Grange Resources Limited Annual Report 2021

Plain-text annual report

ANNUAL REPORT 2021ANNUAL REPORT 2021 GRANGE RESOURCES LIMITEDBurnie Office - Tasmania (Registered Office)34A Alexander Street Burnie, TAS 7320PO Box 659 Burnie, TAS 7320Ph +61 (3) 6430 0222 Em grr.info@grangeresources.com.auGRANGE RESOURCES LIMITED BOARD OF DIRECTORS Michelle Li Yan Jia Chairperson Non-Executive Director, Deputy Chairperson Michael Dontschuk Non-Executive Director David Woodall Non-Executive Director (resigned 30 April 2021) Ajanth Saverimutto Non-Executive Director (appointed 1 June 2021) 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 SHARE REGISTRY 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 This report has been printed on recycled paper. OUR VALUESWE VALUE AT GRANGE WE ALL WILL… SAFETY Work safely.RESPECT Lead & act with fairness, integrity, trust and respect.ACCOUNTABILITY Be responsible & accountable for our actions.EFFICIENCY Utilise our resources efficiently and effectively.SUSTAINABILITY Engage with stakeholders and proactively manage our impact on their environment.TEAMWORK Work together openly and transparently.PEOPLE Promote an inclusive and diverse environment in which our people can develop and prosper.ABOUT GRANGEOUR BUSINESSGrange 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 2.5 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 double the amount of iron ore produced at Savage River, at an initial annual production rate of 5 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 VISIONWe will produce high quality steel making raw materials economically and effectively. Our operations will be efficient, flexible, and stakeholder focused. OUR PURPOSEThe responsible provision of mineral resources to support sustainable development, growth and prosperity.1OPERATIONAL OVERVIEW• Achieved over 1,750 days Lost Time Injury free.• High grade ore provided from North Pit with stripping advanced in Centre Pit.• Concentrate production exceeded 2.5 million tonnes.• Pellet production of 2.60 million tonnes for the year compared to 2.35 million tonnes for the prior year.• Delivered full year’s production profile and managed the safety health and wellbeing of our employees throughout the COVID-19 pandemic. • Prefeasibility for underground mining in North Pit completed with block cave or sub-level cave mining technically feasible and economical.• Furnace 4 redesign completed with construction commenced.FINANCIAL OVERVIEW • Total iron ore product sales of 2.62 million tonnes for the year compared to 2.49 million tonnes for the prior year. • Profit after tax of $321.6 million for the year compared to $203.2 million for the prior year, on revenues from operations of $781.7 million compared to $526.3 million for the prior year.• Average realised product price (FOB Port Latta) of $276.17 per tonne for the year compared to $196.77 for the prior year.• Unit C1 cash operating costs of $99.73 per tonne for the year compared to $99.77 for the prior year. Cash and cash equivalents position of $443.9 million at the end of year compared to $183.4 million at the end of the prior year. 2021 OVERVIEW2.60MILLION TONNESpellet production.2.62MILLION TONNEStotal iron ore product sales.1750DAYS LOSTINJURY TIMEFREE$321.6MILLIONPROFITafter tax.GRANGE RESOURCES | ANNUAL REPORT 20212Grange 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 Northwest Tasmania and makes a significant contribution to the state economy.The Board has defined some key areas of focus to underpin the improvement of Grange’s business. The following areas focus on: Developing a sustainable Life-of-Mine-Plan; Integrating innovation into all aspects of the business; Sustaining ageing infrastructure; Building capacity and capability within our workforce; Achieving environmental, social and governance credentials to ensure our sustainability. Grange’s business and operational planning is directed to deliver into these core strategies.DEVELOPING A SUSTAINABLE LIFE-OF-MINE-PLAN The Life-of-Mine-Plan is a key to underpin investment decisions and to optimise business execution. Geotechnical instability in the mine pit walls has historically introduced uncertainty into the production profile. Over the past 3 years we have reduced the risk to the production profile with the re-commencement of Centre Pit providing a second ore source, the building of a substantial ore stockpile and investment in our geotechnical model and controls. We will continue to 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 2022 and Grange will continue to invest in stripping Centre Pit to deliver future high-grade ore. For longer term asset development, the focus will be on the completion of the Underground Study with the integrated Enterprise Optimisation. This will provide a basis for an optimised Life of Mine Plan with a view to maximise the efficient and effective recovery of the mineral resource at Savage River. INTEGRATE INNOVATIONInnovation 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 green energy; and build production capability for potential expansion of the operation. SUSTAIN AGEING INFRASTRUCTUREOur operation is supported by mature and valuable infrastructure and assets. Careful conditional monitoring and maintenance enabled us extend the life on many of these assets. This has enabled the company to defer capital expenditure on major overhauls and infrastructure replacement during periods of downturn in the past and assets do require investment to restore or replace where appropriate. Cost Benefit Analysis will be used to support overhaul 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 & CAPABILITYWe 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.ESG & SUSTAINABILITYGrange is committed to supporting the prosperity of the communities in which we operate. We align our business, where applicable, to the sustainable development goals that provide a roadmap to sustainability and resilience. 2022 PRIORITIES3OPERATIONAL OVERVIEW• Achieved over 1,750 days Lost Time Injury free.• High grade ore provided from North Pit with stripping advanced in Centre Pit.• Concentrate production exceeded 2.5 million tonnes.• Pellet production of 2.60 million tonnes for the year compared to 2.35 million tonnes for the prior year.• Delivered full year’s production profile and managed the safety health and wellbeing of our employees throughout the COVID-19 pandemic. • Prefeasibility for underground mining in North Pit completed with block cave or sub-level cave mining technically feasible and economical.• Furnace 4 redesign completed with construction commenced.FINANCIAL OVERVIEW • Total iron ore product sales of 2.62 million tonnes for the year compared to 2.49 million tonnes for the prior year. • Profit after tax of $321.6 million for the year compared to $203.2 million for the prior year, on revenues from operations of $781.7 million compared to $526.3 million for the prior year.• Average realised product price (FOB Port Latta) of $276.17 per tonne for the year compared to $196.77 for the prior year.• Unit C1 cash operating costs of $99.73 per tonne for the year compared to $99.77 for the prior year. Cash and cash equivalents position of $443.9 million at the end of year compared to $183.4 million at the end of the prior year. 2021 OVERVIEW2.60MILLION TONNESpellet production.2.62MILLION TONNEStotal iron ore product sales.1750DAYS LOSTINJURY TIMEFREE$321.6MILLIONPROFITafter tax.GRANGE RESOURCES | ANNUAL REPORT 20212Grange 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 Northwest Tasmania and makes a significant contribution to the state economy.The Board has defined some key areas of focus to underpin the improvement of Grange’s business. The following areas focus on: Developing a sustainable Life-of-Mine-Plan; Integrating innovation into all aspects of the business; Sustaining ageing infrastructure; Building capacity and capability within our workforce; Achieving environmental, social and governance credentials to ensure our sustainability. Grange’s business and operational planning is directed to deliver into these core strategies.DEVELOPING A SUSTAINABLE LIFE-OF-MINE-PLAN The Life-of-Mine-Plan is a key to underpin investment decisions and to optimise business execution. Geotechnical instability in the mine pit walls has historically introduced uncertainty into the production profile. Over the past 3 years we have reduced the risk to the production profile with the re-commencement of Centre Pit providing a second ore source, the building of a substantial ore stockpile and investment in our geotechnical model and controls. We will continue to 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 2022 and Grange will continue to invest in stripping Centre Pit to deliver future high-grade ore. For longer term asset development, the focus will be on the completion of the Underground Study with the integrated Enterprise Optimisation. This will provide a basis for an optimised Life of Mine Plan with a view to maximise the efficient and effective recovery of the mineral resource at Savage River. INTEGRATE INNOVATIONInnovation 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 green energy; and build production capability for potential expansion of the operation. SUSTAIN AGEING INFRASTRUCTUREOur operation is supported by mature and valuable infrastructure and assets. Careful conditional monitoring and maintenance enabled us extend the life on many of these assets. This has enabled the company to defer capital expenditure on major overhauls and infrastructure replacement during periods of downturn in the past and assets do require investment to restore or replace where appropriate. Cost Benefit Analysis will be used to support overhaul 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 & CAPABILITYWe 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.ESG & SUSTAINABILITYGrange is committed to supporting the prosperity of the communities in which we operate. We align our business, where applicable, to the sustainable development goals that provide a roadmap to sustainability and resilience. 2022 PRIORITIES3MAGNETITEMagnetite 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.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 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 2.5 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.ABOUT THE GRANGE BUSINESSGRANGE RESOURCES | ANNUAL REPORT 20214DEAR SHAREHOLDERS,The Company achieved record performance in FY2021 as a result of hard work and commitment by our people to keep our operations running safely combined with record high iron ore price. Your Company has delivered very strong financial results and has announced dividends of 22 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. 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. 2021 REVIEWThe Company delivered record financial results as the developed world and China recovered strongly in 2021 from the economic disruption caused by the COVID-19 pandemic. A focus on safety has been maintained across the business. 2021 was still a difficult and challenging year for everyone. We are very proud of the Company’s response to COVID-19. Despite all the uncertainties created by the pandemic, we have achieved over 1750 days Lost Time Injury Free. This remarkable achievement is made possible by the hard work and dedication of hundreds of employees, contractors, and the support of the local community throughout the year. We achieved a profit after tax of $321.6 million (2020: $203.2 million), on revenues from mining operations of $781.7 million (2020: $526.3 million) from improved iron ore prices and record pellet premiums with average product prices of $276.17 per tonne (2020: $196.77 per tonne) (FOB Port Latta). Total iron ore product sales of 2.62 million tonnes (2020: 2.49 million tonnes) were achieved. Increases in fuel and gas costs were balanced with improved production rates resulting in C1 cash operating costs of $99.73 per tonne (2020: $99.77 per tonne). In recognition of this strong performance, the Board declared a final dividend of 10 cents per share after a special dividend of 10 cents per share in December 2021, taking total dividends declared for shareholders this year to a new record of 22 cents per share or $254.6 million. Cash and cash equivalents positioned at $443.9 million (2020: $183.4 million) at the end of the year.Mining activities in North Pit have focused on wall remediation and sustained access to the Main Ore Zone. The installation of additional safety controls on the east wall to reduce the risk of small rockfalls were completed. This was attained with the implementation of a rock fence on a catchment berm to improve the retention of any fallen material and was undertaken utilizing remote equipment and innovations to allow the placement of fencing and structure via remote excavator. Access to high grade ore from the Main Ore Zone in North Pit has been sustained throughout the year. Concentrate production again exceeded 2.5 million tonnes of concentrate with consistent high grade ore supply supporting high production rates. The pre-stripping of waste material from Centre Pit continued throughout the year, with some delays experienced due to weather events. Small volumes of ore have been provided from adjacent lenses with access to the main ore zone in Centre Pit scheduled for later in 2022.The North Pit Underground Prefeasibility Study was completed during the year. The PFS presented a standalone underground case that informs the decision to transition from open pit to an underground mine in the future with demonstrated ore continuity at depth with a 30% (approximately 120 million tonne) increase in Mineral Resources. This outlined the potential for a 6 million ore tonnes per annum production rate with an underground mine life of more than 10 years, utilising underground caving methods. Finalised schedules are being analysed as part of the Enterprise Optimisation to determine the most effective mining sequence and the potential transition for the integration of Open Pit and Underground mining. The scope for the Definitive Feasibility Study is being prepared and will proceed in 2022.The restoration of the Furnaces is well progressed. Furnace Line 4 construction and commissioning is on plan as we continue with the rebuilding and refractory installation. Long lead items including new main blowers are now on track for installation Q2 2022. This redesign will improve the airflow and ensure ease of maintenance for the lifecycle of the furnace.During 2021, the Company commenced an update to the prefeasibility study on a 5 million tonne per annum development case for the Southdown Magnetite Iron Ore Project with new technology and additional test work which is expected to be completed in the coming months. The Prefeasibility Study identifies a reduced capital development option for the Southdown Magnetite Iron Ore Project (anticipated to deliver reductions in initial capital expenditures from A$2.9 billion down to A$1.39 billion). All tenements, permits and project assets continue to be maintained in good order. Budgeting and cost control over expenditure on this project continues to secure the investment per share.Climate change is a defining issue the world is currently facing. Businesses have to consider solutions to the common goal of tackling climate change and Grange is committed to aligning the business, where applicable, to the sustainable development goals. CHAIRPERSON’S & CHIEF EXECUTIVE OFFICER’S REVIEW5DEAR SHAREHOLDERS,The Company achieved record performance in FY2021 as a result of hard work and commitment by our people to keep our operations running safely combined with record high iron ore price. Your Company has delivered very strong financial results and has announced dividends of 22 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. 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. 2021 REVIEWThe Company delivered record financial results as the developed world and China recovered strongly in 2021 from the economic disruption caused by the COVID-19 pandemic. A focus on safety has been maintained across the business. 2021 was still a difficult and challenging year for everyone. We are very proud of the Company’s response to COVID-19. Despite all the uncertainties created by the pandemic, we have achieved over 1750 days Lost Time Injury Free. This remarkable achievement is made possible by the hard work and dedication of hundreds of employees, contractors, and the support of the local community throughout the year. We achieved a profit after tax of $321.6 million (2020: $203.2 million), on revenues from mining operations of $781.7 million (2020: $526.3 million) from improved iron ore prices and record pellet premiums with average product prices of $276.17 per tonne (2020: $196.77 per tonne) (FOB Port Latta). Total iron ore product sales of 2.62 million tonnes (2020: 2.49 million tonnes) were achieved. Increases in fuel and gas costs were balanced with improved production rates resulting in C1 cash operating costs of $99.73 per tonne (2020: $99.77 per tonne). In recognition of this strong performance, the Board declared a final dividend of 10 cents per share after a special dividend of 10 cents per share in December 2021, taking total dividends declared for shareholders this year to a new record of 22 cents per share or $254.6 million. Cash and cash equivalents positioned at $443.9 million (2020: $183.4 million) at the end of the year.Mining activities in North Pit have focused on wall remediation and sustained access to the Main Ore Zone. The installation of additional safety controls on the east wall to reduce the risk of small rockfalls were completed. This was attained with the implementation of a rock fence on a catchment berm to improve the retention of any fallen material and was undertaken utilizing remote equipment and innovations to allow the placement of fencing and structure via remote excavator. Access to high grade ore from the Main Ore Zone in North Pit has been sustained throughout the year. Concentrate production again exceeded 2.5 million tonnes of concentrate with consistent high grade ore supply supporting high production rates. The pre-stripping of waste material from Centre Pit continued throughout the year, with some delays experienced due to weather events. Small volumes of ore have been provided from adjacent lenses with access to the main ore zone in Centre Pit scheduled for later in 2022.The North Pit Underground Prefeasibility Study was completed during the year. The PFS presented a standalone underground case that informs the decision to transition from open pit to an underground mine in the future with demonstrated ore continuity at depth with a 30% (approximately 120 million tonne) increase in Mineral Resources. This outlined the potential for a 6 million ore tonnes per annum production rate with an underground mine life of more than 10 years, utilising underground caving methods. Finalised schedules are being analysed as part of the Enterprise Optimisation to determine the most effective mining sequence and the potential transition for the integration of Open Pit and Underground mining. The scope for the Definitive Feasibility Study is being prepared and will proceed in 2022.The restoration of the Furnaces is well progressed. Furnace Line 4 construction and commissioning is on plan as we continue with the rebuilding and refractory installation. Long lead items including new main blowers are now on track for installation Q2 2022. This redesign will improve the airflow and ensure ease of maintenance for the lifecycle of the furnace.During 2021, the Company commenced an update to the prefeasibility study on a 5 million tonne per annum development case for the Southdown Magnetite Iron Ore Project with new technology and additional test work which is expected to be completed in the coming months. The Prefeasibility Study identifies a reduced capital development option for the Southdown Magnetite Iron Ore Project (anticipated to deliver reductions in initial capital expenditures from A$2.9 billion down to A$1.39 billion). All tenements, permits and project assets continue to be maintained in good order. Budgeting and cost control over expenditure on this project continues to secure the investment per share.Climate change is a defining issue the world is currently facing. Businesses have to consider solutions to the common goal of tackling climate change and Grange is committed to aligning the business, where applicable, to the sustainable development goals. CHAIRPERSON’S & CHIEF EXECUTIVE OFFICER’S REVIEW5OUTLOOK Looking ahead, the iron ore pellet market remains uncertain and challenging. Global economic growth picked up in the second half of 2021 following the lifting of mobility restrictions and is forecasted to remain positive in 2022. The rapid spread of the Omicron variant of COVID-19 has been disruptive but is not anticipated to have a large or sustained impact on growth. Many developed countries have raised their inflation forecasts for 2022 and have emphasised the considerable uncertainty surrounding the economic outlook of 2022. The conflict in Ukraine and subsequent sanctions imposed on Russia will have significant impact on global economic recovery from the pandemic. The rising oil and gas prices as well as food prices are adding to inflationary pressures.Since November 2021, the price of iron ore has swung dramatically between US$90 per tonne and over US$150 per tonne. Iron ore prices have been volatile, falling by 57% in Q3 last year, before rallying 70% between November 2021 and February 2022. China is the world’s biggest importer of iron ore. The gains in the market came amid news China might start to relax its COVID-zero approach by mid-year 2022. That could make way for a surge of infrastructure growth in the nation, which would likely, increase demand for iron ore. Lower interest rates in China are also likely to stabilise the downturn in the property construction sector. China’s intent to provide fiscal and monetary support should help to achieve its target GDP growth of 5.5% in 2022. Infrastructure investment will likely boost steel demand in the coming months. Also of note is China’s plan to setup a single purchasing platform in the country for iron ore which together with the prospect of lower GDP growth will impact the iron ore market. Supply disruptions from Russia and Ukraine may push the iron ore price up in 2022, particularly iron ore pellets. Although the contributions of Russia and Ukraine to the global market is relatively small, in the world of supply and demand, even slight disruptions to the equation can play out in the iron ore price. This may be further impacted by the resumption of supply from Brazil.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. 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 primary goal is to remain competitive in a frequently changing iron ore market. Our focus will remain on delivering superior value to our shareholders in the near, medium and long term. We strive to ensure our company remains strong and resilient. Sustainability will remain an important priority 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 Chinese steel mills have improved, and production has rebounded as the government has held back carbon ambitions for the sector providing a unique opportunity for us. We are confident in our competitiveness to supply a high quality, low impurity iron ore pellet product. We strive to deliver value to our loyal employees and shareholders.Thank youOn 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 LiChairpersonHonglin ZhaoChief Executive OfficerGRANGE RESOURCES | ANNUAL REPORT 202167OUTLOOK Looking ahead, the iron ore pellet market remains uncertain and challenging. Global economic growth picked up in the second half of 2021 following the lifting of mobility restrictions and is forecasted to remain positive in 2022. The rapid spread of the Omicron variant of COVID-19 has been disruptive but is not anticipated to have a large or sustained impact on growth. Many developed countries have raised their inflation forecasts for 2022 and have emphasised the considerable uncertainty surrounding the economic outlook of 2022. The conflict in Ukraine and subsequent sanctions imposed on Russia will have significant impact on global economic recovery from the pandemic. The rising oil and gas prices as well as food prices are adding to inflationary pressures.Since November 2021, the price of iron ore has swung dramatically between US$90 per tonne and over US$150 per tonne. Iron ore prices have been volatile, falling by 57% in Q3 last year, before rallying 70% between November 2021 and February 2022. China is the world’s biggest importer of iron ore. The gains in the market came amid news China might start to relax its COVID-zero approach by mid-year 2022. That could make way for a surge of infrastructure growth in the nation, which would likely, increase demand for iron ore. Lower interest rates in China are also likely to stabilise the downturn in the property construction sector. China’s intent to provide fiscal and monetary support should help to achieve its target GDP growth of 5.5% in 2022. Infrastructure investment will likely boost steel demand in the coming months. Also of note is China’s plan to setup a single purchasing platform in the country for iron ore which together with the prospect of lower GDP growth will impact the iron ore market. Supply disruptions from Russia and Ukraine may push the iron ore price up in 2022, particularly iron ore pellets. Although the contributions of Russia and Ukraine to the global market is relatively small, in the world of supply and demand, even slight disruptions to the equation can play out in the iron ore price. This may be further impacted by the resumption of supply from Brazil.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. 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 primary goal is to remain competitive in a frequently changing iron ore market. Our focus will remain on delivering superior value to our shareholders in the near, medium and long term. We strive to ensure our company remains strong and resilient. Sustainability will remain an important priority 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 Chinese steel mills have improved, and production has rebounded as the government has held back carbon ambitions for the sector providing a unique opportunity for us. We are confident in our competitiveness to supply a high quality, low impurity iron ore pellet product. We strive to deliver value to our loyal employees and shareholders.Thank youOn 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 LiChairpersonHonglin ZhaoChief Executive OfficerGRANGE RESOURCES | ANNUAL REPORT 202167GRANGE RESOURCES | ANNUAL REPORT 20218KEY HIGHLIGHTS• Achieved over 1,750 days Lost Time Injury Free .• High grade ore from the Main Ore Zone in North Pit has been delivered throughout the year.• Pre-stripping of waste material from Centre Pit was undertaken throughout 2021 in preparation for ore supply later in 2022.• Concentrate production was 2.6 million tonnes which is a slight increase from the previous year of 2.5 million tonnes.• Grange’s high quality, low impurity iron ore products attracted a high premium with average realised product price (FOB Port Lat-ta) of $276.17 per tonne for the year, a significant increase com-pared to $196.77 for the prior year.• Second consecutive year of record revenues from operations of $781.7 million compared to $526.3 million for the prior year.• Unit C1 cash operating costs of $99.73 per tonne for the year compared to $99.77 for the prior year.• Delivered profit after tax of $321.6 million for the year compared to $203.2 million for the prior year.