TIDMGFM
RNS Number : 0724C
Griffin Mining Ld
11 April 2013
11(th) April 2013
Griffin Mining Limited
PRELIMINARY RESULTS
PROFIT BEFORE TAX AND INTEREST OF $31.2 MILLION
RECORD ZINC, SILVER & LEAD PRODUCED
Griffin Mining Limited ("Griffin" or the "Company") has today
published its preliminary results for the year ended 31 December
2012. Griffin and its subsidiaries (together the "Group")
recorded:
-- Revenues of $76.9 million (2011 - $79.1 million).
-- Profits before tax and interest $31.2m (2011 - $36.8m).
-- Profits after tax $19.7m (2011 - $27.7m).
-- Attributable profits after tax $14.8m (2011 - $15.8m)
Overview
Despite record throughput, base metal and silver production,
revenues and operating profits in 2012 were impacted by lower metal
prices. As a result of this and decreased gold production, revenues
fell to $76,860,000 (2011 - $79,062,000) with profits from
operations of $31,174,000 (2011 - $36,832,000). In summary,
production results were as follows:
-- A record 789,692 tonnes of ore were mined, compared to
695,848 tonnes in 2011, a 13.5% increase;
-- A record 800,288 tonnes of ore were processed, compared to
715,955 tonnes in 2011, an 11.8% increase;
-- A record 40,581 tonnes of zinc metal in concentrate were
produced, compared to 36,283 tonnes in 2011, an 11.8% increase;
-- A record 409,596 ounces of silver in concentrate were
produced, compared to 312,509 ounces in 2011, a 31.1% increase;
-- A record 2,402 tonnes of lead in concentrate were produced,
compared to 1,909 tonnes in 2011, a 25.8% increase; and
-- 8,322 ounces of gold in concentrate were produced, compared
to 10,281 ounces in 2011, a 19.1% decrease.
The average market price for zinc fell 11% in 2012 from that in
2011. As a result, the average price per tonne of zinc metal in
concentrate received by the Group in 2012 fell by 11% to $1,374
(2011 - $1,546). The average price received for silver declined 13%
to $22.80 per ounce (2011 - $26.22) and that for lead by 10% to
$1,855 per tonne (2011 - $2,054). The average price received for
gold increased by 4% to $1,499 per ounce (2011 - $1,438).
Costs of sales increased 9% in 2012 to $34,795,000 (2011 -
$31,918,000). With throughput increasing 11.8%, some economies of
scale were achieved despite increasing costs as the lower mine
levels continue to be accessed.
Group operating costs, including Caijiaying Mine site
administration costs, rose 5.6% to $10,891,000 (2011 - $10,312,000)
reflecting inflationary cost pressures in China.
Profits before tax declined to $27,239,000 (2011 - $39,953,000)
reflecting not just lower operating profits, but also interest
charges not incurred in prior years of $3,411,000, foreign exchange
losses of $904,000 (2011 - gains of $2,588,000) as well as lower
interest receipts.
Cash balances were utilised in 2012 in the transaction to fund
the acquisition of the non-controlling interests in and extension
of, the Hebei Hua Ao joint venture. As a result, interest receipts
declined to $495,000 (2011 - $616,000).
Bank loan facilities in China were drawn down in 2012 to fund
the payment of dividends used in the transaction to purchase the
non controlling interests in and extension of the Hebei Hua Ao
joint venture. As a result, interest costs of $3,411,000 (2011 -
nil) were incurred.
With outstanding dividends due from Hebei Hua Ao denominated in
Renminbi being paid and used in the transaction as part of the
acquisition of the non controlling interests in, and extension of,
the Hebei Hua Ao joint venture at a time of declining values in the
US dollar, foreign exchange losses of $904,000 (2011 - gains of
$2,588,000) were recorded.
Griffin's 39.2% share of the losses of Spitfire Oil Limited
("Spitfire") of $163,000 (2011 - $118,000) have been
recognised.
Income taxes of $7,532,000 (2011 - $12,256,000) have been
charged. The decrease from 2011 reflects not just reduced profits
subject to Chinese income tax, but also a reduction in Chinese
withholding tax from 10% to 5% on dividends paid to certain
jurisdictions outside China.
The non controlling interests' share of Hebei Hua Ao's profits
of $4,872,000 (2011 - $11,882,000) has been provided for, resulting
in attributable profits to Griffin of $14,835,000 (2011 -
$15,815,00). The reduction in the non controlling interests'
reflects a reduction in profits received commensurate to the
reduction in its equity interests from 40% to 11.2% with effect
from the 25th June 2012.
