TIDMGFM
RNS Number : 4548Y
Griffin Mining Ld
13 May 2021
GRIFFIN MINING LIMITED
Royal Trust House, 54 Jermyn Street, London SW1Y 6LX, United
Kingdom
Telephone: + 44 (0)20 7629 7772 Facsimile: + 44 (0)20 7629
7773
E mail: griffin@griffinmining.com
13(th) May 2021
2020 Results
Preliminary Announcement
Griffin Mining Limited ("Griffin" or the "Company") has today
published its annual report and financial statements for the year
ended 31 December 2020 which are available on the Company's web
site wwww.griffinmining.com.
In 2020, the Company and its subsidiaries (together the "Group")
recorded;
-- Revenues of $75,403,000 (2019: $82,267,000);
-- Operating profit of $15,148,000 (2019: $14,225,000);
-- Profit before tax of $14,515,000 (2019: $11,712,000);
-- Profit after tax of $8,910,000 (2019: $6,084,000); and
-- Basic earnings per share of 5.16 cents per share (2019: 3.52 cents).
Despite interruptions to operations in the first quarter of 2020
with restrictions imposed by the Chinese authorities to contain the
Covid-19 pandemic, the Group recorded a 6.5% increase in operating
profits on that recorded in 2019, primarily as a result of higher
zinc metal prices received and reduced costs.
Turnover of $75,403,000 was down $6,864,000 (8.3%) on that
achieved in 2019 of $82,267,000. This reflects zinc in concentrate
sales down $2,532,000 (4.6%) with 5,535 tonnes (14.6%) less zinc in
concentrate sold at average prices of $174 per tonne (11.8%) higher
than in 2019, as the Group benefited from rising market prices and
falling smelter treatment charges. Lead and precious metal in
concentrate sales were down $3,851,000 (12.9%) on 2019 with 6,494
ozs (36.7%) less gold in concentrate sold at average prices of $441
per oz (33.4%) higher than 2019 and 41,337 ozs (12.4%) less silver
in concentrate sold at average prices of $3.9 per oz (28.3%) higher
than 2019.
In 2020, metal in concentrate sales were:
-- Zinc 32,276 tonnes (2019: 37,811 tonnes);
-- Gold 11,218 ozs (2019: 17,712 ozs);
-- Silver 291,756 ozs (2019: 333,093 ozs); and
-- Lead 1,425 tonnes (2019: 1,221 tonnes).
Average prices achieved in 2020 were:
-- Zinc metal per tonne of $1,645 (2019: $1,471);
-- Gold metal per oz of $1,759 (2019: $1,318);
-- Silver metal per oz of $17.70 (2019: $13.80); and
-- Lead metal per tonne of $1,339 (2019: $1,575).
Cost of sales of $42,737,000 in 2020 were down 12.1% on that
incurred in 2019 of $48,609,000. This reduction in the main
reflects less ore mined, hauled and processed with operations
impacted by restrictions to contain the Covid-19 pandemic in the
first quarter. Additional cost savings were achieved in mining and
haulage thereby reducing unit costs per tonne of ore. Despite the
reduction in tonnes of ore mined and processed, non-cash
depreciation charges rose with additional capital costs.
Administration expenses fell $1,915,000 (9.9%) from $19,433,000
in 2019 to $17,518,000 in 2020. This reduction reflects efforts to
contain costs across the Group during the Covid-19 pandemic,
despite additional work on the application for a mining licence at
Zone II and Green Mine certification.
Foreign exchange gains of $22,000 (2019: losses $93,000) were
recorded in 2020, mainly on a strengthening of the Renminbi.
Interest of $108,000 (2019: $171,000) was received on bank
deposits in 2020 whilst interest of $111,000 (2019: $51,000) was
paid on short term bank loans. Finance interest on the lease of the
dry tailings facility at Caijiaying and the London office totalling
$171,000 (2019: $326,000) was incurred in 2020. Deemed interest on
discounted rehabilitation provisions of $77,000 (2019: $Nil) was
charged in 2020.
Losses on the disposal of $1,129,000 (2019: $305,000) were
recorded with equipment being replaced to meet higher Chinese
environmental standards.
Income taxes of $5,605,000 (2019: $5,628,000) have been charged
in 2020. This includes a deferred taxation charge of $424,000
(2019: $380,000), and PRC withholding taxes on dividend
distributions and fees of $232,000 ($50,000).
Basic earnings per share in 2020 was 5.16 cents (2019: 3.52
cents) and diluted earnings per share was 4.88 cents (2019: 3.24
cents).
Cash generated from operations of $24,398,000 (2019:
$21,639,000) has been used in further developing the mine and
facilities.
Attributable net assets per share at 31st December 2020 was
$1.35 (2019: $1.24).
Chairman's Statement:
I believe I can safely say, this was the year when Griffin
fulfilled all of its outstanding promises to its past, current and
future shareholders by delivering the confirmed regulatory and
operational requirements to propel the Company forward into the
foreseeable future. The list of achievements is extraordinary.
