Ann: GRR - Quarterly Report for 3 months ended 30 June 2017, page-11

Whether or not people's points of view are sincere, they are all open to challenge.

The facts of this situation are that, due to the inability to access the main ore body, Grange mined 2.8m BCM vs an average of about 2.25m BCM in the previous two quarters but only produced about one third of the amount of pellets. Assuming a predominantly fixed operating cost structure, it follows that production costs would have tripled. In other words, most of their effort went into moving dirt.

I'm surprised at the reaction on this thread to the update because this situation was entirely foreseeable. Management had previously stated that the problems with accessing the main ore body would result in production falling by 400-5o0t this year, so having dropped about 300t in the last quarter there is still another 100-200 tonnes to be dropped this quarter. Management have stated that "we are on track to deliver sustainable high grade mill feed in Q3" and have not revised their total tonnage guidance, which is why I don't think there was anything unexpected in this update.

So production costs will be high this quarter but, as the market currently stands, so too will the average IO price. Whether or not cash falls by $10m at the end of the quarter is immaterial to my view of valuation. With the major capital works projects now complete, value (as distinct from price) will be driven by production returning to normal levels and the IO price outlook.