Basic earnings per share in 2012 was 8.46 cents per share (2011
- 8.96 cents) with diluted earnings per share of 8.36 cents in 2012
(2011 - 8.76 cents).
During 2012, 50,000 (2011 - 5,040,000) ordinary shares in
Griffin were bought back on market for cancellation at a cost of
$24,000 (2011 - $4,977,000), thereby reducing the number of Griffin
shares on issue to 175,451,830.
Net cash inflow from operating activities in 2012 amounted to
$32,244,000 (2011 - $43,346,000). $125,419,000 was invested in
2012, which included $117,459,000 in the transaction to purchase
the non controlling interests in, and extend the term of, the Hebei
Hua Ao joint venture.
Attributable net assets per share at 31st December 2012 was 79
cents ( 2011 - 87 cents).
The directors have recommended that no dividend be declared at
this time in view of the need for the use of the Company's
financial resources for further investment in the Caijiaying Mine,
repayment of bank loans and settlement of amounts due to non
controlling interests.
Chairman's Statement:
It has been a remarkable year for Griffin in spite of further
decreases in metals prices, continuing global economic turmoil,
virtually no real growth in the western world, the continuing
destruction of true wealth worldwide and stalled real growth in
China. Yet in spite of all this economic negativity, Griffin was
still able to achieve a memorable year.
Griffin and its subsidiaries recorded: An operating profit of
$31,174,000; profit before tax of $27,239,000; profit after tax of
$19,707,000 and profit after non controlling interests of
$14,835,000 (a reduction of less than a million dollars from the
previous year). This all occurred whilst the average market price
for zinc fell 11%, silver by 13% and lead by 10%.
Impressively, the Group achieved record throughput and record
zinc, lead and silver production. In summary, and in comparison
with the 2011 results, there were 13.4% more tonnes of ore mined,
11.8% more ore processed, 11.8% more zinc metal in concentrate
produced, 31.1% more silver in concentrate produced and 25.8% more
lead in concentrate produced. Only gold in concentrate produced
decreased by 19.1% as the throughput of gold bearing ore was
minimized until the various gold mineralologies of the different
orebodies were examined and forward planning completed to ensure
extraction of the highest possible recoveries going forward.
As expected, the first half of 2012 was primarily focused on the
transaction to increase Griffin's interest in Hebei Hua Ao Mining
Industry Company Limited ("Hebei Hua Ao") to 88.8% and extend the
term of the joint venture through to October 2037. Subsequently,
significant time was dedicated to restructuring site management and
solidifying reporting procedures from the Caijiaying Mine following
the diminution of Chinese involvement in the day to day management
of Hebei Hua Ao.
The Company is now focused on the extensive process of
increasing the mining and processing of ore at the Caijiaying Mine
to 1.5 million tonnes per annum. This will include an expansion of
the processing facilities, the underground development of Zone II
and an expansion of the existing mining operations at Zone III.
These developments are all subject to the successful granting of a
mining licence over Zone II, which licence area will also include
the area between Zone II and Zone III, and which is not expected to
occur prior to the end of the first quarter of 2014. By that time,
the boundary survey, feasibility study and environmental impact
study should have all been completed and underground development
work at both Zones II and III will be well under way. The total
upgrade is expected to be completed by the end of 2014.
Critically, all capital costs associated with the upgrade will
be funded from cash flow from existing operations. The Company
expects to continue its extraordinary record of not raising any new
net equity for a decade and, as such, prevent any dilution to
shareholders. Unfortunately, that also means a decision not to
declare a dividend yet again this year. Obviously, I am well aware
of a number of shareholders desire for the Company to begin paying
dividends both for personal income requirements and the financial
discipline such an action imposes upon management. The Company has
every intention to do so when circumstances allow, however,
shareholders short term need or desire to have cash returned to
them cannot cause an under investment in the future growth of the
Company. It seems abundantly clear that, for now, further
investment in the Caijiaying Mine represents the best use of
Griffin's available resources. Having reviewed many potential
acquisitions and having carefully considered the potential of
Caijiaying and the future market for metals, particularly zinc, it
is clear that further investment in the Caijiaying Mine will
generate higher returns for the Company and its shareholders than
any new, low return/high risk investment elsewhere.
This is even more true when considering the number and size of
the major world zinc mines reaching the end of their economic lives
and the substantial reduction in the future supply of zinc.
Assuming the return of world, or at least Chinese, growth in the
near future, then a rise in zinc prices should follow. Accordingly,
it is expected that the further investment to increase production
at the Caijiaying Mine will result in significant returns to the
Company and to its shareholders, at which time the Company's
dividend policy will be reassessed.