• Cash and cash equivalents position of $443.9 million at the end of year compared to $183.4 million at the end of the prior year. In-crease largely due to higher sales price on shipments and higher sales volume.SAFETY PERFORMANCEGrange operations achieved over 1,750 consecutive days Lost Time Injury free by year end 2021. The sustained focus on lead indicators, hazard identification and risk management has helped us maintain the current long running lost time injury free period, despite a con-tinued increase in worker hours.There was a notable and pleasing decrease in disabling injuries, with a slight rise in medical treatment injuries in 2021 . During the year all 3 disabling injuries have been caused by mine operations jarring events requiring prolonged recovery periods, however, all 3 persons involved were given meaningful work for their respective periods of incapacity. They have actively contributed to their re-turn-to-work programs reducing the periods of alternate work so far as possible.2021 continued to see considerable contractor involvement at both operational sites, again increasing our hours worked and expo-sures with new and ongoing exciting projects undertaken, including a Hitachi crew to introduce electric trucks into our mining fleet. Our SEMS (Safety, Environment Management System) onsite training and Major Hazard Systems improvements continued to support a compliant, well managed and mature safety culture throughout the year.OPERATING AND FINANCIAL REVIEWLAG INDICATORSJan ’21Feb ’21Mar ’21Apr ’21May ’21Jun ’21Jul ’21Aug ’21Sep’21Oct ’21Nov ’21Dec ’21IncidentsIncidents0246802468MTILTIDITRIFRLTIFRDIIFR9GRANGE RESOURCES | ANNUAL REPORT 20218KEY HIGHLIGHTS• Achieved over 1,750 days Lost Time Injury Free .• High grade ore from the Main Ore Zone in North Pit has been delivered throughout the year.• Pre-stripping of waste material from Centre Pit was undertaken throughout 2021 in preparation for ore supply later in 2022.• Concentrate production was 2.6 million tonnes which is a slight increase from the previous year of 2.5 million tonnes.• Grange’s high quality, low impurity iron ore products attracted a high premium with average realised product price (FOB Port Lat-ta) of $276.17 per tonne for the year, a significant increase com-pared to $196.77 for the prior year.• Second consecutive year of record revenues from operations of $781.7 million compared to $526.3 million for the prior year.• Unit C1 cash operating costs of $99.73 per tonne for the year compared to $99.77 for the prior year.• Delivered profit after tax of $321.6 million for the year compared to $203.2 million for the prior year.• Cash and cash equivalents position of $443.9 million at the end of year compared to $183.4 million at the end of the prior year. In-crease largely due to higher sales price on shipments and higher sales volume.SAFETY PERFORMANCEGrange operations achieved over 1,750 consecutive days Lost Time Injury free by year end 2021. The sustained focus on lead indicators, hazard identification and risk management has helped us maintain the current long running lost time injury free period, despite a con-tinued increase in worker hours.There was a notable and pleasing decrease in disabling injuries, with a slight rise in medical treatment injuries in 2021 . During the year all 3 disabling injuries have been caused by mine operations jarring events requiring prolonged recovery periods, however, all 3 persons involved were given meaningful work for their respective periods of incapacity. They have actively contributed to their re-turn-to-work programs reducing the periods of alternate work so far as possible.2021 continued to see considerable contractor involvement at both operational sites, again increasing our hours worked and expo-sures with new and ongoing exciting projects undertaken, including a Hitachi crew to introduce electric trucks into our mining fleet. Our SEMS (Safety, Environment Management System) onsite training and Major Hazard Systems improvements continued to support a compliant, well managed and mature safety culture throughout the year.OPERATING AND FINANCIAL REVIEWLAG INDICATORSJan ’21Feb ’21Mar ’21Apr ’21May ’21Jun ’21Jul ’21Aug ’21Sep’21Oct ’21Nov ’21Dec ’21IncidentsIncidents0246802468MTILTIDITRIFRLTIFRDIIFR9FULL YEAR RESULTGrange recorded a statutory profit after tax of $321.6 million for the year ended 31 December 2021 (2020: $203.2 million).Key revenue metrics for the year ended 31 December 2021 and the preceding 2021 year were as follows:20212020Iron Ore Pellet Sales (dmt)2,507,2012,376,029Iron Ore Concentrate Sales (dmt)42-Iron Ore Chip Sales (dmt)108,130113,611Total Iron Ore Product Sales (dmt)2,615,3732,489,640Average Realised Product Price (US$/t FOB Port Latta)*208.08136.85Average Realised Exchange Rate(AUD:USD)0.75350.6955Average Realised Product Price (A$/t FOB Port Latta)276.17196.77*adjusted for the costs of freight and final pricing settlements on provisional settlements as per sales agreements. Pricing is typically finalised in one to three months after shipment month.Total sales for the year ended 31 December 2021 was 2.62 million tonnes of high quality, low impurity iron ore products (2020: 2.49 million tonnes) and reflects sustained production from maintaining access to high grade ore.The average iron ore product price received during the year was $276.17 per tonne of product sold (FOB Port Latta) (2020: $196.77 per tonne). Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 27.7% of total sales for 2021 (2020: 34.6%).Key operating metrics for the year ended 31 December 2021 and the preceding 2021 year were as follows: 20212020Total BCM Mined13,667,04414,567,158Total Ore BCM2,804,2341,384,744Concentrate Produced (t)2,559,9872,531,759Weight Recovery (%)44.446.1Pellets Produced (t)2,597,4282,348,274Pellet Stockpile (t)210,193119,966“C1” Operating Cost(A$/t Product Produced)(1)99.7399.77(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 activities in North Pit have focused on wall remediation and sustained access to the Main Ore Zone. The installation of additional safety controls on the east wall to reduce the risk of small rockfalls were completed. This was attained with the implementation of a rock fence on a catchment berm to improve the retention of any fallen material and was undertaken utilizing remote equipment and innovations to allow the placement of fencing and structure via remote excavator. Access to high grade ore from the Main Ore Zone in North Pit has been sustained throughout the year. Concentrate production again exceeded 2.5 million tonnes of concentrate with consistent high grade ore supply supporting high production rates.The pre-stripping of waste material from Centre Pit continued throughout the year, with some delays experienced due to weather events. Small volumes of ore have been provided from adjacent lenses with access to the main ore zone in Centre Pit scheduled for later in 2022.NORTH PIT UNDERGROUND DEVELOPMENT PROJECT The North Pit Underground Prefeasibility Study was completed during the year. The PFS presented a standalone underground case that informs the decision to transition from open pit to an underground mine in the future with demonstrated ore continuity at depth with a 30% (approximately 120 million tonne) increase in Mineral Resources reported in JORC Statement dated 31 March 2022. This outlined the potential for a 6 million tonne per annum production rate with an underground mine life of more than 10 years, utilising underground caving methods. Finalised schedules are being analysed as part of the Enterprise Optimisation to determine the most effective mining sequence and the potential transition for the integration of Open Pit and Underground mining. The scope for the Definitive Feasibility Study is being prepared and will proceed in 2022 subject to Board approval. PORT LATTA IMPROVEMENT PROJECTSThe restoration of the Furnace is well progressed. Furnace Line 4 construction and commissioning is on plan as we continue with the rebuilding and refractory installation. Long lead items including new main blowers are now on track for installation Q2 2022. This redesign will improve the airflow and ensure ease of maintenance for the lifecycle of the furnace. ENERGY ALTERNATIVESEarly in 2020, Grange Resources set out to investigate potential routes for carbon reduction of our Tasmanian operation. It was identified that our two biggest contributors were our diesel usage from the mining fleet at Savage River and natural gas usage from the furnaces at our Port Latta operation.As part of this strategic vision, discussions were kicked off in part of the formation of the Heavy Industry Low Carbon Transition CRC (HILT-CRC). In late 2021, the HILT CRC was finalised, with Grange Resources being a founding and Core Partner. It is with great excitement that we work with the newly formed HILT CRC to advance Australian Heavy Industry’s Transition to Low Carbon.In 2021, Grange also set out on a specific Hydrogen Study, in line with the Tasmanian Government’s ambitions to establish a Hydrogen Hub within Tasmania, to utilise the current Green Electricity GRANGE RESOURCES | ANNUAL REPORT 202110FULL YEAR RESULTGrange recorded a statutory profit after tax of $321.6 million for the year ended 31 December 2021 (2020: $203.2 million).Key revenue metrics for the year ended 31 December 2021 and the preceding 2021 year were as follows:20212020Iron Ore Pellet Sales (dmt)2,507,2012,376,029Iron Ore Concentrate Sales (dmt)42-Iron Ore Chip Sales (dmt)108,130113,611Total Iron Ore Product Sales (dmt)2,615,3732,489,640Average Realised Product Price (US$/t FOB Port Latta)*208.08136.85Average Realised Exchange Rate(AUD:USD)0.75350.6955Average Realised Product Price (A$/t FOB Port Latta)276.17196.77*adjusted for the costs of freight and final pricing settlements on provisional settlements as per sales agreements. Pricing is typically finalised in one to three months after shipment month.Total sales for the year ended 31 December 2021 was 2.62 million tonnes of high quality, low impurity iron ore products (2020: 2.49 million tonnes) and reflects sustained production from maintaining access to high grade ore.The average iron ore product price received during the year was $276.17 per tonne of product sold (FOB Port Latta) (2020: $196.77 per tonne). Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales from long term off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 27.7% of total sales for 2021 (2020: 34.6%).Key operating metrics for the year ended 31 December 2021 and the preceding 2021 year were as follows: 20212020Total BCM Mined13,667,04414,567,158Total Ore BCM2,804,2341,384,744Concentrate Produced (t)2,559,9872,531,759Weight Recovery (%)44.446.1Pellets Produced (t)2,597,4282,348,274Pellet Stockpile (t)210,193119,966“C1” Operating Cost(A$/t Product Produced)(1)99.7399.77(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 activities in North Pit have focused on wall remediation and sustained access to the Main Ore Zone. The installation of additional safety controls on the east wall to reduce the risk of small rockfalls were completed. This was attained with the implementation of a rock fence on a catchment berm to improve the retention of any fallen material and was undertaken utilizing remote equipment and innovations to allow the placement of fencing and structure via remote excavator. Access to high grade ore from the Main Ore Zone in North Pit has been sustained throughout the year. Concentrate production again exceeded 2.5 million tonnes of concentrate with consistent high grade ore supply supporting high production rates.The pre-stripping of waste material from Centre Pit continued throughout the year, with some delays experienced due to weather events. Small volumes of ore have been provided from adjacent lenses with access to the main ore zone in Centre Pit scheduled for later in 2022.NORTH PIT UNDERGROUND DEVELOPMENT PROJECT The North Pit Underground Prefeasibility Study was completed during the year. The PFS presented a standalone underground case that informs the decision to transition from open pit to an underground mine in the future with demonstrated ore continuity at depth with a 30% (approximately 120 million tonne) increase in Mineral Resources reported in JORC Statement dated 31 March 2022. This outlined the potential for a 6 million tonne per annum production rate with an underground mine life of more than 10 years, utilising underground caving methods. Finalised schedules are being analysed as part of the Enterprise Optimisation to determine the most effective mining sequence and the potential transition for the integration of Open Pit and Underground mining. The scope for the Definitive Feasibility Study is being prepared and will proceed in 2022 subject to Board approval. PORT LATTA IMPROVEMENT PROJECTSThe restoration of the Furnace is well progressed. Furnace Line 4 construction and commissioning is on plan as we continue with the rebuilding and refractory installation. Long lead items including new main blowers are now on track for installation Q2 2022. This redesign will improve the airflow and ensure ease of maintenance for the lifecycle of the furnace. ENERGY ALTERNATIVESEarly in 2020, Grange Resources set out to investigate potential routes for carbon reduction of our Tasmanian operation. It was identified that our two biggest contributors were our diesel usage from the mining fleet at Savage River and natural gas usage from the furnaces at our Port Latta operation.As part of this strategic vision, discussions were kicked off in part of the formation of the Heavy Industry Low Carbon Transition CRC (HILT-CRC). In late 2021, the HILT CRC was finalised, with Grange Resources being a founding and Core Partner. It is with great excitement that we work with the newly formed HILT CRC to advance Australian Heavy Industry’s Transition to Low Carbon.In 2021, Grange also set out on a specific Hydrogen Study, in line with the Tasmanian Government’s ambitions to establish a Hydrogen Hub within Tasmania, to utilise the current Green Electricity GRANGE RESOURCES | ANNUAL REPORT 202110supply to generate Green Hydrogen. The study, co-founded by the Tasmanian Government, and in collaboration with Hatch was aimed at investigating the feasibility to convert our Port Latta operations from Natural Gas to Green Hydrogen. This Prefeasibility Study concluded that it was technically feasible to operate the Port Latta facility on Hydrogen, with no impact on product make or quality. The study also identified the key commercial drivers which would need to be achieved to make the project commercially feasible. These will require support from the Tasmanian Government as part of establishing a Tasmanian hydrogen economy. If these fundamentals were achieved, the next step would be to undertake a pilot plant scale trial and thereafter convert one of the 5 Port Latta Furnaces to run on Hydrogen (pending supply and legislative requirements being met).The Company will continue to work with the Tasmanian Government, external parties, and as part of the HILT CRC, to progress decarbonisation strategies for our operations.SOUTHDOWN MAGNETITE PROJECTThe 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. The Southdown Magnetite Project is an advanced project with more than 1.2 billion tonnes of high-quality mineral resources, including ore reserves of 388 million tonnes. A Definitive Feasibility Study completed in 2012 (DFS 2012, see ASX announcement May 2012) defined a project to produce 10 million tonnes per annum of high-grade magnetite concentrate at 69.5% iron, over a potential mine life of 14 years. All primary environmental approvals are in place for this development option.A prefeasibility study completed in February 2022 has optimised the project to identify a reduced-capital development option. This involves a smaller 5 million tonnes per annum concentrate production operation within the constraints of existing mineral resources and ore reserves; and is anticipated to deliver reductions in capital spend from A$2.9B down to A$1.39B. This alternative case extends the life of mine from 14 years to 28 years for the western zone, and potentially more than 50 years for the total resource (see Project Details below). It is planned to be a pit to port operation involving:· an open cut mine with contract mining · a concentrator including dry grinding and wet separation techniques· slurry and return water pipelines from/to the Port at Albany· a transhipping operation to export concentrate in Cape size vessels · a transmission line for power supply by a 3rd party to access a significant component of renewable energy· a mix of recycled and groundwater to supply reduced water needs. FINANCIAL POSITIONGrange’s net assets increased during the year to $871.2 million (31 December 2020: $712.1 million). The key movements in net assets during the year are a result of the following:• An increase in cash of $260.5 million with higher sales prices and volume achieved • A reduction in trade debtors by $70.3 million• An increase in tax payable by $79.0 millionThe Group’s market capitalisation as at 22 March 2022 is $1.2 billion.STATEMENT OF CASH FLOWSNET CASH FLOWS FROM OPERATING ACTIVITIESNet cash inflows from operating activities for the year were $498.2 million (2020: inflows $202.6 million) and reflect higher iron ore product sales and decrease in unit operating costs.NET CASH FLOWS FROM INVESTING ACTIVITIESNet cash outflows from investing activities for the period were $79.6 million (2020: outflows $125.1 million) and principally related to expenditures for mine properties and development $40.1 million and property, plant and equipment $40.0 million.NET CASH FLOWS FROM FINANCING ACTIVITIESNet cash outflows from financing activities for the period were $165.3 million (2020 outflow: $26.9 million) and principally related to the payment of 2020 final dividend ($23.1 million), 2021 interim dividend ($23.1 million) and a special dividend of $115.7 million.EXPLORATION AND EVALUATION1,905 metres of diamond drilling was completed underground in 2021. This was focussed at the northern end of North Pit to improve the resource definition and increase orebody knowledge. An additional geotechnical hole was drilled to 347 metres for the NPUG Exploration Decline Stage 2 for geotechnical data collection. Also during the year the resource model was refined with production and grade control data. The Mineral Resource stands at 485.8 million tonnes at 45.4% DTR, a decrease of 11.6 million tonnes from the 2020 annual report. The decrease is a result of mining depletion and the reduction of Resources in South Deposit. Confidence and grade of the resources have slightly increased with addition of production and grade control data acquired during 2021. 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 underground mining study. Ore Reserves decreased slightly to 103.1 million tonnes at 47.2% DTR due to mining depletion from North Pit and Centre Pit during the year. Reported Ore Reserves are for open pits and do not include any underground mineable resources as the North Pit Underground studies are still in progress. Estimation of the combined open pit and underground Ore Reserves will continue in 2022, as part of the continuing feasibility studies. 11GRANGE RESOURCES | ANNUAL REPORT 202112MINERAL RESOURCES AND ORE RESERVES STATEMENT - SAVAGE RIVER OPERATIONSThe following tables show the Mineral Resources and Ore Reserves for the Savage River operations as at 31 December 2021. The mining of ore throughout the year focussed on high grade supply from North Pit. The Mineral Resource has been depleted since the previous estimate dated 31 December 2020 as a result of mining. Ore Reserves have decreased due mining depletion from 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.MINERAL RESOURCESA summary of the total Mineral Resources for Savage River as at 31 December 2021, above a cut-off grade of 15% DTR is as follows:As at December 2021As at December 2020Tonnes (Mt)Grade % DTR*Tonnes (Mt)Grade % DTR*Measured167.752.7163.654.3Indicated176.943.0188.743.0Inferred141.239.7145.239.5Total485.845.4497.545.8* Davis Tube Recovery – a measure of recoverable magnetiteORE RESERVEA summary of the Ore Reserve for Savage River as at 31 December 2021, above a cut-off grade of 15% DTR is as follows: As at December 2021As at December 2020Tonnes (Mt)Grade % DTR*Tonnes (Mt)Grade % DTR*Proved61.651.161.651.6Probable41.541.446.141.3Total103.147.2107.747.2* Davis Tube Recovery – a measure of recoverable magnetiteA detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 31 March 2022. 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 SAFETY AND ENVIRONMENTOVERVIEWGrange 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 is reviewed annually by our executive team and leads us to continually improve our Safety Systems, including this year recognising Psychological Health and Safety at Work.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 2021 SEMS recognised ISO45003 2021 covering Psychological Health and Safety at Work to ensure our systems recognise and afford controls for both the physical and mental health wellbeing of our workers.MISSION STATEMENTTo drive a continuous improvement culture involving everyone at Grange Resources. We strive to eliminate injury, loss and waste, and create positive environmental outcomes adding value to the communities in which we operate. This will be achieved through effective adherence to management systems, integrated risk management practices, risk aware culture, demonstrable leadership, maintaining standards, monitoring performance and looking after our people.SAFETY PRINCIPLES• 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 and respectfully• Every person is accountable for their own safety and the safety of those around them• Safety performance can always be improved13GRANGE RESOURCES | ANNUAL REPORT 202112MINERAL RESOURCES AND ORE RESERVES STATEMENT - SAVAGE RIVER OPERATIONSThe following tables show the Mineral Resources and Ore Reserves for the Savage River operations as at 31 December 2021. The mining of ore throughout the year focussed on high grade supply from North Pit. The Mineral Resource has been depleted since the previous estimate dated 31 December 2020 as a result of mining. Ore Reserves have decreased due mining depletion from 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.MINERAL RESOURCESA summary of the total Mineral Resources for Savage River as at 31 December 2021, above a cut-off grade of 15% DTR is as follows:As at December 2021As at December 2020Tonnes (Mt)Grade % DTR*Tonnes (Mt)Grade % DTR*Measured167.752.7163.654.3Indicated176.943.0188.743.0Inferred141.239.7145.239.5Total485.845.4497.545.8* Davis Tube Recovery – a measure of recoverable magnetiteORE RESERVEA summary of the Ore Reserve for Savage River as at 31 December 2021, above a cut-off grade of 15% DTR is as follows: As at December 2021As at December 2020Tonnes (Mt)Grade % DTR*Tonnes (Mt)Grade % DTR*Proved61.651.161.651.6Probable41.541.446.141.3Total103.147.2107.747.2* Davis Tube Recovery – a measure of recoverable magnetiteA detailed statement of the Mineral Resources and Ore Reserves can be found in the ASX announcement dated 31 March 2022. 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 SAFETY AND ENVIRONMENTOVERVIEWGrange 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 is reviewed annually by our executive team and leads us to continually improve our Safety Systems, including this year recognising Psychological Health and Safety at Work.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 2021 SEMS recognised ISO45003 2021 covering Psychological Health and Safety at Work to ensure our systems recognise and afford controls for both the physical and mental health wellbeing of our workers.MISSION STATEMENTTo drive a continuous improvement culture involving everyone at Grange Resources. We strive to eliminate injury, loss and waste, and create positive environmental outcomes adding value to the communities in which we operate. This will be achieved through effective adherence to management systems, integrated risk management practices, risk aware culture, demonstrable leadership, maintaining standards, monitoring performance and looking after our people.SAFETY PRINCIPLES• 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 and respectfully• Every person is accountable for their own safety and the safety of those around them• Safety performance can always be improved13SAFETY PERFORMANCEThe 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 Board have approved a 3-year HSE Strategic Plan commencing in 2021, during the year the goals of the plan were actively monitored and this plan is on track for a successful 3 year outcome. The effectiveness of our systems and safety management in general is well demonstrated by the consistent measurable improvement in our safety lag indicators. Targeted improvements in our lag indicators continue to be reinforced by a regime of measurable lead indicators to help reduce risk exposures. During 2021 the company reinforced safety controls to manage the impact of the global COVID-19 pandemic. Our controls and the management of these prevented any business disruption and ensured the health safety and wellbeing of our employees, contractors and supported our community. COVID-19 remains an ongoing issue and will be managed accordingly. 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.Grange continued the focus on reducing costs without reducing support services via:• Initiatives for Emergency Response Team (ERT) in-house training saving considerable costs, while maintaining a high standard of response while continuing to develop our underground rescue capability.• The underground emergency refuge chambers and associated ventilation and pumping equipment were monitored to maintain compliance with industry standards and WST 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.• Continuing to obtain Federal and State government training funds reduces the outlay for training in leadership and continuous improvement and may provide an opportunity for additional young workers to commence apprenticeships. • 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. It has already 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.• Focus on gender diversity, respect at work and cultural awareness has promoted the role of women in our workforce and is supporting greater diversity in our teams.• Strategic focus in “Critical Controls” adds focus to 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.2021 has continued the enhancement 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). The lead indicators have been strengthened by the addition of specific “care and maintenance” KPIs for underground workings. 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 also continue to offer a very effective online “Isolations” training package allowing our offsite contract workforce to learn our systems before coming to site.During the year Grange continued to work closely and openly with the Office of the Chief inspector of Mines (OCIM), traditionally our company provide an outlet for GMIRM (Global Mining Industry Risk Management training 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.During 2021 good management of our COVID-19 controls has provided training opportunities to continue with GMIRM training in 2021 with multiple G1 (worker focused) and G3 (management focused) risk assessment training seminars conducted. All G3 seminars were open to other Tasmanian Mines and Mining contractors.GRANGE RESOURCES | ANNUAL REPORT 202114In 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, respect at work and mental health awareness/first aid. the HSE the year team have commenced During the implementation of the new three-year Strategic Plan for HSE, achieving excellent results in environmental systems development. The plan aims to consolidate safety improvements and target areas of lesser performance with a focus on training and safety leadership. 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 providing 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 curriculum information, industry links, a graduate program as well as work opportunities at its operations. During 2021 we still managed to allow a number of work experience students to have a week each on site and hosted smaller size “socially distanced and monitored” school tours despite the threats of the COVID19 pandemic. During 2021 our management and workers have actively participated in WorkSafe Tasmania (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 as demonstrated by the positive feedback following a WST audit of our Principal Major Hazard Standard for Ground Control MHS04, suggestions for improvement were appreciated and actioned immediately. 15 SAFETY PERFORMANCEThe 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 Board have approved a 3-year HSE Strategic Plan commencing in 2021, during the year the goals of the plan were actively monitored and this plan is on track for a successful 3 year outcome. The effectiveness of our systems and safety management in general is well demonstrated by the consistent measurable improvement in our safety lag indicators. Targeted improvements in our lag indicators continue to be reinforced by a regime of measurable lead indicators to help reduce risk exposures. During 2021 the company reinforced safety controls to manage the impact of the global COVID-19 pandemic. Our controls and the management of these prevented any business disruption and ensured the health safety and wellbeing of our employees, contractors and supported our community. COVID-19 remains an ongoing issue and will be managed accordingly. 