AUSTRALIA’S MOST EXPERIENCED
MAGNETITE PRODUCER
2019
ANNUAL
REPORT
Grange Resources Limited » 2019 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
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
2 Riverside Quay
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
2019 overview
2020 priorities
About the Grange business
Chairperson’s & chief executive officer’s review
Outlook
Operating and financial review
Corporate governance statement
1
2
3
4
5
6
8
19
2019 Annual Report » Grange Resources Limited
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 2035.
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
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...
• Work safely
• Lead and act with fairness, integrity, trust and respect
• Be responsible and accountable for our actions
• Utilise our resources efficiently and effectively
• Engage with stakeholders and proactively manage our
impact on their environment
• Work together openly and transparently
• Promote an environment in which our people can develop
and prosper
1
FINANCIAL OVERVIEW
•
Total iron ore product sales of 2.19 million tonnes (2018:
2.37 million tonnes).
Unit C1 cash operating cost of $114.26 per tonne (2018:
$98.10).
Grange’s high quality, low impurity iron ore products
attracted a high premium with average product prices of
$158.33 per tonne (2018: $149.76) (FOB Port Latta).
Weaker AUD:USD exchange rates have supported AUD
revenues.
Delivered profit after tax of $77.3 million (2018: profit after
tax of $112.9 million), on revenues from mining operations
of $368.6 million (2018: $368.2 million).
Continued focus on selling cargoes to targeted customers
and balancing opportunities in the spot market.
Sustained strong cash and cash equivalents position at
$142.1 million (2018: $204.5 million).
•
•
•
•
•
•
Grange Resources Limited » 2019 Annual Report
2019 OVERVIEW
Production rates were impacted in the first half of the year
and revised targets were achieved in spite of delays due to
heavy rainfall and wall instability from the end of 2018.
OPERATIONAL OVERVIEW
•
Surpassed 1000 consecutive days Lost Time Injury free
by year end 2019.
Achieved revised full year production despite the high
rainfall and flooding hampering mining activity from
previous year.
Opportune maintenance was undertaken through the
first half to ensure the concentrator and pellet plant were
prepared for full production in the second half of 2019.
Waste stripping on the west wall of North Pit provided
access into the main ore zone, with ore stockpiles
replenished and providing increased head grade of ore to
the concentrator.
Ore Reserves increased to 113.2MT @ 47.2 %DTR driven
by the completion of the Centre Pit feasibility study and
interim environmental approval.
Progressed Prefeasibility study into underground mining
in the North Pit deposit.
Engineering and design work commenced to improve
airflow through pellet furnaces.
Preserved balance sheet strength with disciplined
operational planning and execution enabling internal
funding of critical mine re-development.
Cost control disciplines maintained to ensure sustainable
operating costs.
•
•
•
•
•
•
•
•
2
2020 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.
The Board undertook a strategic review in the middle of the
year and defined some key areas of focus to underpin the
development of Grange’s business. Four main areas were
defined to address: developing a sustainable Life-of-Mine-
Plan; integrating innovation into all aspects of the business;
sustaining ageing infrastructure and building capacity and
capability within our workforce. Grange’s business and
operational planning is directed to deliver into these core
strategies.
DEVELOPING A SUSTAINABLE LIFE-
OF-MINE-PLAN
is
foundation
The Life-of-Mine-Plan
that underpins
the
investment decisions and to optimise business execution.
Potential failure on the East Wall and instability in the mine
introduces uncertainty into the production profile. The single
source of ore supply and low stockpiles presents risks if any
delays in the mine and extreme weather events have the
potential to interrupt production. To mitigate these uncertainties
we will seek to mitigate increasing pressure on OPEX costs;
develop contingency for extreme weather events; understand
and mitigate risk of environmental approval delays on project
development and complete the studies to enable integration
and optionality for Open Pit and Underground operation.
North Pit is the main source of ore for 2020 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 continuing
pre-feasibility study to inform the development of a de-risked,
long life plan. 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.
Strategic Plan 2020
2019 Annual Report » Grange Resources Limited
INTEGRATE INNOVATION
Innovation is critical to improving safety, efficiency and
reducing cost. Innovation tools are integrated into the
business through our Management Operating System (MOS)
and we are building capability with our people and systems.
This will be considered at the transactional level, and in the
development of the plan. Application of new technology will
support and improve operational outcomes. Our focus will
be to: determine the potential to introduce automation into
the operation; upgrade the equipment tracking system for
the mine and optimise the mining cycle to reduce delay and
increase efficiency; review the opportunity for sources and
supply of energy; and build production capability for potential
expansion of the operation.
SUSTAIN AGEING INFRASTRUCTURE
Our operation
is supported by mature and valuable
infrastructure and assets. Maintenance has been deferred
over periods of downturn in the past and assets require
investment to restore or replace where appropriate. Cost
Benefit Analysis will be used to support repair versus
replacement decisions. Our focus will be to: manage and
maintain mobile plant in the mine; manage and maintain fixed
plant; continue offshore structural refurbishment; sustain the
light vehicle fleet to support safe and productive operation;
and determine the ongoing maintenance requirements to
sustain the Pipeline for the long term.
BUILD CAPACITY & CAPABILITY
We recognise that our people are our most valuable asset.
We have a committed workforce with strong skills and
experience base. There is increasing competition for human
resources as the resource industry cycles and acknowledge
there is a risk of losing key technical staff and some of our
skills and experience.
To mitigate these risks we will implement retention strategies
to retain employees; develop strategies to attract the
required skills into the business; improve the communication
of our brand and operation in order to attract talent and build
specialised expertise as we gain certainty with respect to our
optimised and de-risked Life-of-Mine-Plan
Develop Sustainable LOMP
Integrate Innovation
Sustain Ageing Infrastructure
Build Capacity & Capability
• Uncertainty in the Life-of-Mine Plan is the
foundation that underpins investment
decisions to optimise business execution.
• Potential failure on the East Wall and
Drivers
instability in the mine introduces uncertainty
into the production profile.
•
•
Innovation is critical to improving safety,
efficiency and reducing cost.
Innovation tools are integrated into the
business through our MOS and we are
building capability with our people and
systems.
• Our process is supported by mature and
valuable infrastructure and assets.
• Maintenance has been deferred over
• People are our most valuable asset
• We have a committed workforce with
strong skills and experience base.
periods of downturn.
• There is increasing competition for human
• Assets require investment to restore or
resources as the industry cycles.
replace where appropriate.
• We are losing key technical staff and are at
• A single source of ore supply and low
• This needs to be considered at the
• Cost Benefit Analysis will be used to
stockpiles provides no capacity to absorb any
delays in the mine.
transactional level and in the development
of the plan.
• Extreme weather events have the potential to
• Application of new technology will support
interrupt production
and improve operational outcomes.
support repair vs replacement decision.
risk of losing our skills and experience
base.
• Seek to mitigate increasing pressure on OPEX
• Determine the potential to introduce
• Manage and maintain mobile plant in the
•
costs.
automation into the operation
mine.
Implement retention strategies to retain
employees.
• Analyse Price and Exchange Rate sensitivity
• Develop contingency for extreme weather
events.
• Upgrade the equipment tracking system
and optimise the mining cycle to reduce
delay and increase efficiency.
• Manage and maintain fixed plant.
• Continue offshore structural
refurbishment.
• Understand and mitigate risk of Environmental
• Review the opportunity for sources and
• Sustain the light vehicle fleet to support
Focus
Areas
approval delays on project development.
supply of energy.
• Complete the studies to enable integration and
optionality for Open Pit and Underground
operation.
• Build production capability for potential
expansion
safe and productive operation.
• Determine the ongoing maintenance
requirements to sustain the Pipeline.
• Develop strategies to attract the required
•
skills into the business.
Improve the communication of our brand
and operation in order to attract talent.
• Build specialised expertise when certainty
around LOMP and NPUG direction is
confirmed.
3
Nov 2019
Slide 1
Grange Resources Limited » 2019 Annual Report
ABOUT THE GRANGE BUSINESS
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 2035. 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.
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 or
magnetite. Most of the magnetite mined is usually used to
produce 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 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.
4
2019 Annual Report » Grange Resources Limited
CHAIRPERSON’S & CHIEF EXECUTIVE OFFICER’S REVIEW
Dear Shareholders,
Our outstanding performance in FY2019 was achieved through hard work and commitment by 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 improvements in operating performance and
safety, supported by a continued focus on productivity and higher iron ore prices. Our balance sheet remains strong. We
have been reviewing our strategy against changes in the external environment by analysing the risks and opportunities we
are facing and optimising 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.
2019 REVIEW
Safety remained our top priority in 2019. All of our safety performance indicators improved, and we have achieved over 1000
days Lost Time Injury Free.
The operating performance of the Group was satisfactory, despite the challenges throughout the year. Capital discipline, and
strong iron ore markets enabled us to deliver a robust financial performance in 2019.
We delivered a profit after tax of $77.3 million (2018: profit after tax of $112.9 million), on revenues from mining operations
of $368.6 million (2018: $368.2 million) from improved iron ore prices and record pellet premiums with average product
prices of $158.33 per tonne (2018: $149.76) (FOB Port Latta). Total iron ore product sales of 2.19 million tonnes (2018: 2.37
million tonnes) were achieved. Lower production rates and increased maintenance works in the processing plant, as well
as increased electricity price resulted in an increase in unit C1 cash operating costs to $114.26 per tonne (2018: $98.10).
Cash and cash equivalents positioned at $142.1 million (2018: $204.5 million), decreased largely due to increase in capital
expenditures and income tax paid.
It was a slow start to the year with mining activities restricted in the first six months due to high rain fall and wall instability
during the latter part of the prior year. While this affected production rates throughout the first half of the year, mining rates
improved on the successful remediation of the issue and access to the main ore zone was restored in second half and
achieved the revised full year production target. Waste stripping on the west wall of North Pit provided access into the main
ore zone, with ore stockpiles replenished and provided increased head grade of ore to the concentrator.
Our continued investment in strategic projects to de-risk future production continues with the North pit underground
development pre-feasibility study. Phase 3 drilling program from the exploration decline continued in Q4 2019. These
diamond holes are being drilled directly from the Exploration Decline through the fault zone and into the main ore zone
to provide detailed geotechnical information and improve confidence in the orebody at depth. Further feasibility studies
continued on ventilation, infrastructure, numerical modelling, production schedules and structural geology.
The Exploration Decline is progressing to plan, with the face position in 1,195-metres as at the end of December. The Phase
3 drilling program is progressing well with 6 holes completed and 2 in progress for an advance of over 5,390-metres. The
second rig was mobilized to site in Q4 2019 to accelerate the drilling activity.
The feasibility study for Centre Pit was completed in Q4 2019. Interim environmental approval was achieved for the first stage
of stripping, which commenced in Q4 2019. Final environmental approvals are under review and will be sought in Q1 2020
to support the release of the feasibility study.
Grange ROC Property has completed construction of the first project, Lumley Park, and successfully obtained the Certificate
for occupancy. This marks a significant milestone for the joint property venture, with 4 of the 5 units sold. Construction at
Carter Toorak is progressing well with full completion to be achieved in the first quarter of 2020. 3 of the 8 units have been
sold, and the focus for the coming months is to sell the remaining units. Development approval was successfully achieved
for the Brookville project.
We have continued to seek a buyer for our equity interest in the Southdown joint venture project. During 2019, the joint
venture partners continued 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. Compliance with
environmental and tenement conditions has been maintained. The on-going strategy is to maintain the currency and good
standing of all tenements, permits and project assets.
5
Grange Resources Limited » 2019 Annual Report
OUTLOOK
Looking ahead, our outlook on the iron ore pellet market remains uncertain. The impact of the COVID-19 on our business
is too early to tell.
The iron ore market remained strong throughout most of 2019 due to supply disruptions because of tailings dam failures in
Brazil and cyclones hitting major exporters in Australia. Seaborne supply volumes have yet to recover from those events.
Chinese iron ore imports have dropped as a result of the outbreak of COVID-19 in the beginning of 2020. Iron ore prices
have proved relatively buoyant for the past two months compared with the price plunges we have seen in other commodities
with the COVID-19 pandemic outbreak. Further price support after the outbreak of COVID-19 can be attributed to the strict
containment measures taken by China. Iron ore prices have recently been supported by confidence in the recovery of the
Chinese market. Chinese industrial activities are expected to return to a more normal level by the end of this month, with a
consequent rise in steel production, supported by the government’s stimulus packages. We can also see support for current
iron ore price levels in the fundamentals, with Chinese pig iron production up by 3.1% year-on-year to 132 million tonnes in
the first two months of the year. There was an increase in blast furnace utilisation rates in China, which rose to 86% in the
first week of April from 83% in March. Adding relatively tight seaborne supply to buoyant Chinese demand has created a
recipe for strong price support in the short term.
The 62% Fe iron ore benchmark first dipped to nearly $80 per tonne in the beginning of February and rose to nearly $90 per
tonne again in March before decreasing to the mid $80 in April. Demand for pellets was weakened in both Europe and India
due to the impact of the COVID-19 pandemic on downstream steelmaking facilities causing shutdowns in the regions and
resulting in sellers offering spot cargoes to the only viable market – China.
The potential supply disruptions in the global seaborne supply chain for iron ore, as a result of the pandemic, could keep
prices resilient. This is adding to a supply situation that was already tight because Brazilian iron ore exports have yet to
recover from last year’s dam disaster. Brazilian exports may be affected by the nationwide lockdown. The restrictions in
Canada and national lockdowns in both India and South Africa could further hamper the seaborne supply of iron ore. Further
reductions of seaborne volumes as a result of national lockdowns could cause price spikes, despite slowing demand growth
in China.
This year, the downward trend is likely to be further reinforced by a looming global economic downturn and slowing of
demand growth for Chinese pig iron. China is by far the largest importer of seaborne iron ore and Chinese pig iron production
remains a key driver of iron ore pricing.
The downside risks to iron ore prices will increase with falling steel prices, which will threaten to squeeze the operating
margins for steelmakers. Although there may be upside risks to iron ore prices in the short term, we anticipate a gradual
downward correction in the long term when demand starts to decline, as IMF recently announced the recession will drag
global GDP contraction of 3% in 2020. The uncertainty surrounding other economies is undoubtedly increasing.
6
2019 Annual Report » Grange Resources Limited
Despite the uncertain conditions that we currently face, the long-term outlook for our sector remains positive. We continued
building our safety culture through initiatives, in which our employees are encouraged to come up with new, creative ideas on
how to strengthen and improve our business. Our strong balance sheet provides a fundamental base for managing volatile
markets and ensuring capital is available for sustaining operations through the cycle. This strength is underpinned by our
ongoing generation of solid cash flows from operations. 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 whilst maximising cash flow and preserving the balance sheet through the cycle. Our
primary goal is to remain competitive in a frequently changing iron ore market. Our focus will remain on delivering our value,
and striving to ensure our company remains strong, resilient and able to deliver superior returns to shareholders in the short,
medium and long term. Sustainability will remain important priorities and indeed, will play an increasingly important role in
our business.
The company’s strategic focus is to generate sustained shareholder value by safely producing high quality iron ore products
from its Savage River and Port Latta operations in Tasmania whilst 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
Chairperson
Honglin Zhao
Chief Executive Officer
7
Grange Resources Limited » 2019 Annual Report
OPERATING AND FINANCIAL REVIEW
(2018: $204.5 million), decreased largely due to increase
in capital expenditures and income tax paid.
PROPERTY DEVELOPMENT
• Grange ROC Property has completed construction of
the first project, Lumley Park, and successfully obtained
the Certificate for occupancy. This marks a significant
milestone for the property joint venture. 4 of the 5 units
have been sold.
Construction at Carter Toorak is progressing well with full
completion to be achieved in the first quarter of 2020. 3
of the 8 units have been sold and the focus for the coming
months is to sell the remaining units.
Development approval was successfully achieved for
the Brookville project. The JV is seeking a buyer for the
property and anticipate the sale to be made in the year.
•
•
SAFETY PERFORMANCE
Grange operations surpassed 1000 consecutive days Lost
Time Injury free by year end 2019. Maintained focus on lead
indicators, hazard identification and risk management has
helped us sustain the current long running lost time injury
free period, despite a marked increase in manhours worked.
Unfortunately, there was a slight increase in disabling
injuries, however a significant drop in medical treatment
injuries was achieved. The majority of disabling injuries were
minor, and all persons involved were given meaningful work
for their respective periods of incapacity, they have actively
contributed to their return to work programs reducing the
periods of alternate work.
2019 was a year of significant contractor involvement at
both operational sites, increasing our hours worked and
exposures with new and exciting projects undertaken. Our
SEMS (safety, environment management system) onsite
training and major hazard systems improvements continue
to support a compliant, well managed and mature safety
culture throughout the year.
KEY HIGHLIGHTS
• Achieved a major milestone of over 1000 days Lost Time
Injury Free.
•
• Revised full year production target achieved despite high
rainfall and wall instability during the latter part of the
prior year impacting mine production in the first half of
this year.
Waste stripping on the west wall of North Pit providing
access into the main ore zone, with ore stockpiles
replenished and providing increased head grade of ore to
the concentrator.
Completed feasibility study in Centre Pit, to facilitate the
development of an additional ore source.
Delivered profit after tax of $77.3 million (2018: profit after
tax of $112.9 million), on revenues from mining operations
of $368.6 million (2018: $368.2 million).
Grange’s high quality, low impurity iron ore products
attracted a high premium with average product prices of
$158.33 per tonne (2018: $149.76) (FOB Port Latta).
