TIDMGFM
RNS Number : 8575F
Griffin Mining Ld
04 May 2011
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
4(th) MAY 2011
PRELIMINARY RESULTS
Griffin Mining Limited has today published its preliminary
results for the year ended 31 December 2010.
Highlights:
-- Increased profit before tax and minority interests of $11.2
million, compared with $7.2m in 2009.
-- Increased profits from operations of $13.1m compared with
$5.5m in 2009.
-- 389,496 tonnes of ore processed compared to 276,880 tonnes in
2009, a 40.6% increase.
-- 22,044 tonnes of zinc in concentrate produced compared to
17,167 tonnes in 2009, a 28% increase.
-- Record production of 7,067 ounces of gold in concentrate
compared to 3,726 ounces in 2009, a 90% increase.
-- 157,679 ounces of silver in concentrate produced compared to
89,222 ounces in 2009, a 77% increase.
-- 690 tonnes of lead in concentrate produced compared to 500
tonnes in 2009, a 38% increase.
Overview
Griffin Mining Limited ("Griffin" or the "Company") and its
subsidiaries (together the "Group") recorded a profit before tax
for the year of $11,236,000 (2009: $7,246,000). The increase in
profit arises despite the suspension of site activities from the
9(th) August 2010 to the 9(th) December 2010 following the death of
two men employed by the mining contractor at Caijiaying. This
result is a tribute to the efforts of all site and administrative
personnel who worked so tirelessly to lift the operating suspension
at Caijiaying.
Despite the suspension in activities during 2010, production in
2010 represents a significant increase in performance from the
interrupted 2009 year with zinc concentrate production falling just
short of the maximum achieved in 2008 of 22,922 tonnes.
Outstandingly, 2010 was a record for gold production at
Caijiaying.
In August 2010, construction of the upgraded processing
facilities at Caijiaying was completed creating the operating
capability to process 750,000 tonnes of ore per annum. The
unfortunate events of the 8(th) August 2010 delayed commissioning
of the new ball mill and crushing circuit until recommencement of
operations on the 9(th) December 2010. Commissioning of the
upgraded processing facilities has been completed and mining and
haulage of ore has been increased to meet the expanded processing
capacity of the mill. As with the previous construction of
processing facilities at Caijiaying, it is expected that the
engineering work recently completed on the upgrade to the
processing facilities, in addition to the expertise of the staff on
site, should enable significantly more throughput to be processed
than the designated 750,000 tonnes of ore per annum.
In order to protect the Company's revenue stream should the
price of zinc fall significantly, the Company purchased put options
with a strike price of $1,700 per tonne over 24,000 tonnes of zinc
metal at a cost of $2,238,000. The zinc price remained relatively
strong in 2010 with the LME zinc price averaging approximately
$2,160 per tonne. As a result, the put options were marked to
market at 31 December 2010 with a charge to profit of
$2,224,000.
With cash balances averaging some $67 million in 2010, Griffin
benefited from interest receipts of $350,000 in 2010 (2009:
$253,000).
Foreign exchange gains of $38,000 were recorded in 2010 (2009:
gains of $1,956,000) with a weakened sterling creating losses on
sterling deposits offset by the strengthening Australian Dollar and
Chinese Renminbi which created profits on both Dollar and Renminbi
accounts.
Griffin's 39.2% share of the losses of Spitfire Oil Limited
("Spitfire") of $109,000 has been recognised in 2010 (2009
$517,000).
Chairman's Statement:
In spite of the year not progressing as originally envisaged due
to factors outside the control of the Company, the Group still
managed to record a profit before tax for the year of $11.24
million compared to $7.25 million in 2009. This included a 40.6%
increase in ore processed, a 28% increase in zinc concentrate
produced, a 77% increase in silver produced in concentrate and a
90% increase in gold produced in concentrate, a record for gold
production at Caijiaying.
