Grange Resources Limited, continued strong demand

Team Veye | 27 Jan 2021 ASX - GRR
Grange Resources Limited, continued strong demand

Grange Resources Limited (ASX: GRR)

Grange Resources Limited (ASX: GRR) on 25 January 2021, released its quarterly report for 3 months ended on 31 December 2020.

The company has closed the year 2020 on a very strong note. It has managed to deliver exceptional sales volume figures. The stronger performance of the downstream processing and engineering team in installing and commissioning the Steel Pan Conveyer system in a shorter time than expected resulted in the production of the higher quality pellets with higher compression strength, with less down time and less maintenance and more effective use of energy.

(Chart source: TradingView)


  • Keeping the health, safety and well-being of the company’s workforce on a priority, the operation achieved over 1380 days Lost Time Injury Free
  • Pellet production decreased for the quarter with 479kt compared to 639kt for the September quarter due to the planned major shut for the steel pan conveyor installation.
  • Pellet sales increased for the quarter to 754kt compared with 422kt for the September quarter
  • Increase in average received prices for the quarter to US$174.69/t (A$236.77/t) (FOB Port Latta) compared with US$130.22/t (A$182.49/t) for the September quarter.
  • Unit cash operating cost decreased for the quarter to $101.13/t compared with $101.45/t for the September quarter.
  • Cash and liquid investments of $202.93 million and trade receivables of $79.32 million compared with cash and liquid investments of $175.53 million and trade receivables of $13.15 million for the September quarter.
  • Outlays of approximately $16.7 million has been made in the quarter on capital projects including Mine Control, Truck Trays, NP Open Pit drilling program and Pellet Plant improvement projects.

The Company has also provided an update on its major projects

  • North Pit Underground: Prefeasibility study work continues with designs and schedules being developed to assess different methods of mining. The pre-stripping of waste material from Centre Pit has continued in preparation for ore supply later in 2021. The environmental impact statement for the ultimate design has been prepared and the approval process is underway with a review expected through the first quarter of 2021.
  • Port Latta Improvement Projects:  Redesigning and rebuilding of the fifth furnace continue in order to improve the airflow. Successful completion of the project will improve pellet quality and reduce energy consumption. The conceptual design was developed through Q4, with detailed design work and a review of the procurement of key components being done in Q1, 2021.
  • Southdown Magnetite Project: Company was granted approval of the Southdown Magnetite Project (EPBC 2011/6053) under the Environment Protection and Biodiversity Conservation Act 1999. Strategic review of the project under the current market conditions is being carried out along with the process of seeking a strategic investor(s) for the project (Data Source – Company Reports)


Veye’s Take

Grange had a very strong fourth quarter that completes a strong 2020, delivering exceptional sales volume figures in combination with record sales prices in recent years. The successful installing and commissioning of the Steel Pan Conveyer system in a shorter time than planned enables higher quality pellets with higher compression strength to be produced, reduced down time and less maintenance and more effective use of energy. Grange has fully allocated all of 2021 production through offtake agreements at an additional premium above the 65% Fe fines and pellet premium indices. This demonstrates the strong demand for Grange’s high quality and low impurity products to existing in the future. The stock has been on an upside rally after taking the support of the middle band of the Bollinger at $0.255. Positive divergence formation on RSI, Positive cross over on MACD and “Higher High” formation with no reversal pattern indicates further bullishness. It is trading above its MAs and a close above $0.39, its daily resistance, can have the potential of accelerating its momentum. Veye maintains “Hold” on Grange Resources Limited at the current price levels of $0.370


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