Grange Resources : Full Yr Statutory Accts 12 Months Ended 31 Dec 2021

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Grange Resources Limited

ABN 80 009 132 405

and Controlled Entities

Australia's most experienced magnetite producer

FINANCIAL REPORT

For the Year Ended

31 December 2021

Contents
Directors' Report	2
Corporate Governance Statement	21
Auditor's Independence Declaration	22
Financial Statements	23
Directors' Declaration	76
Independent Auditor's Report	77

For personal use only

GRANGE RESOURCES LIMITED ABN 80 009 132 405

31 DECEMBER 2021 FINANCIAL REPORT

DIRECTORS' REPORT

The Directors present their report on the consolidated entity (the "Group") consisting of Grange Resources Limited ("Grange" or "the Company") and the entities it controlled at the end of, or during, the year ended 31 December 2021.

Directors

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

Michelle Li	Chairperson
Yan Jia	Non-Executive Director, Deputy Chairperson
Honglin Zhao	Executive Director
Michael Dontschuk	Non-Executive Director
David Woodall	Non-Executive Director (resigned 30 April 2021)
Ajanth Saverimutto	Non-Executive Director (appointed 1 June 2021)

Information on Directors

Michelle Li, PhD, GAICD

Independent Non-executive Chairperson, Member of the Audit and Risk Committee, Member of the Remuneration and Nomination Committee.

Dr Li has more than 30 years of international mining experience, including senior executive roles with mining companies such as Citic Pacific, Rio Tinto and Iluka Resources.

Dr Li has a PhD from the University of Queensland and was previously a non-executive Director of Ardiden Limited, Orion Metals Limited and Sherwin Iron Limited.

Yan Jia, GAICD

Non-executive Deputy Chairperson

Ms Jia is currently the Director of the Administration Department with the Jiangsu Shagang International Trade Co Ltd, a subsidiary of Jiangsu Shagang Group, China's largest private steel company. Ms Jia has over ten years' experience of managerial, human resources, intellectual property and commercial experience in the steel industry and bulk raw material transaction sector.

Honglin Zhao

Executive Director, Chief Executive Officer

Mr Zhao is a former Director of Shagang International (Australia) Pty Ltd, former Director and General Manager of Shagang (Australia) Pty Ltd, and former Director of Jiangsu Shagang Group, ultimate shareholder of Shagang International Holdings Limited and China's largest private steel company.

Mr Zhao has over 40 years' experience in the industry and was previously the Commander of Project Development Headquarters with Shagang. Mr Zhao has extensive project management and implementation experience and expertise.

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GRANGE RESOURCES LIMITED ABN 80 009 132 405

31 DECEMBER 2021 FINANCIAL REPORT

Michael Dontschuk BSc(Hons), FFTP, GAICD

Independent Non-executive Director, Chairperson of the Audit and Risk Committee, Chairperson of the Remuneration and Nomination Committee

Mr Dontschuk is a finance professional with over 35 years' experience in investment, finance, treasury and financial risk management. He currently is a professional NED and sits on a number of company boards including Eticore, Public Trustee (Tasmania) and Australia Ratings.

Previously Mr Dontschuk has been Group Treasurer of Grange Resources, Group Treasurer of ANZ Bank, Managing Director of Treasury Corporation Victoria, President and Director of the Finance and Treasury Association of Australia and has worked extensively in corporate financial advisory and investment banking including with Oakvale Capital and Bankers Trust.

David Woodall, MSc, BSc, GAICD

Independent 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.

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 ASXlisted 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.

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GRANGE RESOURCES LIMITED ABN 80 009 132 405

31 DECEMBER 2021 FINANCIAL REPORT

Principal Activities

During the period, the principal continuing activities of the Group consisted of:

• the mining, processing and sale of iron ore; and
• the ongoing exploration, evaluation and development of mineral resources.

Dividends

Dividends paid to members during the financial year were as follows:

	2021	2020
	$'000	$'000
Fully franked special dividend for year ended 31
December 2021 - 10.0 cents per share	115,734	-
Fully franked interim dividend for half year ended
30 June 2021 - 2.0 cents per share	23,147	-
Fully franked final dividend for the year ended 31
December 2020 - 2.0 cents per share	23,147	-
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 paid	162,028	23,148

Since 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 Review

Key Highlights

Mining 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.

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GRANGE RESOURCES LIMITED ABN 80 009 132 405

31 DECEMBER 2021 FINANCIAL REPORT

Safety performance

A focus on safety has been maintained across the business with over 1,750 days Lost Time Injury Free achieved.

Covid-19 Business Response

To 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:

	2021	2020
Iron Ore Pellet Sales (dmt)	2,507,201	2,376,029
Iron Ore Concentrate Sales (dmt)	42	-
Iron Ore Chip Sales (dmt)	108,130	113,611
Total Iron Ore Product Sales (dmt)	2,615,373	2,489,640
Average Realised Product Price	208.08	136.85
(US$/t FOB Port Latta) *
Average Realised Exchange Rate	0.7535	0.6955
(AUD:USD)
Average Realised Product Price	276.17	196.77
(A$/t FOB Port Latta)

*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 off take agreements with Jiangsu Shagang International Trade Co. Ltd represents 27.7% of total sales for 2021 (2020: 34.6%).

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