The increase in profit and production was particularly
noteworthy as it was achieved despite the suspension of all
activities at Caijiaying for 4 months following the death of two
men employed by the mining contractor at Caijiaying. Although the
Company's subsidiary, Hebei Hua Ao Mining Industry Company Limited
("Hebei Hua Ao"), was exonerated from primary fault, I would like
to express my deep sorrow that such an event could occur at
Caijiaying and send my condolences to the deceased miners'
families. Griffin has, and continues to provide, its full
co-operation and support to the Chinese individuals and government
departments touched by this unfortunate occurrence and continues to
seek to improve safety at Caijiaying above and beyond that
recommended by the Chinese authorities.
Although construction of the upgraded processing facilities at
Caijiaying was completed in August 2010, the unfortunate deaths of
the 8th August 2010 delayed commissioning of the new ball mill and
crushing circuit until the first quarter of 2011. As with the
previous construction of processing facilities at Caijiaying, it is
expected that the upgrade of the processing facilities should
enable significantly more throughput to be processed than the
designated 750,000 tonnes of ore per annum.
It is expected that part of that substantially increased
throughput, over and above 750,000 tonnes of ore per annum, will be
provided from the new resource at Zone II. In January 2011, a new
JORC reported Mineral Resource Estimate for Caijiaying was produced
which showed an 18% increase in the mineral resource at Zones II
and III representing a 30 plus year mine life at the increased
throughput rate. This gave Hebei Hua Ao sufficient confidence to
commence the necessary extra infill drilling, reports and work to
support an application for a mining licence at Zone II with a view
to extracting a further 500,000 tonnes of ore per annum from that
area.
In this modern age, it is vital for a mining company to be a
good citizen of the community and country in which it operates. To
that end, Hebei Hua Ao has provided direct water supplies to the
local villagers, constructed sealed roads to the Caijiaying mine
and nearby villages, financed the construction of a local
kindergarten and old people's rest home and assisted with other
infrastructure projects. Hebei Hua Ao has also assisted in the
upgrade of facilities at the local township school and set up
"Project Hope" to provide scholarships to local students. Griffin
estimates that the Caijiaying mine has provided employment directly
and indirectly to over 1,000 Chinese nationals whilst minimizing
the employment of foreign personnel. Griffin has striven to protect
the local environment and in that regard Hebei Hua Ao's activities
in China were formally recognized when it was presented with the
environmental award at the 2010 China Mining conference. Griffin,
through Hebei Hua Ao, has shown itself to be a responsible partner
and operator in China.
Unfortunately, the Company does not operate in an economic
vacuum. As has been mentioned numerous times in past missives,
mining is generally a fixed cost business whose profitability is
largely dependent on a predetermined commodity price. With China
now acquiring 60% of the world's iron ore and 40% of its base
metals production, neither China nor the world's economy can be
ignored, even at the microeconomic level at which Griffin
operates.
Unfortunately the world's economy has been shown to be, at best,
brittle and, at worst, structurally unsound. The global financial
crisis of 2008 has demonstrated that the USA and Europe are on the
downward slope of their economic power without the political or
economic bipartisanship will to undertake the reforms critical to
stave off economic decline. The huge transference of private to
public debt in the USA reaching a staggering $14.3 trillion,
unfunded Medicare and pension liabilities and the need to raise the
national debt ceiling merely to pay recurring expenditure and
interest obligations on US government debt, does not bode well for
the world's largest economy. Europe continues to try to live with
the unliveable with a European Central Bank setting monetary policy
over wayward individual country members setting their own fiscal
policies. The inevitable consequences have become apparent with
Ireland, Portugal and Greece with more surely to follow. China
remains the world's economic powerhouse although with the advent of
rapid inflation coupled with a fixed exchange rate, its export
driven economy will inevitably suffer. It is also worthy to note
the questionable status of the Chinese banking system and the level
of non-performing loans in that country.
