GFM Griffin Mining Limited

RNS Number:6163Y
Griffin Mining Ld
20 February 2006





                               GRIFFIN MINING LIMITED
             60 St James's Street, London SW1A 1LE, United Kingdom
       Telephone: + 44 (0)20 7629 7772  Facsimile:  + 44 (0)20 7629 7773
                       E mail: griffin@griffinmining.com




                               20th February 2006

                                TRADING STATEMENT



Griffin Mining Limited ("Griffin" or the "Company") is pleased to announce that,
following the successful commissioning of the Caijiaying Mine and processing
facilities ("the Mine") in June 2005, 92,096 tonnes of ore have been processed
at the Mine in the six months to 31st December 2005, to produce 6,676 tonnes of
zinc metal in concentrate.  Following commissioning, steady improvements have
been made in recovery rates, concentrate and tailings grades. Production rates
are being increased and throughput is expected to be increased in the near
future.



Operating costs in the period to 31st December 2005 were higher than envisaged
for in the long term budgets due to inevitable initial teething problems in
commissioning the plant.  However, these have now been  rectified with the
skilled labour force, and equipment and spares on site.



Unit costs were also higher than allowed for in the long term budgets for the
Mine due to a lower head grade being fed to the plant and lower initial
production rates. With the plant now fully commissioned, improved efficiencies
in production and increasing production rates are being reflected in falling
unit costs.



Underground mine development has progressed ahead of schedule with the main
production decline completed to a depth of 200 vertical metres.  Access has been
constructed to the Fu Long, Jin Long and Chang Long lodes allowing stoping to
commence at each of these lodes. Access has also been gained to the Hong Long
lode and initial access gained to the main Ju Long lode.  During mine
development, economic mineralisation was found at shallower levels than
previously expected.  As a result, ore was extracted during mine development
with 53,350 tonnes of ore stockpiled as at 31st December 2005.



Management has taken a conscious decision to slightly lower the zinc head grade
being fed into the mill from that envisaged in the feasibility. This has been
done to fully utilise the ore discovered at shallower levels during driving the
decline at the Mine and lowering the cut off grade to increase the Mine tonnage
and increase throughput at the mill.



A combination of supply shortages and high demand in China has helped to drive
up the price of zinc in 2005 and should maintain the upward pressure on the zinc
price in 2006 and subsequent years. The price of refined zinc on the London
Metals Exchange ("LME") grew by 71.71% in 2005. Impacted by the growth in
international markets, the price of Shanghai zinc soared to RMB19,650 ($2,465)
per tonne in January 2006. This compares to a zinc price at the time Griffin
completed its feasibility study on the Mine in August 2003 of $760 per tonne.



Zinc concentrate is currently being sold by monthly tender from the Mine to
Chinese smelters and metals traders. The successful bidder is required to pay
for the concentrate in advance prior to collection of the concentrate from the
Mine. After taking due account of indicative smelter charges and transportation
costs, the prices received for zinc concentrate in 2005 have been in excess of
indicative prices on the London Metals Exchange.



In view of the current high zinc prices and the ready availability of zinc ore
at shallower levels, management has focused on the extraction and processing of
zinc ore without, at this stage, extracting and processing gold rich ore. Should
that situation change, or as the mine develops to lower levels where the bulk of
the higher grade gold is located, then processing of gold ore will take place.
At that point, precious metal dore will be produced at the Mine.



Extremely high health and safety standards to western specifications have been
implemented at the Mine.  As a result, the successful commissioning of the Mine
has been achieved without any serious safety incidents and with no deaths at the
Mine.



Over 350 people are now engaged on the Mine of which 160 are full time employees
of the joint venture company operating the Mine and the remainder provide
contracting services  for the provision of mining, ore haulage and other
supporting services.



Griffin has been able to defer the commencement of the two year Chinese
corporate tax holiday on income derived from the Mine to start from 1st January
2006. With income expected to significantly increase from the Mine in 2006 and
2007, this should have a positive financial impact for the Company.





Mladen Ninkov, Griffin's Chairman, commented as follows:


"The Mine has been commissioned with the absolute minimum of teething problems
for a completely new mine with all the ancillary facilities and services, which
is a huge credit to the professional and supporting staff at the Company and the
Mine.  The Company is now set to reap the financial benefits of the current
extraordinarily strong base metals market. "







Further information


Mladen Ninkov - Chairman                        Telephone: +44(0)20 7629 7772
Roger Goodwin - Finance Director
Griffin Mining Limited

Andrew Smith/Martin Eales                       Telephone: +44(0)20 7523 8350
Collins Stewart Limited

Hugo de Salis                                   Telephone: +44(0)20 7242 4477
St Brides Media & Finance Ltd



Griffin Mining Limited's shares are quoted on the Alternative Investment Market
                (AIM) of the London Stock Exchange (symbol GFM).

      The Company's news releases are available on the Company's web site:
                             www.griffinmining.com







                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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