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.Grange continued the focus on reducing costs without reducing support services via:• Initiatives for Emergency Response Team (ERT) in-house training saving considerable costs, while maintaining a high standard of response while continuing to develop our underground rescue capability.• The underground emergency refuge chambers and associated ventilation and pumping equipment were monitored to maintain compliance with industry standards and WST 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.• Continuing to obtain Federal and State government training funds reduces the outlay for training in leadership and continuous improvement and may provide an opportunity for additional young workers to commence apprenticeships. • 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. It has already 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.• Focus on gender diversity, respect at work and cultural awareness has promoted the role of women in our workforce and is supporting greater diversity in our teams.• Strategic focus in “Critical Controls” adds focus to 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.2021 has continued the enhancement 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). The lead indicators have been strengthened by the addition of specific “care and maintenance” KPIs for underground workings. 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 also continue to offer a very effective online “Isolations” training package allowing our offsite contract workforce to learn our systems before coming to site.During the year Grange continued to work closely and openly with the Office of the Chief inspector of Mines (OCIM), traditionally our company provide an outlet for GMIRM (Global Mining Industry Risk Management training 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.During 2021 good management of our COVID-19 controls has provided training opportunities to continue with GMIRM training in 2021 with multiple G1 (worker focused) and G3 (management focused) risk assessment training seminars conducted. All G3 seminars were open to other Tasmanian Mines and Mining contractors.GRANGE RESOURCES | ANNUAL REPORT 202114ENVIRONMENTAL LEGISLATIVE APPROVALGrange 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 continues to progress approval to mine the ore using underground mining through the North Pit Underground project (NPUG). Late in 2019 Grange also obtained interim approval to commence open pit mining of the Centre Pit (CP) ore reserve and continued with the full approval process through 2021.GOLDAMERE ACTThe Goldamere Act overrides all other Tasmanian legislation with respect to Grange’s operations. The Goldamere Act limits Grange’s liability for remediation of contamination, under Tasmanian law, to damage caused by Grange’s operations, and indemnifies Grange for certain environmental liabilities arising from past operations. Where pollution is caused or might be caused by previous operations and that pollution may be impacting on Grange’s operations or discharges, Grange is indemnified against that pollution. Grange is required to operate to Best Practice Environmental Management (BPEM).PLANNING APPROVALSGrange 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 an Environmental 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 is actively working with the Waratah Wynyard Council and Tasmanian EPA on all aspects of the NPUG and CP projects.During the year Grange were granted approval to install , a sodium hydroxide plant and new sewerage treatment plant at Port Latta.ENVIRONMENTAL MANAGEMENT PLANSThe 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 Tasmanian EPA and relevant Councils for major infrastructure developments and operational expansions and changes. These approvals are in the form of development applications, planning permits, 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 planning permits, 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.The current EMP will be updated in 2022 following final EPA approval of the Centre Pit Project.GOLDAMERE AGREEMENTThe Goldamere Agreement (which forms part of the Goldamere Act) provides a framework for Grange to repay the Tasmanian Government for the purchase of the mine through remediation works. A significant variation to the Goldamere Agreement was signed on the 19 December 2014 which extends the Agreement until 24 December 2034. This variation also removed a significant number of redundant conditions. The amended Goldamere Agreement provides a framework for Grange to co-manage the Savage River Rehabilitation Project (SRRP) and carry out contracted works in lieu of paying the purchase price of the operation to the Government. The agreement also allows Grange to integrate its rehabilitation obligations with those of the State under the SRRP. 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 is updated yearly to reflect the long-term risks and Grange’s latest mining plan.Major projects commenced by the SRRP and Grange during 2021 include final works on the OTD Collection Bund and Transfer Scheme transferring AMD from the OTD around the MCTD, the OTD Cobalt Project, exploring possible Cobalt recovery and Sulphur removal from the OTD and resultant remediation and a stability assessment of the OTD. GRANGE RESOURCES | ANNUAL REPORT 202116ENVIRONMENTAL LEGISLATIVE APPROVALGrange 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 continues to progress approval to mine the ore using underground mining through the North Pit Underground project (NPUG). Late in 2019 Grange also obtained interim approval to commence open pit mining of the Centre Pit (CP) ore reserve and continued with the full approval process through 2021.GOLDAMERE ACTThe Goldamere Act overrides all other Tasmanian legislation with respect to Grange’s operations. The Goldamere Act limits Grange’s liability for remediation of contamination, under Tasmanian law, to damage caused by Grange’s operations, and indemnifies Grange for certain environmental liabilities arising from past operations. Where pollution is caused or might be caused by previous operations and that pollution may be impacting on Grange’s operations or discharges, Grange is indemnified against that pollution. Grange is required to operate to Best Practice Environmental Management (BPEM).PLANNING APPROVALSGrange 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 an Environmental 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 is actively working with the Waratah Wynyard Council and Tasmanian EPA on all aspects of the NPUG and CP projects.During the year Grange were granted approval to install , a sodium hydroxide plant and new sewerage treatment plant at Port Latta.ENVIRONMENTAL MANAGEMENT PLANSThe 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 Tasmanian EPA and relevant Councils for major infrastructure developments and operational expansions and changes. These approvals are in the form of development applications, planning permits, 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 planning permits, 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.The current EMP will be updated in 2022 following final EPA approval of the Centre Pit Project.GOLDAMERE AGREEMENTThe Goldamere Agreement (which forms part of the Goldamere Act) provides a framework for Grange to repay the Tasmanian Government for the purchase of the mine through remediation works. A significant variation to the Goldamere Agreement was signed on the 19 December 2014 which extends the Agreement until 24 December 2034. This variation also removed a significant number of redundant conditions. The amended Goldamere Agreement provides a framework for Grange to co-manage the Savage River Rehabilitation Project (SRRP) and carry out contracted works in lieu of paying the purchase price of the operation to the Government. The agreement also allows Grange to integrate its rehabilitation obligations with those of the State under the SRRP. 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 is updated yearly to reflect the long-term risks and Grange’s latest mining plan.Major projects commenced by the SRRP and Grange during 2021 include final works on the OTD Collection Bund and Transfer Scheme transferring AMD from the OTD around the MCTD, the OTD Cobalt Project, exploring possible Cobalt recovery and Sulphur removal from the OTD and resultant remediation and a stability assessment of the OTD. GRANGE RESOURCES | ANNUAL REPORT 202116PRINCIPAL ENVIRONMENTAL ISSUESWASTE 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 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 and metalliferous drainage (AMD) from the Old Tailings Dam and B-Dump using the excess alkalinity in tailings should Grange and the Crown agree to do so. The 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 AMD seeps within the SDTSF would improve water quality in Main Creek and the Savage River. Regardless of whether the AMD 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 bund occurred in 2019. Final connection through to the SDTSF discharge is expected to occur in 2022.• 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 continued to progress design and construction work for the Main Creek Tails Dam closure during 2021. It is expected that the closure process will take approximately two more years..• Final approval of the Centre Pit Project continued through 2021 with a new development application (DA216/2021) and planning permit progressed with Waratah Wynyard Council and the Tasmanian EPA.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 PLANSGrange 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.17ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) METRICSADOPTING AN ESG FRAMEWORKDevelopments in global markets for directing investment capital have shifted with traditional profit only focus being challenged when assessing companies’ performance. Grange is committed to aligning the business, where applicable, to the sustainable development goals that provide a roadmap to sustainability and resilience. Grange has adopted an Environmental, Social, and Governance (ESG) framework with 21 core metrics and disclosures as created by the World Economic Forum (WEF) and is establishing an impact measurement plan for each sustainability area which includes, but is not limited to, governance, anti-corruption practices, ethical behaviour, human rights, carbon emissions, land use, ecological sensitivity, water consumption, diversity and inclusion, pay equality and tax payments.ESG BACKGROUNDIn its Summer Meeting for 2019, the WEF’s International Business Council (IBC) flagged the existence of multiple ESG reporting frameworks and the lack of consistency and comparability of metrics as pain points preventing companies from credibly demonstrating to all stakeholders their progress on sustainability and their contributions to the sustainable development goals.In collaboration with Deloitte, EY, KPMG and PwC, a set of universal, material ESG metrics and recommended disclosures were identified that could be reflected in the mainstream annual reports of companies on a consistent basis across industry sectors and countries. The metrics were designed to be capable of verification and assurance, to enhance transparency and alignment among corporations, investors, and all stakeholders. The wider objective was to begin reporting collectively on this basis to encourage greater cooperation and alignment among existing standards as well as to catalyse progress towards a systemic solution, such as a generally accepted international accounting standard in this respect.The result of this process is 21 core and 34 expanded metrics and disclosures, which the project commends to both IBC members and non-IBC companies for adoption.GRANGE RESOURCES | ANNUAL REPORT 202118ESG BASELINETo ensure that Grange can measure, monitor, and report on its ESG disclosure progress, the Company has engaged impact monitoring technology platform Socialsuite to streamline the disclosure and ongoing ESG reporting process. The Company’s goal is to demonstrate commitment and progress on making ESG disclosures, but more broadly, aims to progress a range of ESG benchmarks as set out by the WEF’s ESG White Paper.Grange has deployed Socialsuite’s ESG Go technology platform to set its initial ESG baseline. The tailored action plan will support focus on delivering and reporting ongoing progress toward disclosing and improving ESG metrics and indicators.Socialsuite’s ESG Go reporting technology provides an easy way for investors and other stakeholders to assess the commitment and progress of the Company on its journey to create “best in class” ESG credentials and outcomes. Grange’s ESG Go baseline report:(A1-A5) are defined compliance tasks for progress tracking19ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) METRICSADOPTING AN ESG FRAMEWORKDevelopments in global markets for directing investment capital have shifted with traditional profit only focus being challenged when assessing companies’ performance. Grange is committed to aligning the business, where applicable, to the sustainable development goals that provide a roadmap to sustainability and resilience. Grange has adopted an Environmental, Social, and Governance (ESG) framework with 21 core metrics and disclosures as created by the World Economic Forum (WEF) and is establishing an impact measurement plan for each sustainability area which includes, but is not limited to, governance, anti-corruption practices, ethical behaviour, human rights, carbon emissions, land use, ecological sensitivity, water consumption, diversity and inclusion, pay equality and tax payments.ESG BACKGROUNDIn its Summer Meeting for 2019, the WEF’s International Business Council (IBC) flagged the existence of multiple ESG reporting frameworks and the lack of consistency and comparability of metrics as pain points preventing companies from credibly demonstrating to all stakeholders their progress on sustainability and their contributions to the sustainable development goals.In collaboration with Deloitte, EY, KPMG and PwC, a set of universal, material ESG metrics and recommended disclosures were identified that could be reflected in the mainstream annual reports of companies on a consistent basis across industry sectors and countries. The metrics were designed to be capable of verification and assurance, to enhance transparency and alignment among corporations, investors, and all stakeholders. The wider objective was to begin reporting collectively on this basis to encourage greater cooperation and alignment among existing standards as well as to catalyse progress towards a systemic solution, such as a generally accepted international accounting standard in this respect.The result of this process is 21 core and 34 expanded metrics and disclosures, which the project commends to both IBC members and non-IBC companies for adoption.GRANGE RESOURCES | ANNUAL REPORT 202118ESG BASELINETo ensure that Grange can measure, monitor, and report on its ESG disclosure progress, the Company has engaged impact monitoring technology platform Socialsuite to streamline the disclosure and ongoing ESG reporting process. The Company’s goal is to demonstrate commitment and progress on making ESG disclosures, but more broadly, aims to progress a range of ESG benchmarks as set out by the WEF’s ESG White Paper.Grange has deployed Socialsuite’s ESG Go technology platform to set its initial ESG baseline. The tailored action plan will support focus on delivering and reporting ongoing progress toward disclosing and improving ESG metrics and indicators.Socialsuite’s ESG Go reporting technology provides an easy way for investors and other stakeholders to assess the commitment and progress of the Company on its journey to create “best in class” ESG credentials and outcomes. Grange’s ESG Go baseline report:(A1-A5) are defined compliance tasks for progress tracking19SOUTHDOWN MAGNETITE PROJECT The Southdown Project is an advanced project with over 1.2 billion tonnes of high quality mineral resources, including ore reserves of 388 million tonnes (see announcement dated 28 February 2014). The Project has been designed to produce 10 million tonnes per annum of high grade, quality magnetite concentrate at 69.5% iron. This is expected to command a premium price in the iron pellet feed market over a potential mine life of around 30 years. A Definitive Feasibility Study (DFS) was completed by the project owners in 2012 for 10mtpa concentrate production (see announcement dated 1 May 2012)Just 90 kilometres from Albany in Western Australia’s Great Southern region, Southdown is a joint venture between Grange (70%) and SRT Australia Pty Ltd (30%). SRT Australia is jointly owned by Sojitz Corporation, a Japanese global trading company, and Kobe Steel, one of Japan’s largest steel producers. ALTERNATIVE DEVELOPMENT OPTION Grange completed a Prefeasibility Study (PFS) in February 2022 into an optimised project development option which builds on work undertaken by our JV partner in 2015. This would involve a smaller 5 million tonnes per annum operation within the constraints of existing approvals, mineral resources and ore reserves; and is anticipated to deliver reductions in capital spend from ~A$2.9B for the 10 million tonnes per annum option, down to ~A$1.39B. This alternative case extends the life of mine from 14 years to 28 years for the western zone, and more than 50 years for the total resource (see Project Details below). The 10 million tonnes per annum DFS completed in 2012 remains the base case for the JV.2021 PROJECT OVERVIEW• A concept study was completed in March 2021 to assess the potential a 5 million tonnes per annum development option which included dry grinding technology, water supply from groundwater, power supply options, and export of concentrate by transhipping.• A favourable outcome led to Grange commencing a study to update the Project cost estimates and bring the new aspects up to a PFS level of accuracy of ±25%.• PFS 2022 generates an NPV of A$243 million at a nominal discount rate of 10%, and an ungeared IRR of 12%, based on average price assumptions from long term forecasts of US$102.52/tonne FOB Albany, at an AUD:USD exchange rate of $0.71. • Initial capital expenditure is estimated at A$1.39 billion and sustaining capex at A$203 million.• C1 operating costs are estimated at A$60.61 per tonne of concentrate delivered at the ships rail in Albany, with an all-in sustaining cost of A$84.12.• All primary environmental approvals are in place for the 10 million tonnes per annum option, with a revision of the existing land-side approval in preparation to include the new aspects, and a new approval is required for the marine transhipment operations.• Most of the land required for the project site, slurry and water pipelines has been secured.• Aboriginal heritage issues have been successfully addressed for most of the 10 million tonnes per annum option, with engagement ongoing in relation to new areas and sites.2022 PROJECT PRIORITIES • Continue to investigate alternate development models which may see the Southdown Project move into a Definitive Feasibility Study• Maintain all tenements, permits and project assets in good order• Maintain all environmental approvals and permits and progress revisions for the new aspects of the Project.• Grange has the in-house skills, systems, capability and discipline to deliver Southdown’s potential when the time is rightPROJECT OVERVIEWGEOLOGY 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 MININGTargeted concentrate production rates require a material movement in the mine of up to 132 million tonnes per annum by conventional drill, blast, load and haul mining methods. The final proposed pit is six kilometres long, one kilometre wide and about 370 metres deep. The mining operation will draw heavily on Grange’s existing capability as Australia’s most experienced commercial producer of magnetite concentrate, to assist with start-up and ongoing operations.ORE CRUSHING AND CONCENTRATIONThe 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 PORTFinal 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 CAPACITYSubject to a decision to proceed on either development option, a concentrate export facility would be built at Albany Port. The plan incorporates a filtration plant, storage shed, new berth and ship loading facility. The base case 10mtpa production case plans to reclaim 7Ha of land at the eastern end of the Port, and deepen and widen a 9.5 kilometre approach channel to 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 GRANGE RESOURCES | ANNUAL REPORT 202120SOUTHDOWN MAGNETITE PROJECT The Southdown Project is an advanced project with over 1.2 billion tonnes of high quality mineral resources, including ore reserves of 388 million tonnes (see announcement dated 28 February 2014). The Project has been designed to produce 10 million tonnes per annum of high grade, quality magnetite concentrate at 69.5% iron. This is expected to command a premium price in the iron pellet feed market over a potential mine life of around 30 years. A Definitive Feasibility Study (DFS) was completed by the project owners in 2012 for 10mtpa concentrate production (see announcement dated 1 May 2012)Just 90 kilometres from Albany in Western Australia’s Great Southern region, Southdown is a joint venture between Grange (70%) and SRT Australia Pty Ltd (30%). SRT Australia is jointly owned by Sojitz Corporation, a Japanese global trading company, and Kobe Steel, one of Japan’s largest steel producers. ALTERNATIVE DEVELOPMENT OPTION Grange completed a Prefeasibility Study (PFS) in February 2022 into an optimised project development option which builds on work undertaken by our JV partner in 2015. This would involve a smaller 5 million tonnes per annum operation within the constraints of existing approvals, mineral resources and ore reserves; and is anticipated to deliver reductions in capital spend from ~A$2.9B for the 10 million tonnes per annum option, down to ~A$1.39B. This alternative case extends the life of mine from 14 years to 28 years for the western zone, and more than 50 years for the total resource (see Project Details below). The 10 million tonnes per annum DFS completed in 2012 remains the base case for the JV.2021 PROJECT OVERVIEW• A concept study was completed in March 2021 to assess the potential a 5 million tonnes per annum development option which included dry grinding technology, water supply from groundwater, power supply options, and export of concentrate by transhipping.• A favourable outcome led to Grange commencing a study to update the Project cost estimates and bring the new aspects up to a PFS level of accuracy of ±25%.• PFS 2022 generates an NPV of A$243 million at a nominal discount rate of 10%, and an ungeared IRR of 12%, based on average price assumptions from long term forecasts of US$102.52/tonne FOB Albany, at an AUD:USD exchange rate of $0.71. • Initial capital expenditure is estimated at A$1.39 billion and sustaining capex at A$203 million.• C1 operating costs are estimated at A$60.61 per tonne of concentrate delivered at the ships rail in Albany, with an all-in sustaining cost of A$84.12.• All primary environmental approvals are in place for the 10 million tonnes per annum option, with a revision of the existing land-side approval in preparation to include the new aspects, and a new approval is required for the marine transhipment operations.• Most of the land required for the project site, slurry and water pipelines has been secured.• Aboriginal heritage issues have been successfully addressed for most of the 10 million tonnes per annum option, with engagement ongoing in relation to new areas and sites.2022 PROJECT PRIORITIES • Continue to investigate alternate development models which may see the Southdown Project move into a Definitive Feasibility Study• Maintain all tenements, permits and project assets in good order• Maintain all environmental approvals and permits and progress revisions for the new aspects of the Project.• Grange has the in-house skills, systems, capability and discipline to deliver Southdown’s potential when the time is rightPROJECT OVERVIEWGEOLOGY 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 MININGTargeted concentrate production rates require a material movement in the mine of up to 132 million tonnes per annum by conventional drill, blast, load and haul mining methods. The final proposed pit is six kilometres long, one kilometre wide and about 370 metres deep. The mining operation will draw heavily on Grange’s existing capability as Australia’s most experienced commercial producer of magnetite concentrate, to assist with start-up and ongoing operations.ORE CRUSHING AND CONCENTRATIONThe 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 PORTFinal 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 CAPACITYSubject to a decision to proceed on either development option, a concentrate export facility would be built at Albany Port. The plan incorporates a filtration plant, storage shed, new berth and ship loading facility. The base case 10mtpa production case plans to reclaim 7Ha of land at the eastern end of the Port, and deepen and widen a 9.5 kilometre approach channel to 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 GRANGE RESOURCES | ANNUAL REPORT 202120negative pressure and fitted with dust extraction equipment. The 5mtpa production case envisages using existing land to locate the filtration and storage facilities, and then use transshipping to transfer the concentrate out to cape size ships waiting in King George Sound. This option would significantly reduce the footprint and environmental impact of the proposal.The development would more than treble Albany’s current port capacity from approximately 4 Mt per annum to 14 Mt per annum for the base case 10mtpa development option. 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 SUPPLYThe 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. Multiple groundwater sources have been identified to assess alternate water supplies for the construction period. 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. Alternate power supply solutions, including renewable sources, are being assessed.OPERATIONS PLANNINGThe 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 & SCHEDULESubject 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 to work alongside the community, including traditional owners of the land, to ensure a safe and environmentally responsible project. MINERAL RESOURCES AND ORE RESERVES - SOUTHDOWN PROJECTMINERAL RESOURCESThe Mineral Resource estimate for the Southdown Project as at 31 December 2021 is as follows: As at December 2021Tonnes (Mt)Grade %DTR*Measured423.037.8Indicated86.838.7Inferred747.130.9Total1,256.933.7* Davis Tube Recovery – a measure of recoverable magnetite Mineral Resources are reported above a cut-off of 10% DTRORE RESERVESThe current Ore Reserve for the Southdown Project as at 31 December 2021 is based on the pit design and mining schedule developed during the Feasibility Study and includes modifying metallurgical factors and plant recovery. ROM (Mt)DTR* (%)Proven384.635.6Probable3.141.7Total387.735.6* Davis Tube Recovery – a measure of recoverable magnetite Mineral Resources are reported above a cut-off of 10% DTRA 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.21CORPORATE GOVERNANCE STATEMENTGrange 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 2022 corporate governance statement was approved by the Board in February 2022.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 on the Investors page. This facilitates transparency about Grange’s corporate governance practices and assists shareholders and other stakeholders make informed judgments. Grange considers that its governance practices comply with the majority of the ASX Best Practice Recommendations.ASX BEST PRACTICE RECOMMENDATIONSThe 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 2021. 