What this means for Griffin is the need for patience. Although
the Company has significant financial resources, including some $65
million in cash, real value is created by purchasing assets below
their true intrinsic value at the low end of an economic cycle or
in a severe financial downturn. It is the view of the Company that
mineable resources are scarce and becoming ever harder to find. It
is also true that China and India are in the midst of a large
urbanization process which will cause commodity prices to remain
buoyant in the long term. When commodity prices are high, mining
asset values are even higher. No economic growth process in history
has been linear and the Company expects a significant correction in
this progression in the near future. It is therefore the Company's
task to assemble the right acquisition targets, human capital and
capital markets support to make these acquisitions when the
inevitable correction occurs. The Company remains dedicated to only
acquiring further assets where they provide real value over a long
period of time with substantial added value to shareholders.
It is also likely that the Company will list its shares on the
Hong Kong Stock Exchange at some point in the future. That date
will be driven by the Company's need for capital should the next
acquisition require additional funds. History has shown that unless
liquidity is provided in a new listing through a new issue of
shares, that company's stock will trade thinly and without any real
interest by Hong Kong and retail investors. Needless to say, an
acquisition would never be made, a capital raising completed or a
listing sought unless it was genuinely in the best long-term
interest of shareholders.
In that same vein, the directors have agonized, after extensive
consultation with shareholders, over the reinstatement of a
dividend to shareholders. Whilst understanding and agreeing with
the discipline and financial need of many shareholders for a
dividend, the Company still believes that the better use of
internal funds can be made on the acquisition of assets that may
become available in the near future. In the interim, to alleviate
some shareholders need for capital and to allow each individual
shareholder to deal with his or her tax position, the Company has
continued its share buy-back programme.
In such a year as 2010, tribute must be paid to the efforts of
all site staff, head office personnel and the directors who worked
so tirelessly to lift the operating suspension at Caijiaying,
commission the plant upgrade, increase throughput, evaluate
acquisitions and set the Company on the path to renewed financial
strength in 2011. My sincere thanks to every one of them.
Dividend
The directors do not recommend payment of a dividend at this
time in the Company's development but have instigated a share
buyback programme which provides an effective and tax efficient
method of providing returns to individual shareholders.
Further information
Griffin Mining Limited
Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7772
Roger Goodwin - Finance Director
Panmure Gordon (UK) Limited Telephone: +44 (0) 20 7459 3600
Dominic Morley
Hannah Woodley
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
Griffin Mining Limited
Summarised Consolidated Income Statement
For the year ended 31 December 2010
(expressed in thousands US dollars)
2010 2009
$000 $000
Revenue 41,050 25,368
Cost of sales (16,780) (11,909)
Gross profit 24,270 13,459
Net operating expenses (11,127) (7,940)
Profit from operations 13,143 5,519
Share of losses of associated company (109) (517)
Foreign exchange gains 38 1,956
Finance income 350 253
Finance losses (2,224) -
Other income 38 35
Profit before tax 11,236 7,246
Income tax expense (2,376) (1,013)
Profit after tax 8,860 6,233
======== ========
Attributable to non-controlling interests 6,116 2,621
Attributable to equity share owners for
the parent 2,744 3,612
8,860 6,233
======== ========
Basic earnings per share (cents) 1.51 1.99
======== ========
Diluted earnings per share (cents) 1.49 1.97
======== ========
Griffin Mining Limited
Summarised Consolidated Statement of Comprehensive Income
For the year ended 31 December 2010
(expressed in thousands US dollars)
2010 2009
$000 $000
Profit for the year 8,860 6,233
------ -----