•
•
•
o Total iron ore product sales of 2.19 million tonnes
(2018: 2.37 million tonnes).
o Weaker AUD:USD exchange rates have supported
the AUD revenues.
o Continued focus on selling cargoes to targeted
customers and balancing opportunities in the
spot market.
•
Unit C1 cash operating costs of $114.26 per tonne (2018:
$98.10), increased largely due to:
o Decrease in concentrate production. This was
due to low head grade of ore mined in the first
half of the year as the west wall cutback was
advanced to the main ore zone.
o Increased
opportune maintenance works
performed in the processing plant.
o Increased electricity price.
•
Cash and cash equivalents position at $142.1 million
Lag Indicators
8
2019 Annual Report » Grange Resources Limited
FULL YEAR RESULT
Grange recorded a statutory profit after tax of $77.3 million for the year ended 31 December 2019 (2018: $112.9 million).
Key revenue metrics for the year ended 31 December 2019 and the preceding 2018 year were as follows:
Iron Ore Pellet Sales (dmt)
Iron Ore Concentrate Sales (dmt)
Iron Ore Chip Sales (dmt)
Total Iron Ore Product Sales (dmt)
Average Realised Product Price (US$/t FOB Port Latta)
Average Realised Exchange Rate (AUD:USD)
Average Realised Product Price (A$/t FOB Port Latta)
2019
2,096,673
122
95,291
2018
2,258,487
10,042
105,151
2,192,086
2,373,680
109.95
0.6944
158.33
111.92
0.7473
149.76
Total sales for the year ended 31 December 2019 was 2.19 million tonnes of high quality, low impurity iron ore products
(2018: 2.37 million tonnes) and reflects sustained production from maintaining access to high grade ore.
The average iron ore product price received during the year was $158.33 per tonne of product sold (FOB Port Latta) (2018:
$149.76 per tonne). The increase compared to prior year was supported by lower AUD:USD exchange rates.
Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales
from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 35.7% of total sales for
2019 (2018: 40.6%).
Key operating metrics for the year ended 31 December 2019 and the preceding 2018 year were as follows:
Total BCM Mined
Total Ore BCM
Concentrate Produced (t)
Weight Recovery (%)
Pellets Produced (t)
Pellet Stockpile (t)
‘C1’ Operating Cost (A$/t Product Produced)(1)
2019
14,462,931
2,108,370
2,117,053
39.7
2018
14,730,697
1,050,067
2,275,718
53.2
2,055,043
2,185,627
147,721
114.26
189,351
98.10
(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 the main ore zone in the lower parts of the North Pit was completed early in the year. Whilst, heavy rainfall and wall
instability during the latter part of the prior year impacted the remediation and mining of the narrow stage on the east wall,
development of the west wall of North Pit was the main focus for much of the first half of this year. Successful access to the
main ore zone on the west wall was achieved in Q3. Consequently, head grade was significantly increased and presented
higher grade ore to replenish the stockpiles and concentrator.
The planned common equipment shut and opportune maintenance projects were brought forward to align mill downtime.
The concentrate and pellet plants delivered at high production levels throughout the latter part of 2019. Production rates
were impacted in the first half of the year due to heavy rainfall and wall instability impacting ore supply. The scheduled and
opportune maintenance activities at the pellet plant were completed safely and efficiently.
9
Grange Resources Limited » 2019 Annual Report
NORTH PIT UNDERGROUND
DEVELOPMENT PROJECT
The preliminary feasibility study is progressing well. Phase
3 drilling program from the exploration decline continued
in Q4. These diamond holes are being drilled directly from
the Exploration Decline through the fault zone and into the
main ore zone to provide detailed geotechnical information
and improve confidence in the orebody at depth. Further
feasibility studies continued on ventilation, infrastructure,
numerical modelling, production schedules and structural
geology.
The Exploration Decline is progressing to plan, with the
face position in 1,195-metres as at the end of December.
The Phase 3 drilling program is progressing well with 6
holes completed and 2 in progress for an advance of over
5,390-metres. The second rig was mobilised to site in Q4 to
accelerate the drilling activity.
CENTRE PIT FEASIBILITY STUDY
The feasibility study for Centre Pit was completed in
Q4. Interim environmental approval was achieved for the
first stage of stripping, which commenced in Q4. Final
environmental approvals are under review and will be sought
in Q1, 2020 to support the release of the feasibility study.
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 2019, 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 2020, 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 $532.1
million (31 December 2018: $477.8 million) principally as a
result of the following:
• A profit after tax of $77.3 million;
• A final 2019 dividend payment of $11.6 million;
• An interim 2019 dividend payment of $11.6 million.
The Group’s market capitalisation as at 24 April 2020 is
$243.03 million.
SOUTHDOWN MAGNETITE PROJECT
STATEMENT OF CASH FLOWS
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, one of
Japan’s largest steel producers. This advanced project has
Net cash flows from operating activities
Net cash inflows from operating activities for the year were
$55.7 million (2018: inflows $167.4 million) and reflect higher
iron ore product sales and an increase in unit operating
costs.
10
2019 Annual Report » Grange Resources Limited
Net cash flows from investing activities
Net cash outflows from investing activities for the period were
$93.6 million (2018: outflows $110.1 million) and principally
related to expenditures for mine properties and development
$51.0 million and property, plant and equipment $42.2 million.
This has increased the Ore Reserve by 19.2MT including
mining depletion from North Pit during 2019. Resource
drilling and estimation on the deposit will continue in
2020, as part of the continuing pre-feasibility studies. For
details on the Mineral Resource please refer to the ASX
release made on 27 April 2020.
Net cash flows from financing activities
Net cash outflows from financing activities for the period
were $25.6 million (2018 outflow: $27.6 million) and
principally related to the payment of 2018 final dividend
($11.6 million) and 2019 interim dividend ($11.6 million).
EXPLORATION AND EVALUATION
The resource definition during the last year ending Dec
31, 2019 focussed on the mining lease areas around
North Pit.
The Mineral Resource stands at 489.9 million tonnes
at 45.5% DTR. A decrease of 55MT from the previous
statement in 2018 followed a re-estimation of North Pit
in 2019 incorporating the second stage of drilling from
the underground project. Confidence and grade of the
Measured Resource has increased. The decrease in total
Mineral Resources is considered minor given the quantum
of the total Mineral Resources; annual mine production
levels; and the ongoing nature of the drilling program. Ore
Reserves increased significantly to 113.2MT @ 47.2%DTR
driven by the completion of the Centre Pit feasibility study.
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
2019. The mining of ore throughout the year focussed on
high grade supply from North Pit. The Mineral Resource has
decreased since the previous estimate dated 31 December
2018 as a result of the re-estimation, which is continuing with
further refinement expected this year. Ore Reserves have
increased due to the completion of the Centre Pit feasibility
and incorporate mining depletion for North Pit.
Mineral Resources and Ore Reserves are categorised in
accordance with the Australasian Code for Exploration
Results, Mineral Resources and Ore Reserves of 2012
(JORC Code, 2012). Estimated Measured and Indicated
Mineral Resources include those Mineral Resources modified
to produce the estimated Ore Reserves. Mineral Resources
which are not included in the Ore Reserves did not meet the
required economic viability hurdle at the time of last review.
11
Grange Resources Limited » 2019 Annual Report
Mineral Resources
A summary of the total Mineral Resources for Savage River as at 31 December 2019, above a cut-off grade of 15% DTR is
as follows:
Measured
Indicated
Inferred
Total
(1)
Davis Tube Recovery – a measure of recoverable magnetite
Ore Reserve
As at December 2019
Tonnes (Mt) Grade % DTR (1)
55.8
152.6
As at December 2018
Tonnes (Mt) Grade % DTR (1)
55.6
155.0
182.6
154.7
489.9
43.5
37.6
45.5
231.7
158.5
545.2
45.9
39.2
46.7
A summary of the ore reserve for Savage River as at 31 December 2019, above a cut-off grade of 15% DTR is as follows:
Proved
Probable
Total
As at December 2019
Tonnes (Mt) Grade % DTR (1)
53.4
61.1
As at December 2018
Tonnes (Mt) Grade % DTR (1)
54.0
75.9
52.1
113.2
39.9
47.2
18.1
94.0
32.3
49.8
(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 27 April
2020. 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
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. Our OHS policy leads us to
continually improve our Safety Systems.
SEMS is an integral part of the Grange Management System
(GMS) and 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
& ISO 45001 Occupational Health & Safety 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.
During 2019 Major Hazard Systems were refined to manage
the underground operation and be fully compliant with the
appropriate standards and legislation. Critical controls were
also added in 2019 to help manage our Principal Hazards.
12
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.
The goals of our Mission Statement will be achieved through
effective adherence to management systems, integrated risk
management practices, risk aware culture, demonstrable
leadership, maintaining standards, monitoring performance
and looking after our people. Proactive Lead Indicators are
the prime focus for safety to ensure we minimise and control
our Lag Indicators.
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 safety and the
safety of those around them
Safety performance can always be improved
•
Safety Performance
The Company remains 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 share the same level of commitment. We want
all our workers, employees and 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 consistent measurable
in our safety
improvement
indicators. Targeted
improvements in our lag indicators are reinforced by a regime
of measurable lead indicators to help reduce risk exposures.
lag
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 & Australian Standards in
areas where legislation is deficient;
Whistleblower legislation;
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.
During 2019 we continued our focus on reducing costs
without reducing support services via:
•
Initiatives for Emergency Response Team (ERT) in-
house training again saved considerable costs and
we are looking to further reduce these in 2020, while
maintaining a high standard of response.
• ERT training has been maintained to meet underground
requirements and provide a competent onsite resource
for our underground crews.
• The underground emergency refuge chamber and
to maintain
industry standards and WST
associated equipment was sourced
compliance with
expectations.
• 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 first aid component.
• Continuing to obtain Federal and State government
training funds reduces the outlay for training in leadership
and continuous improvement.
• Continuing to develop 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. This machine will come to site
in 2020 and has generated industry wide interest.
• Participating in the Insurance Underwriters safety audit
continues to provide 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.
2019 Annual Report » Grange Resources Limited
• Focus on gender diversity has promoted the role of
women in our workforce and is supporting greater
diversity in our teams.
• Strategic focus in “Critical Controls” is improving our risk
management system 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.
2019 has seen further enhancing of 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). These lead
indicators were supplemented by specific KPIs for the NPUG
workforce. Tracking lead indicators 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
13
Grange Resources Limited » 2019 Annual Report
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
G3 forums and two, 2-day G2 forums both with participants
from other local companies.
The company has developed its own G1 compliant training
program and continues to work with University of Queensland
to develop effective programs. 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. The first stage
of this, minor changes to the Act, has been scheduled for
legislative review.
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/first aid and in 2019
the “Whistleblower Policy” was implemented.
During 2019 the company invested in new promotional videos
that help deliver the safety messages, culture reinforcement
and a means to share important operational and stakeholder
information with our workforces.
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. The
company is a member of the Tasmanian Mines Emergency
Rescue Committee (TMERC) and commits to provide
assistance through Mutual Aid to other member sites if this
is ever requested.
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
14
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.
2019 was also a year of increased assistance to Tasmanian
schools by providing the opportunity for students from all
over the state to have a week of work experience with us at
both operational sites.
in several WorkSafe Tasmania
In 2019 our management and workers have actively
participated
(WST)
workshops, helping to share our Safety Management
approach with other industry participants. Our interactions
with WST have been positive and much appreciated by
the inspectorate.
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. Grange obtained
approval to construct an underground drive and a portal to
allow exploration of the North pit ore body at depth in 2019
and is actively following up an approval to mine the ore using
underground mining (NPUG). Late in 2019 Grange also
obtained an approval to commence open pit mining of the
Centre pit (CP) ore reserve and are actively seeking approval
to continue mining this deposit.
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,
that pollution. Grange
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. Grange are actively
working with and informing the Waratah Wynyard Council on
all aspects of the NPUG project and the CP project.
Environmental Management Plans
TThe 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.
Goldamere Agreement
The Goldamere Agreement (which forms part of the
Goldamere Act) provides a framework for Grange to repay
the Tasmanian Government for the purchase of the mine
through remediation works. A significant variation to the
Goldamere Agreement was signed on 19th December
2014 which extends the Agreement until 24th 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
2019 Annual Report » Grange Resources Limited
River Rehabilitation Project (SRRP) and carry out contracted
works in lieu of paying the purchase price of the operation
to the Government. The agreement also allows Grange to
integrate its rehabilitation obligations with those of the State
under the SRRP.
Savage River Rehabilitation Project (‘SRRP’)
Grange representatives meet with 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 2019 to reflect the long-term risks
and Grange’s latest mining plan.
15
Grange Resources Limited » 2019 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 occurred in 2019 however there is an ongoing
monitoring period before final sign off by GDH.
• 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.
2019 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:
o Progression of the commonwealth environmental
approval for mine, desalination and pipelines.
o Groundwater modelling which confirmed deep
water-bearing palaeo channels have some
potential to contribute to construction water
supply.
o Ongoing hydrogeological baseline studies.
Grange announced to the market on 29 November 2012
that it would significantly reduce expenditure on its 70%
share of the Southdown Magnetite Project. Following this
announcement, the Project’s team size and scope of work
was reduced.
Challenging global economic conditions have resulted in the
search for an equity partner continuing throughout the year.
The reduced Project Team has continued to work toward
securing environmental approvals, and to build land tenure
and access through negotiations with land holders and
government agencies to enhance the ability of the Project to
rapidly mobilise in the future.
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.
2019 Annual Report » Grange Resources Limited
2020 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.
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.
17
Grange Resources Limited » 2019 Annual Report
Ore Crushing and Concentration
The project plan envisages Southdown ore being processed
to increase the iron content from around 25% to 69%.
Extensive metallurgical test work including pilot plant trials
have been conducted since 2004.
The process includes crushing, grinding, classification and
magnetic separation. The concentrate is further upgraded
using hydro separation to remove fine silica, and flotation to
remove sulphur impurities.
Transporting the Concentrate Slurry 110 km to the Port
Final magnetite concentrate will be thickened and transported
through a 110 km pipeline to the Port of Albany, where it will be
filtered and stored for loading onto cape size ships. A second
pipeline will return the filtered water back to the mine site so it
can be used again in the process. Both pipelines will be buried.
Increasing Albany’s Port Capacity
Subject to a decision to proceed, a concentrate export facility
would be built on 7 hectares of reclaimed land at Albany Port,
immediately east of the existing wood chip terminal site. The
plan incorporates a filtration plant, storage shed, new berth
and ship loading facility. Deepening and widening a 9.5
kilometre approach channel will enable 200,000 tonne cape
size ships to use the port. Whilst minimal dust generation
is expected because of the high moisture content of the
concentrate, the shed will be fully enclosed, under negative
pressure and fitted with dust extraction equipment.
The development would more than treble Albany’s current
port capacity from approximately 4 Mt per annum to 14
Mt per annum. The design has been developed in close
consultation with the Southern Ports Authority, Port of Albany
(formerly Albany Port Authority) and in line with the Public
Environmental Review approved in November 2010.
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.
Operations Planning
The Southdown operation will be modelled on Grange’s
existing Savage River operation in Tasmania operating on a
24/7 basis for 365 days per year.
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 2019 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 2019
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
ROM (Mt)
384.6
3.1
387.7
DTR* (%)
35.6
41.7
35.6
An additional 24.4 Mt of Inferred Resources is included within the designed pit.
A detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 28 February
2014. Grange confirms in reproducing the Mineral Resources and Ore Reserves in this subsequent report, that it is not
aware of any new information or data that materially affects the information included, and all the material assumptions and
technical parameters underpinning the estimates in this report continue to apply and have not materially changed. Grange
confirms that all environmental approvals and tenure have been maintained in compliance and terms extended as required
to retain currency.
18
2019 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 2019
corporate governance statement was approved by the Board on 28 February 2020.
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
reviews of specific areas and monitors
the
implementation of system improvements.
19
Grange Resources Limited » 2019 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 2019
Contents
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
21
35
36
Directors’ Declaration
Independent Auditor’s Report
76
79
20
PB
2019 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 2019.
Directors
The following persons were directors of the Company during the whole year and up to the date of this report:
Michelle Li
Honglin Zhao
Chairperson
Executive Director
Daniel Tenardi
Non-Executive Director
Yan Jia
Non-Executive Director, Deputy Chairperson
Michael Dontschuk
Non-Executive Director
David Woodall
Non-Executive Director – appointed 1 March 2019
INFORMATION ON DIRECTORS
Michelle Li, PhD, GAICD
Independent Non-executive Chairperson, Member of the Audit and Risk Committee, Member of
the Remuneration and Nomination Committee.
Dr Li has more than 30 years of international mining experience, including senior executive roles
with mining companies such as Citic Pacific, Rio Tinto and Iluka Resources.
Dr Li has a PhD from the University of Queensland and is 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.
21
PB
Grange Resources Limited » 2019 Annual Report
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.
David Woodall, MSc, BSc, GAICD
Mr. Woodall is a mining engineer with over 30 years’ experience in operations, project development
and evaluations in the mineral resources industry including gold, copper, iron ore, and nickel. He
has had senior management, corporate and operational positions in large scale open pit, large and
small-scale underground operations in Canada, Australia, USA, Fiji, Africa, Central Asia and China.
Mr Woodall is CEO at Superior Lake Resources Limited, and previous roles included Executive
General Manager International Operations for Newcrest and Director Operations for FMG.