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)DepartureExplanation7.3(a)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.The Company’s Management periodically undertakes an internal review of financial systems and processes and where systems are considered to require improvement these systems are developed. The Board also considers external reviews of specific areas and monitors the implementation of system improvements.GRANGE RESOURCES | ANNUAL REPORT 202122CORPORATE GOVERNANCE STATEMENTGrange 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 2022 corporate governance statement was approved by the Board in February 2022.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 on the Investors page. This facilitates transparency about Grange’s corporate governance practices and assists shareholders and other stakeholders make informed judgments. Grange considers that its governance practices comply with the majority of the ASX Best Practice Recommendations.ASX BEST PRACTICE RECOMMENDATIONSThe 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 2021. 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)DepartureExplanation7.3(a)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.The Company’s Management periodically undertakes an internal review of financial systems and processes and where systems are considered to require improvement these systems are developed. The Board also considers external reviews of specific areas and monitors the implementation of system improvements.GRANGE RESOURCES | ANNUAL REPORT 20212223GRANGE RESOURCES | ANNUAL REPORT 2021 GRANGE RESOURCES LIMITED ABN 80 009 132 405 and Controlled Entities FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2021 CONTENTS Directors’ Report Auditor’s Independence Declaration Financial Statements Directors’ Declaration Independent Auditor’s Report 25 40 42 72 73 24 GRANGE RESOURCES | ANNUAL REPORT 2021 GRANGE RESOURCES LIMITED ABN 80 009 132 405 and Controlled Entities FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2021 CONTENTS Directors’ Report Auditor’s Independence Declaration Financial Statements Directors’ Declaration Independent Auditor’s Report 25 40 42 72 73 24 FINANCIAL REPORT25The 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 2021. DIRECTORS The following persons were directors of the Company during the whole year and up to the date of this report:MICHELLE LI ChairpersonYAN JIA Non-Executive Director, Deputy ChairpersonHONGLIN ZHAO Executive DirectorMICHAEL DONTSCHUK Non-Executive Director DAVID WOODALL Non-Executive Director (resigned 30 April 2021)AJANTH SAVERIMUTTO Non-Executive Director (appointed 1 June 2021)DIRECTORS’ REPORTINFORMATION ON DIRECTORSMICHELLE LI, PHD, GAICDIndependent 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 was previously a non-executive Director of Ardiden Limited, Orion Metals Limited and Sherwin Iron Limited.YAN JIA, GAICDNon-executive Deputy Chairperson Ms Jia is affiliated with 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 ZHAOExecutive Director, Chief Executive OfficerMr 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. MICHAEL DONTSCHUK BSC(HONS), FFTP, GAICDIndependent Non-executive Director, Chairperson of the Audit and Risk Committee, Chairperson of the Remuneration and Nomination CommitteeMr 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) 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, GAICDIndependent Non-executive Director and member of the Remuneration and Nomination Committee and Audit and Risk Committee. Mr Woodall resigned from the board on 30 April 2021.GRANGE RESOURCES | ANNUAL REPORT 2021 AJANTH SAVERIMUTTO, BENG (MINING) HONS, BBUS (ACCOUNTING) Independent Non-executive Director and Member of the Audit and Risk Committee Mr Saverimutto is a Mining Engineer and Accountant with over 25 years’ experience in the resources industry. Mr Saverimutto has extensive Corporate and Senior Management experience in a number of ASX listed and private companies. Currently Mr Saverimutto is President and Director of Black Mountain Metals, a private, natural resources company. Mr Saverimutto’s previous positions include Managing Director of ASX listed Venturex Resources, Managing Director and Founder of privately held Australian company Salt Lake Mining. Mr Saverimutto has held senior operational roles including Mining Manager for leading international copper producer Freeport McMoRan (NYSE: FCX), Chief Operating Officer of ASX listed gold miner Unity Mining and Mining Manager for BHP Billiton – Stainless Steel Materials. Mr Saverimutto was appointed to the board on 1 June 2021. 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. 26 FINANCIAL REPORT27Since the end of the financial year the directors have recommended the payment of a 10.0 cent per share final dividend of $115.7 million. This represents a total of $254.6 million (22.0 cents per share) fully franked dividend for the year-end 31 December 2021. The final dividend was declared NIL conduit foreign income and will be paid on 29 March 2022.OPERATING AND FINANCIAL REVIEWKEY HIGHLIGHTSMINING OPERATIONS• Achieved a major milestone of over 1,750 days Lost Time Injury free.• Pellet production of 2.60 million tonnes for the year compared to 2.35 million tonnes for the prior year.• Total iron ore product sales of 2.62 million tonnes for the year compared to 2.49 million tonnes for the prior year. • Profit after tax of $321.6 million for the year compared to $203.2 million for the prior year, on revenues from operations of $781.7 million compared to $526.3 million for the prior year.• Average realised product price (FOB Port Latta) of $276.17 per tonne for the year compared to $196.77 for the prior year.• Unit C1 cash operating costs of $99.73 per tonne for the year compared to $99.77 for the prior year. • Cash and cash equivalents position of $443.9 million at the end of year compared to $183.4 million at the end of the prior year. Increase largely due to higher sales price on shipments and higher sales volume.SAFETY PERFORMANCEA focus on safety has been maintained across the business with over 1,750 days Lost Time Injury Free achieved.COVID-19 BUSINESS RESPONSETo date, the Company has had no material production impact due to COVID-19. The impact of the pandemic continues to be well managed across our operations. We remain ready to respond promptly and accordingly in the event of any required precautionary measures and reinstatement of government restrictions. The Company has rapidly adapted to a new mode of operation in order to ensure the health, safety and wellbeing of our people through the course of the pandemic. Business continuity plans have been implemented and operations have instigated multiple layers of controls. These have centred around our 4 simple steps to Sanitise, Separate, Self-care and Support each other, including temperature checks onsite as we continue our operation and protect our people at work and at home.Key revenue metrics for the year ended 31 December 2021 and the preceding 2020 year were as follows:20212020Iron Ore Pellet Sales (dmt)2,507,2012,376,029Iron Ore Concentrate Sales (dmt)42-Iron Ore Chip Sales (dmt)108,130113,611Total Iron Ore Product Sales (dmt)2,615,3732,489,640Average Realised Product Price (US$/t FOB Port Latta) *208.08136.85Average Realised Exchange Rate(AUD:USD)0.75350.6955Average Realised Product Price (A$/t FOB Port Latta)276.17196.77*adusted for the costs of freight and final pricing settlements on provisional settlements as per sales agreements. Pricing is typically finalised in one to three months after shipment month.Total sales for the year ended 31 December 2021 was 2.62 million tonnes of high quality, low impurity iron ore products (2020: 2.49 million tonnes) and reflects sustained production from maintaining access to high grade ore.The average iron ore product price received during the year was $276.17 per tonne of product sold (FOB Port Latta) (2020: $196.77 per tonne). Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales from long term offtake agreements with Jiangsu Shagang International Trade Co. Ltd represents 27.7% of total sales for 2021 (2020: 34.6%).PRINCIPAL ACTIVITIESDuring the period, the principal continuing activities of the Group consisted of: • the mining, processing and sale of iron ore; and• the ongoing exploration, evaluation and development of mineral resources. 2021$’0002020$’000Fully franked special dividend for year ended 31 December 2021 - 10.0 cents per share115,734 - Fully franked interim dividend for half year ended 30 June 2021 - 2.0 cents per share23,147 - Fully franked final dividend for the year ended 31 December 2020 - 2.0 cents per share23,147 - Fully franked interim dividend for half year ended 30 June 2020 - 1.0 cents per share- 11,574 Fully franked final dividend for the year ended 31 December 2019 - 1.0 cents per share - 11,574 Total dividends paid162,028 23,148 DIVIDENDSDividends paid to members during the financial year were as follows: AJANTH SAVERIMUTTO, BENG (MINING) HONS, BBUS (ACCOUNTING) Independent Non-executive Director and Member of the Audit and 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. GRANGE RESOURCES | ANNUAL REPORT 2021 Risk Committee Mr Saverimutto is a Mining Engineer and Accountant with over 25 years’ experience in the resources industry. Mr Saverimutto has extensive Corporate and Senior Management experience in a number of ASX listed and private companies. Currently Mr Saverimutto is President and Director of Black Mountain Metals, a private, natural resources company. Mr Saverimutto’s previous positions include Managing Director of ASX listed Venturex Resources, Managing Director and Founder of privately held Australian company Salt Lake Mining. Mr Saverimutto has held senior operational roles including Mining Manager for leading international copper producer Freeport McMoRan (NYSE: FCX), Chief Operating Officer of ASX listed gold miner Unity Mining and Mining Manager for BHP Billiton – Stainless Steel Materials. Mr Saverimutto was appointed to the board on 1 June 2021. 26 FINANCIAL REPORT27Since the end of the financial year the directors have recommended the payment of a 10.0 cent per share final dividend of $115.7 million. This represents a total of $254.6 million (22.0 cents per share) fully franked dividend for the year-end 31 December 2021. The final dividend was declared NIL conduit foreign income and will be paid on 29 March 2022.OPERATING AND FINANCIAL REVIEWKEY HIGHLIGHTSMINING OPERATIONS• Achieved a major milestone of over 1,750 days Lost Time Injury free.• Pellet production of 2.60 million tonnes for the year compared to 2.35 million tonnes for the prior year.• Total iron ore product sales of 2.62 million tonnes for the year compared to 2.49 million tonnes for the prior year. • Profit after tax of $321.6 million for the year compared to $203.2 million for the prior year, on revenues from operations of $781.7 million compared to $526.3 million for the prior year.• Average realised product price (FOB Port Latta) of $276.17 per tonne for the year compared to $196.77 for the prior year.• Unit C1 cash operating costs of $99.73 per tonne for the year compared to $99.77 for the prior year. • Cash and cash equivalents position of $443.9 million at the end of year compared to $183.4 million at the end of the prior year. Increase largely due to higher sales price on shipments and higher sales volume.SAFETY PERFORMANCEA focus on safety has been maintained across the business with over 1,750 days Lost Time Injury Free achieved.COVID-19 BUSINESS RESPONSETo date, the Company has had no material production impact due to COVID-19. The impact of the pandemic continues to be well managed across our operations. We remain ready to respond promptly and accordingly in the event of any required precautionary measures and reinstatement of government restrictions. The Company has rapidly adapted to a new mode of operation in order to ensure the health, safety and wellbeing of our people through the course of the pandemic. Business continuity plans have been implemented and operations have instigated multiple layers of controls. These have centred around our 4 simple steps to Sanitise, Separate, Self-care and Support each other, including temperature checks onsite as we continue our operation and protect our people at work and at home.Key revenue metrics for the year ended 31 December 2021 and the preceding 2020 year were as follows:20212020Iron Ore Pellet Sales (dmt)2,507,2012,376,029Iron Ore Concentrate Sales (dmt)42-Iron Ore Chip Sales (dmt)108,130113,611Total Iron Ore Product Sales (dmt)2,615,3732,489,640Average Realised Product Price (US$/t FOB Port Latta) *208.08136.85Average Realised Exchange Rate(AUD:USD)0.75350.6955Average Realised Product Price (A$/t FOB Port Latta)276.17196.77*adusted for the costs of freight and final pricing settlements on provisional settlements as per sales agreements. Pricing is typically finalised in one to three months after shipment month.Total sales for the year ended 31 December 2021 was 2.62 million tonnes of high quality, low impurity iron ore products (2020: 2.49 million tonnes) and reflects sustained production from maintaining access to high grade ore.The average iron ore product price received during the year was $276.17 per tonne of product sold (FOB Port Latta) (2020: $196.77 per tonne). Please refer to Note 4 of the Financial Report for segment information for sales to different geographical markets. The sales from long term offtake agreements with Jiangsu Shagang International Trade Co. Ltd represents 27.7% of total sales for 2021 (2020: 34.6%).PRINCIPAL ACTIVITIESDuring the period, the principal continuing activities of the Group consisted of: • the mining, processing and sale of iron ore; and• the ongoing exploration, evaluation and development of mineral resources. 2021$’0002020$’000Fully franked special dividend for year ended 31 December 2021 - 10.0 cents per share115,734 - Fully franked interim dividend for half year ended 30 June 2021 - 2.0 cents per share23,147 - Fully franked final dividend for the year ended 31 December 2020 - 2.0 cents per share23,147 - Fully franked interim dividend for half year ended 30 June 2020 - 1.0 cents per share- 11,574 Fully franked final dividend for the year ended 31 December 2019 - 1.0 cents per share - 11,574 Total dividends paid162,028 23,148 DIVIDENDSDividends paid to members during the financial year were as follows: GRANGE RESOURCES | ANNUAL REPORT 202128Key operating metrics for the year ended 31 December 2021 and the preceding 2020 year were as follows: 20212020Total BCM Mined13,667,04414,567,158Total Ore BCM2,804,2341,384,744Concentrate Produced (t)2,559,9872,531,759Weight Recovery (%)44.446.1Pellets Produced (t)2,597,4282,348,274Pellet Stockpile (t)210,193119,966“C1” Operating Cost(A$/t Product Produced)(1)99.7399.77(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 activities in North Pit have focused on wall remediation and sustained access to the Main Ore Zone. The installation of additional safety controls on the east wall to reduce the risk of small rockfalls were completed. This was attained with the implementation of a rock fence on a catchment berm to improve the retention of any fallen material and was undertaken utilizing remote equipment and innovations to allow the placement of fencing and structure via remote excavator. Access to high grade ore from the Main Ore Zone in North Pit has been sustained throughout the year. Concentrate production again exceeded 2.5 million tonnes of concentrate with consistent high grade ore supply supporting high production rates.The pre-stripping of waste material from Centre Pit continued throughout the year, with some delays experienced due to weather events. Small volumes of ore have been provided from adjacent lenses with access to the main ore zone in Centre Pit scheduled for later in 2022. NORTH PIT UNDERGROUND DEVELOPMENT PROJECT The North Pit Underground Prefeasibility Study was completed during the year. The PFS presented a standalone underground case that informs the decision to transition from open pit to an underground mine in the future with demonstrated ore continuity at depth with a 30% (approximately 120 million tonne) increase in Mineral Resources. This outlined the potential for 6 million tonne per annum production rate with an underground mine life of more than 10 years, utilising underground caving methods. Finalised schedules are being analysed as part of the Enterprise Optimisation to determine the most effective mining sequence and the potential transition for the integration Open Pit and Underground mining. The scope for the Definitive Feasibility Study is being prepared and will proceed in 2022 subject to Board approval. PORT LATTA IMPROVEMENT PROJECTSThe restoration of the Furnace is well progressed. Furnace Line 4 construction and commissioning is on plan as we continue with the rebuilding and refractory installation. Long lead items including new main blowers are now on track for installation in the common equipment shut planned for Q1 2022. This redesign will improve the airflow and ensure ease of maintenance for the lifecycle of the furnace. FINANCIAL POSITIONGrange’s net assets increased during the year to $871.2 million (31 December 2020: $712.1 million). The key movements in net assets during the year are a result of the following:• An increase in cash of $260.5 million with higher sales prices and volume achieved • A reduction in trade debtors by $70.3 million• An increase in tax payable by $79.0 million STATEMENT OF CASH FLOWSNET CASH FLOWS FROM OPERATING ACTIVITIESNet cash inflows from operating activities for the year were $498.2 million (2020: inflows $202.6 million) and reflect higher iron ore product sales and decrease in unit operating costs.NET CASH FLOWS FROM INVESTING ACTIVITIESNet cash outflows from investing activities for the period were $79.6 million (2020: outflows $125.1 million) and principally related to expenditures for mine properties and development $40.1 million and property, plant and equipment $40.0 million.NET CASH FLOWS FROM FINANCING ACTIVITIESNet cash outflows from financing activities for the period were $165.3 million (2020 outflow: $26.9 million) and principally related to the payment of 2020 final dividend ($23.1 million), 2021 interim dividend ($23.1 million) and a special dividend ($115.7 million).ADOPTING AN ESG FRAMEWORKGrange is pleased to announce that the Company has adopted an Environmental, Social, and Governance (ESG) framework with 21 core metrics and disclosures as created by the World Economic Forum (WEF). Developments in global markets for directing investment capital have shifted with traditional profit only focus being challenged when assessing companies’ performance. Grange is committed to aligning the business, where applicable, to the sustainable development goals that provide a roadmap to sustainability and resilience. The Board has resolved to adopt the WEF ESG framework and instructed management to set up an impact measurement plan for each sustainability area which includes, but is not limited to, governance, anti-corruption practices, ethical behaviour, human rights, carbon emissions, land use, ecological sensitivity, water consumption, diversity and inclusion, pay equality and tax payments.To ensure that Grange can measure, monitor, and report on its ESG disclosure progress, the Company has engaged impact monitoring technology platform Socialsuite to streamline the disclosure and ongoing ESG reporting process. The Company’s goal is to demonstrate commitment and progress on making ESG disclosures, but more broadly, aims to progress a range of ESG benchmarks as set out by the WEF’s ESG White Paper.FINANCIAL REPORT29SOUTHDOWN MAGNETITE PROJECTThe 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 and Kobe Steel. This advanced project has 1.2 billion tonnes of high quality resource and has access to established infrastructure.During 2021, the Company commenced to carry out an updated prefeasibility study on a 5 Mtpa development case with new technology and additional testwork which is expected to be completed in coming months.All tenements, permits and project assets continue to be maintained in good order. Budgeting and cost control over expenditure on this project continues to secure the investment. The Joint Venture Partners continue to monitor all ongoing project requirements.SIGNIFICANT CHANGES IN STATE OF AFFAIRSThere was no significant change in the state of affairs of the Group that occurred during the year ended 31 December 2021. 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 YEARSince the end of the financial year the directors have recommended the payment of a 10.0 cent per share final dividend of $115.7 million. At 31 January 2022 the Brookville land was settled for $11.3m.There were no other matters or circumstances arising since 31 December 2021 that has significantly affected, or may significantly affect:• The Group’s operations in future 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 OPERATIONSGrange’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 Definitive Feasibility Study into the ability to access the ore body in North Pit through underground development• Optimising the mine design for Centre Pit• Delivering on secured off take agreements• 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 projectsSOUTHDOWN PROJECT• Completing feasibility study on a 5 Mtpa development case with new technology and additional testwork• Ensuring that all tenements, permits and project assets remain in good standingRISK MANAGEMENTThe 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 energy prices and availability• Geotechnical risks including wall stability• Production risks and costs associated with aging infrastructure• Project evaluation and development• Health, safety and environment• Impacts of climate change on our business RISK MITIGATION STRATEGIES INCLUDE THE FOLLOWING:• Optimise timing of sales to the fluctuations in iron ore prices and demands from different markets• 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 environmentENVIRONMENTAL REGULATION The mining and exploration tenements held by the Group contain environmental requirements and conditions that the Group must comply with in the course of normal operations. These conditions and regulations cover the management of the storage of hazardous materials and rehabilitation of mine sites.The Group is subject to significant environmental legislation and regulation in respect of its mining, processing and exploration activities as set out below:SAVAGE RIVER AND PORT LATTA OPERATIONSThe 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 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).GRANGE RESOURCES | ANNUAL REPORT 202130During the financial year there were no breaches of licence conditions.SOUTHDOWN JOINT VENTUREThe Southdown Joint Venture has not been responsible for any activities which would cause a breach of environmental legislation.MOUNT WINDSOR JOINT VENTUREThe 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 2007The 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 through the Emissions and Energy Reporting System (EERS) by 31 October each year.NATIONAL GREENHOUSE AND ENERGY REPORTING (SAFEGUARD MECHANISM) RULE 2015The Safeguard Mechanism applies to designated large facilities and is triggered when the facility exceeds 100,000 t CO2-e as per Division 8 of NEGR (Safeguard Mechanism) Rule 2015. The entity with operational control of a designated large facility is responsible for meeting safeguard requirements, including that the facility must keep net emissions at or below baseline emission levels. Grange has two facilities which have or may trigger the Safeguard Mechanism. The Savage River Mine Site and the Port Latta Pelletising Plant are currently operating on three-year monitoring periods and Port Latta has moved to a Production Adjusted Baseline and Savage River has applied for a Transitional Calculated Baseline.RENEWABLE ENERGY (ELECTRICITY) ACT 2000 In recognition that the Renewable Energy Targets scheme may increase costs to Companies that carry on Emissions Intensive Trade Exposed (EITE) activities, the exemption provisions under the Renewable Energy (Electricity) Act 2000 as amended allow a prescribed person to apply for an exemption certificate in relation to the electricity supplied to an EITE activity carried on at a site. Subject to agreement from the prescribed person an exemption certificate may be traded to the liable entity for the electricity supplied, and provides the liable entity with exemption from liability for a certain amount of megawatt-hours of electricity in the given calendar year. Grange has received exemption certificates under this scheme. CLIMATE CHANGE RISK AND OPPORTUNITIESPhysical Risks• Concentrated rainfall event causing flooding • Rising sea levels and reduced rainfall causing groundwater scarcityRisk related to transition to a low carbon economy• Policy and legal risks as a result of government regulation of carbon emissions, resulting in higher energy prices and other production costs or restricted energy availability.• Technology, market and reputation risk as a result of change in consumer expectations and demand for low carbon goods and services.The Group identifies and monitors these risks through the enterprise risk assessment process and continues to identify opportunities for improvement. The Group acknowledges that the world is moving to a low-carbon future. The steel market is already starting to value ‘green steel’ and while our pellets reduce emissions in the production of steels, the Group will continue to explore opportunities to reduce carbon emissions in its production processes.FINANCIAL REPORT31GRANGE RESOURCES | ANNUAL REPORT 202132MEETINGS OF DIRECTORSThe numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 31 December 2021, and the numbers of meetings attended by each Director were:NameDirectors’ meetingsMeetings of CommitteesAuditRemunerationABABABM Li666644Y Jia66 44H Zhao56 M Dontschuk666622D Woodall232211A Saverimutto3333 A = Number of meetings attendedB = Number of meetings held during the time the Director held office or was a member of the committee during the year ended 31 December 2021INTERESTS IN THE SHARES, RIGHTS AND OPTIONS OF THE COMPANYThe relevant interest of each Director in the share capital and options of the Company as at the date of this report is: DirectorNumber of Fully Paid Ordinary SharesRightsOptionsM Li13,507--Y Jia(1)---M Dontschuk13,000--D Woodall---H Zhao(2)1,727,702--A Saverimutto---(1) 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.(2) 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 REPORTThis 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 REPORTNon-executive directorsMichelle Li Yan Jia Michael DontschukDavid Woodall – resigned 30 April 2021Ajanth Saverimutto – appointed 1 June 2021 Executive directors PositionHonglin Zhao Executive Director Chief Executive OfficerOther key management personnel PositionSteven Phan Chief Financial Officer Ben Maynard – appointed 1 September 2021 Chief Operating Officer(II) REMUNERATION GOVERNANCEThe 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 Michael Dontschuk (Independent Non-executive Director and Committee Chairperson)and Dr Michelle Li (Independent Non-executive 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 the Chief Operating Officer;• Periodically assessing the skills required by the Board;• Recommend processes to evaluate the performance of the Board, it’s Committees and individual Directors; and• Reviewing governance arrangements pertaining to remuneration matters.The Charter is reviewed annually, and remuneration strategies are reviewed regularly.(III) EXECUTIVE REMUNERATION PHILOSOPHY AND FRAMEWORKIt is the Company’s objective 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:• 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.GRANGE RESOURCES | ANNUAL REPORT 202132MEETINGS OF DIRECTORSThe numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 31 December 2021, and the numbers of meetings attended by each Director were:NameDirectors’ meetingsMeetings of CommitteesAuditRemunerationABABABM Li666644Y Jia66 44H Zhao56 M Dontschuk666622D Woodall232211A Saverimutto3333 A = Number of meetings attendedB = Number of meetings held during the time the Director held office or was a member of the committee during the year ended 31 December 2021INTERESTS IN THE SHARES, RIGHTS AND OPTIONS OF THE COMPANYThe relevant interest of each Director in the share capital and options of the Company as at the date of this report is: DirectorNumber of Fully Paid Ordinary SharesRightsOptionsM Li13,507--Y Jia(1)---M Dontschuk13,000--D Woodall---H Zhao(2)1,727,702--A Saverimutto---(1) 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.