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Grange Resources Pellet sales agreement with Shagang
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Tuesday, 20 Nov 2012
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Grange Resources Limited, Australia's leading magnetite producer, announced that it has reached agreement with its major customer Jiangsu Shagang International Trade Company Ltd, to revise the annual off take tonnage and the pricing mechanism applying to its iron ore pellet sales agreement for Savage River production.

The annual contracted pellet off take tonnage to Shagang will be 1 million tonnes per annum. This revised off take tonnage is consistent with the Company's risk diversification strategy and eliminates the reliance on a single off taker and geographic market by providing the Company with an opportunity to actively market its iron ore pellets to customers across a number of geographic locations.

The pricing mechanism for iron ore pellet sales to Shagang, which has been revised in accordance with the existing agreement, will adopt a Metal Bulletin Iron Ore Pellet reference price. This reference price is published weekly for a 65% to 66% Fe, iron ore pellet product and is quoted on a USD per dry metric tonne CFR North China basis. The reference price will be converted to an FOB price per dry metric tonne using a freight net back calculation developed with the assistance of independent advisors. The revised pricing mechanism will be applied retrospectively to all shipments from 1st April 2012 and will not have a material effect on previously reported sales revenues.

Mr Richard Mehan MD of Grange said that "The agreement will put Grange in a strong position to facilitate the further development of key relationships with major iron ore buyers. We have a significant cornerstone contract, at market prices, with Shagang a major Chinese steel producer and the ability to diversify our customer base for products that are sought after in Asian markets as well as retain some flexibility to sell into spot price markets."

Source - Grange Resources Limited

(www.steelguru.com)

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