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
2019 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 2019 - 1.0 cents per
share
Fully franked final dividend for the year ended 31 December 2018 - 1.0 cents per
share
Fully franked interim dividend for half year ended 30 June 2018 - 1.0 cents per
share
Fully franked final dividend for the year ended 31 December 2017
2019
$’000
11,574
11,574
-
-
Total dividends paid
23,148
2018
$’000
-
-
11,574
11,574
23,148
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
2019. The final dividend was declared NIL conduit foreign income and will be paid on 30 March 2020.
OPERATING AND FINANCIAL REVIEW
advanced to the main ore zone.
o Increased
opportune maintenance works
performed in the processing plant.
o Increased electricity price.
Cash and cash equivalents position at $142.1 million (2018:
$204.5 million), decreased largely due to increase in capital
expenditures and income tax paid.
PROPERTY DEVELOPMENT
• Grange ROC Property has completed construction of
the first project, Lumley Park, and successfully obtained
the Certificate for occupancy. This marks a significant
milestone for the property joint venture. 4 of the 5 units
have been sold.
• Construction at Carter Toorak is progressing well with
full completion to be achieved in the first quarter of
2020. 3 of the 8 units have been sold and the focus for
the coming months is to sell the remaining units.
• Development approval was successfully achieved for
the Brookville project. The JV is seeking a buyer for the
property and anticipate the sale to be made in the year.
Key Highlights
MINING OPERATIONS
• Achieved a major milestone of over 1000 days Lost Time
Injury Free.
• Revised full year production target achieved despite high
rainfall and wall instability during the latter part of the
prior year impacting mine production in the first half of
this year.
• Waste stripping on the west wall of North Pit providing
access into the main ore zone, with ore stockpiles
replenished and providing increased head grade of ore
to the concentrator.
• Delivered profit after tax of $77.3 million (2018: profit
after tax of $112.9 million), on revenues from mining
operations of $368.6 million (2018: $368.2 million).
• Grange’s high quality, low impurity iron ore products
attracted a high premium with average product prices
of $158.33 per tonne (2018: $149.76) (FOB Port Latta).
o Total iron ore product sales of 2.19 million tonnes
(2018: 2.37 million tonnes).
o Weaker AUD:USD exchange rates have supported
the AUD revenues.
o Continued focus on selling cargoes to targeted
customers and balancing opportunities in the
spot market.
• Unit C1 cash operating costs of $114.26 per tonne (2018:
$98.10), increased largely due to:
o Decrease in concentrate production. This was
due to low head grade of ore mined in the first
half of the year as the west wall cutback was
23
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
SAFETY PERFORMANCE
A focus on safety has been maintained across the business with over 1000 days Lost Time Injury Free achieved.
Key revenue metrics for the year ended 31 December 2019 and the preceding
2018 year were as follows:
Iron Ore Pellet Sales (dmt)
Iron Ore Concentrate Sales (dmt)
Iron Ore Chip Sales (dmt)
Total Iron Ore Product Sales (dmt)
Average Realised Product Price (US$/t FOB Port Latta)
Average Realised Exchange Rate (AUD:USD)
Average Realised Product Price (A$/t FOB Port Latta)
2019
2,096,673
122
95,291
2018
2,258,487
10,042
105,151
2,192,086
2,373,680
109.95
0.6944
158.33
111.92
0.7473
149.76
Total sales for the year ended 31 December 2019 was 2.19 million tonnes of high quality, low impurity iron ore products
(2018: 2.37 million tonnes) and reflects sustained production from maintaining access to high grade ore.
The average iron ore product price received during the year was $158.33 per tonne of product sold (FOB Port Latta) (2018:
$149.76 per tonne). The increase compared to prior year was supported by lower AUD:USD exchange rates.
Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales
from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 35.7% of total sales for
2019 (2018: 40.6%).
support the release of the feasibility study.
Southdown Magnetite Project
Key operating metrics for the year ended 31 December 2019 and the preceding
2018 year were as follows:
Total BCM Mined
Total Ore BCM
Concentrate Produced (t)
Weight Recovery (%)
Pellets Produced (t)
Pellet Stockpile (t)
‘C1’ Operating Cost (A$/t Product Produced)(1)
2019
14,462,931
2,108,370
2,117,053
39.7
2018
14,730,697
1,050,067
2,275,718
53.2
2,055,043
2,185,627
147,721
114.26
189,351
98.10
(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 the main ore zone in the lower parts of the North Pit was completed early in the year. Whilst, heavy rainfall and wall
instability during the latter part of the prior year impacted the remediation and mining of the narrow stage on the east wall,
development of the west wall of North Pit was the main focus for much of the first half of this year. Successful access to the
main ore zone on the west wall was achieved in Q3. Consequently, head grade was significantly increased and presented
higher grade ore to replenish the stockpiles and concentrator.
The planned common equipment shut and opportune maintenance projects were brought forward to align mill downtime.
The concentrate and pellet plants delivered at high production levels throughout the latter part of 2019. Production rates
were impacted in the first half of the year due to heavy rainfall and wall instability impacting ore supply. The scheduled and
opportune maintenance activities at the pellet plant were completed safely and efficiently.
24
PB
North Pit Underground Development Project
The preliminary feasibility study is progressing well. Phase
3 drilling program from the exploration decline continued in
Q4. These diamond holes are being drilled directly from the
Exploration Decline through the fault zone and into the main ore
zone to provide detailed geotechnical information and improve
confidence in the orebody at depth. Further feasibility studies
continued on ventilation, infrastructure, numerical modelling,
production schedules and structural geology.
The Exploration Decline is progressing to plan, with the face
position in 1,195-metres as at the end of December. The Phase
3 drilling program is progressing well with 6 holes completed
and 2 in progress for an advance of over 5,390-metres. The
second rig was mobilized to site in Q4 to accelerate the drilling
related to expenditures for mine properties and development
$51.0 million and property, plant and equipment $42.2 million.
Net cash flows from financing activities
Net cash outflows from financing activities for the period were
$25.6 million (2018 outflow: $27.6 million) and principally related
to the payment of 2018 final dividend ($11.6 million) and 2019
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 2019.
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
activity.
Centre Pit Feasibility Study
Year
The feasibility study for Centre Pit was completed in Q4.
Interim environmental approval was achieved for the first stage
of stripping, which commenced in Q4. Final environmental
approvals are under review and will be sought in Q1, 2020 to
In February 2020, the last apartment unit for the Lumley Court
project of the property JV was sold. With the Lumley Court
project fully constructed and all projects sold, this marks the
successful completion of the first project by the property JV.
There were no other matters or circumstances arising since
31 December 2019 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
• 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
• Maintaining access to high grade ore by continuing to invest
geographic customer risk
in mine development
• Continuing to invest in process infrastructure
• Continuing focus on improving productivity and implementing
cost control projects
Southdown 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 2019, 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 2020, as we formulate a valid
alternate development model and seek to secure equity partners
Financial Position
Grange’s net assets increased during the year to $ 532.1 million
(31 December 2018: $477.8 million) principally as a result of the
following:
A profit after tax of $77.3 million;
A final 2019 dividend payment of $11.6 million
An interim 2019 dividend payment of $11.6 million
Statement of Cash Flows
Net cash flows from operating activities
for a strategic share of the Company’s interest in the project.
• Optimising the mine design for Centre Pit
Net cash inflows from operating activities for the year were
• Ensuring that all tenements, permits and project assets
$55.7 million (2018: inflows $167.4 million) and reflect higher iron
remain in good standing
ore product sales and an increase in unit operating costs.
Net cash flows from investing activities
• Secure Commonwealth EPBC approval for the minesite,
slurry pipeline, port facilities and desalination infrastructure
Net cash outflows from investing activities for the period were
• Maintaining the currency of all the elements of the Definitive
$93.6 million (2018: outflows $110.1 million) and principally
Feasibility Study
PB
A focus on safety has been maintained across the business with over 1000 days Lost Time Injury Free achieved.
Key revenue metrics for the year ended 31 December 2019 and the preceding
Grange Resources Limited » 2019 Annual Report
SAFETY PERFORMANCE
2018 year were as follows:
Iron Ore Pellet Sales (dmt)
Iron Ore Concentrate Sales (dmt)
Iron Ore Chip Sales (dmt)
Total Iron Ore Product Sales (dmt)
Average Realised Product Price (US$/t FOB Port Latta)
Average Realised Exchange Rate (AUD:USD)
Average Realised Product Price (A$/t FOB Port Latta)
2019
2018
2,096,673
2,258,487
2,192,086
2,373,680
122
95,291
109.95
0.6944
158.33
10,042
105,151
111.92
0.7473
149.76
2019
2018
14,462,931
14,730,697
2,108,370
2,117,053
39.7
147,721
114.26
1,050,067
2,275,718
53.2
189,351
98.10
2,055,043
2,185,627
Total sales for the year ended 31 December 2019 was 2.19 million tonnes of high quality, low impurity iron ore products
(2018: 2.37 million tonnes) and reflects sustained production from maintaining access to high grade ore.
The average iron ore product price received during the year was $158.33 per tonne of product sold (FOB Port Latta) (2018:
$149.76 per tonne). The increase compared to prior year was supported by lower AUD:USD exchange rates.
Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales
from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 35.7% of total sales for
2019 (2018: 40.6%).
Key operating metrics for the year ended 31 December 2019 and the preceding
2018 year were as follows:
Total BCM Mined
Total Ore BCM
Concentrate Produced (t)
Weight Recovery (%)
Pellets Produced (t)
Pellet Stockpile (t)
‘C1’ Operating Cost (A$/t Product Produced)(1)
(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 the main ore zone in the lower parts of the North Pit was completed early in the year. Whilst, heavy rainfall and wall
instability during the latter part of the prior year impacted the remediation and mining of the narrow stage on the east wall,
development of the west wall of North Pit was the main focus for much of the first half of this year. Successful access to the
main ore zone on the west wall was achieved in Q3. Consequently, head grade was significantly increased and presented
higher grade ore to replenish the stockpiles and concentrator.
The planned common equipment shut and opportune maintenance projects were brought forward to align mill downtime.
The concentrate and pellet plants delivered at high production levels throughout the latter part of 2019. Production rates
were impacted in the first half of the year due to heavy rainfall and wall instability impacting ore supply. The scheduled and
opportune maintenance activities at the pellet plant were completed safely and efficiently.
PB
North Pit Underground Development Project
The preliminary feasibility study is progressing well. Phase
3 drilling program from the exploration decline continued in
Q4. These diamond holes are being drilled directly from the
Exploration Decline through the fault zone and into the main ore
zone to provide detailed geotechnical information and improve
confidence in the orebody at depth. Further feasibility studies
continued on ventilation, infrastructure, numerical modelling,
production schedules and structural geology.
The Exploration Decline is progressing to plan, with the face
position in 1,195-metres as at the end of December. The Phase
3 drilling program is progressing well with 6 holes completed
and 2 in progress for an advance of over 5,390-metres. The
second rig was mobilized to site in Q4 to accelerate the drilling
activity.
Centre Pit Feasibility Study
The feasibility study for Centre Pit was completed in Q4.
Interim environmental approval was achieved for the first stage
of stripping, which commenced in Q4. Final environmental
approvals are under review and will be sought in Q1, 2020 to
support the release of the feasibility study.
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 2019, 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 2020, 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 $ 532.1 million
(31 December 2018: $477.8 million) principally as a result of the
following:
A profit after tax of $77.3 million;
A final 2019 dividend payment of $11.6 million
An interim 2019 dividend payment of $11.6 million
Statement of Cash Flows
Net cash flows from operating activities
2019 Annual Report « Grange Resources Limited
related to expenditures for mine properties and development
$51.0 million and property, plant and equipment $42.2 million.
Net cash flows from financing activities
Net cash outflows from financing activities for the period were
$25.6 million (2018 outflow: $27.6 million) and principally related
to the payment of 2018 final dividend ($11.6 million) and 2019
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 2019.
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
In February 2020, the last apartment unit for the Lumley Court
project of the property JV was sold. With the Lumley Court
project fully constructed and all projects sold, this marks the
successful completion of the first project by the property JV.
There were no other matters or circumstances arising since
31 December 2019 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
• Optimising the mine design for 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
Net cash inflows from operating activities for the year were
$55.7 million (2018: inflows $167.4 million) and reflect higher iron
ore product sales and an increase in unit operating costs.
Net cash flows from investing activities
Net cash outflows from investing activities for the period were
$93.6 million (2018: outflows $110.1 million) and principally
• Ensuring that all tenements, permits and project assets
remain in good standing
• Secure Commonwealth EPBC approval for the minesite,
slurry pipeline, port facilities and desalination infrastructure
• Maintaining the currency of all the elements of the Definitive
Feasibility Study
25
PB
Grange Resources Limited » 2019 Annual Report
• Continuing review and identifying the potential for alternative
project development models
• 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 within 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
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
ended 31 December 2019
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.
Approach to Climate Change
Grange acknowledges that, though iron ore is fundamental to
a sustainable future, our industry must anticipate and address
the risks and opportunities that climate change will bring. The
Group is continuing to monitor the implications of potential risks
of regulatory changes, reduction in demand for our product,
increased energy prices and physical risks associated with
climate change and to formulate a strategy to mitigate against
these potential risks.
2019 Annual Report « Grange Resources Limited
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 2019, and the numbers of meetings attended by each Director were:
Directors’ meetings
Audit
Remuneration
Meetings of Committees
Name
M Li
Y Jia
D Tenardi
H Zhao
M Dontschuk
D Woodall
A
9
8
9
9
9
8
B
9
9
9
9
9
8
A
7
7
7
B
7
7
7
A
4
4
4
B
4
4
4
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
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
13,000
-
-
-
-
-
-
-
-
-
-
-
-
-
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 554,762,656 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 554,762,656 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
David Woodall
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
The responsibilities and functions for the Remuneration
Committee to assist in overseeing the development of policies
and Nomination Committee include reviewing and making
and practices which enable the Company to attract and
recommendations on the following:
retain capable Directors and employees, reward employees
fairly and responsibly and meet the Board’s oversight
• Equity based executive and employee incentive plans;
responsibilities in relation to corporate governance practices.
• Recruitment, retention, succession planning, performance
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).
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;
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
• Continuing review and identifying the potential for alternative
Notices 248/2 and 302/2 respectively. The currently approved
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 2019, and the numbers of meetings attended by each Director were:
Meetings of Committees
Name
M Li
Y Jia
D Tenardi
H Zhao
M Dontschuk
D Woodall
Directors’ meetings
Audit
A
9
8
9
9
9
8
B
9
9
9
9
9
8
A
7
7
7
B
7
7
7
Remuneration
B
A
4
4
4
4
4
4
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
ended 31 December 2019
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
-
-
13,000
-
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 554,762,656 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 554,762,656 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
David Woodall
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;
27
PB
project development models
• Continuing the search for new equity partners to take a
strategic share of the Company’s interest in the Project
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,
The Group continues to assess and manage various business
is the basis for the management of all environmental aspects
risks that could impact the Group’s operating and financial
of the mining leases. The Group has been relieved of any
performance and its ability to successfully deliver strategic
environmental obligation in relation to contamination, pollutants
• 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.
Southdown Joint Venture
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
The Southdown Joint Venture has not been responsible for
any activities which would cause a breach of environmental
• Geotechnical risks including wall stability
• Production
risks and costs associated with aging
legislation.
Mount Windsor Joint Venture
Risk Management
priorities including:
exchange rates
agreements
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
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
• A well developed tool kit to ensure projects are adequately
planned and peer reviewed prior to commitment and
October each year.
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 within 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
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.
Approach to Climate Change
Grange acknowledges that, though iron ore is fundamental to
a sustainable future, our industry must anticipate and address
the risks and opportunities that climate change will bring. The
Group is continuing to monitor the implications of potential risks
of regulatory changes, reduction in demand for our product,
increased energy prices and physical risks associated with
climate change and to formulate a strategy to mitigate against
The Group obtained approvals to operate in 1996 and 1997
under the Land Use Planning and Approvals Act (LUPA) and
these potential risks.
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 » 2019 Annual Report
• Periodically assessing the skills required by the Board;
• Recommend processes to evaluate the performance of
the Board, its Committees and individual Directors; and
• Reviewing governance arrangements pertaining
to
remuneration matters.
The Charter
strategies are reviewed regularly.
is reviewed annually, and remuneration
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 3 year deferred cash
incentive scheme with immediate effect from 1 January 2019.
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
performance hurdles and subject to ongoing employment
with Grange. The deferred cash component is determined
by measuring the Company’s progress made on:
• Development of mineral assets (weighting 35%)
• Mine development (weighting 20%)
• Downstream process improvement (weighting 15%)
• Financial returns (weighting 20%)
• Safety and sustainability (weighting 10%)
The deferred cash component is determined based on the
Company’s performance for the year ended 31 December,
with 33.3% payable on 31 December the first following year,
33.3% payable on 31 December the second following year,
and the balance payable on the following 31 December
(i.e. 3 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. The
Company did not issue any Rights to employees in the 12
months ended 31 December 2019.