(2) 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 REPORTThis 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 REPORTNon-executive directorsMichelle Li Yan Jia Michael DontschukDavid Woodall – resigned 30 April 2021Ajanth Saverimutto – appointed 1 June 2021 Executive directors PositionHonglin Zhao Executive Director Chief Executive OfficerOther key management personnel PositionSteven Phan Chief Financial Officer Ben Maynard – appointed 1 September 2021 Chief Operating Officer(II) REMUNERATION GOVERNANCEThe 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 Michael Dontschuk (Independent Non-executive Director and Committee Chairperson)and Dr Michelle Li (Independent Non-executive 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 the Chief Operating Officer;• Periodically assessing the skills required by the Board;• Recommend processes to evaluate the performance of the Board, it’s Committees and individual Directors; and• Reviewing governance arrangements pertaining to remuneration matters.The Charter is reviewed annually, and remuneration strategies are reviewed regularly.(III) EXECUTIVE REMUNERATION PHILOSOPHY AND FRAMEWORKIt is the Company’s objective 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:• 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.FINANCIAL REPORT33Using 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. During the year, the Committee engaged remuneration consultants Godfrey Remuneration Group to provide advice and market insights in relation to executive remuneration arrangements. The remuneration consultants’ advice and feedback are under review by the Committee.The framework provides a mix of fixed and variable pay, and a blend of short and long term incentives detailed as follows:FIXED REMUNERATIONFixed 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.VARIABLE REMUNERATION - LONG TERM INCENTIVE (“LTI”) a) Deferred CashThe 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 SharesThe 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 2021.(IV) RELATIONSHIP BETWEEN REMUNERATION AND GRANGE RESOURCES PERFORMANCEThe table below shows key performance indicators of Company performance over the past five years.20172018201920202021Revenue from operations$ million247.9368.2368.6526.3781.7Net profit after tax$ million60.7112.9477.3203.19321.60Basic earnings per shareCents5.259.796.7117.6427.84Dividend payments$ million11.623.123.123.1162.0Share price (last trade day of financial year)Cents21.520.025.029.575.5GRANGE RESOURCES | ANNUAL REPORT 202134(V) NON-EXECUTIVE DIRECTOR REMUNERATION POLICYFees 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) (effective 1 June 2021) $210,000 Deputy Chairperson $92,000 Non-executive Director $81,000 Audit and Risk Committee Chairperson $15,750 Committee Member $10,500 Remuneration and Nomination Committee Chairperson $15,750 Committee Member $7,500(1) The Chairperson is not paid any additional amounts for Committee membership.GRANGE RESOURCES | ANNUAL REPORT 202134(V) NON-EXECUTIVE DIRECTOR REMUNERATION POLICYFees 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) (effective 1 June 2021) $210,000 Deputy Chairperson $92,000 Non-executive Director $81,000 Audit and Risk Committee Chairperson $15,750 Committee Member $10,500 Remuneration and Nomination Committee Chairperson $15,750 Committee Member $7,500(1) The Chairperson is not paid any additional amounts for Committee membership.FINANCIAL REPORT35(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 2021Short-term employee benefitsPost employment benefitsLong-term benefits Long term incentive (LTI)Salary & feesNon-monetary benefitsAnnual leaveShort term incentive (STI)Super-annuationLong service leaveTermin-ation benefitsEarned RightsTotalNon-Executive Directors$$$$$$$ $$ M Li193,333--------193,333 Y Jia107,749--------107,749 D Woodall(1)30,137---2,863----33,000 M Dontschuk(2)96,752--------96,752 A Saverimutto(3)53,375--------53,375Sub-total Non-Executive Directors481,346---2,863----484,209Executive Directors H Zhao541,93472,94330,068121,44352,83920,879-94,751-934,857Key Management S Phan350,295-8,14172,03634,15412,192-48,996-525,814 B Maynard389,428-73880,46937,96916,919-54,651-580,174Sub-total Key Management Personnel1,281,65772,94338,947273,948124,96249,990-198,398-2,040,845TOTAL1,763,00372,94338,947273,948127,82549,990-198,398-2,525,054(1) Mr Woodall resigned on 30 April 2021 (2) Mr Dontschuk was appointed Chairperson of the Remuneration and Nomination Committee effective 1 December 2021 (3) Mr Saverimutto was appointed on 1 June 2021Table 2: Remuneration for the year ended 31 December 2020Short-term employee benefitsPost employment benefitsLong-term benefits Long term incentive (LTI)Salary & feesNon-monetary benefitsAnnual leave(1)Short term incentive (STI)Super-annuationLong service leaveTermin-ation benefitsEarned RightsTotalNon-Executive Directors$$$$$$$ $$ M Li155,256---14,748----170,004 Y Jia104,313--------104,313 D Tenardi40,820---3,875----44,695 M Dontschuk88,356---8,400----96,756 M Woodall83,563---7,942----91,505Sub-total Non-Executive Directors472,308---34,965----507,273Executive Directors H Zhao526,65693,012(12,917)115,33750,02930,626-72,152-874,895Key Management S Phan340,427-14,08967,09832,34010,286-37,567-501,807 B Maynard378,453-(9,186)74,59335,95315,359-42,032-537,204Sub-total Key Management Personnel1,245,53693,012(8,014)257,028118,32256,271-151,751-1,913,906TOTAL1,717,84493,012(8,014)257,028153,28756,271-151,751-2,421,179(1) 2020 updated to include annual leave comparativeGRANGE RESOURCES | ANNUAL REPORT 202136(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 PERSONNELShort term incentiveFor each short term incentive benefit, the percentage of the available bonus to be awarded will be paid early in the year subsequent to the year of assessment. 2021 STI ProgramNameMaximum possible incentive award %Amount Executive DirectorsH Zhao$143,07085%$121,443(1)Key Management PersonnelS Phan$83,23087%$ 72,036(1)B Maynard$92,52887%$ 80,469(1)(1) Inclusive of superannuation.Long term incentive a) Deferred Cash2021 LTI ProgramNameMaximum possible incentive award %Amount Executive DirectorsH Zhao$178,83874% $132,638(1)Key Management PersonnelS Phan$92,47874%$68,588(1)B Maynard$102,80974%$76,250(1)(1) Inclusive of superannuation.b) Rights to Grange SharesThe 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 2021 and 2020.Table 3: Relative proportions linked to performanceThe relative proportions of remuneration that are linked to performance and those that are fixed are as follows:Fixed RemunerationAt Risk - STIAt Risk - LTINameDec-21 Dec-20 Dec-21Dec-20Dec-21Dec-20Executive Directors H Zhao77%79%13%13%10%8%Key Management PersonnelS Phan77%79%14%13%9%7%B Maynard77%78%14%14%9%8%FINANCIAL REPORT37Share holdingsThe 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 2021Balance1 January 2021On vesting of rightsOn market purchasesOn market disposalsOtherBalance31 December 2021Directors of Grange Resources LimitedM Li13,507----13,507M Dontschuk13,000----13,000H Zhao1,287,702-440,000--1,727,702Key Management PersonnelB Maynard68,122----68,12231 December 2020Balance1 January 2020On vesting of rightsOn market purchasesOn market disposalsOtherBalance31 December 2020Directors of Grange Resources LimitedM Li13,507----13,507M Dontschuk13,000----13,000H Zhao--1,287,702--1,287,702Key Management PersonnelB Maynard68,122----68,122(IX) LOANS TO KEY MANAGEMENT PERSONNELThere were no loans to key management personnel during the year (December 2020: Nil).(X) OTHER TRANSACTIONS WITH DIRECTORS AND KEY MANAGEMENT PERSONNELA 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 25 February 2022, Shagang holds 47.93% (28 February 2021: 47.93%) 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 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: 2021$2020$Sales of iron ore productsPellets216,292,463182,146,622 The following balances are outstanding at the end of the reporting period in relation to the above transactions:2021$2020$Trade receivables (sales of iron ore products)Pellets19,095,808 32,350,066Others(62,961) (10,187)19,032,847 32,339,879Insurance 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. Proceedings on behalf of the Company 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.GRANGE RESOURCES | ANNUAL REPORT 202138Indemnity of AuditorsThe Company has entered into an agreement to indemnify its auditor, PwC, against any claims or liabilities (including legal costs) asserted by third parties arising out of their services as auditor of the Company, where the liabilities arise as a direct result of the Company’s breach of its obligations to the Auditors, unless prohibited by the Corporations Act 2001.Audit and Non-audit ServicesThe 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:2021$'0002020$'000Assurance ServicesPwC AustraliaAudit and review of financial reports313325Other assurance services10226Network firms of PwC Australia1718Total assurance services432369Non-Assurance Services81Total remuneration paid440370It is the Group’s policy to employ PwC on assignments additional to their statutory audit duties where PwC’s expertise and experience with the Group are important. These assignments are principally tax consulting and advice or where PwC is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders on all major consulting assignments. Group policy also requires the Chairperson of the Audit and Risk Committee to approve all individual assignments performed by PwC with total fees greater than $10,000. Auditor’s independence declarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 40.Rounding of amountsThe 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 the instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.AuditorPwC continues in office in accordance with section 327 of the Corporations Act 2001.The report is made in accordance with a resolution of Directors. Michelle LiChairperson of the Board of DirectorsPerth, Western Australia25 February 2022GRANGE RESOURCES | ANNUAL REPORT 202138Indemnity of AuditorsThe Company has entered into an agreement to indemnify its auditor, PwC, against any claims or liabilities (including legal costs) asserted by third parties arising out of their services as auditor of the Company, where the liabilities arise as a direct result of the Company’s breach of its obligations to the Auditors, unless prohibited by the Corporations Act 2001.Audit and Non-audit ServicesThe 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:2021$'0002020$'000Assurance ServicesPwC AustraliaAudit and review of financial reports313325Other assurance services10226Network firms of PwC Australia1718Total assurance services432369Non-Assurance Services81Total remuneration paid440370It is the Group’s policy to employ PwC on assignments additional to their statutory audit duties where PwC’s expertise and experience with the Group are important. These assignments are principally tax consulting and advice or where PwC is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders on all major consulting assignments. Group policy also requires the Chairperson of the Audit and Risk Committee to approve all individual assignments performed by PwC with total fees greater than $10,000. Auditor’s independence declarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 40.Rounding of amountsThe 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 the instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.AuditorPwC continues in office in accordance with section 327 of the Corporations Act 2001.The report is made in accordance with a resolution of Directors. Michelle LiChairperson of the Board of DirectorsPerth, Western Australia25 February 2022FINANCIAL REPORT39 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. Auditor’s Independence Declaration As lead auditor for the audit of Grange Resources Limited for the year ended 31 December 2021, 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 Melbourne Partner PricewaterhouseCoopers 25 February 2022 GRANGE RESOURCES | ANNUAL REPORT 202140 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. Auditor’s Independence Declaration As lead auditor for the audit of Grange Resources Limited for the year ended 31 December 2021, 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 Melbourne Partner PricewaterhouseCoopers 25 February 2022 GRANGE RESOURCES | ANNUAL REPORT 202140FINANCIAL REPORT41GRANGE RESOURCES | ANNUAL REPORT 202142CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2021ConsolidatedNOTES2021$'0002020$'000Revenues from operations4, 5 781,662 526,324Cost of sales6 (337,269) (295,506)Gross profit from operations 444,393 230,818Administration expenses7 (3,883) (5,218)Operating profit before other income 440,510 225,600Exploration and evaluation expenditure (12,611) (1,414)Other income8 11,141 386Operating profit before finance costs 439,040 224,572Finance income9 23,060 5,344Finance expenses9 (1,210) (21,037)Profit before tax 460,890 208,879Income tax expense10 (139,275) (5,693)Profit for the year 321,615 203,186 Total comprehensive income for the year 321,615 203,186Total comprehensive income/(loss) for the period attributable to:- Equity holders of Grange Resources Limited 322,260 204,179- Non-controlling Interests (645) (993) 321,615 203,186Earnings per share for profit attributable to the ordinary equity holders of Grange Resources LimitedBasic earnings per share (cents per share)34 27.84 17.64Diluted earnings per share (cents per share)34 27.84 17.64The above statement of comprehensive income should be read in conjunction with the accompanying notesGRANGE RESOURCES | ANNUAL REPORT 202142CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2021ConsolidatedNOTES2021$'0002020$'000Revenues from operations4, 5 781,662 526,324Cost of sales6 (337,269) (295,506)Gross profit from operations 444,393 230,818Administration expenses7 (3,883) (5,218)Operating profit before other income 440,510 225,600Exploration and evaluation expenditure (12,611) (1,414)Other income8 11,141 386Operating profit before finance costs 439,040 224,572Finance income9 23,060 5,344Finance expenses9 (1,210) (21,037)Profit before tax 460,890 208,879Income tax expense10 (139,275) (5,693)Profit for the year 321,615 203,186 Total comprehensive income for the year 321,615 203,186Total comprehensive income/(loss) for the period attributable to:- Equity holders of Grange Resources Limited 322,260 204,179- Non-controlling Interests (645) (993) 321,615 203,186Earnings per share for profit attributable to the ordinary equity holders of Grange Resources LimitedBasic earnings per share (cents per share)34 27.84 17.64Diluted earnings per share (cents per share)34 27.84 17.64The above statement of comprehensive income should be read in conjunction with the accompanying notesFINANCIAL REPORT43CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2021NOTES31 December 2021$'00031 December 2020$'000ConsolidatedASSETSCurrent AssetsCash and cash equivalents2, 11443,890183,385Trade and other receivables1224,11994,469Inventories13162,001123,010Other financial assets2 20,79919,539Total current assets 650,809420,403Non-current assetsReceivables147,9848,484Property, plant and equipment15137,180113,994Right of Use Assets1618,5402,311Mine properties and development17262,377269,297Deferred tax assets1843,34559,291Total non-current assets 469,426453,377Total assets 1,120,235873,780LIABILITIESCurrent liabilitiesLease liability1616,9201,109Trade and other payables2, 19120,83639,879Borrowings2, 20-14,044Provisions2122,29024,584Other financial liabilities2-3,890Total current liabilities 160,04683,506Non-current liabilitiesLease liability165351,299Provisions2288,43572,616Other financial liabilities2-4,268Total non-current liabilities 88,97078,183Total liabilities 249,016161,689Net assets 871,219712,091EQUITYContributed equity23331,513331,513Other reserves26(2,273)-Retained earnings24541,979381,747Capital and reserves attributable to owners of Grange Resources Limited871,219713,260Non-Controlling Interests26-(1,169)Total equity 871,219712,091The above statement of financial position should be read in conjunction with the accompanying notesGRANGE RESOURCES | ANNUAL REPORT 202144CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2021NOTESContributed equity $'000Other Reserves $'000Non-Controlling Interests $'000Retained earnings$'000TOTAL$'000 Balance at 1 January 2021 331,513-(1,169)381,747712,091Profit for the period attributable to owners of Grange Resources Limited---322,260322,260Loss attributable to non-controlling interests --(645)-(645)Total comprehensive profit/(loss) for the year --(645)322,260321,615Transactions with owners in their capacity as ownersTransactions with non-controlling interests26-(2,273)1,814-(459)Dividends paid25---(162,028)(162,028)Balance at 31 December 2021 331,513(2,273)-541,979871,219 Balance at 1 January 2020 331,513-(176)200,716532,053Profit for the period attributable to owners of Grange Resources Limited---204,179204,179Loss attributable to non-controlling interests --(993)-(993)Total comprehensive profit/(loss) for the year --(993)204,179203,186Transactions with owners in their capacity as ownersDividends paid25---(23,148)(23,148)Balance at 31 December 2020 331,513-(1,169)381,747712,091The above statement of changes in equity should be read in conjunction with the accompanying notes GRANGE RESOURCES | ANNUAL REPORT 202144CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2021NOTESContributed equity $'000Other Reserves $'000Non-Controlling Interests $'000Retained earnings$'000TOTAL$'000 Balance at 1 January 2021 331,513-(1,169)381,747712,091Profit for the period attributable to owners of Grange Resources Limited---322,260322,260Loss attributable to non-controlling interests --(645)-(645)Total comprehensive profit/(loss) for the year --(645)322,260321,615Transactions with owners in their capacity as ownersTransactions with non-controlling interests26-(2,273)1,814-(459)Dividends paid25---(162,028)(162,028)Balance at 31 December 2021 331,513(2,273)-541,979871,219 Balance at 1 January 2020 331,513-(176)200,716532,053Profit for the period attributable to owners of Grange Resources Limited---204,179204,179Loss attributable to non-controlling interests --(993)-(993)Total comprehensive profit/(loss) for the year --(993)204,179203,186Transactions with owners in their capacity as ownersDividends paid25---(23,148)(23,148)Balance at 31 December 2020 331,513-(1,169)381,747712,091The above statement of changes in equity should be read in conjunction with the accompanying notes FINANCIAL REPORT45CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 20212021$'0002020$'000ConsolidatedNOTESCash flows from operating activitiesReceipts from customers and other debtors (inclusive of goods and services tax) 841,849 478,540Payments to suppliers and employees (inclusive of goods and services tax) (305,541) (234,585) 536,308 243,955Interest received 6,442 5,408Interest paid (304) (327)Income taxes paid (44,286) (46,468)Net cash inflow from operating activities 498,160 202,568Cash flows from investing activitiesProceeds from sale of property, plant and equipment - 21Payments for property, plant and equipment15 (39,996) (41,092)Payments for mine properties and development17 (40,074) (86,652)Proceeds from loan receivable- 2,626Proceeds / (payments) for term deposits 504 (23)Net cash outflow from investing activities (79,566) (125,120)Cash flows from financing activitiesRepayments of borrowings - (2,711)Dividends paid to shareholders25 (162,028) (23,148)Lease payments16 (3,222) (1,027)Net cash outflow from financing activities (165,250) (26,886)Net increase in cash and cash equivalents 253,344 50,562Cash and cash equivalents at beginning of the year 183,385 142,143Net foreign exchange differences 7,161 (9,320)Cash and cash equivalents at end of the year11 443,890 183,385The above statement of cash flows should be read in conjunction with accompanying notes.GRANGE RESOURCES | ANNUAL REPORT 202146NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe 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. The financial statements are for the consolidated entity consisting of Grange Resources Limited and its subsidiaries.(A) BASIS OF PREPARATIONThis 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 IFRSThe 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 CONVENTIONThese 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 GROUPThe group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2021:• AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions [AASB 16], and• AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform- Phase 2 (AASB 4, AASB 7, AASB 9, AASB 16 & AASB 139).The 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.New standards and interpretations not yet adoptedCertain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.COMPARATIVE FIGURESWhere necessary, comparative figures have been adjusted to conform to changes in the presentation in the current period.CRITICAL ACCOUNTING ESTIMATESThe 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) SUBSIDIARIESThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Grange Resources Limited as at 31 December 2021 and the results of all subsidiaries for the year then ended. Grange Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.Subsidiaries are those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Details of subsidiaries are set out in note 31.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 ARRANGEMENTSJOINT OPERATIONSThe 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 32.(C) SEGMENT REPORTINGOperating 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 CURRENCYItems 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 BALANCESAll foreign currency transactions during the financial period are translated into the functional currency using the exchange rate prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.GRANGE RESOURCES | ANNUAL REPORT 202146NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe 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. The financial statements are for the consolidated entity consisting of Grange Resources Limited and its subsidiaries.(A) BASIS OF PREPARATIONThis 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 IFRSThe 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 CONVENTIONThese 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 GROUPThe group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2021:• AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions [AASB 16], and• AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform- Phase 2 (AASB 4, AASB 7, AASB 9, AASB 16 & AASB 139).The 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.New standards and interpretations not yet adoptedCertain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.COMPARATIVE FIGURESWhere necessary, comparative figures have been adjusted to conform to changes in the presentation in the current period.CRITICAL ACCOUNTING ESTIMATESThe 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) SUBSIDIARIESThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Grange Resources Limited as at 31 December 2021 and the results of all subsidiaries for the year then ended. Grange Resources Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.Subsidiaries are those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Details of subsidiaries are set out in note 31.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 ARRANGEMENTSJOINT OPERATIONSThe 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 32.(C) SEGMENT REPORTINGOperating 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 CURRENCYItems 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 BALANCESAll foreign currency transactions during the financial period are translated into the functional currency using the exchange rate prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.FINANCIAL REPORT47Non-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 COMPANIESThe 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 COMBINATIONSThe acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the • fair values of the assets transferred • liabilities incurred to the former owners of the acquired business • equity interests issued by the Group • fair value of any asset or liability resulting from a contingent consideration arrangement, and • fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.The excess of the • consideration transferred, • amount of any non-controlling interest in the acquired entity, and • 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 RECOGNITIONRevenue 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 customerii. Identify the performance obligations in the contactiii. Determine the transaction priceiv. 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.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 REVENUEInterest revenue is recognised on a time proportion basis using the effective interest method. GRANGE RESOURCES | ANNUAL REPORT 202148NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)SALE OF APARTMENTSRevenue 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; andv. The buyer has physical possession of the assetAASB 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 INCOMEDistribution income from short term managed funds is recognised when the right to receive the income has been established. (G) GOVERNMENT GRANTSGovernment 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) LEASESI. THE GROUP’S LEASING ACTIVITIES AND HOW THESE ARE ACCOUNTED FORThe 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.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 leaseThe 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 the statement of financial position (note 16).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.II. EXTENSION OPTIONSOptions 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.III. VARIABLE LEASE PAYMENTSThe 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.(I) CASH AND CASH EQUIVALENTSCash 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.GRANGE RESOURCES | ANNUAL REPORT 202148NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)SALE OF APARTMENTSRevenue 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; andv. The buyer has physical possession of the assetAASB 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 INCOMEDistribution income from short term managed funds is recognised when the right to receive the income has been established. (G) GOVERNMENT GRANTSGovernment 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) LEASESI. THE GROUP’S LEASING ACTIVITIES AND HOW THESE ARE ACCOUNTED FORThe 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.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 leaseThe 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 the statement of financial position (note 16).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.II. EXTENSION OPTIONSOptions 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.III. VARIABLE LEASE PAYMENTSThe 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.(I) CASH AND CASH EQUIVALENTSCash 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.FINANCIAL REPORT49(J) TRADE AND OTHER RECEIVABLESTrade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance. As permitted by AASB 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) INVENTORIESRaw 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 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.Development work in progress pertains to development and construction of housing units and comprises expenditures relating to:• Cost of acquisitionThe 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 TAXThe 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.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. GRANGE RESOURCES | ANNUAL REPORT 202150NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(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 EQUIPMENTLand and buildings and plant and equipment are measured at cost less, where applicable, any accumulated depreciation, amortisation or impairment in value. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.Land is not depreciated. Assets under construction are measured at cost and are not depreciated until they are ready and available for use. Depreciation on assets is calculated using either a straight-line or diminishing value method to allocate the cost, net of their residual values, over the estimated useful lives or the life of the mine, whichever is shorter. Leasehold improvements and certain leased plant and equipment are depreciated over the shorter lease term.Other non-mine plant and equipment typically has the following estimated useful lives: Buildings 10 yearsPlant and Equipment 4 to 8 yearsComputer Equipment 3 to 5 yearsThe 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 EVALUATIONExploration 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.Exploration and evaluation expenditure is charged against profit and loss as incurred; except for expenditure incurred after a decision to proceed to development is made, in which case the expenditure is capitalised as an asset. (P) MINE PROPERTIES AND DEVELOPMENTMine properties and development represent the accumulation of all exploration, evaluation and development expenditure incurred by, not on behalf of, the entity in relation to areas of interest in which mining of a mineral resource has commenced.Where further development expenditure is incurred in respect of a production property after the commencement of production, such expenditure is carried forward as part of the cost of that production property only when substantial future economic benefits arise, otherwise such expenditure is classified as part of the cost of production.Costs on production properties in which the Group has an interest are amortised over the life of the area of interest to which such costs relate on the production output basis. Changes to the life of the area of interest are accounted for prospectively.The carrying value of each mine property and development are assessed annually for impairment in accordance with note 1(r). (Q) DEFERRED STRIPPING COSTSStripping (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. GRANGE RESOURCES | ANNUAL REPORT 202150NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(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 EQUIPMENTLand and buildings and plant and equipment are measured at cost less, where applicable, any accumulated depreciation, amortisation or impairment in value. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.Land is not depreciated. Assets under construction are measured at cost and are not depreciated until they are ready and available for use. Depreciation on assets is calculated using either a straight-line or diminishing value method to allocate the cost, net of their residual values, over the estimated useful lives or the life of the mine, whichever is shorter. Leasehold improvements and certain leased plant and equipment are depreciated over the shorter lease term.Other non-mine plant and equipment typically has the following estimated useful lives: Buildings 10 yearsPlant and Equipment 4 to 8 yearsComputer Equipment 3 to 5 yearsThe 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 EVALUATIONExploration 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.Exploration and evaluation expenditure is charged against profit and loss as incurred; except for expenditure incurred after a decision to proceed to development is made, in which case the expenditure is capitalised as an asset. (P) MINE PROPERTIES AND DEVELOPMENTMine properties and development represent the accumulation of all exploration, evaluation and development expenditure incurred by, not on behalf of, the entity in relation to areas of interest in which mining of a mineral resource has commenced.Where further development expenditure is incurred in respect of a production property after the commencement of production, such expenditure is carried forward as part of the cost of that production property only when substantial future economic benefits arise, otherwise such expenditure is classified as part of the cost of production.Costs on production properties in which the Group has an interest are amortised over the life of the area of interest to which such costs relate on the production output basis. Changes to the life of the area of interest are accounted for prospectively.The carrying value of each mine property and development are assessed annually for impairment in accordance with note 1(r). (Q) DEFERRED STRIPPING COSTSStripping (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. FINANCIAL REPORT51Capitalised 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.Deferred stripping costs form part of the total investment in a cash generating unit, which is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.(R) IMPAIRMENT OF ASSETS At each reporting date, the Group assesses whether there is any indication that an asset, including capitalised development expenditure, may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of the recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement.Recoverable amount is the greater of fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units).Where there is no binding sale agreement or active market, fair value less costs of disposal is based on the best information available to reflect the amount the Group could receive for the cash generating unit in an arm’s length transaction. In assessing fair value, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the pre-impairment value, adjusted for any depreciation that would have been recognised on the asset had the initial impairment loss not occurred. Such reversal is recognised in profit or loss.After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.(S) INVESTMENTS AND OTHER FINANCIAL ASSETS (I) CLASSIFICATIONThe 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. (II) RECOGNITION Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership. (III) MEASUREMENTAt 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 INSTRUMENTSSubsequent 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. GRANGE RESOURCES | ANNUAL REPORT 202152NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) • 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.EQUITY INSTRUMENTSThe group subsequently measures all equity investments at fair value. Where the group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the group’s right to receive payments is established.Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.(IV) IMPAIRMENTThe 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) DERIVATIVESDerivatives 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 RESERVESThe 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 PAYABLESTrade 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)BORROWINGSAll borrowings are initially recognised at the fair value of the consideration received, less transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.BORROWING COSTSBorrowing 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) PROVISIONSProvisions 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.GRANGE RESOURCES | ANNUAL REPORT 202152NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) • 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.EQUITY INSTRUMENTSThe group subsequently measures all equity investments at fair value. Where the group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the group’s right to receive payments is established.Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.(IV) IMPAIRMENTThe 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) DERIVATIVESDerivatives 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 RESERVESThe 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 PAYABLESTrade 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)BORROWINGSAll borrowings are initially recognised at the fair value of the consideration received, less transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.BORROWING COSTSBorrowing 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) PROVISIONSProvisions 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.FINANCIAL REPORT53If 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 RESTORATIONDecommissioning 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 ENTITLEMENTSWAGES, SALARIES AND SICK LEAVELiabilities 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 LEAVELiabilities 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 LEAVEThe 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 FUNDSContributions to defined contribution funds are recognised as an expense in the income statement as they become payable.(Z) CONTRIBUTED EQUITYOrdinary 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) DIVIDENDSProvision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial period but not distributed at balance date.(AB) EARNINGS PER SHARE (EPS)(I) BASIC EARNINGS PER SHAREBasic 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 SHAREDiluted 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.GRANGE RESOURCES | ANNUAL REPORT 202154NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(AC) PARENT ENTITY FINANCIAL INFORMATIONThe financial information for the parent entity, Grange Resources Limited, disclosed in note 35 has been prepared on the same basis as the consolidated financial statements, except as set out below.INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE ENTITIESInvestments 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 GUARANTEESWhere 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 AMOUNTSThe 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.GRANGE RESOURCES | ANNUAL REPORT 202154NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(AC) PARENT ENTITY FINANCIAL INFORMATIONThe financial information for the parent entity, Grange Resources Limited, disclosed in note 35 has been prepared on the same basis as the consolidated financial statements, except as set out below.INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE ENTITIESInvestments 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 GUARANTEESWhere 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 AMOUNTSThe 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.FINANCIAL REPORT55GRANGE RESOURCES | ANNUAL REPORT 202156NOTE 2. FINANCIAL RISK MANAGEMENTThe 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:2021$'0002020$'000Financial AssetsCash and cash equivalents443,890183,385Short Term Managed Funds19,59219,539Trade and other receivables31,604101,900Other financial assets1,207 - 496,293304,824Financial LiabilitiesTrade and other payables120,83639,879Other financial liabilities - 8,158Borrowings - 14,044 120,83662,081The carrying amount and movement in Short Term Managed Funds are set out below:2021$'0002020$'000Short Term Managed FundsBalance at the beginning of the year 19,539 19,783 Movement in Short Term Managed Funds 53 (244)Carrying amount at the end of the year 19,592 19,539 NET DEBT RECONCILIATIONThis section sets out an analysis of net debt and the movements in net debt for each of the periods presented.2021$'0002020$'000Net debt reconciliationCash and cash equivalents443,890183,385Liquid investments19,59219,539Borrowings - repayable within one year - (14,044)Net asset463,482188,880Cash and liquid investments463,482202,924Gross debt - fixed interest rates - (14,044)Net asset463,482188,880FINANCIAL ASSETS/(LIABILITIES) AT FAIR VALUE THROUGH PROFIT OR LOSSCLASSIFICATIONThe group classifies the following financial assets/(liabilities) at fair value through profit or loss (FVPL)• short term managed funds • derivative financial instruments2021$'0002020$'000Current Assets / LiabilitiesShort Term Managed Funds19,59219,539Derivative financial instruments1,207(8,158) 20,79911,381AMOUNTS RECOGNISED IN PROFIT OR LOSSDuring the year, the following gains/(losses) were recognised in profit or loss:2021$'0002020$'000Current Assets / LiabilitiesFair value gain(loss) on short term managed funds held at FVPL recognised in Gain/(loss) on financial instruments53(243)Fair value gain(loss) on derivative financial instruments at FVPL recognised in Gain/(loss) on financial instruments9,366(7,214) 9,419(7,457)(A) MARKET RISK(I) FOREIGN EXCHANGE RISKThe Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar.Foreign exchange risk arises from commercial transactions, given that the Group’s sales revenues are denominated in US dollars and the majority of its operating costs are denominated in Australian dollars, and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.The Group’s exposure to US dollar denominated foreign currency risk at the reporting date, expressed in Australian dollars, was as follows: 2021$'0002020$'000Market riskCash and cash equivalents131,36099,117Trade and other receivables18,46478,694Trade and other payables56(125)Net US dollar surplus149,880177,686GROUP SENSITIVITYBased on the financial instruments held at 31 December 2021, 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 $7.5 million higher / $9.21 million lower (2020: $11.3 million higher / $13.8 million lower), mainly as a result of foreign exchange gains/losses on US dollar denominated cash and cash equivalents, term deposits and receivables as detailed in the above table.GRANGE RESOURCES | ANNUAL REPORT 202156NOTE 2. FINANCIAL RISK MANAGEMENTThe Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group has used derivative financial instruments such as foreign exchange contracts and forward commodity contracts to manage certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risks to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and commodity price risks and aging analysis for credit risk.Risk management is carried out by the management team following guidance received from the Audit and Risk Committee. The Group holds the following financial instruments:2021$'0002020$'000Financial AssetsCash and cash equivalents443,890183,385Short Term Managed Funds19,59219,539Trade and other receivables31,604101,900Other financial assets1,207 - 496,293304,824Financial LiabilitiesTrade and other payables120,83639,879Other financial liabilities - 8,158Borrowings - 14,044 120,83662,081The carrying amount and movement in Short Term Managed Funds are set out below:2021$'0002020$'000Short Term Managed FundsBalance at the beginning of the year 19,539 19,783 Movement in Short Term Managed Funds 53 (244)Carrying amount at the end of the year 19,592 19,539 NET DEBT RECONCILIATIONThis section sets out an analysis of net debt and the movements in net debt for each of the periods presented.2021$'0002020$'000Net debt reconciliationCash and cash equivalents443,890183,385Liquid investments19,59219,539Borrowings - repayable within one year - (14,044)Net asset463,482188,880Cash and liquid investments463,482202,924Gross debt - fixed interest rates - (14,044)Net asset463,482188,880FINANCIAL ASSETS/(LIABILITIES) AT FAIR VALUE THROUGH PROFIT OR LOSSCLASSIFICATIONThe group classifies the following financial assets/(liabilities) at fair value through profit or loss (FVPL)• short term managed funds • derivative financial instruments2021$'0002020$'000Current Assets / LiabilitiesShort Term Managed Funds19,59219,539Derivative financial instruments1,207(8,158) 20,79911,381AMOUNTS RECOGNISED IN PROFIT OR LOSSDuring the year, the following gains/(losses) were recognised in profit or loss:2021$'0002020$'000Current Assets / LiabilitiesFair value gain(loss) on short term managed funds held at FVPL recognised in Gain/(loss) on financial instruments53(243)Fair value gain(loss) on derivative financial instruments at FVPL recognised in Gain/(loss) on financial instruments9,366(7,214) 9,419(7,457)(A) MARKET RISK(I) FOREIGN EXCHANGE RISKThe Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar.Foreign exchange risk arises from commercial transactions, given that the Group’s sales revenues are denominated in US dollars and the majority of its operating costs are denominated in Australian dollars, and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.The Group’s exposure to US dollar denominated foreign currency risk at the reporting date, expressed in Australian dollars, was as follows: 2021$'0002020$'000Market riskCash and cash equivalents131,36099,117Trade and other receivables18,46478,694Trade and other payables56(125)Net US dollar surplus149,880177,686GROUP SENSITIVITYBased on the financial instruments held at 31 December 2021, 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 $7.5 million higher / $9.21 million lower (2020: $11.3 million higher / $13.8 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.FINANCIAL REPORT57(II) PRICE RISKThe Group is exposed to commodity price risk. During current and prior years, the price of iron ore pellets is based on a price index used in the market. 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 RISKThe 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 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.(B) CREDIT RISKCredit 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 2021, there are $0.18m in trade receivables (2020 $8.76m) that are past due. The other classes within trade and other receivables do not contain impaired assets and are not past due.(C) LIQUIDITY RISKPrudent 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. 2021 - ConsolidatedLess than 6 months $'0006-12 months $'000Between 1 and 2 years $'000Between 2 and 5 years $'000Over 5 years $'000Total contractual cash flows $'000Carrying amount liabilities $'000Non-derivatives Trade and other payables120,836----120,836120,836 Lease liabilities16,912212261306-17,69117,455Total non-derivatives137,748212261306-138,527 138,291Derivatives Trading derivatives995212---1,2071,207Total derivatives995212---1,2071,2072020 - ConsolidatedLess than 6 months $'0006-12 months $'000Between 1 and 2 years $'000Between 2 and 5 years $'000Over 5 years $'000Total contractual cash flows $'000Carrying amount liabilities $'000Non-derivatives Trade and other payables39,879----39,87939,879 Fixed rate borrowings-14,044---14,04414,044 Lease liabilities603654812513-2,5822,408Total non-derivatives40,48214,698812513- 56,505 56,331Derivatives Trading derivatives2,0151,8754,275(7)-8,1588,158Total derivatives2,0151,8754,275(7)-8,1588,158GRANGE RESOURCES | ANNUAL REPORT 202158NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)(D) CAPITAL RISK MANAGEMENTWhen managing capital, the Group’s objective is to safeguard the ability to continue as a going concern so that the Group continues to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.Management is constantly reviewing and adjusting, where necessary, the capital structure. This involves the use of corporate forecasting models which enable analysis of the Group’s financial position including cash flow forecasts to determine future capital management requirements. To ensure sufficient funding, a range of assumptions are modeled.(E) DERIVATIVESThe Group entered into derivative financial instruments (commodity and foreign currency options) with counterparties, principally financial institutions. These derivatives are reported at fair value at 31 December 2021 using valuation techniques which employs the use of market observable inputs. The change in fair value of these derivatives has been recognised in the statement of profit or loss.(I) CLASSIFICATION OF DERIVATIVESDerivatives are classified as held for trading and accounted for at fair value through profit or loss. They are presented as current assets or liabilities if they are expected to be settled within 12 months after the end of the reporting period.2021$'0002020$'000Electricity fixed forward500(3,859)Diesel commodity swap 461 (4,163)Foreign currency options246228Foreign currency forward -(364)Derivative financial instruments1,207(8,158)(F) RECOGNISED FAIR VALUE MEASUREMENTSThis section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting standards. Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1. Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Specific valuation techniques used to value the derivative financial instruments mainly include determining the fair value of forward contracts using forward rates at the balance sheet date provided by the dealers.The following table presents the group’s assets and liabilities measured and recognised at fair value at 31 December 2021 and 31 December 2020.2021Level 1$'000Level 2$'000Level 3$'000Total$'000Financial AssetsShort Term Managed Funds-19,592-19,592Derivative financial instruments-1,207-1,207 -20,799-20,7992020Level 1$'000Level 2$'000Level 3$'000Total$'000Financial AssetsShort Term Managed Funds - 19,539 - 19,539Financial LiabilitiesDerivative financial instruments - (8,158) - (8,158) - 11,381 - 11,381 FINANCIAL REPORT59NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSEstimates 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 INVENTORIESThe 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 value include a number of assumptions, including commodity price expectations, foreign exchange rates and costs to complete inventories to a saleable product. As at 31 December 2021 the net realisable value exceeded cost for all significant inventory balances.DEVELOPMENT PROPERTIESProperty 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 DEVELOPMENTWhere 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. Significant judgements and assumptions are required in making estimates of Fair Value. The CGU valuations are subject to variability in key assumptions including, but not limited to, long term iron ore pellet prices, currency exchange rates, and discount rates. An adverse change in one or more of the assumptions used to estimate Fair Value could result in a reduction in a CGU’s recoverable value. This could lead to the recognition of impairment losses in the future. At 31 December 2021, the Group determined that there were no indicators of impairment.To identify any indications of impairment, Management considers both external and internal sources as summarised below:External Sourcesi. The carrying amount of the net assets more than its market capitalisationii. Market interest rate have increased during the periodiii. Significant changes with an adverse effect on the entity have taken place or will take place in the futureiv. Observable indications that an asset market value has declined significantly more than that would be expected because of the passage of time and usedInternal Sourcesi. Significant changes have taken place or expected to take place in the near future which an asset is used or expected to be usedii. Internal reporting suggests that the economic performance of an asset is or will be worse than expectediii. Obsolescence or physical damage of an asset(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 RESERVESMineral 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.GRANGE RESOURCES | ANNUAL REPORT 202160NOTE 4. SEGMENT INFORMATION(A) DESCRIPTION OF SEGMENTSOperating 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; andii. Development and construction of housing unitsThe 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.NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)(E) TAXATIONThe Group’s accounting policy for taxation 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. 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. (F) PROVISION FOR DECOMMISSIONING AND RESTORATION COSTSDecommissioning 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, with reference to analysis performed by internal and external experts.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.Ore MiningProperty DevelopmentTotal2021 $’0002020 $’0002021 $’0002020 $’0002021 $’0002020 $’000Revenue from external customers775,481510,9856,181 15,339 781,662 526,324 Timing of revenue recognitionAt a point in time722,283 489,8826,181 15,339 728,464 505,221 Over time - Freight53,198 21,103--53,198 21,103 2021 $’0002020 $’0002021 $’0002020 $’0002021 $’0002020 $’000Total Assets1,095,526 836,96824,709 36,8121,120,235 873,780 Total Liabilities247,891 148,5891,125 13,100249,016 161,689 In August 2021, the Group acquired the 49% non-controlling interest in the property development segment (refer to note 26).GRANGE RESOURCES | ANNUAL REPORT 202160NOTE 4. SEGMENT INFORMATION(A) DESCRIPTION OF SEGMENTSOperating 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; andii. Development and construction of housing unitsThe 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.NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)(E) TAXATIONThe Group’s accounting policy for taxation 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. 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. (F) PROVISION FOR DECOMMISSIONING AND RESTORATION COSTSDecommissioning 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, with reference to analysis performed by internal and external experts.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.Ore MiningProperty DevelopmentTotal2021 $’0002020 $’0002021 $’0002020 $’0002021 $’0002020 $’000Revenue from external customers775,481510,9856,181 15,339 781,662 526,324 Timing of revenue recognitionAt a point in time722,283 489,8826,181 15,339 728,464 505,221 Over time - Freight53,198 21,103--53,198 21,103 2021 $’0002020 $’0002021 $’0002020 $’0002021 $’0002020 $’000Total Assets1,095,526 836,96824,709 36,8121,120,235 873,780 Total Liabilities247,891 148,5891,125 13,100249,016 161,689 In August 2021, the Group acquired the 49% non-controlling interest in the property development segment (refer to note 26).FINANCIAL REPORT61The following table presents revenues from sales of iron ore based on the geographical location of the port of discharge.Segment revenues from sales to external customers2021$'0002020$'000Ore MiningAustralia 46,314 41,667 China 551,330 469,318 Korea 177,837 - Total Mining 775,481 510,985 Property DevelopmentAustralia 6,181 15,339 Total Property Development 6,181 15,339 TOTAL REVENUE 781,662 526,324 Segment assets and capital are allocated based on where the assets are located. The consolidated assets of the Group were predominately located in Australia as at 31 December 2021 and 31 December 2020. The total costs incurred during the current and comparative periods to acquire segment assets were also predominately incurred in Australia.NOTE 5. REVENUEDISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERSRevenue from contracts with provisional pricing is recognised based on the estimated forward prices where available which the Group expects to receive at the end of the quotation period. Where an estimated forward price is not available, spot prices are applied as management’s best estimate of the provisional prices. The quotation period exposure is considered to be an embedded derivative and forms part of trade receivables. The subsequent changes in the fair value are recognised in the statement of profit or loss and other comprehensive income as other revenue (loss). Changes in fair value over, and until the end of the quotation period, are estimated by reference to updated forward market prices.NOTE 6. COST OF SALES2021$'0002020$'000Cost of sales - miningMining costs137,837139,992Production costs117,370114,971Changes in inventories(45,485)(11,010)Mining & Production Costs209,722243,953Freight costs53,19921,103Government royalties24,75219,646Depreciation expense18,30021,056Mine properties and development - Amortisation expense9,4727,035Deferred stripping - Amounts capitalised during the year(38,941)(69,308) - Amortisation expense54,89931,127Foreign exchange (loss)/gain(1,202)4,554Total cost of sales - mining330,201279,166Cost of sales - property developmentProperty costs6,39613,771Inventory provision6722,569Total cost of sales - property development7,06816,340Total cost of sales337,269295,506Depreciation expenseLand and buildings991920Plant and equipment17,01019,666Computer equipment299470 18,30021,056NOTE 7. ADMINISTRATIVE EXPENSES2021$'0002020$'000Salaries2,6293,348Consultancy fees930675Provision for rehabilitation - change in estimate-269Other 324926 3,8835,218NOTE 8. OTHER INCOME2021$'0002020$'000Rent income230188Other income237178Provision for rehabilitation - change in estimate5,954-Unwind of net borrowings for the joint venture (Note 26) 2,561-Gain on the disposal of property, plant and equipment2,1592011,141386GRANGE RESOURCES | ANNUAL REPORT 202162NOTE 9. FINANCE INCOME/(EXPENSES)2021$'0002020$'000Finance IncomeInterest income received or receivable 5,541 4,428Distribution Income 940 916Gain on financial instruments 9,418 -Exchange gains on foreign currency deposits / borrowings (net) 7,161 - 23,060 5,3442021$'0002020$'000Finance expensesProvisions: unwinding of discount - Decommissioning and restoration (885) (774)Interest charge on lease liabilities (304) (132)Other interest charges (21) (224)Loss on financial instruments - (7,457)Exchange loss on foreign currency deposits / borrowings (net) - (9,320)Borrowing costs - (326)Credit losses - (2,804) (1,210) (21,037)NOTE 10. INCOME TAX EXPENSE2021$'0002020$'000(a) Income tax expense Current tax123,329 32,694 Total current tax expense123,32932,694Deferred income taxDecrease in deferred tax assets 15,946 30,827Previously unrecognised deferred tax assets for temporary