The combination of market speculation over a future acquisition and the recent iron ore price rally has provided Grange Resources with an overdue market revaluation, its managing director says.
There was a small correction yesterday in which Grange dropped 2ï¿½ to 33ï¿½ but the Perth-based magnetite producer rose more than 20 per cent to 35ï¿½ on Monday on heavy volumes, sparking a price query from the Australian Securities Exchange.
Speaking to _WestBusiness _ yesterday, Grange managing director Richard Mehan attributed the price rise to the recent rise in the iron ore price.
"We're a pure iron ore stock now and when the iron ore price is high Savage River (its open cut mine in Tasmania) has good margins," Mr Mehan said. "And it's about time the market recognised our value."
Iron ore hit $US144.90 a tonne yesterday - up from $US115/t at the start of December.
Grange was hit hard when the iron ore price collapsed to three-year lows of less than $US90/t in September. Its share price plunged to 3 1/2 -year lows of 22Â¢.
The adverse market conditions also played a part in the company's decision to put the $2.9 billion Southdown magnetite project near Albany on ice in November.
That has opened the door for Grange, now cashed-up, to acquire another project.
Mr Mehan said there was nothing specific on the radar yet, however it was something the board and senior management were actively perusing."We don't have the expenditure requirements on Southdown after the revision and we have a good balance sheet, so it makes sense to look around," Mr Mehan said. "It's been discussed but it's still early days."
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