•
•
•
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
PB
2019 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
Share price (last trade day of financial year)
Cents
2015
205.6
(277.8)
(24.00)
-
9.0
2016
276.3
92.9
8.03
11.6
14.0
2017
247.9
60.71
5.25
11.6
21.5
2018
368.2
112.94
9.79
23.1
20.0
2019
368.6
77.3
6.71
23.1
25.0
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 » 2019 Annual Report
2019 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 2019
Table 2: 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) (3)
annuation
leave
benefits
Cash (1) Rights (1)
Total
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
170,002
99,502
107,253
96,752
473,509
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
14,749
9,305
8,394
32,448
$
-
-
$
-
-
-
-
-
-
155,253
99,502
97,948
88,358
441,061
-
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
Personnel
-
-
-
-
-
-
-
-
494,509
120,657
73,930
46,978
25,760
48,331
810,165
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
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Dec-19
Dec-18
Dec-19
Dec-18
Dec-19
Dec-18
Fixed Remuneration
At Risk - STI
At Risk - LTI
Executive Directors
H Zhao
Other Key Management Personnel
78%
84%
81%
76%
82%
79%
S Phan
B Maynard
14%
9%
12%
14%
8%
12%
8%
7%
7%
10%
10%
9%
Non-executive
Directors
M Li
Y Jia
D Tenardi
M Dontschuk
D Woodall
Sub-total
Non-Executive
Directors
Executive
Directors
H Zhao
Other Key
Management
Personnel
S Phan
B Maynard
Sub-total Key
Management
Personnel
$
155,255
99,503
97,946
88,357
61,649
502,710
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
14,748
-
9,303
8,397
5,859
38,307
$
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
511,813
156,967 102,288
48,624
27,773
-
60,219
330,829
375,204
-
-
37,082
60,676
31,427
35,644
11,445
16,643
-
-
32,535
36,062
$
$
-
-
-
-
-
-
-
-
-
170,003
99,503
107,249
96,754
67,508
541,017
907,684
443,318
524,229
1,217,846
156,967 200,046
115,695
55,861
- 128,816
- 1,875,231
TOTAL 1,720,556
156,967 200,046
154,002
55,861
- 128,816
-
2,416,248
(1)
Represents short term and long-term incentive payments for the year ended 31 December 2018 and 2017 granted in February 2019 and 2018, 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.
Committee approves the remuneration entitlement.
Table 3: Relative proportions linked to performance
30
PB
PB
Salary &
fees
Non-
monetary
benefits
Short-term employee benefits
Short
term
incentive
(STI) (3)
Table 2: Remuneration for the year ended 31 December 2018
2019 Annual Report « Grange Resources Limited
Post
employment
benefits
Long-
term
benefits
Long term
incentive (LTI)
Super-
annuation
Long
service
leave
Termination
benefits
Cash (1) Rights (1)
Total
Grange Resources Limited » 2019 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 2019
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
$
155,255
99,503
97,946
88,357
61,649
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
-
14,748
9,303
8,397
5,859
38,307
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
$
170,003
99,503
107,249
96,754
67,508
541,017
-
-
-
-
-
-
511,813
156,967 102,288
48,624
27,773
-
60,219
907,684
Non-Executive
502,710
Non-executive
Directors
M Li
Y Jia
D Tenardi
M Dontschuk
D Woodall
Sub-total
Directors
Executive
Directors
H Zhao
Other Key
Management
Personnel
S Phan
B Maynard
Sub-total Key
Personnel
330,829
375,204
-
-
37,082
60,676
31,427
35,644
11,445
16,643
-
-
32,535
36,062
443,318
524,229
Management
1,217,846
156,967 200,046
115,695
55,861
- 128,816
- 1,875,231
TOTAL 1,720,556
156,967 200,046
154,002
55,861
- 128,816
-
2,416,248
(1)
Represents short term and long-term incentive payments for the year ended 31 December 2018 and 2017 granted in February 2019 and 2018, 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.
-
-
-
-
-
-
-
-
-
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
319,941
352,003
-
-
27,051
45,100
30,366
33,440
6,905
26,277
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48,331
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
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 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-19
Dec-18
Dec-19
Dec-18
Dec-19
Dec-18
Fixed Remuneration
At Risk - STI
At Risk - LTI
Executive Directors
H Zhao
78%
Other Key Management Personnel
S Phan
B Maynard
84%
81%
76%
82%
79%
14%
9%
12%
14%
8%
12%
8%
7%
7%
10%
10%
9%
PB
31
PB
Grange Resources Limited » 2019 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 2019 STI program had been approved:
2019 STI Program
Maximum possible
incentive award
Awarded
Amount awarded
$112,086
$65,205
$73,951
88.57%
93.07%
93.07%
$99,268(1)
$60,683(1)
$68,822(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 2019 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
2019 LTI Program
Maximum possible
incentive award
Awarded
Amount awarded
$84,065
$43,470
$49,301
95.54%
95.54%
95.54%
$80,315(1)
$41,531(1)
$47,101(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.
There were no Rights to Grange shares issued to directors or senior employees in the years 2019 and 2018.
32
PB
2019 Annual Report « Grange Resources Limited
Share holdings
31 December 2019
M Li
M Dontschuk
B Maynard
31 December 2018
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 2019
rights
On market
purchases
On market
disposals
Balance
31 December
2019
Other
Directors of Grange Resources Limited
Balance
On vesting of
1 January 2018
rights
On market
purchases
On market
disposals
Balance
31 December
2018
Other
-
-
-
-
-
-
-
-
-
-
-
41,500
28,500
-
-
-
-
-
-
-
-
-
-
-
13,507
13,000
68,121
13,507
41,500
68,121
13,507
41,500
68,121
13,507
-
68,121
Directors of Grange Resources Limited
M Li
M Donstchuk
B Maynard
Other Key Management Personnel
ix) Loans to key management personnel
There were no loans to key management personnel during the year (December 2018: Nil).
x) Other transactions with key management personnel
A director, Mr Honglin Zhao, is a former director of Jiangsu
A director, Ms Yan Jia, is an employee of Shagang
Shagang Group (Shagang) to which sales of iron ore
International Trade Co. Ltd., which is a wholly owned
products are made under long-term off-take agreements. As
subsidiary of Jiangsu Shagang Group (Shagang) to which
at 28 February 2020, Shagang holds 47.93% (28 February
sales of iron ore products are made under long-term off-take
2019: 46.68%) of the issued ordinary shares of Grange.
agreements. Transactions between Shagang and Grange
Transactions between Shagang and Grange must be
must be approved by non-associated shareholders of
approved by non-associated shareholders of Shagang or
Shagang, or approved by the Grange independent directors.
approved by the Grange independent directors.
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)
Pellets
Others
Insurance of Officers
During the financial period, the Company has paid premiums in respect of Directors’ and Officers’ Liability Insurance and
Company Reimbursement policies, which cover all Directors and Officers of the Group to the extent permitted under the
Corporations Act 2001. The policy conditions preclude the Group from any detailed disclosures.
2019
2018
131,598,839
149,342,457
2019
2018
2,869,107
(2,772,327)
2,062
-
2,871,169
(2,772,327)
PB
2019 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 2019
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 2019 STI program had been approved:
B Maynard
68,121
31 December 2018
Directors of Grange Resources Limited
M Li
M Dontschuk
13,507
41,500
-
-
-
-
-
-
-
28,500
-
Balance
1 January 2019
On vesting of
rights
On market
purchases
On market
disposals
Balance
1 January 2018
On vesting of
rights
On market
purchases
On market
disposals
Directors of Grange Resources Limited
M Li
M Donstchuk
13,507
-
Other Key Management Personnel
B Maynard
68,121
-
-
-
-
41,500
-
-
-
-
ix) Loans to key management personnel
There were no loans to key management personnel during the year (December 2018: Nil).
Balance
31 December
2019
Other
-
-
-
13,507
13,000
68,121
Balance
31 December
2018
Other
-
-
-
13,507
41,500
68,121
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 2020, Shagang holds 47.93% (28 February
2019: 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.
A director, Ms Yan Jia, is an employee of Shagang
International Trade Co. Ltd., which is a wholly owned
subsidiary of Jiangsu Shagang Group (Shagang) to which
sales of iron ore products are made under long-term off-take
agreements. 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:
Sales of iron ore products
Pellets
2019
2018
131,598,839
149,342,457
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 2019 and 2018.
Trade receivables (sales of iron ore products)
Pellets
Others
Insurance of Officers
2019
2018
2,869,107
(2,772,327)
2,062
-
2,871,169
(2,772,327)
During the financial period, the Company has paid premiums in respect of Directors’ and Officers’ Liability Insurance and
Company Reimbursement policies, which cover all Directors and Officers of the Group to the extent permitted under the
Corporations Act 2001. The policy conditions preclude the Group from any detailed disclosures.
33
PB
Grange Resources Limited » 2019 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
At the date of this report, the performance for the 2019 LTI program had been approved.
2019 STI Program
Maximum possible
incentive award
Awarded
Amount awarded
$112,086
$65,205
$73,951
88.57%
93.07%
93.07%
$99,268(1)
$60,683(1)
$68,822(1)
2019 LTI Program
Maximum possible
incentive award
Awarded
Amount awarded
$84,065
$43,470
$49,301
95.54%
95.54%
95.54%
$80,315(1)
$41,531(1)
$47,101(1)
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.
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
Proceedings on behalf of the Company
Audit and Non-audit Services
No person has applied to the Court under section 237 of
the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings
to which the company is a party, for the purpose of taking
responsibility on behalf of the company for all or part of
those proceedings. No proceedings have been brought or
intervened in on behalf of the company with leave of the
Court under section 237 of the Corporations Act 2001.
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.
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
2019
$’000
302
43
20
365
-
5
370
2018
$’000
291
42
23
356
13
5
374
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.
the instrument to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
Auditor
PwC continues in office in accordance with section 327 of
the Corporations Act 2001.
The report is made in accordance with a resolution of
Directors.
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 35.
Michelle Li
Rounding of amounts
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/191, 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
Chairperson of the Board of Directors
Perth, Western Australia
28 February 2020
34
PB
Auditor’s Independence Declaration
As lead auditor for the audit of Grange Resources Limited for the year ended 31 December 2019, 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 2020
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.
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
(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.
Auditor’s Independence Declaration
As lead auditor for the audit of Grange Resources Limited for the year ended 31 December 2019, 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
Amanda Campbell
Partner
PricewaterhouseCoopers
Melbourne
28 February 2020
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.
35
PB
Proceedings on behalf of the Company
Audit and Non-audit Services
No person has applied to the Court under section 237 of
The Board of Directors has considered the position and, in
the Corporations Act 2001 for leave to bring proceedings on
accordance with advice received from the Company’s Audit
behalf of the company, or to intervene in any proceedings
and Risk Committee, is satisfied that the provision of non-
to which the company is a party, for the purpose of taking
audit services is compatible with the general standard of
responsibility on behalf of the company for all or part of
independence for auditors imposed by the Corporations
those proceedings. No proceedings have been brought or
Act 2001. The Directors are satisfied that the provision of
intervened in on behalf of the company with leave of the
non-audit services by the auditor, as set out below, did not
Court under section 237 of the Corporations Act 2001.
compromise the auditor independence requirements of the
Indemnity of Auditors
Corporations Act 2001 for the following reasons:
•
all non-audit services have been reviewed by the Audit
The Company has entered into an agreement to indemnify its
and Risk Committee to ensure they do not impact the
auditor, PwC, against any claims or liabilities (including legal
impartiality and objectivity of the auditor; and
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.
•
none of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
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
2019
$’000
302
43
20
365
-
5
370
2018
$’000
291
42
23
356
13
5
374
It is the Group’s policy to employ PwC on assignments
the instrument to the nearest thousand dollars, or in certain
additional to their statutory audit duties where PwC’s
cases, to the nearest dollar.
PwC continues in office in accordance with section 327 of
the Corporations Act 2001.
The report is made in accordance with a resolution of
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
Auditor
Directors.
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 35.
Rounding of amounts
The Company is of a kind referred to in ASIC Legislative
28 February 2020
Instrument 2016/191, 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
Michelle Li
Chairperson of the Board of Directors
Perth, Western Australia
PB
Grange Resources Limited » 2019 Annual Report
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019
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
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
2019
$’000
368,601
(286,072)
82,529
(5,949)
76,580
(1,235)
174
75,519
7,991
(1,884)
81,626
(4,292)
77,334
2018
$’000
368,204
(238,938)
129,266
(5,177)
124,089
(822)
281
123,548
13,648
(1,868)
135,328
(22,390)
112,938
77,334
112,938
77,661
(327)
77,334
113,325
(387)
112,938
9.79
9.79
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)
36
36
6.71
6.71
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
36
PB
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019
2019 Annual Report « Grange Resources Limited
31 December 2019
31 December 2018
NOTES
$’000
$’000
Consolidated
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Total current assets
Non-current assets
Non-current receivables
Non-current inventories
Property, plant and equipment
Right of Use Assets
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 earnings
Capital and reserves attributable to owners
of Grange Resources Limited
Non-Controlling Interests
Total equity
2, 11
12
13
2
14
15
16
17
18
19
2, 20
2, 21
22
23
24
25
26
28
142,143
58,809
119,801
18,839
339,592
8,470
-
97,756
2,883
206,321
32,855
348,285
687,877
51,258
16,755
23,693
91,706
-
64,118
64,118
155,824
532,053
331,513
200,716
532,229
(176)
532,053
The above statement of financial position should be read in conjunction with the accompanying notes.
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
37
PB
Grange Resources Limited » 2019 Annual Report
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2019
Balance at 1 January 2019
Change in Accounting Policy (note 17)
Restated Opening Equity at 1 January
2019
Profit for the period attributable to
owners of Grange Resources Limited
Loss attributable to non-controlling
interests
Total comprehensive profit/(loss) for
the year
Transactions with owners in their
capacity as owners
Dividends paid
Non-controlling interest
Contributed equity
Balance at 31 December 2019
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/(loss) for the
year
Transactions with owners in their
capacity as owners
Dividends paid
Non-controlling interest
Contributed equity
NOTES
Contributed
equity
$’000
331,513
331,513
-
-
-
-
-
331,513
331,513
-
-
-
-
-
27
28
27
28
Balance at 31 December 2018
331,513
Non-
Controlling
Interests
$’000
74
74
-
(327)
(327)
-
77
77
(176)
-
-
Retained
earnings
$’000
146,243
(40)
TOTAL
$’000
477,830
(40)
146,203
477,790
77,661
77,661
-
(327)
77,661
77,334
(23,148)
(23,148)
-
(23,148)
200,716
56,066
77
(23,071)
532,053
387,579
113,325
113,325
(387)
-
(387)
(387)
113,325
112,938
-
(23,148)
(23,148)
461
461
74
-
(23,148)
146,243
461
(22,687)
477,830
The above statements of changes in equity should be read in conjunction with the accompanying notes
38
PB
2019 Annual Report « Grange Resources Limited
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2019
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)
NOTES
2019
$’000
2018
$’000
359,299
376,960
(276,845)
(207,728)
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 to managed funds
Proceeds from managed funds
(Payments) proceeds for term deposits
Net cash outflow from investing activities
Cash flows from financing activities
Increase in loan receivable
Proceeds from borrowings
Dividends paid to shareholders
Lease Payments
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
35
16
18
27
Cash and cash equivalents at end of the year
11
82,454
7,405
(38)
(34,085)
55,736
-
(42,214)
(50,974)
10,163
(10,000)
(537)
(93,562)
(12,881)
10,816
(23,148)
(446)
77
(25,582)
(63,408)
204,497
1,054
142,143
The above statement of cash flows should be read in conjunction with accompanying notes.
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
39
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of the consolidated financial statements are set out below.
These policies have been consistently applied for all the
periods presented, unless otherwise stated.
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.
The financial statements are for the consolidated entity
consisting of Grange Resources Limited and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting
Standards Board and the Corporations Act 2001. Grange
Resources Limited is a for-profit entity for the purpose of
preparing the financial statements.
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 2019:
• AASB 16 Leases
The group changed its accounting policies as a result of
adopting AASB 16. The group elected to adopt the new
rules retrospectively but recognised the cumulative effect
of initially applying the new standard on 1 January 2019.
This is disclosed in note 17. The other amendments listed
above did not have any impact on the amounts recognised in
prior periods and are not expected to significantly affect the
current or future periods.
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 2019 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
40
PB
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases. Details of subsidiaries are
set out in note 33.
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 34.
(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
proportionate share of the acquired entity’s net identifiable
cost in foreign currency are translated using the exchange
assets. Acquisition-related costs are expensed as incurred.
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
The excess of the
consideration transferred,
•
•
entity, and
amount of any non-controlling interest in the acquired
value was determined.
(iii) Group companies
The results and financial position of all the Group entities
•
acquisition-date fair value of any previous equity interest
(none of which has the currency of a hyperinflationary
in the acquired entity
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
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
•
assets and liabilities for each balance sheet presented
acquired, the difference is recognised directly in profit or
are translated at the closing rate at the date of that
loss as a bargain purchase. Where settlement of any part of
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.
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
(e) Business combinations
The acquisition method of accounting is used to account
may be circumstances when judgment is required when
for all business combinations, regardless of whether equity
recognising revenue based on the five-step model below:
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
•
•
•
•
i.
Identify the contract(s) with a customer
ii.
Identify the performance obligations in the contract
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
fair value of any asset or liability resulting from a
contingent consideration arrangement, and
performance obligation.
•
fair value of any pre-existing equity interest in the
subsidiary.
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
Identifiable assets acquired, and liabilities and contingent
above, the Group has determined that freight services is a
liabilities assumed in a business combination are, with
separate performance obligation. Therefore, the revenue for
limited exceptions, measured initially at their fair values at the
shipping services is recognised as the Group satisfies the
acquisition date. The Group recognises any non-controlling
performance obligation over time rather than at point when
interest in the acquired entity on an acquisition-by-acquisition
product is transferred to the vessel on which the product will
basis either at fair value or at the non-controlling interest’s
be shipped.
PB
Grange Resources Limited » 2019 Annual Report
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
control. The Group controls an entity when the Group
of the consolidated financial statements are set out below.
is exposed to, or has rights to, variable returns from its
These policies have been consistently applied for all the
involvement with the entity and has the ability to affect those
periods presented, unless otherwise stated.
returns through its power to direct the activities of the entity.