differences now recognised-(57,828)Total deferred tax expense 15,946(27,001)Total income tax expense139,275 5,693 2021$'0002020$'000(b) Numerical reconciliation of income tax expense to prima facie tax payableProfit from continuing operations before income tax / expense460,890208,879Tax expense at the Australian tax rate of 30% (2020: 30%)138,26762,664Tax effect of amounts which are not deductible (taxable) in calculating taxable income:Sundry items41290138,67962,754Movement in current year net deferred tax assets relating to temporary differences39(205)Deferred tax recognised for previously unrecognised temporary differences - (57,828)Adjustments to tax of prior period557 972Income tax expense139,2755,6932021$'0002020$'000(c) Taxation LossesUnused taxation losses for which no deferred tax asset has been recognised 3,733 4,855Potential tax benefit @ 30%1,120 1,457 2021$'0002020$'000(d) Unrecognised temporary differencesTemporary difference for which deferred tax assets not recognised- 1,339 Potential tax benefit @ 30% -402 Unrecognised deferred tax assets relating to above temporary differences - 402 In 2020 the Group has recognised all previously unrecognised deductible temporary differences for the mining operation.NOTE 11. CASH AND CASH EQUIVALENTS2021$’0002020$’000Cash at bank and in hand5,2409,508Short-term deposits438,650173,877 443,890183,385Cash at bank and in hand as per statement of cash flows443,890183,385 443,890183,385Total cash is held in trading accounts or term deposits with major financial institutions under normal terms and conditions appropriate to the operation of the accounts. These deposits earn interest at rates set by these institutions. As at 31 December 2021 the weighted average interest rate on the Australian dollar accounts was 0.31% (31 December 2020: 0.47%) and the weighted average interest rate on the United States dollar accounts was 1.94% (31 December 2020: 2.44%).The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.GRANGE RESOURCES | ANNUAL REPORT 202162NOTE 9. FINANCE INCOME/(EXPENSES)2021$'0002020$'000Finance IncomeInterest income received or receivable 5,541 4,428Distribution Income 940 916Gain on financial instruments 9,418 -Exchange gains on foreign currency deposits / borrowings (net) 7,161 - 23,060 5,3442021$'0002020$'000Finance expensesProvisions: unwinding of discount - Decommissioning and restoration (885) (774)Interest charge on lease liabilities (304) (132)Other interest charges (21) (224)Loss on financial instruments - (7,457)Exchange loss on foreign currency deposits / borrowings (net) - (9,320)Borrowing costs - (326)Credit losses - (2,804) (1,210) (21,037)NOTE 10. INCOME TAX EXPENSE2021$'0002020$'000(a) Income tax expense Current tax123,329 32,694 Total current tax expense123,32932,694Deferred income taxDecrease in deferred tax assets 15,946 30,827Previously unrecognised deferred tax assets for temporary differences now recognised-(57,828)Total deferred tax expense 15,946(27,001)Total income tax expense139,275 5,693 2021$'0002020$'000(b) Numerical reconciliation of income tax expense to prima facie tax payableProfit from continuing operations before income tax / expense460,890208,879Tax expense at the Australian tax rate of 30% (2020: 30%)138,26762,664Tax effect of amounts which are not deductible (taxable) in calculating taxable income:Sundry items41290138,67962,754Movement in current year net deferred tax assets relating to temporary differences39(205)Deferred tax recognised for previously unrecognised temporary differences - (57,828)Adjustments to tax of prior period557 972Income tax expense139,2755,6932021$'0002020$'000(c) Taxation LossesUnused taxation losses for which no deferred tax asset has been recognised 3,733 4,855Potential tax benefit @ 30%1,120 1,457 2021$'0002020$'000(d) Unrecognised temporary differencesTemporary difference for which deferred tax assets not recognised- 1,339 Potential tax benefit @ 30% -402 Unrecognised deferred tax assets relating to above temporary differences - 402 In 2020 the Group has recognised all previously unrecognised deductible temporary differences for the mining operation.NOTE 11. CASH AND CASH EQUIVALENTS2021$’0002020$’000Cash at bank and in hand5,2409,508Short-term deposits438,650173,877 443,890183,385Cash at bank and in hand as per statement of cash flows443,890183,385 443,890183,385Total cash is held in trading accounts or term deposits with major financial institutions under normal terms and conditions appropriate to the operation of the accounts. These deposits earn interest at rates set by these institutions. As at 31 December 2021 the weighted average interest rate on the Australian dollar accounts was 0.31% (31 December 2020: 0.47%) and the weighted average interest rate on the United States dollar accounts was 1.94% (31 December 2020: 2.44%).The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.FINANCIAL REPORT63NOTE 12. TRADE AND OTHER RECEIVABLES2021$’0002020$’000Trade receivables18,82279,323Security deposits370374Loan receivable - 11,483Other receivables4,4292,235Prepayments4981,054 24,11994,469Trade receivables include provisionally priced receivables relating to sales contracts where the selling price is determined after delivery to the customers, based on the market price at the relevant quotation point stipulated in the contract (note 5 – Revenue). The quotation period exposure is considered to be an embedded derivative and not separated from the entire balance. The entire balance is accounted for as one instrument and measured at fair value.On 2 August 2021, Grange Resources Investments Pty Ltd agreed with its joint venture partner an exit arrangement. Refer to Note 26 for further information.Security deposits comprises of restricted deposits that are used for monetary backing for performance guarantees.(A) IMPAIRED TRADE RECEIVABLESInformation regarding the impairment of trade and other receivables is provided in note 2. (B) FOREIGN EXCHANGE AND INTEREST RATE RISKInformation about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in note 2.(C) FAIR VALUE AND CREDIT RISKDue to the short-term nature of these receivables, their carrying amount is assumed to be their fair value. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above. Refer to note 2 for more information on the credit quality of the Group’s trade and other receivables.NOTE 13. INVENTORIES2021$’0002020$’000Stores and spares34,98634,975Ore stockpiles91,66738,551Work in progress97011,420Finished goods (at lower of cost and net realisable value)22,16319,344Properties developed for sale12,21518,720 162,001123,010Ore stockpiles, work in progress, finished goods and stores and spares are valued at the lower of weighted average cost and estimated net realisable value. A credit of $45.5 million in 2021 and a credit of $11.01 million in 2020 were recognised for the movements in inventories (note 6).Properties developed for sale pertains to property acquired for development and sale and are valued at lower of cost and estimated net realisable value. Sale of these properties is expected to occur within the next 12 months.NOTE 14. NON-CURRENT RECEIVABLES2021$’0002020$’000Security deposits 7,9848,484 7,9848,484Non-current security deposits comprise of restricted deposits that are used for monetary backing for performance guarantees.Information about the Group’s exposure to credit risk, foreign exchange risk and interest rate risk in relation to security deposits is provided in note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above.GRANGE RESOURCES | ANNUAL REPORT 202164NOTE 15. PROPERTY, PLANT AND EQUIPMENT Land and buildings$'000Plant and equipment$'000ComputerEquipment$'000Total$'000At 1 January 2021Cost 54,284 454,083 9,741 518,108Accumulated depreciation and impairment (39,015) (356,361) (8,738) (404,114)Net book amount 15,269 97,722 1,003 113,994Year ended 31 December 2021Opening net book amount 15,269 97,722 1,003 113,994Additions 648 39,334 14 39,996Disposals - net book value - (448) (1) (449)Depreciation charge (992) (15,063) (306) (16,361)Transfer to MP&D - - - -Closing net book amount 14,925 121,545 710 137,180At 31 December 2021Cost 54,932 492,969 9,754 557,655Accumulated depreciation and impairment (40,007) (371,424) (9,044) (420,475)Net book amount 14,925 121,545 710 137,180At 1 January 2020Cost 49,818 434,387 9,085 493,290Accumulated depreciation and impairment (38,093) (349,181) (8,260) (395,534)Net book amount 11,725 85,206 825 97,756Year ended 31 December 2020Opening net book amount 11,725 85,206 825 97,756Additions 4,466 35,968 658 41,092Disposals - net book value - (1) - (1)Depreciation charge (922) (18,808) (480) (20,210)Transfer to MP&D - (4,643) - (4,643)Closing net book amount 15,269 97,722 1,003 113,994At 31 December 2020Cost 54,284 454,083 9,741 518,108Accumulated depreciation and impairment (39,015) (356,361) (8,738) (404,114)Net book amount 15,269 97,722 1,003 113,994(A) ASSETS UNDER CONSTRUCTIONThe carrying amounts of the assets disclosed above includes expenditure of $68.2 million (2020: $43.01 million) recognised in relation to property, plant and equipment which is in the course of construction.GRANGE RESOURCES | ANNUAL REPORT 202164NOTE 15. PROPERTY, PLANT AND EQUIPMENT Land and buildings$'000Plant and equipment$'000ComputerEquipment$'000Total$'000At 1 January 2021Cost 54,284 454,083 9,741 518,108Accumulated depreciation and impairment (39,015) (356,361) (8,738) (404,114)Net book amount 15,269 97,722 1,003 113,994Year ended 31 December 2021Opening net book amount 15,269 97,722 1,003 113,994Additions 648 39,334 14 39,996Disposals - net book value - (448) (1) (449)Depreciation charge (992) (15,063) (306) (16,361)Transfer to MP&D - - - -Closing net book amount 14,925 121,545 710 137,180At 31 December 2021Cost 54,932 492,969 9,754 557,655Accumulated depreciation and impairment (40,007) (371,424) (9,044) (420,475)Net book amount 14,925 121,545 710 137,180At 1 January 2020Cost 49,818 434,387 9,085 493,290Accumulated depreciation and impairment (38,093) (349,181) (8,260) (395,534)Net book amount 11,725 85,206 825 97,756Year ended 31 December 2020Opening net book amount 11,725 85,206 825 97,756Additions 4,466 35,968 658 41,092Disposals - net book value - (1) - (1)Depreciation charge (922) (18,808) (480) (20,210)Transfer to MP&D - (4,643) - (4,643)Closing net book amount 15,269 97,722 1,003 113,994At 31 December 2020Cost 54,284 454,083 9,741 518,108Accumulated depreciation and impairment (39,015) (356,361) (8,738) (404,114)Net book amount 15,269 97,722 1,003 113,994(A) ASSETS UNDER CONSTRUCTIONThe carrying amounts of the assets disclosed above includes expenditure of $68.2 million (2020: $43.01 million) recognised in relation to property, plant and equipment which is in the course of construction.FINANCIAL REPORT65NOTE 16. LEASESThis note provides information for leases where the group is a lessee. (I) AMOUNTS RECOGNISED IN THE BALANCE SHEETThe balance sheet shows the following amounts relating to leases:2021$’0002020$’000Right-of-use assetsLand and buildings 255 330Plant and equipment 18,285 1,981 18,540 2,311Lease liabilitiesCurrent 16,920 1,109Non-current 535 1,299Total lease liabilities 17,455 2,408Additions to the right of use assets during the 2021 financial year were $18,268,097 (2020-$380,057)2021$’0002020$’000Depreciation charge of right of use assetsLand and buildings (75) (75)Plant and equipment (1,964) (878) (2,039) (953)(II) AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSSThe statement of profit or loss shows the following amounts relating to leases:Interest expense (including finance cost) 304 132Expense relating to short-term leases (included in cost of sales)315 6 The total cash outflow for leases in 2021 was $3,221,573 (2020 - $1,027,102)NOTE 17. MINE PROPERTIES AND DEVELOPMENT2021$’0002020$’000Mine properties and development (at cost)670,898652,389Accumulated amortisation and impairment(491,276)(481,805)Net book amount179,622170,584Deferred stripping costs(net book amount)82,75598,713Total mine properties and development262,377269,297Movements in mine properties and development are set out below:2021$’0002020$’000Mine properties and developmentOpening net book amount170,584146,415Current year expenditure capitalised1,13417,344Change in rehabilitation estimate21,9134,325Change in discount rate(4,537)5,518Transfer from PPE-4,643Amortisation expense(9,472)(7,661)Closing net book amount179,622170,584Deferred stripping costsOpening net book amount98,71359,906Current year expenditure capitalised38,94169,308Amortisation expense(54,899)(30,501)Closing net book amount82,75598,713NOTE 18. DEFERRED TAX ASSETSThe balance comprises temporary differences attributable to:2021$’0002020$’000Deferred Tax AssetsProperty, plant and equipment17,972 21,895Mine properties and development 816 10,131Decommissioning and restoration 24,224 20,585Employee benefits7,174 6,620Prepayments 1 - Trade Receivables53 841 Derivatives - 2,447 Foreign exchange- 1,131 Trade payables- 205Total deferred tax assets50,24063,855Deferred Tax LiabilitiesInventory(5,133)(4,503)Foreign exchange(1,104)- Derivatives(363) - Trade Payables(295)- Prepayments - (61)Total deferred tax liabilities(6,895)(4,564)Total net deferred tax assets43,34559,291GRANGE RESOURCES | ANNUAL REPORT 202166NOTE 19. TRADE AND OTHER PAYABLES2021$’0002020$’000Trade payables and accruals36,61334,037Contract Liabilities3,7934,238Tax payable79,11066Other payables1,3201,538 120,83639,879(A) RISK EXPOSURETrade payables are non-interest bearing and are normally settled on repayment terms between 7 and 30 days. Information about the Group’s exposure to foreign exchange risk is provided in note 2.NOTE 20. BORROWINGS (CURRENT)2021$’0002020$’000Other borrowings -14,044 -14,044On 2 August 2021, Grange Resources Investments Pty Ltd agreed with its joint venture partner an exit arrangement. Refer to Note 26 for further information.NOTE 21. PROVISIONS (CURRENT)2021$’0002020$’000Leave Obligations17,63015,449Employee benefits3,0932,780Property settlement related provision80405Decommissioning and restoration1,4875,950 22,29024,584The 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 $17.6 million (2020 $15.45 million) is presented as current, since the group does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.2021$’0002020$’000Current leave obligations expected to be settled after 12 months10,4769,700Movements in provision for decommissioning and restoration are set out below2021$’0002020$’000Balance at beginning of the year5,9507,378Payments(177)(2,101)Transfers (to)/from non-current provisions(4,286)673Balance at the end of the year1,4875,950NOTE 22. PROVISIONS (NON-CURRENT)2021$’0002020$’000Leave obligations2,8953,643Employee benefits305302Decommissioning and restoration85,23568,671 88,43572,616Movements in provision for decommissioning and restoration are set out below2021$’0002020$’000Balance at beginning of the year68,67158,311Change in estimate11,42210,337Unwinding of discount906696Transfers (from)/to current provisions4,236(673)Balance at the end of the year85,23568,671The main component of the provision for decommissioning and restoration costs is for the Group’s obligation to rehabilitate the Savage River and Port Latta sites for the disturbance caused by its operations. The rehabilitation provision also includes an obligation under the Tasmanian Goldamere Pty Ltd Act 1996 to repay the Tasmanian Government for part of the purchase of the mine through expenditure on remediation.NOTE 23. CONTRIBUTED EQUITYORDINARY SHARESOrdinary shares entitle the holder to participate in dividends and the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held. Ordinary shares entitle their holder to one vote per share, either in person or by proxy, at a meeting of the Company. Ordinary shares have no par value and the Company does not have a limited amount of authorised share capital(a) Movements in ordinary share capitalNumber of shares$'000Balance at 1 January 2021 / 31 December 20211,157,338,698 331,513GRANGE RESOURCES | ANNUAL REPORT 202166NOTE 19. TRADE AND OTHER PAYABLES2021$’0002020$’000Trade payables and accruals36,61334,037Contract Liabilities3,7934,238Tax payable79,11066Other payables1,3201,538 120,83639,879(A) RISK EXPOSURETrade 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 20. BORROWINGS (CURRENT)2021$’0002020$’000Other borrowings -14,044 -14,044On 2 August 2021, Grange Resources Investments Pty Ltd agreed with its joint venture partner an exit arrangement. Refer to Note 26 for further information.NOTE 21. PROVISIONS (CURRENT)2021$’0002020$’000Leave Obligations17,63015,449Employee benefits3,0932,780Property settlement related provision80405Decommissioning and restoration1,4875,950 22,29024,584The 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 $17.6 million (2020 $15.45 million) is presented as current, since the group does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.2021$’0002020$’000Current leave obligations expected to be settled after 12 months10,4769,700Movements in provision for decommissioning and restoration are set out below2021$’0002020$’000Balance at beginning of the year5,9507,378Payments(177)(2,101)Transfers (to)/from non-current provisions(4,286)673Balance at the end of the year1,4875,950NOTE 22. PROVISIONS (NON-CURRENT)2021$’0002020$’000Leave obligations2,8953,643Employee benefits305302Decommissioning and restoration85,23568,671 88,43572,616Movements in provision for decommissioning and restoration are set out below2021$’0002020$’000Balance at beginning of the year68,67158,311Change in estimate11,42210,337Unwinding of discount906696Transfers (from)/to current provisions4,236(673)Balance at the end of the year85,23568,671The main component of the provision for decommissioning and restoration costs is for the Group’s obligation to rehabilitate the Savage River and Port Latta sites for the disturbance caused by its operations. The rehabilitation provision also includes an obligation under the Tasmanian Goldamere Pty Ltd Act 1996 to repay the Tasmanian Government for part of the purchase of the mine through expenditure on remediation.NOTE 23. CONTRIBUTED EQUITYORDINARY SHARESOrdinary shares entitle the holder to participate in dividends and the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held. Ordinary shares entitle their holder to one vote per share, either in person or by proxy, at a meeting of the Company. Ordinary shares have no par value and the Company does not have a limited amount of authorised share capital(a) Movements in ordinary share capitalNumber of shares$'000Balance at 1 January 2021 / 31 December 20211,157,338,698 331,513FINANCIAL REPORT67NOTE 24. RETAINED EARNINGS ATTRIBUTABLE TO OWNERS OF GRANGE RESOURCES2021$’0002020$’000Retained earningsMovements in retained profits were as follows:Balance at the beginning of the year381,747 200,716Profit for the year322,260204,179Dividends paid(162,028) (23,148)Balance at the end of the year541,979 381,747NOTE 25. DIVIDENDS2021$’0002020$’000Fully franked special dividend for year ended 31 December 2021 - 10.0 cents per share115,734 -Fully franked interim dividend for half year ended 30 June 2021 - 2.0 cents per share23,147 - Fully franked final dividend for the year ended 31 December 2020 - 2.0 cents per share23,147 - Fully franked interim dividend for half year ended 30 June 2020 - 1.0 cents per share- 11,574 Fully franked final dividend for the year ended 31 December 2019 - 1.0 cents per share - 11,574 Total dividends paid162,028 23,148 Since the end of the financial year the directors have recommended the payment of a 10.0 cent final dividend of $115.7 million. This represents a total of $254.6 million (22.0 cents per share) fully franked dividend for the year-end 31 December 2021. The final dividend was declared NIL conduit foreign income and will be paid on 29 March 2022.FRANKED DIVIDENDSThe final dividends recommended after 31 December 2021 will be fully franked out of existing franking credits, or out of franking credits arising from the payment of income tax in the year ending 31 December 2021.31 December2021$’00031 December 2020$’000Franking credits available for subsequent reporting periods126,93774,505Based on a tax rate of 30% (2020 – 30%)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 26. NON-CONTROLLING INTERESTSGrange ROC Property Pty Ltd (the Joint Venture) was involved in the development and construction of apartments. On 2 August 2021, Grange Resources Investments Pty Ltd agreed with its joint venture partner an exit arrangement. The net effect of the arrangement in the income statement in the current year is $2.5m income as a result of the unwind of the net borrowings to the Joint Venture.The effect on the equity attributable to owners of the parents during the year is summarised as follows:2021$’0002020$’000Carrying amount of non-controlling interests acquired(1,814) -Consideration paid to non-controlling interests(459)-Excess of consideration paid recognised in the transaction with non-controlling interests reserve within equity(2,273) -The Group is currently focused on undertaking sales campaigns to sell the remaining 2 unsold units at the Carter Toorak project and the land at the Brookville project. NOTE 27. CARRYING VALUE OF NON-CURRENT ASSETSAt each reporting date, the Group assesses whether there is any indication that an asset may be impaired. The Group considers both internal and external factors when reviewing for indicators of impairment (Note 3(b)).At 31 December 2021, the Group determined that there were no indicators of impairment for Property Plant and Equipment, Mine Property & Development and Right of Use of Assets due to improved market capitalisation, strong spot and consensus forecast iron ore prices, foreign exchange rates, reserves and resources, and asset performance at 31 December 2021. In addition to this, the Group is currently undertaking an underground project to extend the life of mine, reduce the operating costs and minimise the future capital expenditures. GRANGE RESOURCES | ANNUAL REPORT 202168GRANGE RESOURCES | ANNUAL REPORT 202168FINANCIAL REPORT69NOTE 28. REMUNERATION OF AUDITORSDuring the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms.2021$’0002020$’000Assurance ServicesPwC AustraliaAudit and review of financial reports313325Other assurance services10226Network firms of PwC Australia1718Total assurance services432369Non-Assurance ServicesPwC AustraliaTaxation compliance services81Total remuneration paid440370NOTE 29. COMMITMENTS AND CONTINGENCIES(A) TENEMENT EXPENDITURE COMMITMENTSIn order to maintain the mining and exploration tenements in which the Group is involved, the Group is committed to meet conditions under which the tenements were granted. If the Group continues to hold those tenements, the minimum expenditure requirements (including interests in joint venture arrangements) will be approximately:2021$’0002020$’000Within one year492532Later than one year but not later than five years1,5671,691Later than five years2,4452,876 4,5045,099(B) CAPITAL EXPENDITURE COMMITMENTSCapital expenditure obligations at the end of the reporting period but not recognised as liabilities are as follows:2021$’0002020$’000Within one year17,7397,131After one year but not more than five years9,21810,000Later than five years-- 26,95717,131(C) CONTRACTUAL OPERATING EXPENDITURE COMMITMENTSObligations to external parties which arise with respect to legal supply contracts made by the company (other than lease agreements).2021$’0002020$’000Within one year26,17713,870After one year but not more than five years26,909212Later than five years-- 53,08614,082(D) BANK GUARANTEESBank guarantees have been provided on the Group’s behalf to secure, on demand by the Minister for Mines and Energy for the State of Queensland, any sum to a maximum aggregate amount of $2,012,963 (2020: $2,517,424), 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 $3,170,622 (2020: $3,166,540). 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 (2020: $2,800,000). This amount is a guarantee against the purchase price outstanding with the Tasmanian government as specified in the Goldamere Agreement. No material losses are anticipated in respect to the above bank guarantees and the rehabilitation provisions include these amounts. (E) CONTINGENT ASSETS AND LIABILITIESThe Group did not have any material contingent assets or liabilities at the Balance Sheet Date.NOTE 30. RELATED PARTY TRANSACTIONS(A) ULTIMATE PARENTGrange Resources Limited (Grange) is the ultimate Australian par-ent company. (B) SUBSIDIARIESInterests in subsidiaries are set out in note 32.(C) KEY MANAGEMENT PERSONNEL COMPENSATION 2021$’0002020$’000Short term employee benefits1,667,4951,587,562Post-employment benefits124,962118,322Long-term benefits49,99056,271Long-term incentives198,398151,751 2,040,845 1,913,906Detailed remuneration disclosures are provided in the remuneration report on pages 32 to 37.(D) TRANSACTIONS WITH RELATED PARTIESDuring the year the following transactions occurred with related parties:2021$2020$Sales of iron ore products 216,292,463 182,146,622Sales 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. GRANGE RESOURCES | ANNUAL REPORT 202170NOTE 30. RELATED PARTY TRANSACTIONS (CONTINUED)During the year, 783,010 dry metric tonnes of iron ore products were sold to Shagang in accordance with the terms of the long term off-take agreements 2021 contract year (1 April 2020 to 31 March 2021: 860,542 dmt) (2020: 1,012,503 dry metric tonnes, 2020 contract year (1 April 2019 to 31 March 2020: 923,284 dmt). (E) OUTSTANDING BALANCES ARISING FROM TRANSACTIONS WITH RELATED PARTIESThe 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)2021$2020$Pellets 19,095,808 32,350,066Others (62,961) (10,187) 19,032,847 32,339,879Amounts outstanding under the long term off-take agreement with Shagang are unsecured whereas amounts outstanding in respect of spot sales are secured against an irrevocable letter of credit. All outstanding balances will be settled in cash. The credit balance of the receivables in the current 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 (2020: Nil).LONG TERM OFF-TAKE AGREEMENTGrange 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 25 February 2022, holds 47.93% (26 February 2021: 47.93%) of the issued ordinary shares of Grange. PELLETSThe 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 based on a price index used by other market participants 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.NOTE 31. SUBSIDIARIESThe 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 GroupName2021%2020%Ever Green Resources Co., Limited (1)100100Grange Tasmania Holdings Pty Ltd 100100Beviron Pty Ltd100100Grange Resources (Tasmania) Pty Ltd100100Grange Capital Pty Ltd100100Grange Administrative Services Pty Ltd 100100Barrack Mines Pty Ltd100100Bamine Pty Ltd100100BML Holdings Pty Ltd100100Horseshoe Gold Mine Pty Ltd100100Grange Resources (Southdown) Pty Ltd 100100Grange Resources Investments Pty Ltd 100100Grange ROC Property Pty Ltd 10051(1) Ever Green Resources Co., Limited is incorporated in Hong Kong, and registered as a foreign company under the Corporations Act 2001.NOTE 32. INTEREST IN JOINT OPERATIONSName of Joint Operation% Interest 2021% Interest 2020Southdown Magnetite and Associated Pellet Project(s) – Iron Ore70.0070.00Reward - Copper / Gold31.1531.15Highway – Copper30.0030.00Reward Deeps / Conviction - Copper30.0030.00Mt Windsor Exploration - Gold / Base Metals 30.0030.00Durack / Wembley – Exploration Gold 15.0015.00The 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.GRANGE RESOURCES | ANNUAL REPORT 202170NOTE 30. RELATED PARTY TRANSACTIONS (CONTINUED)During the year, 783,010 dry metric tonnes of iron ore products were sold to Shagang in accordance with the terms of the long term off-take agreements 2021 contract year (1 April 2020 to 31 March 2021: 860,542 dmt) (2020: 1,012,503 dry metric tonnes, 2020 contract year (1 April 2019 to 31 March 2020: 923,284 dmt). (E) OUTSTANDING BALANCES ARISING FROM TRANSACTIONS WITH RELATED PARTIESThe 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)2021$2020$Pellets 19,095,808 32,350,066Others (62,961) (10,187) 19,032,847 32,339,879Amounts outstanding under the long term off-take agreement with Shagang are unsecured whereas amounts outstanding in respect of spot sales are secured against an irrevocable letter of credit. All outstanding balances will be settled in cash. The credit balance of the receivables in the current 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 (2020: Nil).LONG TERM OFF-TAKE AGREEMENTGrange 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 25 February 2022, holds 47.93% (26 February 2021: 47.93%) of the issued ordinary shares of Grange. PELLETSThe 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 based on a price index used by other market participants 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.NOTE 31. SUBSIDIARIESThe 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 GroupName2021%2020%Ever Green Resources Co., Limited (1)100100Grange Tasmania Holdings Pty Ltd 100100Beviron Pty Ltd100100Grange Resources (Tasmania) Pty Ltd100100Grange Capital Pty Ltd100100Grange Administrative Services Pty Ltd 100100Barrack Mines Pty Ltd100100Bamine Pty Ltd100100BML Holdings Pty Ltd100100Horseshoe Gold Mine Pty Ltd100100Grange Resources (Southdown) Pty Ltd 100100Grange Resources Investments Pty Ltd 100100Grange ROC Property Pty Ltd 10051(1) Ever Green Resources Co., Limited is incorporated in Hong Kong, and registered as a foreign company under the Corporations Act 2001.NOTE 32. INTEREST IN JOINT OPERATIONSName of Joint Operation% Interest 2021% Interest 2020Southdown Magnetite and Associated Pellet Project(s) – Iron Ore70.0070.00Reward - Copper / Gold31.1531.15Highway – Copper30.0030.00Reward Deeps / Conviction - Copper30.0030.00Mt Windsor Exploration - Gold / Base Metals 30.0030.00Durack / Wembley – Exploration Gold 15.0015.00The 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.FINANCIAL REPORT71NOTE 33. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES2021$’0002020$’000Profit for the year 321,615 203,186Unwinding of discount 885 774Depreciation and amortisation 18,400 21,163Mine properties and development amortisation 64,370 38,162Other non-cash (income) / expenses(9,196)2,804Interest expense 21 356Inventory provision 672 2,569Proceeds from sale of property, plant and equipment- (21)Profit on disposal of property, plant and equipment 447 1Loss (gain) on financial instruments (9,418) 7,457Net unrealised foreign exchange loss (gain) (7,161) 9,320Change in operating assets and liabilities(Increase) decrease in trade and other receivables 58,863 (41,080)Increase in inventories (39,664) (5,778)Decrease (increase) in deferred tax assets 15,946 (26,437)Increase in trade and other payables (excluding tax payable) 1,914 7,849Increase in other provisions1,424 1,451Decrease (increase) in provision for income tax payable 79,042 (19,208)Net cash inflow from operating activities 498,160 202,568NOTE 34. EARNINGS PER SHARE2021Cents2020CentsBasic earnings per shareFrom continuing operations attributable to the ordinary equity holders of the Group27.8417.64Diluted earnings per shareFrom continuing operations attributable to the ordinary equity holders of the Group27.8417.64(A) RECONCILIATIONS OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE2021$’0002020$’000Profit attributable to the ordinary equity holders of the Group used in calculating basic earnings per share from continuing operations322,260204,179Diluted earnings per shareProfit attributable to the ordinary equity holders of the Group used in calculating diluted earnings per share from continuing operations322,260204,179(B) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR2021Number2020NumberWeighted average number of ordinary shares used as the denominator in calculating basic earnings per share 1,157,338,698 1,157,338,698 NOTE 35. PARENT ENTITY FINANCIAL INFORMATION(A) SUMMARY FINANCIAL INFORMATIONThe individual financial statements for the parent entity show the following aggregate amounts:Balance Sheet2021$’0002020$’000Current assets 36,222 1,269Total assets 489,115 313,825Current liabilities 82,241 2,450Total liabilities 113,983 34,810Shareholders' equityContributed equity 392,475 392,475Reserves - Share-based payments 31,191 31,191Retained losses (48,534) (144,651)Total equity 375,132 279,015Profit for the year 259,972 39,230Total comprehensive income for the year 259,972 39,230Independent auditor’s report To the members of Grange Resources Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Grange Resources Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a)giving a true and fair view of the Group's financial position as at 31 December 2021 and of itsfinancial performance for the year then ended(b)complying with Australian Accounting Standards and the Corporations Regulations 2001.What we have audited The Group financial report comprises: ●the consolidated statement of financial position as at 31 December 2021●the consolidated statement of comprehensive income for the year then ended●the consolidated statement of changes in equity for the year then ended●the consolidated statement of cash flows for the year then ended●the notes to the financial statements, which include significant accounting policies and otherexplanatory information●the directors’ declaration.Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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 & 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. 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 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. GRANGE RESOURCES | ANNUAL REPORT 202172NOTE 35. PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)(B) CONTINGENT LIABILITIES OF THE PARENT ENTITYOTHER CONTINGENT LIABILITIESPursuant 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.NOTE 36. EVENTS OCCURRING AFTER THE REPORTING PERIODSince the end of the financial year the directors have recommended the payment of a 10.0 cent per share final dividend of $115.7 million. At 31 January 2022 the Brookville land was settled for $11.3m.There were no other matters or circumstances arising since 31 December 2021 that has significantly affected, or may significantly affect:• The Group’s operations in future years; or• The results of those operations in future financial years; or• The Group’s state of affairs in future financial years.DIRECTORS’ DECLARATIONIn the Directors’ opinion: (a) the financial statements and notes set out on pages 42 to 72 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (ii) giving true and fair view of the consolidated entity’s financial position as at 31 December 2021 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 LiChairperson of the Board of DirectorsPerth, Western Australia25 February 2022 Independent auditor’s report To the members of Grange Resources Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Grange Resources Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a)giving a true and fair view of the Group's financial position as at 31 December 2021 and of itsfinancial performance for the year then ended(b)complying with Australian Accounting Standards and the Corporations Regulations 2001.What we have audited The Group financial report comprises: ●the consolidated statement of financial position as at 31 December 2021●the consolidated statement of comprehensive income for the year then ended●the consolidated statement of changes in equity for the year then ended●the consolidated statement of cash flows for the year then ended●the notes to the financial statements, which include significant accounting policies and otherexplanatory information●the directors’ declaration.Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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 & 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. 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 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. GRANGE RESOURCES | ANNUAL REPORT 202172NOTE 35. PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)(B) CONTINGENT LIABILITIES OF THE PARENT ENTITYOTHER CONTINGENT LIABILITIESPursuant 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.NOTE 36. EVENTS OCCURRING AFTER THE REPORTING PERIODSince the end of the financial year the directors have recommended the payment of a 10.0 cent per share final dividend of $115.7 million. At 31 January 2022 the Brookville land was settled for $11.3m.There were no other matters or circumstances arising since 31 December 2021 that has significantly affected, or may significantly affect:• The Group’s operations in future years; or• The results of those operations in future financial years; or• The Group’s state of affairs in future financial years.DIRECTORS’ DECLARATIONIn the Directors’ opinion: (a) the financial statements and notes set out on pages 42 to 72 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (ii) giving true and fair view of the consolidated entity’s financial position as at 31 December 2021 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 LiChairperson of the Board of DirectorsPerth, Western Australia25 February 2022 Independent auditor’s report To the members of Grange Resources Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Grange Resources Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a)giving a true and fair view of the Group's financial position as at 31 December 2021 and of itsfinancial performance for the year then ended(b)complying with Australian Accounting Standards and the Corporations Regulations 2001.What we have audited The Group financial report comprises: ●the consolidated statement of financial position as at 31 December 2021●the consolidated statement of comprehensive income for the year then ended●the consolidated statement of changes in equity for the year then ended●the consolidated statement of cash flows for the year then ended●the notes to the financial statements, which include significant accounting policies and otherexplanatory information●the directors’ declaration.Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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 & 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. 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 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. FINANCIAL REPORT73individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality Audit scope Key audit matters ●For the purpose of our auditwe used overall Groupmateriality of $12.4 million,which representsapproximately 5% of theGroup’s average profit beforetax over the past 3 years.●We applied this threshold,together with qualitativeconsiderations, to determinethe scope of our audit and thenature, timing and extent ofour audit procedures and toevaluate the effect ofmisstatements on the financialreport as a whole.●We chose Group averageprofit before tax because, inour view, it is the benchmarkagainst which the performanceof the Group is mostcommonly measured. Due tofluctuations in profit and lossfrom year to year, we chose athree year average.●We utilised a 5% thresholdbased on our professionaljudgement, noting it is withinthe range of commonlyacceptable thresholds.●Our audit focused on wherethe Group made subjectivejudgements; for example,significant accountingestimates involvingassumptions and inherentlyuncertain future events.●Amongst other relevant topics,we communicated thefollowing key audit matters tothe Audit and Risk Committee:−Assessing the carryingvalue of mining assets−Accounting for the cost ofrehabilitation●These are further described inthe Key audit matters sectionof our reportKey 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. We communicated the key audit matters to the Audit and Risk Committee. Key audit matter How our audit addressed the key audit matter Assessing the carrying value of mining assets (Refer to note 15, 16, 17 and 27) At 31 December 2021, the Group had carrying values for property, plant and equipment of $137.2 million mine properties and development of $262.4 million and right of use assets of $18.5 million (the ‘mining assets’). In line with AASB 116 Property Plant and Equipment, the Group is required to assess whether there is any indication that an asset may be impaired at each reporting period. At 31 December 2021, the Group concluded that there were no indicators of impairment in relation to the carrying value of mining assets. The assessment for the carrying value of mining assets was a key audit matter due to the financial significance of the balances. To assess the carrying value of mining assets we performed the following procedures, amongst others: ●Evaluated the Group’s assessment of whetherthere were any indicators of mining assetimpairment, including consideration of iron oreprices, foreign exchange rates, reserves andresources and asset performance over the year.●Compared the value of net assets of the Group atyear ended 31 December 2021 to the marketcapitalisation.Accounting for the cost of rehabilitation (Refer to note 21 and 22 ) The main component of the provision for decommissioning and restoration costs 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 $85.2 million (non-current) and $1.5 million (current), for a total of $86.7 million. To assess the accounting for the cost of rehabilitation, we performed the following procedures, amongst others: ●Obtained the Group’s calculation of therehabilitation provision. We checked themathematical accuracy on a sample ofcalculations and whether the timing of the cashflows in the rehabilitation models was consistentwith the life of mine plans.●Assessed whether the discount rates used in therehabilitation models were reasonable bycomparing them to market data.●Where external and internal experts were used bythe Group to estimate remediation costs, weassessed our ability to use their estimates,considering their objectivity, competency andGRANGE RESOURCES | ANNUAL REPORT 202174individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality Audit scope Key audit matters ●For the purpose of our auditwe used overall Groupmateriality of $12.4 million,which representsapproximately 5% of theGroup’s average profit beforetax over the past 3 years.●We applied this threshold,together with qualitativeconsiderations, to determinethe scope of our audit and thenature, timing and extent ofour audit procedures and toevaluate the effect ofmisstatements on the financialreport as a whole.●We chose Group averageprofit before tax because, inour view, it is the benchmarkagainst which the performanceof the Group is mostcommonly measured. Due tofluctuations in profit and lossfrom year to year, we chose athree year average.●We utilised a 5% thresholdbased on our professionaljudgement, noting it is withinthe range of commonlyacceptable thresholds.●Our audit focused on wherethe Group made subjectivejudgements; for example,significant accountingestimates involvingassumptions and inherentlyuncertain future events.●Amongst other relevant topics,we communicated thefollowing key audit matters tothe Audit and Risk Committee:−Assessing the carryingvalue of mining assets−Accounting for the cost ofrehabilitation●These are further described inthe Key audit matters sectionof our reportKey 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. We communicated the key audit matters to the Audit and Risk Committee. Key audit matter How our audit addressed the key audit matter Assessing the carrying value of mining assets (Refer to note 15, 16, 17 and 27) At 31 December 2021, the Group had carrying values for property, plant and equipment of $137.2 million mine properties and development of $262.4 million and right of use assets of $18.5 million (the ‘mining assets’). In line with AASB 116 Property Plant and Equipment, the Group is required to assess whether there is any indication that an asset may be impaired at each reporting period. At 31 December 2021, the Group concluded that there were no indicators of impairment in relation to the carrying value of mining assets. The assessment for the carrying value of mining assets was a key audit matter due to the financial significance of the balances. To assess the carrying value of mining assets we performed the following procedures, amongst others: ●Evaluated the Group’s assessment of whetherthere were any indicators of mining assetimpairment, including consideration of iron oreprices, foreign exchange rates, reserves andresources and asset performance over the year.●Compared the value of net assets of the Group atyear ended 31 December 2021 to the marketcapitalisation.Accounting for the cost of rehabilitation (Refer to note 21 and 22 ) The main component of the provision for decommissioning and restoration costs 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 $85.2 million (non-current) and $1.5 million (current), for a total of $86.7 million. To assess the accounting for the cost of rehabilitation, we performed the following procedures, amongst others: ●Obtained the Group’s calculation of therehabilitation provision. We checked themathematical accuracy on a sample ofcalculations and whether the timing of the cashflows in the rehabilitation models was consistentwith the life of mine plans.●Assessed whether the discount rates used in therehabilitation models were reasonable bycomparing them to market data.●Where external and internal experts were used bythe Group to estimate remediation costs, weassessed our ability to use their estimates,considering their objectivity, competency andGRANGE RESOURCES | ANNUAL REPORT 202174Key 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. We communicated the key audit matters to the Audit and Risk Committee. Key audit matter How our audit addressed the key audit matter Assessing the carrying value of mining assets (Refer to note 15, 16, 17 and 27) At 31 December 2021, the Group had carrying values for property, plant and equipment of $137.2 million mine properties and development of $262.4 million and right of use assets of $18.5 million (the ‘mining assets’). In line with AASB 116 Property Plant and Equipment, the Group is required to assess whether there is any indication that an asset may be impaired at each reporting period. At 31 December 2021, the Group concluded that there were no indicators of impairment in relation to the carrying value of mining assets. The assessment for the carrying value of mining assets was a key audit matter due to the financial significance of the balances. To assess the carrying value of mining assets we performed the following procedures, amongst others: ●Evaluated the Group’s assessment of whetherthere were any indicators of mining assetimpairment, including consideration of iron oreprices, foreign exchange rates, reserves andresources and asset performance over the year.●Compared the value of net assets of the Group atyear ended 31 December 2021 to the marketcapitalisation.Accounting for the cost of rehabilitation (Refer to note 21 and 22 ) The main component of the provision for decommissioning and restoration costs 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 $85.2 million (non-current) and $1.5 million (current), for a total of $86.7 million. To assess the accounting for the cost of rehabilitation, we performed the following procedures, amongst others: ●Obtained the Group’s calculation of therehabilitation provision. We checked themathematical accuracy on a sample ofcalculations and whether the timing of the cashflows in the rehabilitation models was consistentwith the life of mine plans.●Assessed whether the discount rates used in therehabilitation models were reasonable bycomparing them to market data.●Where external and internal experts were used bythe Group to estimate remediation costs, weassessed our ability to use their estimates,considering their objectivity, competency andFINANCIAL REPORT75Key audit matter How our audit addressed the key audit matter Given the financial significance of this balance and the judgments involved in accounting for the cost of rehabilitation, this was a key audit matter. capability and assessing that the scope of work they performed was appropriate for the purposes of the estimate. ●We compared the Group’s significantassumptions on rehabilitation costs to othersimilar costs in the business or external quoteswhere appropriate.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 2021, 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 32 to 37 of the directors’ report for the year ended 31 December 2021. In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers Amanda Campbell Melbourne Partner 25 February 2022 GRANGE RESOURCES | ANNUAL REPORT 202176Key audit matter How our audit addressed the key audit matter Given the financial significance of this balance and the judgments involved in accounting for the cost of rehabilitation, this was a key audit matter. capability and assessing that the scope of work they performed was appropriate for the purposes of the estimate. ●We compared the Group’s significantassumptions on rehabilitation costs to othersimilar costs in the business or external quoteswhere appropriate.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 2021, 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 32 to 37 of the directors’ report for the year ended 31 December 2021. In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers Amanda Campbell Melbourne Partner 25 February 2022 GRANGE RESOURCES | ANNUAL REPORT 202176Auditor’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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 32 to 37 of the directors’ report for the year ended 31 December 2021. In our opinion, the remuneration report of Grange Resources Limited for the year ended 31 December 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers Amanda Campbell Melbourne Partner 25 February 2022 FINANCIAL REPORT77GRANGE RESOURCES | ANNUAL REPORT 202178TENEMENT SCHEDULEAS AT 28 FEBRUARY 2022PROSPECTTENEMENTINTERESTTASMANIASavage River2M/2001100% (1)14M/2007100% (1)11M/2008100% (1)4M/2019100% (1)EL30/2003100% (1)EL8/2014100%(1)WESTERN AUSTRALIASouthdownM70/130970% (3) (4)G70/21770% (4)R70/6170% (4)L70/18570% (4)L70/18670% (4)L70/18870%(2) (4)L70/20170%(2) (4)L70/22570%(2) (4)WembleyM52/80115% (5) (6)Horseshoe LightsM52/7430% (7)Abercromby Well M53/3360% (8)Red HillM27/570% (9)FreshwaterM52/278,279,2990% (10)M52/295-2960% (11)M52/300-3010% (11)M52/305-3060% (10)M52/369-3700% (10)PilbaraE47/18460% (12)QUEENSLANDMt Windsor JVML 157130% (13)ML 173430% (13)ML 173930% (13)ML 1002830% (13)ML 175830% (13)NORTHERN TERRITORYMt SamuelMLC 49 0% (14)MLC 5270% (15)MLC 5990% (15)MLC 6170% (15)MCC 1740% (15)MCC 2120% (15)MCC 287-2880% (15)MCC 3080% (15)MCC 3440% (15)True Blue MCC 3420% (15)MLC 6190% (15)Aga Khan MLC 5220% (15)Black Cat MCC 338-3390% (15)MCC316-3170% (15)MCC 340-3410% (15)NOTES:1. Held by Grange Resources (Tasmania) Pty Ltd.2. Under application.3. Subject to conditional purchase agreement with Medaire Inc. 4. Subject to Joint Venture Implementation Agreement with SRT Australia Pty Ltd5. Subject to 1% Net Smelter Return royalty with Lac Minerals (Australia) NL6. Subject to joint venture agreement with Aragon Resources Pty Ltd7. Royalty interest with Horseshoe Metals Limited8. Royalty interest with Nova Energy Pty Ltd9. Royalty interest with Kanowna Mines Pty Ltd10. Royalty interest with Dampier (Plutonic) Pty Ltd11. Royalty interest with Billabong Gold Pty Ltd12. Royalty interest with Fortescue Metals Group Ltd13. Subject to joint venture agreement with Thalanga Copper Mines Pty Limited14. Royalty interest with Santexco Pty Ltd15. Royalty interest with Giants Reef Exploration Pty LtdFINANCIAL REPORT79LIST OF SIGNIFICANT ASX ANNOUNCEMENTSFrom 1 January 2021 through to 10 March 2022Date Announcement 25 Jan 2021Quarterly Report for 3 months ended 31 December 20202 Feb 2021Board Update26 Feb 2021Appendix 4E - 31 December 202026 Feb 2021Full Yr Statutory Accts 12 Months Ended 31 Dec 202026 Feb 2021Dividend/Distribution26 Feb 2021Appendix 4G26 Feb 2021Corporate Governance Statement25 Mar 2021Date of AGM31 Mar 2021Update to Savage River Mineral Resources and Ore Reserves13 Apr 2021Change of AGM date23 Apr 2021Annual Report to shareholders23 Apr 2021Notice of Annual General Meeting/Proxy Form27 Apr 2021Quarterly Report for 3 months ended 31 March 20214 May 2021Final Director's Interest Notice25 May 2021Results of Meeting1 Jun 2021Director Appointment3 Jun 2021Initial Director's Interest Notice6 Jul 2021Change of Director's Interest Notice20 Jul 2021Quarterly Report for 3 months ended 30 June 202125 Aug 2021Appendix 4D - Half Year Ending 30 June 202125 Aug 2021Half Yearly Report and Accounts25 Aug 2021Dividend/Distribution25 Oct 2021Quarterly Report for 3 months ended 30 September 202122 Nov 2021JobKeeper Payments Notification10 Dec 2021Grange to pay $0.10 special dividend10 Dec 2021Dividend/Distribution23 Dec 2021Savage River Underground Prefeasibility Study Results28 Jan 2022Quarterly Report for 3 months ended 31 December 202125 Feb 2022Appendix 4E - 31 December 202125 Feb 2022Full Yr Statutory Accts 12 Months Ended 31 Dec 202125 Feb 2022Dividend/Distribution25 Feb 2022Appendix 4G25 Feb 2022Corporate Governance StatementASX ADDITIONAL INFORMATIONAdditional 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 27 January 2022 except where otherwise indicated.ORDINARY SHARESTwenty Largest Shareholders as at 27 January 2022 The twenty largest holders of ordinary fully paid shares are listed below:Name Number % Shagang International Holdings Ltd (Hong Kong) 554,762,656 47.9Pacific International Co (Hong Kong) 76,764,1796.6Realindex Investments Pty Ltd (Australia)26,459,534 2.3DFA Australia Ltd (Australia)22,826,1892.0 Acadian Asset Management LLC (United States)20,820,0921.8 Dimensional Fund Advisors LP (United States)12,192,6031.0ABN AMRO Bank NV (Netherlands)12,103,5991.0JPMorgan Securities (Australia) Ltd (Australia)10,650,4750.9Morgan Stanley & Co. International Plc (Collateral Account) (United Kingdom)10,227,0640.9Minbok Family (Australia)9,753,8240.8Credit Suisse AG (Switzerland)7,756,7200.7LSV Asset Management (United States)7,715,1000.7Adam Garrigan (Australia)7,500,0000.6Interactive Brokers - Private Clients (Various Countries)6,964,9770.6John Swinnerton (Australia)6,300,0000.5Jonathan Hestelow (Australia)5,164,1000.4UBS AG (Private Banking) (Switzerland)4,555,8360.4Coöperatieve Rabobank U.A. (Netherlands)4,258,2070.4Ensign Peak Advisors, Inc. (United States)4,238,2600.4UBS Securities Australia Ltd (Collateral Account) (Australia)3,939,6510.3Sub-total 814,953,06670.2GRANGE RESOURCES | ANNUAL REPORT 202180DISTRIBUTION OF EQUITY SECURITIESAnalysis of number of shareholders by size and holding:Ordinary SharesDirectorOptionsEmployee OptionsOtherOptions1 - 1,000 928---1,001 - 10,000 3,560---10,001 - 100,0002,508- --100,001 - and over514--Total7,510000The number of shareholders holding less than a marketable parcel of Ordinary Shares at 10 March 2022 was 281.VOTING RIGHTSAll shares carry one vote per share without restriction.SUBSTANTIAL SHAREHOLDERSAn extract of the Company’s Register of Substantial Shareholders as at 10 March 2022 is set out below: NameNumber of fully paid sharesVoting powerShagang International Holdings LimitedEver Lucky Developments LimitedRGL Holdings Co. Ltd>572,104,66849.4%Pacific International Co76,764,1796.6%SECURITIES SUBJECT TO VOLUNTARY ESCROWThe following securities are subject to voluntary escrow: Class of SecurityNumber of paid SecuritiesEscrowperiod endsFully Paid Ordinary SharesNilNot applicableGRANGE RESOURCES LIMITED BOARD OF DIRECTORS Michelle Li Yan Jia Chairperson Non-Executive Director, Deputy Chairperson Michael Dontschuk Non-Executive Director David Woodall Non-Executive Director (resigned 30 April 2021) Ajanth Saverimutto Non-Executive Director (appointed 1 June 2021) 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 SHARE REGISTRY 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 This report has been printed on recycled paper. GRANGE RESOURCES | ANNUAL REPORT 202180DISTRIBUTION OF EQUITY SECURITIESAnalysis of number of shareholders by size and holding:Ordinary SharesDirectorOptionsEmployee OptionsOtherOptions1 - 1,000 928---1,001 - 10,000 3,560---10,001 - 100,0002,508- --100,001 - and over514--Total7,510000The number of shareholders holding less than a marketable parcel of Ordinary Shares at 10 March 2022 was 281.VOTING RIGHTSAll shares carry one vote per share without restriction.SUBSTANTIAL SHAREHOLDERSAn extract of the Company’s Register of Substantial Shareholders as at 10 March 2022 is set out below: NameNumber of fully paid sharesVoting powerShagang International Holdings LimitedEver Lucky Developments LimitedRGL Holdings Co. Ltd>572,104,66849.4%Pacific International Co76,764,1796.6%SECURITIES SUBJECT TO VOLUNTARY ESCROWThe following securities are subject to voluntary escrow: Class of SecurityNumber of paid SecuritiesEscrowperiod endsFully Paid Ordinary SharesNilNot applicableANNUAL REPORT 2021ANNUAL REPORT 2021 GRANGE RESOURCES LIMITEDBurnie Office - Tasmania (Registered Office)34A Alexander Street Burnie, TAS 7320PO Box 659 Burnie, TAS 7320Ph +61 (3) 6430 0222 Em grr.info@grangeresources.com.au

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