Grange Resources (GRR): An 83% Loss in Three Years—What Went Wrong and Can It Recover?
3min read 
Investors in Grange Resources (ASX:GRR) have faced a staggering 83% decline in their holdings over the past three years—a collapse driven by a toxic mix of deteriorating fundamentals, poor capital allocation, and governance missteps. To understand this downturn, we analyze the company’s financial unraveling and assess whether recent strategic shifts can reverse its trajectory.
Ask Aime: What are the reasons behind Grange Resources' 83% decline, and can it recover?
The Earnings Collapse: A 61% Drop in EPS by 2024
Grange’s decline began with a catastrophic erosion of profitability. Its earnings per share (EPS) fell by 43% annually between 2022 and 2024, far outpacing the 48% annual drop in its share price. By FY 2024, EPS plummeted to AU$0.051, a 61% decline from 2023 levels. This collapse was exacerbated by:
- Margin Compression: Net margins halved to 11.2% in 2024 from 24.4% in 2023, as rising operational costs outpaced revenue growth.
- Industry Underperformance: While the Metals & Mining sector saw EPS grow 20.1% annually, Grange’s EPS declined -10.6% annually, making it one of the worst performers in its sector.
Capital Inefficiency: ROCE Plummets to 4.7%
The company’s inability to generate returns on invested capital (ROCE) became a critical red flag. ROCE dropped from 13% in 2018 to 4.7% by late 2024, far below the sector average of 8.3%. This signaled:
- Misallocated Capital: Despite deploying AU$1.3 billion in assets by 2024, revenue grew at a meager 2.4% annually, versus the industry’s 22.3% growth rate.
- Strategic Blind Spots: Projects like the Savage River Underground prefeasibility study failed to deliver expected returns, highlighting poor project prioritization.
Revenue Stagnation Amid Sector Growth
Grange’s revenue growth stalled even as commodity prices rose. Key issues included:
- Weak Revenue Generation: Revenue grew just 2.4% annually, falling from a peak of AU$782 million in 2021 to AU$521 million by late 2024.
- Competitor Outperformance: Peers capitalized on rising iron ore prices (up ~30% in 2022–2023), but Grange’s sales volumes and pricing power lagged, reflecting lost market share.
Governance and Leadership Failures
Internal instability compounded financial woes:
- Board Turnover: Directors like Chongtao Xu (April 2025) and Yan Jia (Sept 2023) resigned, with <50% of the board being independent, raising governance concerns.
- Dividend Cuts: Grange slashed dividends from AU$0.10 in 2022 to AU$0.02 in 2024, signaling cash flow strain and eroding investor confidence.
Ask Aime: "Grange Resources Stock Plummeted. Will it Recover?"
Market Sentiment: A 54% Single-Year Loss
Investors reacted harshly:
- Share Price Decline: The stock fell 86% over three years (2022–2025), underperforming the broader market (which rose 4.5% annually).
- Technical Weakness: A -2.14% YTD return in Q1 2025 and a “Hold” technical rating reflect lingering skepticism.
Recent Developments: Can Grange Turn the Tide?
Q1 2025 results offered a glimmer of hope:
1. Safety and Project Progress: No lost-time injuries and advancements in the North Pit Underground project (targeting 2026 execution) suggest operational resilience.
2. Strategic Shifts:
- The Southdown Magnetite Project feasibility study confirmed its viability in the direct reduction iron (DRI) market, a high-growth sector for green steel production.
- Re-acquiring a joint venture partner’s interest in Southdown strengthens control over this promising asset.
3. Cash Position: Despite a slight dip in cash reserves, Grange maintained a $152.5 million market cap, leaving room for disciplined capital allocation.
Conclusion: Recovery Requires More Than Projects
Grange’s 83% loss is the result of a perfect storm: operational failures, poor capital allocation, and governance risks. While recent moves like the Southdown project and North Pit Underground aim to restore growth, success hinges on:
- ROCE Improvement: ROCE must rebound from 4.7% to at least 8% to align with sector norms.
- Revenue Growth: Reaching 5–7% annual revenue growth (vs. current 2.4%) is critical to rebuild margins.
- Leadership Stability: Reducing board turnover and enhancing independent oversight will rebuild investor trust.
Final Analysis: Grange’s fundamentals remain fragile. While its DRI-focused projects offer long-term potential, near-term risks—such as reliance on volatile iron ore prices and execution delays—loom large. Until ROCE and revenue growth stabilize, investors should tread cautiously.