As outlined so often in the past, the Company continues to
investigate a large number of potential mining ventures worldwide,
pursuing any mining opportunity which shows the necessary economic
returns demanded by the Company's shareholders. Such opportunities
are rare and, geologically speaking, becoming rarer, as any
brownfields exploration prospect has inevitably been explored long
ago and greenfields exploration becomes far more difficult, deeper
and more expensive. Hope exists that, as the equity markets remain
generally closed to the junior mining market, a hidden gem will be
found either in junior public mining companies or in private
organizations incapable of raising new equity in private or public
markets.
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 7886 2500
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 2012
(expressed in thousands US dollars)
2012 2011
$000 $000
Revenue 76,860 79,062
Cost of sales (34,795) (31,918)
Gross profit 42,065 47,144
Net operating expenses (10,891) (10,312)
Profit from operations 31,174 36,832
Share of losses of associated
company (163) (118)
Foreign exchange (losses) / gains (904) 2,588
Finance income 495 616
Finance losses - (14)
Finance costs (3,411) -
Other income 48 49
-------- --------
Profit before tax 27,239 39,953
Income tax expense (7,532) (12,256)
Profit after tax 19,707 27,697
======== ========
Attributable to non-controlling
interests 4,872 11,882
Attributable to equity share owners
for the parent 14,835 15,815
19,707 27,697
======== ========
Basic earnings per share (cents) 8.46 8.96
======== ========
Diluted earnings per share (cents) 8.36 8.76
======== ========
Griffin Mining Limited
Summarised Consolidated Statement of Comprehensive Income
For the year ended 31 December 2012
(expressed in thousands US dollars)
2012 2011
$000 $000
Profit for the year 19,707 27,697
-------- --------
Other comprehensive income
Exchange differences on translating
foreign operations 545 2,417
Other comprehensive income for
the period, net of tax 545 2,417
-------- --------
Total comprehensive income for
the period 20,252 30,114
======== ========
Attributable to non-controlling
interests 4,960 12,691
Attributable to equity owners
of the parent 15,292 17,423
20,252 30,114
======== ========
Griffin Mining Limited
Summarised Consolidated Statement of Financial Position
As at 31 December 2012
(expressed in thousands US dollars)
2012 2011
$000 $000
ASSETS
Non-current assets
Property, plant and equipment 177,470 85,291
Intangible assets - Exploration
interests 1,707 1,573
Investment in associated company 3,596 3,759
----------- -----------
182,773 90,623
----------- -----------
Current assets
Inventories 6,231 4,608
Receivables and other current assets 4,168 2,505
Cash and cash equivalents 16,764 91,089
----------- -----------
27,163 98,202
Total assets 209,936 188,825
=========== ===========
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Share capital 1,755 1,755
Share premium 70,037 70,061
Contributing surplus 3,690 3,690
Share based payments 3,055 3,030
Other reserve on acquisition of
non controlling interests (29,346) -
Other reserves 1,313 1,300
Foreign exchange reserve 10,485 10,041
Profit and loss reserve 77,966 63,131
----------- -----------
Total equity attributable to equity
holders of the parent 138,955 153,008
----------- -----------
Non-controlling interests 4,904 12,523
Total equity 143,859 165,531
----------- -----------
Non-current liabilities
Long-term provisions 2,535 806
----------- -----------
Current liabilities
Taxation payable 3,840 11,631
Trade and other payables 12,590 10,857
Bank loans 47,112 -
----------- -----------
Total current liabilities 63,542 22,488
----------- -----------
Total equities and liabilities 209,936 188,825
=========== ===========
Number of shares in issue 175,451,830 175,501,830
Attributable net asset value /
total equity per share $0.79 $0.87
Griffin Mining Limited
Summarised Consolidated Statement of Changes in Equity.
