Grange Resources appears to be backing away from a mid-2015 production deadline for its proposed $2.9 billion Southdown magnetite project, in the wake of significant drops in iron ore prices in recent months.
New managing director and chief executive Richard Mehan, who took over at Grange on August 6 after the surprise resignation of predecessor Russell Clark, said Grange shouldn’t be “prescriptive” about dates in the current iron ore climate.
Shortly before his resignation in late July, Mr Clark said commissioning Southdown was targeted for mid-2015 with production to follow shortly after that.
But Mr Mehan said the company was now in cost-saving mode and was concentrating on its current process of selling down at least 30 per cent of its 70 per cent stake in Southdown rather than focusing on commissioning deadlines for the project.
“The critical things in this are final investment decisions and financing,” he said.
“(Dates) depend on the interest we get and what eventuates from the sell-down.”
Mr Mehan visited the proposed Southdown site near Wellstead for the first time last week and said Grange would continue to spend a significant amount on the project for now.
“But I’m looking at all the bucks in that as well, as you would in a market like we’re in,” he said.
“We’ve got a good balance sheet, a good cash reserve, (but my priority) is making sure that we get through the second half as well as we can.
“When you go through a severe correction you’ve got to do lots of things to manage your costs.”
One of the cost-saving measures was a recent announcement of a cut in Grange’s interim dividend from 2c per share to an unfranked 1c.
Mr Mehan said the cut was partially in response to a rock slide at its Savage River operation in Tasmania in July, in addition to the market fall.