Other comprehensive income
Exchange differences on translating foreign
operations 1,374 87
Other comprehensive income for the period,
net of tax 1,374 87
------ -----
Total comprehensive income for the period 10,234 6,320
====== =====
Attributable to non-controlling interests 6,218 2,616
Attributable to equity owners of the parent 4,016 3,704
10,234 6,320
====== =====
Griffin Mining Limited
Summarised Consolidated Statement of Financial Position
As at 31 December 2010
(expressed in thousands US dollars)
2010 2009
$000 $000
ASSETS
Non-current assets
Property, plant and equipment 77,745 63,214
Intangible assets - Exploration interests 1,481 1,422
Investment in associated company 3,877 3,986
----------- -----------
83,103 68,622
----------- -----------
Current assets
Inventories 3,136 2,780
Other current assets 3,423 5,279
Cash and cash equivalents 66,450 67,630
----------- -----------
73,009 75,689
Total assets 156,112 144,311
=========== ===========
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent
Share capital 1,804 1,817
Share premium 74,948 75,984
Contributing surplus 3,690 3,690
Share based payments 2,513 4,790
Other reserves 938 759
Foreign exchange reserve 8,480 7,234
Profit and loss reserve 47,631 40,440
----------- -----------
Total equity attributable to equity holders
of the parent 140,004 134,714
----------- -----------
Non-controlling interests 6,218 2,616
----------- -----------
Non-current liabilities
Long-term provisions 768 743
----------- -----------
Current liabilities
Taxation payable 1,011 1,572
Trade and other payables 8,111 4,666
Total liabilities 9,122 6,238
----------- -----------
Total equities and liabilities 156,112 144,311
=========== ===========
Number of shares in issue 180,408,496 181,688,497
Attributable net asset value / total equity
per share $0.78 $0.74
Griffin Mining Limited
Summarised Consolidated Statement of Changes in Equity.
For the year ended 31 December 2010
(expressed in thousands US dollars)
Total
Share Share Contributing Share Other Foreign Profit attributable Non Total
and to equity
Capital Premium surplus Based Reserves Exchange loss holders Controlling Equity
Payments Reserve Reserve Of parent Interests
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 31 December
2008 1,816 75,950 3,690 5,826 711 7,142 35,345 130,480 - 130,480
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
Regulatory
transfer for
future
investment - - - - 48 - (48) - - -
Issue of share
capital 1 41 - - - - - 42 - 42
Purchase of
shares for
cancellation - (7) - - - - - (7) - (7)
Cost of share
based
payments - - - 495 - - 495 - 495
Transfer in
respect of
share based
payments - - - (1,531) - - 1,531 - - -
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
Transaction
with owners 1 34 - (1,036) 48 - 1,483 530 - 530
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
Retained
profit for
the year - - - - - - 3,612 3,612 2,621 6,233
Other
comprehensive
income:
Exchange
differences
on
translating
foreign
operations - - - - - 92 - 92 (5) 87
Total
comprehensive
income for
the year - - - - - 92 3,612 3,704 2,616 6,320
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
At 31 December
2009 1,817 75,984 3,690 4,790 759 7,234 40,440 134,714 2,616 137,330
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
Regulatory
transfer for
future
investment - - - - 153 - (153) - - -
Issue of share
capital 3 94 - - - - - 97 - 97
Purchase of
shares for
cancellation (16) (1,130) - - - - - (1,146) - (1,146)
Cost of share
based
payments - - - 2,323 - - - 2,323 - 2,323
Transfers in
respect of
share based
payments - - - (4,600) - - 4,600 - - -
Transfers in
respect of
distributions - - - - - - - - (2,616) (2,616)
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
Transaction
with owners (13) (1,036) - (2,277) 153 - 4,447 1,274 (2,616) (1,342)
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
Retained
profit for
the year - - - - - - 2,744 2,744 6,116 8,860
Other
comprehensive
income:
Exchange
differences
on
translating
foreign
operations - - - - 26 1,246 - 1,272 102 1,374
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
Total
comprehensive
income for
the year - - - - 26 1,246 2,744 4,016 6,218 10,234
------- ------- ------------ -------- -------- -------- ------- ------------ ----------- -------
