change of Director's Interest Notice
27/04/2018 Notice of Annual General Meeting/Proxy Form
26/04/2018 GRR - Quarterly Report for 3 months ended 31 March 2018
23/04/2018
Annual Report to shareholders
3/04/2018
Updated Resource & Reserve Statement - Savage River
29/03/2018 Change in substantial holding
26/03/2018 Change of Director's Interest Notice
2/03/2018
Corporate Update - Grange Strategic Developments
27/02/2018 Dividend/Distribution - GRR
27/02/2018
Appendix 4G
27/02/2018 Grange Full Yr Statutory Accts 12 Months Ended 31 Dec 2017
27/02/2018 Grange Resources Limited Appendix 4E - 31 December 2017
23/02/2018 Market Update - Southdown Magnetite Project
24/01/2018 GRR - Quarterly Report for 3 months ended 31 December 2017
PB
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
Held by Grange Resources (Tasmania) Pty Ltd.
Under application.
Medaire Inc.
Subject to conditional purchase agreement with
Subject
to Joint Venture
Implementation
Agreement with SRT Australia Pty Ltd
Subject to 1% Net Smelter Return royalty with
Lac Minerals (Australia) NL
Subject to joint venture agreement with Aragon
Resources Pty Ltd
Royalty interest with Horseshoe Metals Limited
Royalty interest with Nova Energy Pty Ltd
Royalty interest with Kanowna Mines Pty Ltd
Royalty interest with Dampier (Plutonic) Pty Ltd
Royalty interest with Northern Star Resources
Ltd
Royalty interest with Fortescue Metals Group Ltd
Subject to joint venture agreement with Thalanga
Copper Mines Pty Limited
Royalty interest with Santexco Pty Ltd
Royalty interest with Giants Reef Exploration Pty Ltd
Grange Resources Limited » 2018 Annual Report
TENEMENT SCHEDULE
AS AT 28 FEBRUARY 2019
TENEMENT
INTEREST
Notes:
2M/2001
14M/2007
11M/2008
EL30/2003
EL8/2014
M70/1309
G70/217
E70/2512
E70/3073
L70/185
L70/186
M52/801
M52/743
E52/2042
M53/336
M27/57
M52/278,279,299
M52/295-296
M52/300-301
M52/305-306
M52/369-370
E47/1846
ML 1571
ML 1734
ML 1739
ML 10028
ML 1758
MLC 49
MLC 527
MLC 599
MLC 617
MCC 174
MCC 212
MCC 308
MCC 344
MCC 342
MLC 619
MLC 522
MCC 287-288
MCC 338-339
MCC 316-317
MCC 340-341
100% (1)
100% (1)
100% (1)
100% (1)
100% (1)
70% (3) (4)
70% (4)
70% (4)
70% (4)
70% (4)
70% (4)
15% (5) (6)
0% (7)
0% (7)
0% (8)
0% (9)
0% (10)
0% (11)
0% (11)
0% (10)
0% (10)
0% (12)
30% (13)
30% (13)
30% (13)
30% (13)
30% (13)
0% (14)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
0% (15)
PROSPECT
TASMANIA
Savage River
WESTERN AUSTRALIA
Southdown
Wembley
Horseshoe Lights
Abercromby Well
Red Hill
Freshwater
Pilbara
QUEENSLAND
Mt Windsor JV
NORTHERN TERRITORY
Mt Samuel
True Blue
Aga Khan
Black Cat
PB
LIST OF SIGNIFICANT ASX ANNOUNCEMENTS
FROM 1 JANUARY 2018 THROUGH TO 15 MARCH 2019
2018 Annual Report « Grange Resources Limited
Date
Announcement
1/03/2019
Initial Director's Interest Notice
1/03/2019
Director Appointment
28/02/2019 Corporate Governance Statement
28/02/2019 Dividend/Distribution - GRR
28/02/2019
Appendix 4G
28/02/2019 Grange Full Yr Statutory Accts 12 Months Ended 31 Dec 2018
28/02/2019 Grange Resources Limited Appendix 4E - 31 December 2018
23/01/2019 GRR - Quarterly Report for 3 months ended 31 December 2018
24/10/2018 GRR - Quarterly Report for 3 months ended 30 September 2018
28/09/2018 Change in substantial holding
28/08/2018 Dividend/Distribution - GRR
28/08/2018 Half Yearly Report and Accounts
28/08/2018
Appendix 4D - Half Year Ending 30 June 2018
26/07/2018 GRR - Quarterly Report for 3 months ended 30 June 2018
26/06/2018 Corporate Governance Statement
30/05/2018 Results of Meeting
30/05/2018
AGM Presentation
3/05/2018
Change of Director's Interest Notice
27/04/2018 Notice of Annual General Meeting/Proxy Form
26/04/2018 GRR - Quarterly Report for 3 months ended 31 March 2018
23/04/2018
Annual Report to shareholders
3/04/2018
Updated Resource & Reserve Statement - Savage River
29/03/2018 Change in substantial holding
26/03/2018 Change of Director's Interest Notice
2/03/2018
Corporate Update - Grange Strategic Developments
27/02/2018 Dividend/Distribution - GRR
27/02/2018
Appendix 4G
27/02/2018 Grange Full Yr Statutory Accts 12 Months Ended 31 Dec 2017
27/02/2018 Grange Resources Limited Appendix 4E - 31 December 2017
23/02/2018 Market Update - Southdown Magnetite Project
24/01/2018 GRR - Quarterly Report for 3 months ended 31 December 2017
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Grange Resources Limited » 2018 Annual Report
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as
follows. The shareholder information set out below was applicable as at 18 February 2019 except where otherwise indicated.