The financial statements are for the consolidated entity
Subsidiaries are fully consolidated from the date on which
consisting of Grange Resources Limited and its subsidiaries.
control is transferred to the Group. They are de-consolidated
(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. Grange
Resources Limited is a for-profit entity for the purpose of
preparing the financial statements.
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 2019:
• AASB 16 Leases
from the date that control ceases. Details of subsidiaries are
set out in note 33.
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 34.
(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
The group changed its accounting policies as a result of
adopting AASB 16. The group elected to adopt the new
rules retrospectively but recognised the cumulative effect
of initially applying the new standard on 1 January 2019.
Officer.
This is disclosed in note 17. The other amendments listed
Refer to note 4 for further information on segment descriptions.
above did not have any impact on the amounts recognised in
prior periods and are not expected to significantly affect the
current or future periods.
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
(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.
The consolidated financial statements incorporate the assets
Foreign exchange gains and losses resulting from the
and liabilities of all subsidiaries of Grange Resources Limited
settlement of such transactions and from the translation at
as at 31 December 2019 and the results of all subsidiaries
period end exchange rates of monetary assets and liabilities
for the year then ended. Grange Resources Limited and its
denominated in foreign currencies are recognised in the
subsidiaries together are referred to in this financial report as
profit and loss, except when they are deferred in equity as
the Group or the consolidated entity.
Subsidiaries are those entities over which the Group has
qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a
foreign operation.
PB
Non-monetary items that are measured in terms of historical
cost in foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value was determined.
(iii) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
•
•
assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet,
income and expenses for each income statement are
translated at average exchange rates (unless this is not
a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates
of the transactions), and
•
all resulting exchange differences are recognised in
other comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated
as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold
or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences
are reclassified to the income statement, as part of the gain
or loss on sale where applicable. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entities and
translated at the closing rate.
(e) Business combinations
The acquisition method of accounting is used to account
for all business combinations, regardless of whether equity
instruments or other assets are acquired. 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
2019 Annual Report « Grange Resources Limited
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
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 contract
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.
41
PB
Grange Resources Limited » 2019 Annual Report
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
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
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 requires 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.
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.
(h) Leases
As explained in note 1(a) above, the group changed its
accounting policy for leases where the group is a lessee. The
new policy is described and its impact is in note 17.
(i)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits
held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months
or less that are readily convertible to amounts of cash and
which are subject to an insignificant risk of changes in value.
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
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.
42
PB
2019 Annual Report « Grange Resources Limited
Development work in progress pertains to development and
Deferred tax assets and liabilities are offset when there is
construction of housing units and comprises expenditures
a legally enforceable right to offset current tax assets and
relating to:
• Cost of acquisition
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
The cost of acquisition comprises the purchase price of
offset and intends either to settle on a net basis, or to realise
the land along with any direct costs incurred as part of
the asset and settle the liability simultaneously.
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.
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
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the
payables in the balance sheet.
end of the reporting period in the countries where the
Cash flows are included in the Statement of Cash Flows on
Group’s subsidiaries operate and generate taxable income.
a gross basis and the GST component of cash flows arising
Management periodically evaluates positions taken in tax
from investing and financing activities, which is recoverable
returns with respect to situations in which applicable tax
from, or payable to, the taxation authority, are presented as
regulation is subject to interpretation. It establishes provisions
operating cash flows.
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
authority.
Commitments and contingencies are presented net of the
amount of GST recoverable from, or payable to, the taxation
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not
accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and
are expected to apply when the related deferred income tax
asset is realised, or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary
differences 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.
(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
PB
Grange Resources Limited » 2019 Annual Report
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
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
using the effective interest method.
Sale of apartments
(h) Leases
As explained in note 1(a) above, the group changed its
accounting policy for leases where the group is a lessee. The
new policy is described and its impact is in note 17.
(i)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits
held at call with financial institutions, other short-term, highly
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
Interest revenue is recognised on a time proportion basis
liquid investments with original maturities of three months
Revenue is recognised when control of a good or service
liabilities on the balance sheet.
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
(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,
v. The buyer has physical possession of the asset
letter of credit and timing of payment.
AASB 15 requires 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.
Distribution Income
(k)
Inventories
Raw materials and stores, ore stockpiles, work in progress
and finished goods are stated at the lower of cost and net
realisable value. Cost is determined primarily on the basis of
weighted average costs and comprises of the cost of direct
materials and the costs of production which include:
•
labour costs, materials and contractor expenses which
are directly attributable to the extraction and processing
Distribution income from short term managed funds is
recognised when the right to receive the income has been
of ore;
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.
•
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 sale.
PB
Development work in progress pertains to development and
construction of housing units and comprises expenditures
relating to:
• Cost of acquisition
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
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.
2019 Annual Report « Grange Resources Limited
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.
(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
43
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
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:
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).
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
gain access to areas of interest and amounts payable to third
parties to acquire interests in existing projects.
(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
useful life are accounted for prospectively.
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.
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.
(p) Mine properties and development
(r)
Impairment of assets
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
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
44
PB
or groups of assets (cash generating units).
(iii) Measurement
Where there is no binding sale agreement or active
At initial recognition, the group measures a financial asset at
market, fair value less costs of disposal is based on the
its fair value plus, in the case of a financial asset not at fair
best information available to reflect the amount the Group
value through profit or loss (FVPL), transaction costs that are
could receive for the cash generating unit in an arm’s length
directly attributable to the acquisition of the financial asset.
transaction. In assessing fair value, the estimated future cash
Transaction costs of financial assets carried at FVPL are
flows are discounted to their present value using a post-tax
expensed in profit or loss.
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset.
Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows
An assessment is also made at each reporting date as to
are solely payment of principal and interest.
whether there is any indication that previously recognised
impairment losses may no longer exist or may have
Debt instruments
decreased. If such indication exists, the recoverable amount
Subsequent measurement of debt instruments depends
is estimated. A previously recognised impairment loss is
on the group’s business model for managing the asset and
reversed only if there has been a change in the estimates
the cash flow characteristics of the asset. There are three
used to determine the asset’s recoverable amount since the
measurement categories into which the group classifies its
last impairment loss was recognised. If that is the case the
debt instruments:
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.
(s)
(i)
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
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
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.
• 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
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.
(ii) Recognition
Equity instruments
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.
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
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
method to allocate the cost, net of their residual values, over
to which such costs relate on the production output basis.
or groups of assets (cash generating units).
(iii) Measurement
the estimated useful lives or the life of the mine, whichever is
Changes to the life of the area of interest are accounted for
shorter. Leasehold improvements and certain leased plant
prospectively.
and equipment are depreciated over the shorter lease term.
Other non-mine plant and equipment typically has the
are assessed annually for impairment in accordance with
following estimated useful lives:
note 1(r).
The carrying value of each mine property and development
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
gain access to areas of interest and amounts payable to third
parties to acquire interests in existing projects.
(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
useful life are accounted for prospectively.
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.
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.
(p) Mine properties and development
(r)
Impairment of assets
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
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
PB
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
Classification
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
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.
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
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.
(ii) Recognition
Equity instruments
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.
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
45
PB
Grange Resources Limited » 2019 Annual Report
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
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.
(t)
Derivatives
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.
(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
46
PB
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.
Borrowing costs
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended
use or sale. Other borrowing costs are expensed.
(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.
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
service. Expected future payments are discounted using
investments.
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.
Changes in cost of goods or services required for restoration
activity as a result of future changes to the legal and
regulatory framework, for example, surrounding climate
change, may result in future actual expenditure differing from
the amounts currently provided.
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.
account:
and
2019 Annual Report « Grange Resources Limited
(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
•
the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares;
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 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.
The liability for long service leave is recognised in the
Investments in subsidiaries, associates and joint venture
provision for employee benefits and measured as the present
entities
value of expected future payments to be made in respect
of services provided by employees up to the reporting date
using the projected unit credit method.
Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of
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
than being deducted from the carrying amount of these
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.
Financial guarantees
Defined contribution superannuation funds
Contributions to defined contribution funds are recognised
as an expense in the income statement as they become
cost of the investment.
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
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.
(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.
PB
Grange Resources Limited » 2019 Annual Report
recognised in other gains/(losses) in the statement of profit
the extent that it is probable that some or all of the facility
or loss as applicable. Impairment losses (and reversal of
will be drawn down. In this case the fee is deferred until the
impairment losses) on equity investments measured at
draw down occurs. To the extent there is no evidence that it
FVOCI are not reported separately from other changes in
is probable that some or all of the facility will be drawn down,
fair value.
(iv) Impairment
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.
(t)
Derivatives
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.
(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
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 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.
Borrowing costs
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended
use or sale. Other borrowing costs are expensed.
(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.
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
Changes in cost of goods or services required for restoration
activity as a result of future changes to the legal and
regulatory framework, for example, surrounding climate
change, may result in future actual expenditure differing from
the amounts currently provided.
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
to the Group prior to the end of the financial period that are
and are subject to formal review at regular intervals.
PB
2019 Annual Report « Grange Resources Limited
(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
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.
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.
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.
47
PB
Grange Resources Limited » 2019 Annual Report
NOTE 2. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks:
market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall
risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The Group
has 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:
Financial Assets
Cash and cash equivalents
Short Term Managed Funds
Trade and other receivables
Derivative financial instruments
Financial Liabilities
Trade and other payables
Borrowings
2019
$’000
142,143
19,783
66,088
(944)
227,070
51,258
16,755
68,013
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
Balance at the beginning of the year
Movement in Short Term Managed Funds
Carrying amount at the end of the year
2019
$’000
19,783
19,783
19,988
(205)
19,783
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
48
PB
Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
2019 Annual Report « Grange Resources Limited
Cash and cash equivalents
Liquid investments
Borrowings - repayable within one year
Borrowings - repayable after one year
Net (debt)/asset
Cash and liquid investments
Gross debt - fixed interest rates
Net (debt)/asset
2019
$’000
142,143
19,783
(16,755)
-
2018
$’000
204,497
19,988
(7,126)
(611)
145,171
216,748
161,926
(16,755)
224,485
(7,737)
145,171
216,748
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
Financial assets measured at FVPL include the following:
Current Assets
Short Term Managed Funds
Derivative financial instruments
2019
$’000
19,783
(944)
18,839
Amounts recognised in profit or loss
During the year, the following gains/(losses) were recognised in profit or loss:
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
2019
$’000
(43)
(690)
(733)
2018
$’000
19,988
(254)
19,734
2018
$’000
(12)
(320)
(332)
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.
49
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
The Group’s exposure to US dollar denominated foreign currency risk at the reporting date, expressed in Australian dollars,
was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Net US dollar surplus
2019
$’000
43,104
29,848
(73)
72,879
2018
$’000
65,431
17,645
(66)
83,010
Group sensitivity
Based on the financial instruments held at 31 December 2019,
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
$4.6 million higher / $5.7 million lower (2018: $5.3 million higher /
$6.4 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.
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
issued at fixed rates expose the Group to fair value interest
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 2019, there are $1.54m in
trade receivables (2018 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
Between 1
Between 2
months 6-12 months
and 2 years
and 5 years Over 5 years
2019 - Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivatives
Trade and other
payables
Borrowings
Lease liabilities
Total non-
derivatives
Non-derivatives
Trade and other
payables
Borrowings
Total non-
derivatives
51,258
-
486
-
16,755
968
51,744
17,723
-
-
1,302
1,302
45,116
-
1,349
6,184
46,465
6,184
-
739
739
-
-
460
460
-
-
-
Less than 6
Between 1
Between 2
months 6-12 months
and 2 years
and 5 years Over 5 years
2018 - Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
Total
contractual
cash flows
Carrying
amount
liabilities
$’000
51,258
51,258
16,755
16,755
3,216
2,923
71,229
70,936
Total
contractual
cash flows
Carrying
amount
liabilities
$’000
45,116
45,116
8,272
7,738
53,388
52,854
-
-
-
-
-
-
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
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.
continues to provide returns for shareholders and benefits
Level 1: The fair value of financial instruments traded in
for other stakeholders, and to maintain an optimal capital
active markets (such as publicly traded derivatives and
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
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.
Group’s financial position including cash flow forecasts to
Level 2: The fair value of financial instruments that are not
determine future capital management requirements. To ensure
traded in an active market (for example, over-the-counter
sufficient funding, a range of assumptions are modeled.
derivatives) is determined using valuation techniques
e) Derivatives
which maximise the use of observable market data and
rely as little as possible on entity-specific estimates. If all
Derivatives are only used for economic hedging purposes
significant inputs required to fair value an instrument are
and not as speculative investments.
observable, the instrument is included in level 2.
(i) Classification of derivatives
Derivatives are classified as held for trading and
accounted for at fair value through profit or loss. They
level 3.
Level 3: If one or more of the significant inputs is not based
on observable market data, the instrument is included in
are presented as current assets or liabilities if they are
Specific valuation techniques used to value the derivative
expected to be settled within 12 months after the end
financial instruments mainly include determining the fair
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
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 2019 and 31 December 2018.
50
PB
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
The Group’s exposure to US dollar denominated foreign currency risk at the reporting date, expressed in Australian dollars,
was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Net US dollar surplus
2019
$’000
43,104
29,848
(73)
72,879
2018
$’000
65,431
17,645
(66)
83,010
Group sensitivity
rate risk if the borrowings are carried at fair value. The
Group’s fixed rate borrowings are carried at amortised cost.
Based on the financial instruments held at 31 December 2019,
had the Australian dollar weakened/strengthened by 10%
The Group analyses its interest rate exposure on a
against the US dollar with all other variables held constant, the
dynamic basis. Various scenarios are simulated taking into
Group’s post tax profit for the financial period would have been
consideration refinancing, renewal of existing positions,
$4.6 million higher / $5.7 million lower (2018: $5.3 million higher /
alternative financing and hedging.
$6.4 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.
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
b) Credit 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.
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
Going forward, the Group may consider using financial
transactions.
instruments to manage commodity price risk given exposures
to market prices arising from the adoption of index based
market pricing mechanisms.
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
Short term managed funds are exposed to price risk arising
is limited to the carrying value of trade receivables, cash
from investments held by the fund for which the future prices
and cash equivalents and deposits with banks and financial
are uncertain. The investment manager moderates this risk
institutions. As at 31 December 2019, there are $1.54m in
through a careful selection of securities within specified limits.
trade receivables (2018 nil) that are past due. The other
The fund actively maintains a high level of diversification in its
classes within trade and other receivables do not contain
holdings, thus potentially reducing the amount of risk in the
impaired assets and are not past due.
(iii) Cash flow and fair value interest rate risk
c) Liquidity Risk
The Group’s main interest rate risk arises from cash and
sufficient cash and marketable securities, the availability of
cash equivalents, term deposits and short term managed
funding through an adequate amount of committed credit
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
Maturities of financial liabilities
main interest rate risk arises from the Fund’s investments in
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.
The table below analyses the Group’s financial liabilities
into relevant maturity groupings based on the remaining
As at the reporting date, the Group has no variable rate
period as at the reporting date to the contractual maturity
borrowings outstanding. Borrowings issued at variable rates
date. The amounts disclosed in the table are the contractual
expose the Group to cash flow interest rate risk. Borrowings
undiscounted cash flows.
issued at fixed rates expose the Group to fair value interest
fund.
funds.
bonds.
PB
2019 - Consolidated
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
Non-derivatives
Trade and other
payables
Borrowings
Lease liabilities
Total non-
derivatives
2018 - Consolidated
Non-derivatives
Trade and other
payables
Borrowings
Total non-
derivatives
51,258
-
486
-
16,755
968
51,744
17,723
-
-
1,302
1,302
-
-
460
460
51,258
51,258
16,755
16,755
3,216
2,923
71,229
70,936
-
-
-
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
46,465
6,184
-
739
739
-
-
-
45,116
45,116
8,272
7,738
53,388
52,854
-
-
-
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.
Prudent liquidity risk management implies maintaining
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 2019 and 31 December 2018.
51
PB
Grange Resources Limited » 2019 Annual Report
2019
Financial Assets
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Short Term Managed Funds
202
17,272
2,309
19,783
Derivative financial instruments
Total Financial Assets
2018
Financial Assets
Short Term Managed Funds
Derivative financial instruments
-
202
Level 1
$’000
823
-
(944)
16,328
Level 2
$’000
18,763
(254)
-
2,309
Level 3
$’000
402
-
(944)
18,839
Total
$’000
19,988
(254)
Total Financial Assets
823
18,509
402
19,734
52
PB
NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
2019 Annual Report « Grange Resources Limited
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 2019 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 29.
c) Stripping costs in the production phase of a
surface mine (Interpretation 20)
The application of Interpretation 20 requires management
judgement in determining whether a surface mine is in the
production phase and whether the benefits of production
stripping activities will be realised in the form of inventory
produced through improved access to ore.
Judgement is also applied in identifying the component
of the ore body and the manner in which stripping costs
are capitalised and amortised. There are a number
of uncertainties inherent in identifying components of
the ore body and the inputs to the relevant production
methods for capitalising and amortising stripping costs
and these assumptions may change significantly when
new information becomes available. Such changes
could impact on capitalisation and amortisation rates for
capitalised stripping costs and deferred stripping asset
values.
d) Determination of mineral resources and ore reserves
Mineral resources and ore reserves are based on information
compiled by a Competent Person as defined in accordance
with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the JORC
2012 code). There are numerous uncertainties inherent in
estimating ore reserves and assumptions that are valid at
the time of estimation may change significantly when new
information becomes available. Changes in forecast prices of
commodities, exchange rates, production costs or recovery
rates may change the economic status of ore reserves and
may, ultimately, result in the reserves being restated. Such
changes in reserves could impact on depreciation and
amortisation rates, asset carrying values and provisions for
rehabilitation.
e) Taxation
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.
