Grange Resource expects more price for iron ore

Saturday, 22 Jan 2011
Magnetite iron ore exporter Grange Resources expects to secure a 20% jump in prices this quarter to USD 180 a tonne.
Grange, which mines at the Savage River project in Tasmania, received USD 150 a tonne last quarter for its iron ore pellets, which require more processing and generally receive a USD 50 a tonne premium to the iron ore fines mined in Western Australia's Pilbara region.
The Perth based miner said costs at Savage River in the three months to the end of December jumped 43% to USD 91.37 a tonne because a previously announced rockslide meant it produced less from worse quality ore than in the previous quarter.
Quarterly pellet production slipped to 442,427 tonnes from 640,000 tonnes the previous quarter.
Higher prices kept revenue from falling too far, with the company reporting USD 89.2 million of sales, down from USD 97 million in the previous quarter. However, the stock market was squarely focused on the price outlook for iron ore, pushing Grange's shares 10c higher to 90c and pushing the company's market value past $1 billion for the first time since October 2008.
Grange is also investigating the bigger Southdown magnetite project near Albany in WA.
At Southdown, Grange has increased the scope of its project to one that will be able to produce 10 million tonnes of magnetite concentrate a year, which is about four times the size of Savage River.
Following a pre feasibility study finished last month, the company has also decided it will require a desalination plant to provide water to treat the increased production.
The increased size, from 7 million tonnes previously and the desalination plant will increase the capital cost from previous estimates of USD 1.9 billion but the company is not releasing the new estimates. (Sourced from The Australian)