At 31 December
2010 1,804 74,948 3,690 2,513 938 8,480 47,631 140,004 6,218 146,222
======= ======= ============ ======== ======== ======== ======= ============ =========== =======
Griffin Mining Limited
Summarised Cash Flow Statement
For the year ended 31 December 2010
(expressed in thousands US dollars)
2010 2009
$000 $000
Net cash flows from operating activities
Profit before taxation 11,236 7,246
Share of associated company losses 109 517
Foreign exchange (gains) (38) (1,956)
Finance (income) (350) (253)
Finance losses 2,224 -
Adjustment in respect of share based payments 2,323 495
Depreciation, depletion and amortisation 2,151 1,533
(Increase) / decrease in inventories (356) 446
(Increase) / decrease in other current assets (747) 285
Increase / (decrease) in trade and other payables 3,445 (2,882)
Net cash inflow from operating activities 19,997 5,431
-------- -------
Taxation paid (2,936) -
--------
Cash flows from investing activities
Interest received 350 253
Payments to acquire intangible fixed assets
- exploration interests (10) (105)
Payments to acquire tangible fixed assets
- mineral interests (10,162) (5,944)
Payments to acquire tangible fixed assets
- plant and equipment (4,285) (1,298)
Payments to acquire tangible fixed assets
- office equipment (36)
Payments to acquire put options (2,239)
Net cash outflow from investing activities (16,382) (7,094)
-------- -------
Cash flows from financing activities
Issue of ordinary share capital 97 42
Purchase of shares for cancellation (1,146) (7)
-------
(1,049) 35
-------- -------
Decrease in cash and cash equivalents (370) (1,628)
Cash and cash equivalents at the beginning
of the year 67,630 67,193
Effects of exchange rates (810) 2,065
-------
Cash and cash equivalents at the end of the
year 66,450 67,630
-------- -------
Cash and cash equivalents comprise bank deposits.
Bank deposits 66,450 67,630
======== =======
Included within net cash flows of $370,000 (2009 $1,628,000) are
foreign exchange gains of $38,000 (2009 $1,956,000) which have been
treated as realised.
Notes:
1. This statement has been prepared using accounting policies
and presentation consistent with those applied in the preparation
of the statutory accounts of the Company.
2. The summary accounts set out above do not constitute
statutory accounts as defined by Section 84 of the Bermuda
Companies Act 1981 or Section 435 of the UK Companies Act 2006. The
summarised consolidated statement of financial position at 31
December 2010 and the summarised consolidated income statement,
summarised statement of comprehensive income, consolidated
statement of changes in equity and the summarised consolidated cash
flow statement for the year then ended have been extracted from the
Group's 2010 statutory financial statements upon which the
auditors' opinion is unqualified. The results for the year ended 31
December 2009 have been extracted from the statutory accounts for
that period, which contain an unqualified auditors' report.
3. The annual report and accounts for 2010 are being sent by
post to all registered shareholders. Additional copies of the
annual report and accounts are available from the Company's London
office, 6(th) Floor, 60 St James's Street, London, SW1A 1LE.
4. The calculation of the basic earnings per share is based on
the earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year. The
calculation of diluted earnings per share is based on the basic
earnings per share on the assumed conversion of all dilutive
options and other dilutive potential ordinary shares.
Reconciliation of the earnings and weighted average number of
shares used in the calculations are set out below:
2010 2009
Weighted Per Weighted Per
Average share Average share
Earnings number of amount Earnings number of amount
$000 shares (cents) $000 shares (cents)
Basic earnings per
share
Earnings
attributable
to ordinary
shareholders 2,744 181,579,409 1.51 3,612 181,560,512 1.99
Dilutive effect of
securities
Options 2,648,124 1,906,603
--------- ------------ -------- --------- ------------ --------
Diluted
earnings per
share 2,744 184,227,533 1.49 3,612 183,467,115 1.97
========= ============ ======== ========= ============ ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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