53
PB
Grange Resources Limited » 2019 Annual Report
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 from external customers
Timing of revenue recognition
At a point in time - Pellets
Over time - Freight
Total Assets
Total Liabilites
2019
$’000
368,601
347,068
21,533
2019
$’000
634,851
136,789
Ore Mining
2018
$’000
368,204
Property Development
2018
$’000
-
2019
$’000
-
355,473
12,731
2018
$’000
590,462
124,946
-
-
2019
$’000
53,025
19,035
-
-
2018
$’000
18,153
5,839
The Group holds 51% ownership of the property development segment and is fully consolidated (refer to note 28).
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
2019
$’000
24,704
313,738
-
30,159
-
-
368,601
2018
$’000
47,493
224,179
11,876
46,506
22,914
15,236
368,204
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 2019 and 31 December 2018. The total costs incurred during the
current and comparative periods to acquire segment assets were also predominately incurred in Australia.
54
PB
2019 Annual Report « Grange Resources Limited
NOTE 5. REVENUE
Disaggregation of revenue from contracts with customers
2019
2018
Revenue from
Contracts with
Customers
$’000
Other
Revenue
(Loss)
$’000
Cons.
Revenues
$’000
Revenue from
Contracts with
Customers
$’000
Consolidated
Revenues
$’000
Cons.
Revenues
$’000
366,875
366,875
1,726
1,726
368,601
368,601
370,596
370,596
(2,392)
(2,392)
368,204
368,204
From mining operations
Sales of iron ore products
Revenue from contracts with provisional pricing is recognised based on the estimated forward prices where available which
the Group expects to receive at the end of the quotation period. Where an estimated forward price is not available, spot
prices are applied as management’s best estimate of the provisional prices. 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
Changes in inventories
Mining & production costs
Freight costs
Government royalties
Depreciation and amortisation expense
Mine properties and development
- Capitalised
- Amortisation expense
Deferred stripping
- Amounts capitalised during the year
- Amortisation expense
Foreign exchange gain
Depreciation and amortisation
Land and buildings
Plant and equipment
Computer equipment
2019
$’000
133,656
107,960
(32,443)
209,173
21,533
9,511
21,991
(14,525)
6,659
(3,989)
35,832
(113)
286,072
480
21,221
290
21,991
2018
$’000
123,530
99,802
12,658
235,990
12,731
3,379
7,725
-
1,230
(45,728)
24,865
(1,254)
238,938
231
7,368
126
7,725
55
PB
Grange Resources Limited » 2019 Annual Report
NOTE 7. ADMINISTRATIVE EXPENSES
Salaries
Consultancy fees
Provision for rehabilitation - Interest in joint operation
Other
NOTE 8. OTHER INCOME (EXPENSES)
Rent income
Other income
Net loss on the disposal of property, plant and
equipment
NOTE 9. FINANCE INCOME (EXPENSES)
Finance Income
Interest income received or receivable
Exchange gains on foreign currency deposits /
borrowings (net)
Distribution Income
Finance expenses
Loss on financial instruments
Interest charge on lease liabilities
Provisions: unwinding of discount
- Decommissioning and restoration
2019
$’000
3,412
1,334
370
833
5,949
2019
$’000
236
28
(90)
174
2019
$’000
5,978
1,054
959
7,991
(733)
(156)
(995)
(1,884)
2019 Annual Report « Grange Resources Limited
29,036
27,926
(b) Numerical reconciliation of income tax (benefit) / expense to prima facie tax payable
2018
$’000
3,096
749
282
1,050
5,177
2018
$’000
137
675
(531)
281
2018
$’000
6,461
6,874
313
13,648
(332)
(238)
(1,298)
(1,868)
NOTE 10. INCOME TAX BENEFIT (EXPENSE)
(a) Income tax expense (benefit)
Current tax
current tax expense
Deferred tax
Previously unrecognised tax losses now recouped to reduce
Deferred income tax included in income tax expense (benefit)
comprises:
(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% (2018: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Sundry items
Movement in unrecognised deferred tax assets relating to
temporary differences
Previously unrecognised tax losses now recouped to reduce
current tax expense
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
2019
$’000
(4,869)
(19,875)
4,292
(19,875)
(19,875)
81,626
24,488
280
24,768
(15,386)
(4,869)
(221)
4,292
-
54,104
-
16,231
192,897
244,179
57,869
73,254
57,869
73,254
The ATO has agreed to allow a deduction of $16.2 million (tax-effected $4.87 million) relating to the Group’s carried forward
losses of $54.1 million incurred prior to 2 January 2009. The Group will no longer be entitled to claim any further deduction
in relation to these tax losses incurred prior to 2009, and therefore ceases to disclose the respective tax losses in note 10(c)
of the 2019 annual report.
56
PB
2018
$’000
-
(5,536)
22,390
(5,536)
(5,536)
135,328
40,598
183
40,781
(17,051)
-
(1,340)
22,390
PB
Grange Resources Limited » 2019 Annual Report
NOTE 7. ADMINISTRATIVE EXPENSES
Salaries
Consultancy fees
Other
Provision for rehabilitation - Interest in joint operation
NOTE 8. OTHER INCOME (EXPENSES)
Rent income
Other income
equipment
Net loss on the disposal of property, plant and
NOTE 9. FINANCE INCOME (EXPENSES)
Finance Income
Interest income received or receivable
Exchange gains on foreign currency deposits /
borrowings (net)
Distribution Income
Finance expenses
Loss on financial instruments
Interest charge on lease liabilities
Provisions: unwinding of discount
- Decommissioning and restoration
2019
$’000
3,412
1,334
370
833
5,949
2019
$’000
236
28
(90)
174
2019
$’000
5,978
1,054
959
7,991
(733)
(156)
(995)
(1,884)
2018
$’000
3,096
749
282
1,050
5,177
2018
$’000
137
675
(531)
281
2018
$’000
6,461
6,874
313
13,648
(332)
(238)
(1,298)
(1,868)
(b) Numerical reconciliation of income tax (benefit) / expense to prima facie tax payable
NOTE 10. INCOME TAX BENEFIT (EXPENSE)
(a) Income tax expense (benefit)
Current tax
Previously unrecognised tax losses now recouped to reduce
current tax expense
Deferred tax
Deferred income tax included in income tax expense (benefit)
comprises:
(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% (2018: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Sundry items
Movement in unrecognised deferred tax assets relating to
temporary differences
Previously unrecognised tax losses now recouped to reduce
current tax expense
Adjustments to tax of prior period
Income tax expense
(c) Taxation Losses
Unused taxation losses for which no deferred tax asset has
been recognised
Potential tax benefit @ 30%
(d) Unrecognised temporary differences
Temporary difference for which deferred tax assets not
recognised
Potential tax benefit @ 30%
2019 Annual Report « Grange Resources Limited
2019
$’000
2018
$’000
29,036
27,926
(4,869)
(19,875)
4,292
(19,875)
(19,875)
81,626
24,488
280
24,768
(15,386)
(4,869)
(221)
4,292
-
(5,536)
22,390
(5,536)
(5,536)
135,328
40,598
183
40,781
(17,051)
-
(1,340)
22,390
-
54,104
-
16,231
192,897
244,179
57,869
73,254
Unrecognised deferred tax assets relating to above temporary
differences
57,869
73,254
The ATO has agreed to allow a deduction of $16.2 million (tax-effected $4.87 million) relating to the Group’s carried forward
losses of $54.1 million incurred prior to 2 January 2009. The Group will no longer be entitled to claim any further deduction
in relation to these tax losses incurred prior to 2009, and therefore ceases to disclose the respective tax losses in note 10(c)
of the 2019 annual report.
PB
57
PB
Grange Resources Limited » 2019 Annual Report
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
2019
$’000
6,435
135,708
142,143
142,143
142,143
2018
$’000
7,664
196,833
204,497
204,497
204,497
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 2019 the weighted average interest rate on the Australian dollar accounts was 1.69% (31 December 2018: 2.52%)
and the weighted average interest rate on the United States dollar accounts was 3.53% (31 December 2018: 4.16%).
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
2019
$’000
30,469
364
16,913
9,870
1,193
58,809
2018
$’000
18,220
362
5,372
3,958
3,803
31,715
Loan Receivables
Security deposits
a) Risk exposure
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 $16.9
million, representing the other partner’s portion of the shareholder loans. This loan is secured, carries an annual interest of
7% to 12% 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
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.
c) Fair value and credit risk
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.
2019 Annual Report « Grange Resources Limited
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
2019
$’000
29,117
40,476
508
17,322
32,378
119,801
-
2019
$’000
8,470
8,470
Inventories are valued at the lower of weighted average cost and estimated net realisable value. A credit of $32.44 million in
2019 and an expense of $12.66 million in 2018 were recognised for the movements in 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.
NOTE 14. NON-CURRENT RECEIVABLES
Non-current security deposits comprise of restricted deposits that are used for monetary backing for performance guarantees.
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
-
222
-
222
In 2018, non-current development work in progress pertained to property acquired for development and sale where
completion of development and sale of this property was not expected to occur within the next 12 months.
2019
$’000
2018
$’000
58
PB
2018
$’000
24,219
7,327
378
18,159
10,647
60,730
2018
$’000
611
8,043
8,654
PB
Grange Resources Limited » 2019 Annual Report
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
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 2019 the weighted average interest rate on the Australian dollar accounts was 1.69% (31 December 2018: 2.52%)
and the weighted average interest rate on the United States dollar accounts was 3.53% (31 December 2018: 4.16%).
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
2019
$’000
6,435
135,708
142,143
142,143
142,143
2019
$’000
30,469
364
16,913
9,870
1,193
58,809
2018
$’000
7,664
196,833
204,497
204,497
204,497
2018
$’000
18,220
362
5,372
3,958
3,803
31,715
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 $16.9
million, representing the other partner’s portion of the shareholder loans. This loan is secured, carries an annual interest of
7% to 12% 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
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.
c) Fair value and credit risk
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.
Trade receivables
Security deposits
Loan receivable
Other receivables
Prepayments
PB
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
2019 Annual Report « Grange Resources Limited
2019
$’000
29,117
40,476
508
17,322
32,378
119,801
2018
$’000
24,219
7,327
378
18,159
10,647
60,730
Inventories are valued at the lower of weighted average cost and estimated net realisable value. A credit of $32.44 million in
2019 and an expense of $12.66 million in 2018 were recognised for the movements in 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.
NOTE 14. NON-CURRENT RECEIVABLES
Loan Receivables
Security deposits
2019
$’000
-
8,470
8,470
2018
$’000
611
8,043
8,654
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
2019
$’000
-
2018
$’000
222
-
222
In 2018, non-current development work in progress pertained to property acquired for development and sale where
completion of development and sale of this property was not expected to occur within the next 12 months.
59
PB
Grange Resources Limited » 2019 Annual Report
NOTE 16. PROPERTY, PLANT AND EQUIPMENT
Land and buildings
$’000
Plant and
equipment
$’000
Computer
equipment
$’000
At 1 January 2019
Cost
Accumulated depreciation and
impairment
Net book amount
Year ended 31 December 2019
Opening net book amount
Additions
Disposals - net book value
Depreciation charge
Closing net book amount
At 31 December 2019
Cost
Accumulated depreciation and
impairment
Net book amount
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
At 31 December 2018
Cost
Accumulated depreciation and
impairment
Net book amount
a) Assets under construction
45,908
396,905
(37,612)
(328,253)
8,296
68,652
8,296
3,910
-
(481)
11,725
68,652
37,572
(90)
(20,928)
85,206
49,818
434,387
(38,093)
(349,181)
11,725
85,206
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
8,353
(7,956)
397
397
732
-
(304)
825
9,085
(8,260)
825
8,055
(7,810)
245
245
297
-
(145)
-
397
8,353
(7,956)
397
Total
$’000
451,166
(373,821)
77,345
77,345
42,214
(90)
(21,713)
97,756
493,290
(395,534)
97,756
504,443
(366,054)
138,389
138,389
35,297
(533)
(7,767)
(88,041)
77,345
451,166
(373,821)
77,345
The carrying amounts of the assets disclosed above includes expenditure of $23.78 million (2018: $27.66 million) recognised
in relation to property, plant and equipment which is in the course of construction.
60
PB
2019 Annual Report « Grange Resources Limited
NOTE 17. LEASES
The Group has adopted AASB 16 retrospectively from 1 January 2019, but has not restated comparatives for the 2018
reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the
adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019.
(a)
Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the group recognised lease liabilities in relation to leases which had previously been classified
as ‘operating leases’ under the principles of AABS 117 Leases. These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The lessee’s
incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5.16%.
i)
Practical expedients applied
In applying AASB 16 for the first time, the group has used the following practical expedients permitted by the standard:
• The use of a single discount rate to a portfolio of leases with reasonably similar characteristics
• Reliance on previous assessments on whether leases are onerous
• The accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-
term leases
• Excluding initial direct costs for the measurement of the right of-use asset at the date of initial application, and
• The use of hindsight in determining the lease term where the contract contains operations to extend or terminate the
lease.
The group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the group relied on its assessment made applying AASB 117
and Interpretation 4 Determining whether an Arrangement contains a Lease.
Reconciliation of lease commitments under non-cancellable operating lease disclosed at 31 December 2018 and lease
liability recognised on 1 January 2019 upon applying AASB 16:
Operating lease commitments disclosed as at 31 December 2018
Discounted using the lessee's incremental borrowing rate of at the date of initial
application
(Less): short-term leases not recognised as a liability
Add/(less): adjustments as a result of a different treatment of extension and termination
options
Lease liability recognised as at 1 January 2019
of which are:
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
2019
$’000
545
476
(61)
145
560
(90)
(470)
(560)
61
PB
Grange Resources Limited » 2019 Annual Report
The recognised right-of-use assets relate to the following type of assets
As at 1 January 2019
Cost
Accumulated depreciation
Net book amount
Year ended 31 December 2019
Opening net book amount
Additions
Disposals - net book value
Depreciation charge
Closing net book amount
Land and buildings
$’000
Plant and
equipment
$’000
597
(118)
479
479
-
-
(75)
404
146
(105)
41
41
2,769
(19)
(312)
2,479
Total
$’000
743
(223)
520
520
2,769
(19)
(387)
2,883
The change in accounting policy affected the following items in the balance sheet on 1 January 2019.
• Right-of-use asset – increase by $742,833
•
Lease liabilities – increase by $560,481
• Accumulated depreciation – increase by $222,651
The net impact on retained earnings on 1 January 2019 was a decrease of $40,299.
(b)
The group’s leasing activities and how these are accounted for
The group leases office spaces, mobile radars, forklifts, and motor vehicles with lease terms between 3 to 8 years but may
have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range of
different terms and conditions.
Until the 2018 financial year, leases of property, plant and equipment were classified as either finance or operating leases.
Payments under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-
line basis over the period of the lease.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the
leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost.
The finance cost is charged to profit or loss over the lease period as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period – refer to Note 9. The right of use asset is depreciated over the shorter of
the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease payments included in the
measure of the lease liability comprise:
fixed payments less any lease incentives
variable lease payments that are based on an index or rate
amounts expected to be payable under residual value guarantees
purchase option exercise price where lessee is reasonably certain to exercise
lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option
penalties for termination of lease
•
•
•
•
•
•
62
PB
2019 Annual Report « Grange Resources Limited
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the
lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary
to obtain an asset of a similar value in a similar economic environmental with similar terms and conditions.
The Group presents lease liabilities in ‘Provisions’ (Note 22 and 24) in the statement of financial position.
Right-of-use assets are initially measured at cost comprising of the following:
•
•
•
•
the amount of the initial measurement of the lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs, and an
restoration costs.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of less than 12 months
and leases of low-value assets. The Group recognises lease payments associated with these types of leases as an expense
in the profit or loss.
(i)
Extension options
Options for a new lease are stipulated in the office space and mobile radars lease and are only exercisable by the Group,
not the lessor. Exercising the option will contain similar terms as the initial lease. In determining the lease term under AASB
16, management considers all facts and circumstances that create an economic incentive to exercise the extension option
or not exercise a termination option. The Group reassesses whether it is reasonably certain to exercise the options if there
is a significant event or significant change in the circumstances within its control.
As it is reasonably certain that the Group will exercise the extension option for the office space lease, additional future cash
outflows of $403,180 have been included in the calculation of the lease liability with a corresponding adjustment to the right-
of-use asset.
(ii)
Variable lease payments
The group is exposed to potential future increases in variable lease payments based on an index or rate. When adjustments
to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right
of use asset. The forklift hire lease contains variable lease payments that are subject to CPI adjustments, effective on an
annual basis.
NOTE 18. 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
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
2019
$’000
620,559
(474,144)
146,415
59,906
206,321
101,553
46,985
4,536
(6,659)
146,415
91,749
3,989
(35,832)
59,906
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
63
PB
Grange Resources Limited » 2019 Annual Report
NOTE 19. 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
Tax losses
Foreign exchange
Total deferred tax assets
Deferred Tax Liabilities
Inventory
Foreign exchange
Prepayments
Total deferred tax liabilities
Total net deferred tax assets
NOTE 20. TRADE AND OTHER PAYABLES
Trade payables and accruals
Unearned Revenue
Contract Liabilities
Tax payable
Other payables
(a) Risk exposure
2019
$’000
10,335
16,828
16
2,354
6,591
565
2018
$’000
5,983
7,493
-
1,031
3,027
-
397
-
37,086
(4,204)
-
(27)
(4,231)
32,855
2019
$’000
25,048
5,278
316
19,274
1,342
51,258
17,534
(3,916)
(1,202)
-
(5,118)
12,416
2018
$’000
20,156
-
-
23,759
1,201
45,116
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.