ORDINARY SHARES
Twenty Largest Shareholders as at 18 February 2019
Distribution of Equity Securities
The twenty largest holders of ordinary fully paid shares are
listed below:
Analysis of number of shareholders by size and holding:
Number
%
540,225,987
46.68
1 - 1,000
Ordinary Director Employee
Shares Options
-
464
Other
Options Options
-
-
Name
Shagang International
(Australia) Pty Ltd (Australia)
Pacific International Co
(Hong Kong)
Realindex Investments Pty
Ltd (Australia)
RGL Holdings Ltd (Hong
Kong)
Nero Resource Fund Pty Ltd
(Australia)
79,909,035
39,601,568
24,085,466
17,460,511
DFA Australia Ltd (Australia)
16,650,398
ABN AMRO Bank NV
(Netherlands)
Coöperatieve Rabobank U.A.
(Netherlands)
Interactive Brokers
Bank Julius Baer & Co. AG
(Switzerland)
UBS AG Switzerland
(Switzerland)
IFM Investors Pty Ltd
(Australia)
Credit Suisse AG
(Switzerland)
15,648,883
10,254,881
9,804,413
9,763,941
9,311,077
7,957,731
7,669,720
Mr Adam Garrigan (Australia)
7,500,000
JPMorgan Chase Bank
7,200,000
Dimensional Fund Advisors
LP (United States)
7,167,862
Morgan Stanley & Co.
International Plc (United
Kingdom)
LSV Asset Management
(United States)
6.90
3.42
2.08
1.51
1.44
1.35
0.89
0.85
0.84
0.80
0.69
0.66
0.65
0.62
0.62
1,001 - 10,000
10,001 - 100,000
100,001 - and over
2,069
2,156
463
Total
5,152
-
-
-
0
-
-
-
0
-
-
-
0
The number of shareholders holding less than a marketable
parcel of Ordinary Shares at 15 March 2019 was 686.
Voting Rights
All shares carry one vote per share without restriction.
Substantial Shareholders
An extract of the Company’s Register of Substantial
Shareholders as at 18 February 2019 is set out below:
Name
Shagang International
(Australia) Pty Ltd
Shagang International
Holdings Limited
Ever Lucky
Developments Limited
RGL Holdings Co. Ltd
Number of
fully
paid shares
Voting
power
|
|
>564,311,453
48.76%
|
Pacific International Co
79,909,035
6.90%
Securities Subject to Voluntary Escrow
The following securities are subject to voluntary escrow:
Class of Security
Number of
Securities
Escrow
period ends
6,409,202
0.55
6,183,400
0.53
Fully Paid Ordinary Shares
Nil Not applicable
APAC Resources Commodity
Trading Limited (China)
5,800,000
Mrs Karen Hislop (Australia)
5,681,548
Sub-total 834,285,623
0.50
0.49
72.09
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Burnie Office - Tasmania
(Registered Office)
34A Alexander Street
BURNIE TAS 7320
PO Box 659
BURNIE TAS 7320
Telephone: + 61 (3) 6430 0222
Facsimile: + 61 (3) 6432 3390
Email: grr.info@grangeresources.com.au