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Grange in a holding pattern
Nick Sas, The West Australian May 9, 2013, 7:19 am
Grange in a holding pattern
With its flagship project on ice and its share price hitting 10-year lows, Grange Resources managing director Richard Mehan has conceded its current situation is not one to promote, and it will continue a holding pattern until conditions improve.
Speaking to shareholders at its general meeting yesterday, Mr Mehan, who has been in the role since September, said in the context of the general negative sentiment surrounding small resource stocks, and its corporate inactivity, it was logical to remain on the sidelines.
Grange operates the small but profitable Savage River magnetite operation in Tasmania, but announced in late November its flagship $2.9 billion Southdown project near Albany would be put on ice until market conditions improved, after it failed to find a strategic partner.
The announcement, along with the September iron ore price meltdown, has correlated into a severe drop in Grange's share price, which hit a 10-year low of 13.5¢ earlier this month.
Mr Mehan, along with chairman Zhiqiang Xi, admitted yesterday they had received concerned calls from shareholders questioning the price demise.
Responding to a question at yesterday's meeting on Grange's lack of marketing strategy from former Grange managing director Russell Clark, who still owns 1.8 million shares in the company, Mr Mehan said if you did not have a good story to tell, it was not the time to talk.
"Frankly the company has had three difficult quarters, particularly in terms of costs (at Savage River)," Mr Mehan said.
"And in December we announced the growth project (Southdown) that we talked about so much, for good reasons, for the previous four years, has been reduced to a minimum expenditure.
"We've been out there talking to people and telling them the company's in good shape, but in terms of being able to announce something that is a great marketing development or opportunity, it's been a very difficult time to do that.
"We have been doing some, but we haven't - in the past eight or nine months - had a great story to tell."
According to Grange, which is 59.5 per cent owned by Chinese steel mill Shagang International Holdings, it has $164 million in cash, term deposits and trade receivables and no net debt.
http://au.news.yahoo.com/thewest/business/a/-/wa/...-holding-pattern/
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