For the year ended 31 December 2012
(expressed in thousands US dollars)
Share Share Contributing Share Chinese Other Foreign Profit Total Non Total
Capital premium surplus based re reserve exchange and attributable controlling equity
investment on loss to
payments Reserve acquisition reserve reserve equity interests
of holders
non
controlling of parent
interests
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 31 December
2010 1,804 74,948 3,690 2,513 938 - 8,480 47,631 140,004 6,218 146,222
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
Regulatory
transfer for
future
investment - - - - 315 - - (315) - - -
Issue of share
capital 1 40 - - - - - - 41 - 41
Purchase of
shares for
cancellation (50) (4,927) - - - - - - (4,977) - (4,977)
Cost of share
based
payments - - - 517 - - - - 517 - 517
Transfer in
respect of
distributions - - - - - - - - - (6,386) (6,386)
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
Transaction
with owners (49) (4,887) - 517 315 - - (315) (4,419) (6,386) (10,805)
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
Retained
profit for
the
year - - - - - - - 15,815 15,815 11,882 27,697
Other
comprehensive
income:
Exchange
differences
on
translating
foreign
operations - - - - 47 - 1,561 - 1,608 809 2,417
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
Total
comprehensive
income
for the 6
month period - - - - 47 - 1,561 15,815 17,423 12,691 30,114
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
At 31 December
2011 1,755 70,061 3,690 3,030 1,300 - 10,041 63,131 153,008 12,523 165,531
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
Regulatory
transfer for
future
investment - - - - - - - - - -
Acquisition of
non
controlling
interests - - - - - (29,346) - - (29,346) (18) (29,364)
Purchase of
shares for
cancellation - (24) - - - - - - (24) - (24)
Cost of share
based
payments - - - 25 - - - - 25 - 25
Transfer in
respect of
distributions - - - - - - - - - (12,561) (12,561)
Transaction
with owners - (24) - 25 - (29,346) - - (29,345) (12,579) (41,924)
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
- - - -
Retained
profit for
the
year - - - - - - - 14,835 14,835 4,872 19,707
Other
comprehensive
income: - - - - - - - - - - -
Exchange
differences
on
translating
foreign
operations - - - - 13 - 444 - 457 88 545
------- ------- ------------ -------- ---------- ----------- -------- ------- ------------ ----------- --------
Total
comprehensive
income
for the 6
month period - - - - 13 - 444 14,835 15,292 4,960 20,252
At 31st
December 2012 1,755 70,037 3,690 3,055 1,313 (29,346) 10,485 77,966 138,955 4,904 143,859
======= ======= ============ ======== ========== =========== ======== ======= ============ =========== ========
Griffin Mining Limited
Summarised Cash Flow Statement
For the year ended 31 December 2012
(expressed in thousands US dollars)
2012 2011
$000 $000
Net cash flows from operating activities
Profit before taxation 27,239 39,953
Share of associated company losses 163 118
Foreign exchange losses / (gains) 904 (2,588)
Finance (income) (495) (616)
Finance losses - 14
Finance costs 3,411 -
Adjustment in respect of share
based payments 25 517
Depreciation, depletion and amortisation 6,762 5,900
(Increase) / decrease in inventories (1,623) (1,472)
(Increase) / decrease in receivables
and other current assets (1,663) (1,226)
(decrease) / increase in trade
and other payables (2,479) 2,746
Net cash inflow from operating
activities 32,244 43,346
--------- -------
Taxation paid (11,435) (1,637)
---------
Cash flows from investing activities
Interest received 495 616
Payments to extend joint venture
term and non-controlling interests (117,459) -
Payments to acquire tangible assets
- mineral interests (4,206) (6,073)
Payments to acquire tangible assets
- plant and equipment (4,129) (3,605)
Payments to acquire tangible assets
- office equipment (3) (2)
Payments to acquire intangible
assets - exploration interests (117) (19)
Net cash (outflow) from investing
activities (125,419) (9,083)
--------- -------
Cash flows from financing activities
Issue of ordinary share capital - 41
Purchase of shares for cancellation (24) (4,977)
Interest paid (3,411) -
Dividends paid to non controlling
interests (12,561) (4,257)
Proceeds from bank loans 47,112 -
-------
Net cash inflow / (outflow) from
financing activities 31,116 (9,193)
--------- -------
(Decrease) / increase in cash and
cash equivalents (73,494) 23,433
Cash and cash equivalents at the
beginning of the year 91,089 66,450
Effects of exchange rates (831) 1,206
-------
Cash and cash equivalents at the
end of the year 16,764 91,089
--------- -------
Cash and cash equivalents comprise
bank deposits.
Bank deposits 16,764 91,089
========= =======
Included within net cash flows of $73,495,000 (2011 $23,433,000)
are foreign exchange gains of $904,000 (2011 $2,588,000) 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 2012 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 2012 statutory financial statements upon which the
auditors' opinion is unqualified. The results for the year ended 31
December 2011 have been extracted from the statutory accounts for
that period, which contain an unqualified auditors' report.
3. The annual report and accounts for 2012 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:
2012 2011
Earnings Weighted Per Earnings Weighted Per
Average share Average share
number amount number amount
$000 of shares (cents) $000 of shares (cents)
Basic earnings
per share
Earnings attributable
to ordinary
shareholders 14,835 175,456,077 8.46 15,815 176,499,620 8.96
Options 2,021,897 3,981,592
--------- -------------- --------- --------- -------------- ---------
Diluted earnings
per share 14,835 177,477,974 8.36 15,815 180,481,212 8.76
========= ============== ========= ========= ============== =========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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