Shares in magnetite iron ore pellet producer Grange Resources jumped more than 8% yesterday after the company revealed a maiden dividend and a $58.1 million first half profit.
Grange shares were up 8.4% to 51.5c, a rise of 4c on the day,
The shares closed at the day’s high.
The company told the market yesterday that it would pay a maiden unfranked interim dividend of 2c a share.
The result was achieved on an 8% rise in revenue to $209 million in the six months to June, compared with the same period of 2010.
The company produced 840,018 tonnes of pellets in the six months to the end of June at its flagship Savage River operations in Tasmania.
It also said it had advanced a feasibility study for its Southdown magnetite project near Albany.
Grange managing director Russell Clark said the company was pleased to declare an inaugural dividend and expected to continue to issue dividends in the periods ahead on the back of continuing strong prices for iron ore.
"Grange has delivered a solid half year to shareholders. Savage River continues to enjoy strong commodity prices with excellent cash generation and development of the Southdown project near Albany in Western Australia is progressing on schedule and under budget. Highlights for the half year include," Mr Clark said.
"The recent appreciation of the Australian dollar has been mitigated by higher iron ore pellet prices during the half year. Margins from pellets sales remain high (A$95.2 per tonne of pellets sold) and continued cost management has created a platform for the Company to continue its investment in the Savage River mine and processing infrastructure as well as fund its continued investment of the Southdown project.
"Opportunities with nearby magnetite developers in Tasmania, together with exploration success at Savage River provide a path to produce more at that operation and to drive unit costs down," he said.
The company said it continued to target production of 2mtpa of pellets from Savage River and expected to produce significantly more tonnage in the second half of 2011 than in the first six months, with a consequent reduction in unit operating costs.
Grange is controlled by Chinese group, Shagang International Holdings Ltd and associates who owned around 66.2% of the shares.
Shagang is one of the company’s two major customers, along with BlueScope Steel.
And BlueScope’s recent cuts at its Wollongong steel mill seems to be the only black cloud hanging over the group, although Wednesday’s profit statement made no mention of it.
But in the wake of the BlueScope announcement early last week, this statement was issued by Grange:
"Australia’s leading magnetite producer yesterday confirmed that it has a contract with BlueScope Steel for the delivery of 800,000 tonnes of iron ore pellets in the year 1st July 2011 to 30th June 2012 from its Savage River operations.
"On 22nd August 2011, BlueScope Steel advised the market that it planned to shut down its No.6 blast furnace at Port Kembla, with overall steel production to reduce to 2.6 million tonnes per annum from early October, 2011.
"Grange has advised it is working with BlueScope to assess the impact of BlueScope’s planned production changes on its requirements for Savage River Pellets from October 2011 to June 2012. Grange advised this may include assistance for "onselling" a portion of remaining contracted offtake that BlueScope may determine is not required for its steel making at Port Kembla.
"Grange advises that it does not expect to suffer any financial loss as a result of BlueScope determining its revised requirements, and potentially on-selling offtake to other customers. Grange’s contract with BlueScope is fixed term with a pricing mechanism that has previously been agreed. Grange is confident that the contract terms will be met by BlueScope."
And would-be iron ore miner Murchison Metals has named the day for the release of its all important June 30 results.
The company said yesterday that as a mining company, it is not obliged to file its June 30 figures until the end of September.
"As announced yesterday (Tuesday), Murchison plans to release its results for the financial year ended 30 June 2011 on 21 September 2011, consistent with the timing of its results in previous years," the company told the ASX yesterday.
Murchison is involved in the stalled $6 billion Oakajee port and rail development in Western Australia.
The results will detail the company’s attempts to find finance for this huge project which is heavily over budget.
Murchison is a 50% shareholder in Crosslands Resources Ltd, which is the owner of the Jack Hills iron ore project in the Midwest WA.
The other half of Crosslands is held by Mitsubishi Development Pty Ltd, a subsidiary of Japan’s huge Mitsubishi Corporation.
The future of the Oakajee project remains uncertain since state-owned Chinese group and would-be customer Sinosteel mothballed its $2 billion Weld Range iron ore project in June.
Murchison revealed its funding difficulties and the cost problems in a detailed statement in early July. Changes in senior management were made at the same time.
Murchison’s shares have dropped sharply be