NOTE 21. BORROWINGS (CURRENT)
Insurance premium funding (1)
Other borrowings (2)
2019
$’000
-
16,755
16,755
2018
$’000
1,798
5,328
7,126
Insurance premium funding represents an unsecured loan which carried a fixed interest rate of 1.63% and was fully paid in August 2019.
Loans payable to the other partner in the arrangement of $16.8 million, representing the other partner’s portion of the shareholder loans. This loan is secured, carries an
annual interest of 7% to 12% and will be payable upon completion of the development property projects.
(1)
(2)
64
PB
NOTE 22. PROVISIONS (CURRENT)
Leave Obligations
Employee benefits
Lease liability (current)
Decommissioning and restoration
2019 Annual Report « Grange Resources Limited
2019
$’000
13,290
2,186
839
7,378
23,693
2018
$’000
12,488
2,174
-
5,506
20,168
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 $13.29
million (2018 - $12.49 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 23. BORROWINGS (NON-CURRENT)
Secured
Loans Payable
2019
$’000
6,780
5,506
(189)
2,061
7,378
2019
$’000
-
-
2018
$’000
5,861
713
(419)
5,212
5,506
2018
$’000
611
611
Loans payable to the other partner in the arrangement of $5.4 million. This loan is secured, carries an annual interest of 7%
to 12% and will be payable upon completion of the development property projects.
65
PB
Grange Resources Limited » 2019 Annual Report
NOTE 24. PROVISIONS (NON-CURRENT)
Leave obligations
Employee benefits
Lease liability (NC)
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 25. CONTRIBUTED EQUITY
Ordinary shares
2019
$’000
3,621
102
2,084
58,311
64,118
54,564
4,966
842
(2,061)
58,311
2018
$’000
3,123
77
-
54,564
57,764
56,795
1,683
1,298
(5,212)
54,564
NOTE 27. DIVIDENDS
Fully franked interim dividend for half year ended 30
June 2019 - 1.0 cents per share
Fully franked final dividend for the year ended 31
December 2018 - 1.0 cents per share
Fully franked interim dividend for half year ended 30
June 2018 - 1.0 cents per share
Fully franked final dividend for the year ended 31
December 2017 - 1.0 cents per share
2019 Annual Report « Grange Resources Limited
2019
$’000
11,574
11,574
-
-
2018
$’000
-
-
11,574
11,574
Total dividends paid
23,148
23,148
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 2019. The
final dividend was declared NIL conduit foreign income and will be paid on 30 March 2020.
Franked Dividends
The final dividends recommended after 31 December 2019 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 2019.
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.
Franking credits available for subsequent reporting
periods. Based on a tax rate of 30% (2018 – 30%)
(a) Movements in ordinary share capital
Balance at 1 January 2019 / 31 December 2019
Number of shares
1,157,338,698
$’000
331,513
the end of the year.
NOTE 26. RETAINED PROFITS ATTRIBUTABLE TO OWNERS OF GRANGE RESOURCES
Retained profits
Movements in retained profits were as follows:
Balance at the beginning of the year
Change in Accounting Policy - note 17
Restated Opening Retained Earnings
Profit for the year
Dividends paid
Balance at the end of the year
2019
$’000
146,243
(40)
146,203
77,661
(23,148)
200,716
2018
$’000
56,066
-
56,066
113,325
(23,148)
146,243
31 December
2019
$’000
36,434
31 December
2018
$’000
12,269
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
NOTE 28. 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.
As at 31 December 2019, there are three projects which are 100% owned by Grange ROC Property Pty Ltd :
i. Lumley Court which has constructed a 3-level, 5 unit prestige apartment. Construction has been completed and the
Certificate of Occupancy has been obtained in January, 2020. 4 of the 5 units have been pre-sold with the properties
due to settle in the first quarter of 2020.
ii. Brookville Road which will construct a 3-level prestige residential apartment and has achieved planning approval.
iii. GRP Malvern Road which is in progress to construct a 3-level, 8 unit prestige apartment. Construction is due for
completion in the first quarter of 2020, and 3 units have been pre-sold.
Grange ROC Property Pty Ltd is a controlled entity and therefore is fully consolidated as the Group has:
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 29. 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 2019, the market capitalisation of the Company was
below the book value of its net assets indicating a potential trigger for impairment of assets.
66
PB
PB
Grange Resources Limited » 2019 Annual Report
NOTE 24. PROVISIONS (NON-CURRENT)
Leave obligations
Employee benefits
Lease liability (NC)
Decommissioning and restoration
Balance at beginning of the year
Change in estimate
Unwinding of discount
Transfers to current provisions
Balance at the end of the year
NOTE 25. CONTRIBUTED EQUITY
Ordinary shares
Movements in provision for decommissioning and restoration are set out below
2019
$’000
3,621
102
2,084
58,311
64,118
54,564
4,966
842
(2,061)
58,311
2019
$’000
146,243
(40)
146,203
77,661
(23,148)
200,716
2018
$’000
3,123
77
-
54,564
57,764
56,795
1,683
1,298
(5,212)
54,564
$’000
331,513
2018
$’000
56,066
-
56,066
113,325
(23,148)
146,243
(a) Movements in ordinary share capital
Balance at 1 January 2019 / 31 December 2019
Number of shares
1,157,338,698
NOTE 26. RETAINED PROFITS ATTRIBUTABLE TO OWNERS OF GRANGE RESOURCES
Retained profits
Movements in retained profits were as follows:
Balance at the beginning of the year
Change in Accounting Policy - note 17
Restated Opening Retained Earnings
Profit for the year
Dividends paid
Balance at the end of the year
NOTE 27. DIVIDENDS
Fully franked interim dividend for half year ended 30
June 2019 - 1.0 cents per share
Fully franked final dividend for the year ended 31
December 2018 - 1.0 cents per share
Fully franked interim dividend for half year ended 30
June 2018 - 1.0 cents per share
Fully franked final dividend for the year ended 31
December 2017 - 1.0 cents per share
2019 Annual Report « Grange Resources Limited
2019
$’000
11,574
11,574
-
-
2018
$’000
-
-
11,574
11,574
Total dividends paid
23,148
23,148
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 2019. The
final dividend was declared NIL conduit foreign income and will be paid on 30 March 2020.
Franked Dividends
The final dividends recommended after 31 December 2019 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 2019.
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.
Franking credits available for subsequent reporting
periods. Based on a tax rate of 30% (2018 – 30%)
2019
31 December
$’000
36,434
2018
31 December
$’000
12,269
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 28. 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.
As at 31 December 2019, there are three projects which are 100% owned by Grange ROC Property Pty Ltd :
i. Lumley Court which has constructed a 3-level, 5 unit prestige apartment. Construction has been completed and the
Certificate of Occupancy has been obtained in January, 2020. 4 of the 5 units have been pre-sold with the properties
due to settle in the first quarter of 2020.
ii. Brookville Road which will construct a 3-level prestige residential apartment and has achieved planning approval.
iii. GRP Malvern Road which is in progress to construct a 3-level, 8 unit prestige apartment. Construction is due for
completion in the first quarter of 2020, and 3 units have been pre-sold.
Grange ROC Property Pty Ltd is a controlled entity and therefore is fully consolidated as the Group has:
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 29. 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 2019, the market capitalisation of the Company was
below the book value of its net assets indicating a potential trigger for impairment of assets.
PB
67
PB
NOTE 30. 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.
2019 Annual Report « Grange Resources Limited
Grange Resources Limited » 2019 Annual Report
(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 2019:
Assumptions
2020
2021 - 2025
31 December 2019
Long Term 2026+
Iron ore pellets (FOB Port
Latta) (US$ per DMT)
(Nominal)
AUD:USD exchange rate
Post-tax real discount rate
US$106.52
US$95.90 – US$104.78
US$125.81
Total remuneration paid
$0.6943
$0.7447
$0.75
7.93%
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
2019
$’000
302
43
20
365
-
5
370
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.
While the Group acknowledges that factors such as future changes to the regulatory framework in response to climate
change could impact future recoverability, these factors have not been included in our assumptions.
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 2019.
(iv)
Sensitivity analysis
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 2019:
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
$19.35 million
$29.14 million
$15.18 million
$10.76 million
Reasonably possible changes in circumstances may affect these key assumptions and therefore the fair value. In reality, a
change in any one of the aforementioned assumptions (including operating performance) would usually be accompanied
by a change in another assumption which may have an off-setting impact. Action is usually taken to respond to adverse
changes in assumptions to mitigate the impact of any such change. If the carrying amount is assessed to be impaired, the
impairment charge is recognised in profit or loss.
68
PB
2018
$’000
291
42
23
356
13
5
374
PB
NOTE 30. 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.
2019 Annual Report « Grange Resources Limited
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.
Other assurance services
Assurance services
PwC Australia
Audit and review of financial reports
US$106.52
US$95.90 – US$104.78
US$125.81
Total remuneration paid
Network firms of PwC Australia
Total assurance services
Non-assurance services
PwC Australia
Other consulting services
Taxation compliance services
2019
$’000
302
43
20
365
-
5
370
2018
$’000
291
42
23
356
13
5
374
69
PB
Grange Resources Limited » 2019 Annual Report
(a)
Impairment Testing
(i)
Methodology
An impairment loss is recognised for a Cash Generating Unit (CGU) when the recoverable amount is less than the carrying
amount. The recoverable amount of each CGU has been estimated using a fair value less costs of disposal basis. The
costs of disposal have been estimated by management based on prevailing market conditions. The fair value assessment is
categorised within level 3 in the fair value hierarchy.
Fair value is estimated based on the net present value of estimated future cash flows for a CGU. Future cash flows are based
on a number of assumptions, including commodity price expectations, foreign exchange rates, reserves and resources and
expectations regarding future operating performance and capital requirements which are subject to risk and uncertainty. An
(ii) Key assumptions
The key assumptions which are used by the Directors in determining the recoverable amount for the Group’s Savage River
CGU were in the following ranges at 31 December 2019:
Assumptions
2020
2021 - 2025
31 December 2019
Long Term 2026+
Iron ore pellets (FOB Port
Latta) (US$ per DMT)
(Nominal)
AUD:USD exchange rate
Post-tax real discount rate
$0.6943
$0.7447
$0.75
7.93%
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.
While the Group acknowledges that factors such as future changes to the regulatory framework in response to climate
change could impact future recoverability, these factors have not been included in our assumptions.
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
The Group has conducted a carrying value analysis and has not identified further impairment to its net assets carrying value
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 2019:
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
$19.35 million
$29.14 million
$15.18 million
$10.76 million
Reasonably possible changes in circumstances may affect these key assumptions and therefore the fair value. In reality, a
change in any one of the aforementioned assumptions (including operating performance) would usually be accompanied
by a change in another assumption which may have an off-setting impact. Action is usually taken to respond to adverse
changes in assumptions to mitigate the impact of any such change. If the carrying amount is assessed to be impaired, the
impairment charge is recognised in profit or loss.
Discount rate
asset.
(iii)
Impacts
as at 31 December 2019.
(iv)
Sensitivity analysis
PB
2019 Annual Report « Grange Resources Limited
e) Bank Guarantees
Bank guarantees have been provided on the Group’s behalf to secure, on demand by the Minister for Mines and Energy
for the State of Queensland, any sum to a maximum aggregate amount of $2,517,424 (2018: $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 $3,153,121 (2018:
$3,122,535). 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 (2018:
$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.
f) Contingent Assets and Liabilities
The Group did not have any contingent assets or liabilities at the Balance Sheet Date.
Grange Resources Limited » 2019 Annual Report
NOTE 31. 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:
Within one year
After one year but not more than five years
Later than five years
2019
$’000
583
2,167
-
2,750
2018
$’000
688
2,188
-
2,876
b) Capital expenditure commitments
Capital expenditure obligations at the end of the reporting period but not recognised as liabilities are as follows:
Within one year
After one year but not more than five years
Later than five years
2019
$’000
6,899
9,082
-
15,981
2018
$’000
15,801
-
-
15,801
c) Contractual Operating expenditure commitments
Obligations to external parties which arise with respect to legal supply contracts made by the company (other than lease
agreements).
Within one year
After one year but not more than five years
Later than five years
2019
$’000
15,334
5,169
-
20,503
2018
$’000
27,271
20,503
-
47,774
d) Operating lease expenditure commitments
The group leases motor vehicles, offices and carparks under non-cancellable operating leases. The leases have varying
terms and renewal rights.
From 1 January 2019, the group has recognised right-of-use assets for these leases, except for short-term and low-value
leases, refer note 17 for more information.
Within one year
After one year but not more than five years
2019
$’000
-
-
-
2018
$’000
123
422
545
70
PB
PB
Grange Resources Limited » 2019 Annual Report
NOTE 31. 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:
b) Capital expenditure commitments
Capital expenditure obligations at the end of the reporting period but not recognised as liabilities are as follows:
2019 Annual Report « Grange Resources Limited
e) Bank Guarantees
Bank guarantees have been provided on the Group’s behalf to secure, on demand by the Minister for Mines and Energy
for the State of Queensland, any sum to a maximum aggregate amount of $2,517,424 (2018: $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 $3,153,121 (2018:
$3,122,535). 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 (2018:
$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.
f) Contingent Assets and Liabilities
The Group did not have any contingent assets or liabilities at the Balance Sheet Date.
71
PB
2019
$’000
583
2,167
-
2,750
2019
$’000
6,899
9,082
-
15,981
2019
$’000
15,334
5,169
-
20,503
2018
$’000
688
2,188
-
2,876
2018
$’000
15,801
-
-
15,801
2018
$’000
27,271
20,503
-
47,774
2019
$’000
-
-
-
2018
$’000
123
422
545
c) Contractual Operating expenditure commitments
Obligations to external parties which arise with respect to legal supply contracts made by the company (other than lease
agreements).
The group leases motor vehicles, offices and carparks under non-cancellable operating leases. The leases have varying
From 1 January 2019, the group has recognised right-of-use assets for these leases, except for short-term and low-value
Within one year
After one year but not more than five years
Later than five years
Within one year
After one year but not more than five years
Later than five years
Within one year
After one year but not more than five years
Later than five years
d) Operating lease expenditure commitments
terms and renewal rights.
leases, refer note 17 for more information.
Within one year
After one year but not more than five years
PB
Grange Resources Limited » 2019 Annual Report
NOTE 32. 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 33.
c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Long-term incentives
2019
$
2,077,569
154,002
55,861
128,816
2,416,248
2018
$
1,874,252
143,232
58,942
103,235
2,179,661
Detailed remuneration disclosures are provided in the remuneration report on pages 30 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
2019
$
131,598,839
-
2018
$
149,394,404
(51,947)
(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, 852,489 dry metric tonnes of iron ore products were sold to Shagang in accordance with the terms of the long term off-take agreements (2018: 1,014,306 dry metric tonnes).
The lower tonnages sold to Shagang in 2019 were due to lower production availability by Grange. Shagang has agreed to defer these shipments to 2020.
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:
2018
$
2019
$
Trade receivables (sales of iron ore products)
Pellets
Others
2,869,107
2,062
2,871,169
(2,772,327)
-
(2,772,327)
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 in the prior year
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 (2018: Nil).
Long term off-take agreement
Grange Resources (Tasmania) Pty Ltd (Grange Tasmania) is
party to a long term off-take agreement (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 2020, holds 47.93% (28 February 2019:
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.
72
PB
2019 Annual Report « Grange Resources Limited
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, at market rates.
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
Percentage of equity interest held by the Group
Agency agreements with related parties
Grange sold some product on the spot market through
sales agency agreements with sales agents who were
related parties of Grange directors. Any appointment of a
related party sales agent was non-exclusive and negotiated
and appointed by Grange directors and management
independent of related parties, acting in the best interests of
all Grange shareholders.
The majority of related party sales had nil commission.
Where commission was payable to the related party sales
NOTE 33. SUBSIDIARIES
with the accounting policy described in note 1.
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 Investment Pty Ltd
Grange ROC Property Pty Ltd
2019
%
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 was incorporated in Malaysia and has been deregistered in 2019.
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
PB
Grange Resources Limited » 2019 Annual Report
NOTE 32. RELATED PARTY TRANSACTIONS
a) Ultimate Parent
b) Subsidiaries
Interests in subsidiaries are set out in note 33.
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 30 to 34.
d) Transactions with related parties
During the year the following transactions occurred with related parties:
2019
$
2,077,569
154,002
55,861
128,816
2,416,248
131,598,839
2019
$
-
2019
$
2,869,107
2,062
2,871,169
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)
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, 852,489 dry metric tonnes of iron ore products were sold to Shagang in accordance with the terms of the long term off-take agreements (2018: 1,014,306 dry metric tonnes).
The lower tonnages sold to Shagang in 2019 were due to lower production availability by Grange. Shagang has agreed to defer these shipments to 2020.
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 in the prior year
• The sale of 1 million dry metric tonnes of iron ore pellets
represents the final price adjustments due to the quotation
per annum until 2022.
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 (2018: 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 agreement (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 2020, holds 47.93% (28 February 2019:
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
Agency agreements with related parties
Grange sold some product on the spot market through
sales agency agreements with sales agents who were
related parties of Grange directors. Any appointment of a
related party sales agent was non-exclusive and negotiated
and appointed by Grange directors and management
independent of related parties, acting in the best interests of
all Grange shareholders.
The majority of related party sales had nil commission.
Where commission was payable to the related party sales
NOTE 33. SUBSIDIARIES
2019 Annual Report « Grange Resources Limited
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, at market rates.
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 Investment Pty Ltd
Grange ROC Property Pty Ltd
2019
%
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 was incorporated in Malaysia and has been deregistered in 2019.
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
73
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
NOTE 34. INTEREST IN JOINT OPERATIONS
NOTE 36. 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
2019
70.00
31.15
30.00
30.00
30.00
15.00
% Interest
2018
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 35. 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
Net unrealised foreign exchange gain
Change in operating assets and liabilities
(Increase) decrease in trade and other receivables
Decrease (increase) in inventories
Decrease (increase) in deferred tax assets
Increase in trade and other payables (excluding tax payable)
Increase in other provisions
Increase provision for income tax payable
Net cash inflow from operating activities
2019
$’000
77,334
995
22,101
42,491
119
90
733
(1,054)
(15,445)
(58,849)
(20,439)
10,627
1,518
(4,485)
55,736
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
74
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
2019
Cents
6.71
6.71
2019
$’000
77,661
Profit attributable to the ordinary equity holders of the Company used
in calculating diluted earnings per share from continuing operations
77,661
113,325
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 37. PARENT ENTITY FINANCIAL INFORMATION
a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
2019
Number
2018
Number
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
*Includes final FY 2017 dividend declared March 2018 of $14.6m.
b) Contingent liabilities of the parent entity
Other contingent liabilities
2019
$’000
6,026
315,727
20,243
51,803
392,475
31,191
(159,742)
263,924
29,003
29,003
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.
2018
Cents
9.79
9.79
2018
$’000
113,325
2018
$’000
3,131
316,688
26,495
58,620
392,475
31,191
(165,598)
258,068
37,878*
37,878*
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
NOTE 34. INTEREST IN JOINT OPERATIONS
NOTE 36. 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
2019
Cents
6.71
6.71
2019
$’000
77,661
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
77,661
113,325
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 35. 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 37. PARENT ENTITY FINANCIAL INFORMATION
a) Summary financial information
2019
Number
2018
Number
1,157,338,698
1,157,338,698
The individual financial statements for the parent entity show the following aggregate amounts:
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
*Includes final FY 2017 dividend declared March 2018 of $14.6m.
b) Contingent liabilities of the parent entity
Other contingent liabilities
2019
$’000
6,026
315,727
20,243
51,803
392,475
31,191
(159,742)
263,924
29,003
29,003
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.
75
PB
2019
70.00
31.15
30.00
30.00
30.00
15.00
2019
$’000
77,334
995
22,101
42,491
119
90
733
(1,054)
(15,445)
(58,849)
(20,439)
10,627
1,518
(4,485)
55,736
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
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
Net unrealised foreign exchange gain
Change in operating assets and liabilities
(Increase) decrease in trade and other receivables
Decrease (increase) in inventories
Decrease (increase) in deferred tax assets
Increase in trade and other payables (excluding tax payable)
Increase in other provisions
Increase provision for income tax payable
Net cash inflow from operating activities
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
NOTE 38. EVENTS OCCURRING AFTER THE REPORTING PERIOD
In February 2020, the last apartment unit for the Lumley Court project of the property JV was sold. With the Lumley Court
project fully constructed and all projects sold, this marks the successful completion of the first project by the property JV.
There were no matters or circumstances arising since 31 December 2019 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 36 to 76 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 2019 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 2020
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
76
PB
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
NOTE 38. EVENTS OCCURRING AFTER THE REPORTING PERIOD
In February 2020, the last apartment unit for the Lumley Court project of the property JV was sold. With the Lumley Court
project fully constructed and all projects sold, this marks the successful completion of the first project by the property JV.
There were no matters or circumstances arising since 31 December 2019 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 36 to 76 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 2019 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 2020
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
77
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
Key audit matter
How our audit addressed the key audit
matter
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
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.
Independent auditor’s report
Auditor’s responsibilities for the audit of the financial report
To the members of Grange Resources Limited
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
Report on the audit of the financial report
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
Our opinion
if, individually or in the aggregate, they could reasonably be expected to influence the economic
In our opinion:
decisions of users taken on the basis of the financial report.
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:
A further description of our responsibilities for the audit of the financial report is located at the
(a) giving a true and fair view of the Group's financial position as at 31 December 2019 and of its
Auditing and Assurance Standards Board website at:
financial performance for the year then ended
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
auditor's report.
•
•
•
•
•
What we have audited
Report on the remuneration report
The Group financial report comprises:
the statement of financial position as at 31 December 2019
Our opinion on the remuneration report
the statement of comprehensive income for the year then ended
We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year
the statement of changes in equity for the year then ended
•
ended 31 December 2018.
the statement of cash flows for the year then ended
In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December
the notes to the financial statements, which include a summary of significant accounting policies
2018 complies with section 300A of the Corporations Act 2001.
the directors’ declaration.
Basis for opinion
Responsibilities
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
The directors of the Company are responsible for the preparation and presentation of the
those standards are further described in the Auditor’s responsibilities for the audit of the financial
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
report section of our report.
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Australian Auditing Standards.
our opinion.
Independence
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
PricewaterhouseCoopers
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Our audit approach
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
Amanda Campbell
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
Melbourne
28 February 2019
Partner
users taken on the basis of the financial report.
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.
78
PB
PB
Grange Resources Limited » 2019 Annual Report
2019 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.
Auditor’s responsibilities for the audit of the financial report
Independent auditor’s report
To the members of Grange Resources Limited
(a) giving a true and fair view of the Group's financial position as at 31 December 2019 and of its
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
financial performance for the year then ended
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
auditor's report.
Report on 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.
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:
Our opinion
In our opinion:
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
What we have audited
The Group financial report comprises:
Report on the remuneration report
the statement of financial position as at 31 December 2019
Our opinion on the remuneration report
the statement of comprehensive income for the year then ended
•
•
•
We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year
ended 31 December 2018.
the statement of changes in equity for the year then ended
the statement of cash flows for the year then ended
•
•
the notes to the financial statements, which include a summary of significant accounting policies
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.
the directors’ declaration.
•
Basis for opinion
Responsibilities
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
report section of our report.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Australian Auditing Standards.
our opinion.
Independence
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 (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers
Our audit approach
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
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
Amanda Campbell
Partner
Melbourne
28 February 2019
PB
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.
79
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
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 $4.1 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
We evaluated the cash flow forecasts in the model and
cash generating unit (CGU)
(Refer to Note 29)
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
(to 2036).
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 board approved Life of Mine plan
amount to the statement of financial position. There
In order to assess the Group’s ability to make reliable
were also a number of factors in the impairment
forecasts, we compared current year (2019) actual
assessment requiring judgement including:
results with the figures included in the prior year
• The pellet (final product) price and the AUD/USD
forecasts (2018).
exchange rates.
• The discount rate
• Estimation uncertainty associated with forecast of
operating and capital expenditure for the period to
2036 (Life of Mine).
We also assessed:
• The long term pellet price and AUD/USD exchange
rate assumptions by comparing them to economic
and industry forecasts;
• The discount rate used by assessing the cost of
The Group prepared a discounted cashflow model (the
capital for the Group, assisted by PwC valuations
model) to determine the recoverable amount of the
experts, and comparing the rate to market data and
Savage River CGU balance, which requires a number
industry research.
of assumptions as described in Note 29.
Accounting for the cost of rehabilitation
We evaluated the Group’s calculation of the
(Refer to Note 22 and 24)
rehabilitation obligation for consistency with the
The main component of the provision is for the
current Life of Mine plan.
Group’s obligation to rehabilitate the Savage River
We compared the discount rate used to available
and Port Latta sites for the disturbance caused by its
market data.
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.
audit.
The net present value of the cost of rehabilitation is
recorded as a provision of $58.3 million (non-current)
and $7.4 million (current), for a total of $65.7 million.
business.
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
We compared the Group’s assumptions on
rehabilitation costs to other similar costs in the
Given the significance of this balance and the level of
complexity and uncertainty within the estimate, our
examination of the provision for rehabilitation was a
key audit matter.
80
PB
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
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 $4.1 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 29)
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 rates.
• The discount rate
• Estimation uncertainty associated with forecast of
operating and capital expenditure for the period to
2036 (Life of Mine).
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 29.
Accounting for the cost of rehabilitation
(Refer to Note 22 and 24)
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 $58.3 million (non-current)
and $7.4 million (current), for a total of $65.7 million.
Given the significance of this balance and the level of
complexity and uncertainty within the estimate, 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 board approved Life of Mine plan
(to 2036).
In order to assess the Group’s ability to make reliable
forecasts, we compared current year (2019) actual
results with the figures included in the prior year
forecasts (2018).
We also assessed:
• The long term pellet price and AUD/USD exchange
rate assumptions by comparing them to economic
and industry forecasts;
• 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 evaluated the Group’s calculation of the
rehabilitation obligation for consistency with the
current Life of Mine plan.
We compared the discount rate used to available
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
81
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
Report on the remuneration report
Report on the remuneration report
Our opinion on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 11 to 18 of the directors’ report for the
We have audited the remuneration report included in pages 11 to 18 of the directors’ report for the
year ended 31 December 2019.
year ended 31 December 2019.
In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December
In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December
2019 complies with section 300A of the Corporations Act 2001.
2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
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
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
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
Australian Auditing Standards.
PricewaterhouseCoopers
PricewaterhouseCoopers
Amanda Campbell
Amanda Campbell
Partner
Partner
Melbourne
Melbourne
28 February 2020
28 February 2020
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2019, 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 the Directors' Report and the Corporate Governance Statement. 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
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.
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.
82
PB
PB
Grange Resources Limited » 2019 Annual Report
2019 Annual Report « Grange Resources Limited
Report on the remuneration report
Report on the remuneration report
Our opinion on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 11 to 18 of the directors’ report for the
We have audited the remuneration report included in pages 11 to 18 of the directors’ report for the
year ended 31 December 2019.
year ended 31 December 2019.
In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December
In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December
2019 complies with section 300A of the Corporations Act 2001.
2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
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
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
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
Australian Auditing Standards.
PricewaterhouseCoopers
PricewaterhouseCoopers
Amanda Campbell
Amanda Campbell
Partner
Partner
Melbourne
Melbourne
28 February 2020
28 February 2020
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2019, 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 the Directors' Report and the Corporate Governance Statement. 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
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.
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.
PB
83
PB
Grange Resources Limited » 2019 Annual Report
TENEMENT SCHEDULE
AS AT 28 FEBRUARY 2019
LIST OF SIGNIFICANT ASX ANNOUNCEMENTS
FROM 1 JANUARY 2019 THROUGH TO 24 APRIL 2020
2019 Annual Report « Grange Resources Limited
TENEMENT
INTEREST
Notes:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
Held by Grange Resources (Tasmania) Pty Ltd.
Under application.
Subject to conditional purchase agreement with
Medaire Inc.
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 Ltd.
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 Ltd.
Royalty interest with Santexco Pty Ltd.
Royalty interest with Giants Reef Exploration Pty Ltd.
2M/2001
14M/2007
11M/2008
EL30/2003
EL8/2014
M70/1309
G70/217
E70/2512
L70/185
L70/186
M52/801
M52/743
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)
15% (5) (6)
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
84
PB
Date
Announcement
15/04/2020 Change of Director’s Interest Notice
03/04/2020 Date of AGM
25/03/2020 Board Update
28/02/2020 Corporate Governance Statement
28/02/2020 Appendix 4G
28/02/2020 Dividend/Distribution - GRR
28/02/2020 Grange Full Yr Statutory Accts 12 Months Ended 31 Dec 2019
28/02/2020 Grange Resources Limited Appendix 4E - 31 December 2019
28/01/2020 GRR - Quarterly Report for 3 months ended 31 December 2019
24/10/2019 GRR - Quarterly Report for 3 months ended 30 September 2019
27/08/2019 Dividend/Distribution - GRR
27/08/2019 Half Yearly Report and Accounts
27/08/2019
Appendix 4D - Half Year Ending 30 June 2019
30/07/2019
Savage River Production Update
29/07/2019 GRR - Quarterly Report for 3 months ended 30 June 2019
05/07/2019 Change of Director's Interest Notice
09/05/2019 Results of Meeting
09/05/2019
AGM Presentation
26/04/2019 GRR - Quarterly Report for 3 months ended 31 March 2019
11/04/2019
Savage River Production Update
10/04/2019 Notice of Annual General Meeting/Proxy Form
09/04/2019
Annual Report to shareholders
08/04/2019
Significant increase in Savage River Mineral Resources
26/03/2019 Grange commences Exploration Decline
01/03/2019
Initial Director's Interest Notice
01/03/2019 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
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 Ltd.
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 Ltd.
Royalty interest with Santexco Pty Ltd.
Royalty interest with Giants Reef Exploration Pty Ltd.
Grange Resources Limited » 2019 Annual Report
TENEMENT SCHEDULE
AS AT 28 FEBRUARY 2019
TENEMENT
INTEREST
Notes:
PROSPECT
TASMANIA
Savage River
WESTERN AUSTRALIA
Southdown
Wembley
Horseshoe Lights
Abercromby Well
Red Hill
Freshwater
Pilbara
QUEENSLAND
Mt Windsor JV
NORTHERN TERRITORY
Mt Samuel
2M/2001
14M/2007
11M/2008
EL30/2003
EL8/2014
M70/1309
G70/217
E70/2512
L70/185
L70/186
M52/801
M52/743
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)
15% (5) (6)
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)
True Blue
Aga Khan
Black Cat
PB
LIST OF SIGNIFICANT ASX ANNOUNCEMENTS
FROM 1 JANUARY 2019 THROUGH TO 24 APRIL 2020
2019 Annual Report « Grange Resources Limited
Date
Announcement
15/04/2020 Change of Director’s Interest Notice
03/04/2020 Date of AGM
25/03/2020 Board Update
28/02/2020 Corporate Governance Statement
28/02/2020 Appendix 4G
28/02/2020 Dividend/Distribution - GRR
28/02/2020 Grange Full Yr Statutory Accts 12 Months Ended 31 Dec 2019
28/02/2020 Grange Resources Limited Appendix 4E - 31 December 2019
28/01/2020 GRR - Quarterly Report for 3 months ended 31 December 2019
24/10/2019 GRR - Quarterly Report for 3 months ended 30 September 2019
27/08/2019 Dividend/Distribution - GRR
27/08/2019 Half Yearly Report and Accounts
27/08/2019
Appendix 4D - Half Year Ending 30 June 2019
30/07/2019
Savage River Production Update
29/07/2019 GRR - Quarterly Report for 3 months ended 30 June 2019
05/07/2019 Change of Director's Interest Notice
09/05/2019 Results of Meeting
09/05/2019
AGM Presentation
26/04/2019 GRR - Quarterly Report for 3 months ended 31 March 2019
11/04/2019
Savage River Production Update
10/04/2019 Notice of Annual General Meeting/Proxy Form
09/04/2019
Annual Report to shareholders
08/04/2019
Significant increase in Savage River Mineral Resources
26/03/2019 Grange commences Exploration Decline
01/03/2019
Initial Director's Interest Notice
01/03/2019 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
85
PB
Grange Resources Limited » 2019 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 3 February 2020 except where otherwise indicated.
ORDINARY SHARES
Twenty Largest Shareholders as at 3 February 2020
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
%
554,762,656
47.9
1 - 1,000
Ordinary Director Employee
Shares Options
-
460
Other
Options Options
-
-
1,001 - 10,000
10,001 - 100,000
100,001 - and over
2,152
2,231
566
Total
5,409
-
-
-
0
-
-
-
0
-
-
-
0
The number of shareholders holding less than a marketable
parcel of Ordinary Shares at 24 April 2020 was 932.
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 24 April 2020 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
|
|
>571,448,122
49.3%
|
Pacific International Co
78,764,179
6.8%
Securities Subject to Voluntary Escrow
The following securities are subject to voluntary escrow:
Class of Security
Number of
Securities
Escrow
period ends
Fully Paid Ordinary Shares
Nil Not applicable
6.8
3.9
1.4
1.3
1.2
1.2
0.9
0.8
0.7
0.7
0.7
0.6
0.6
0.5
0.5
0.5
0.4
0.4
Name
Shagang International
Holdings Limited (Hongkong)
Pacific International Co
(Hong Kong)
Realindex Investments Pty
Ltd (Australia)
RGL Holdings Ltd (Hong
Kong)
78,764,179
45,257,032
16,685,466
DFA Australia Ltd (Australia)
15,106,023
JP Morgan Securities
(Australia) Ltd (Australia)
ABN AMRO Bank NV
(Netherlands)
Morgan Stanley & Co.
International Plc (United
Kingdom)
Coöperatieve Rabobank U.A.
(Netherlands)
UBS AG Switzerland
(Switzerland)
IFM Investors Pty Ltd
(Australia)
Credit Suisse AG
(Switzerland)
13,931,074
13,771,031
10,911,693
9,395,527
8,528,666
7,844,650
7,606,720
Mr Adam Garrigan (Australia)
7,500,000
Dimensional Fund Advisors
LP (United States)
LSV Asset Management
(United States)
Interactive Brokers
Mr Gary and Mrs Susan
Sadler (Australia)
7,147,746
6,183,400
5,922,129
5,656,861
Mrs Karen Hislop (Australia)
4,881,548
Standard Chartered Bank
(Hong Kong) Ltd (Hong
Kong)
4,515,001
Swiss Trading Overseas Corp
(Panama)
4,426,000
Sub-total
828,797,402
0.4
71.4
86
PB
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