Firstly, the granting by the Chinese Ministry of Land and
Natural Resources (the "MNR") of new the Mining Licence covering
both Zone II and Zone III in conjunction with the issuance of the
3(rd) Stage Zone III Project Final Acceptance Permit (the "PFA")
was a momentous achievement in terms of time, complexity and
operational importance. It will increase the annual ore mined from
Zone III from 820,000 tonnes in 2020 to 1.1 million tonnes in 2021,
but with the increased ore accessed from Zone II, this should
increase to over 1.5 million tonnes per annum in 2022, possibly
increasing further as these zones continue to be developed. It
catapults Griffin into the ranks of one of the largest zinc
producers in China, which remains the largest consuming base and
ferrous metals market in the world.
Secondly, the announcement of the new Global Mineral Resource
estimate reported in accordance with the JORC Code (2012) for the
Caijiaying Mine of an amazing 101.5 million tonnes at 3.9% Zinc,
0.6% Lead, 27.0 g/t Silver and 0.5 g/t Gold, resulting in total
contained metal of approximately 4.0 million tonnes of Zinc, 0.6
million tonnes of Lead, 88.8 million ounces of Silver and 1.59
million ounces of Gold totalling $17.7 billion of metal in situ, a
50% increase in the known mineral resource.
Thirdly, obtaining Green Mine accreditation by the MNR having
passed the national level green mine assessment. Failing to obtain
certification would have meant closure of the Caijiying Mine. So
not only has the smooth continuation of operations at the
Caijiaying Mine been ensured, but it continues also to show the
Company's commitment to the environment, the local Chinese
community and to the greater People's Republic of China. Green Mine
approval comes after the Company's past environmental best
practices were recognised by the Chinese government with the
Environmental Award and the Mine Development Outstanding
Achievement Award at successive China Mining Conferences.
Fourthly, yet another outstanding operational result considering
operations were either suspended or severely curtailed in the first
quarter of 2020 due to the Covid-19 pandemic, with access being
denied for the whole of 2020 to the deeper stopes in Zone III
awaiting PFA approval and the wait for the Zone II new Mining
Licence. Nevertheless, operating profit, profit before tax, profit
after tax and earnings per share all increased. Griffin now has the
extraordinary claim that it has been profitable on an operational
basis, in all the turmoils of the commodities markets, for the full
15 years it has been in operation and has only made a loss, on a
net profit basis, in one of those years.
Fifthly, and although I place little faith in the share price as
an indicator of value, in the last 12 months the Company's share
price has increased approximately 200%; 65.1% against the FTSE
Fledgling Index, 64% against the FTSE All AIM Index and 60% against
the FTSE Small Mining Cap Index. A remarkable performance.
As the Company has grown and generated cash, inevitably various
opinions have been voiced in relation to the share price, share
buybacks, dividends and even the realisation of the value of the
Company. It is enough to say that your board continues to evaluate
all these options on an ongoing and meticulous basis and remains
committed to ensuring that the views of all the shareholders are
considered and, where possible, acted upon, a course of action that
Solomon himself, with all his wisdom, would find difficult.
The Company continues to evaluate opportunities not only through
acquisition or organic expansion but also through continuing
exploration at the Caijiaying Mine and the surrounding region and
through exploration outside of Hebei Province wherever host rocks
mimic the Caijiaying Mine area and provide the potential for
significant exploration success.
Penultimately, I would like to thank our Chinese and ex pat
employees, contractors, consultants, subsidiary directors,
partners, spouses and children. Life has taught me that people make
things happen and, in the extraordinary Covid-19 year of 2020,
these very people went above and beyond the call of duty to travel
and work in extremely difficult circumstances, often leaving homes
and loved ones, to put the Company's interests first. We couldn't
be more grateful.
Lastly, I would like to thank on behalf of the shareholders,
those few to whom we owe so much and of whom Michael Jordan said in
The Last Dance "Have some respect for the people who laid the
foundations to make this a profitable organization." I call them
the founders of the Company. Those who believed when no-one
believed. Those who flew standby (when that existed) and sat at the
airport for a week hoping to catch a flight home. Those few who
went to Caijiaying when it was a 12-hour drive from Beijing on a
single lane gravel road overrun with over-laden coal trucks and
stayed at what can only loosely be called accommodation. Those few
who took no salaries or compensation and stayed when the Company
had almost run out of funds. Those few who worked out of a
terrible, serviced office the size of a cupboard. Those few include
Roger Goodwin, Dal Brynelsen, the deceased Bill Mulligan and the
recently departed Rupert Crowe.
It would be absolutely wrong of me to not mention Rupert, even
though I have said much before. His wisdom, expertise and counsel
are missed every day by all of us at Griffin. Without him, the
Caijiaying Mine would have remained a valley, topped by Mongolian
sands, next to a little village in northern China. An
extraordinary, brilliant geologist, the Father of Caijiaying and,
far more importantly, a gracious, gentle, considered, dedicated,
intelligent human being it has been my absolute privilege to know
and to have spent a large portion of my working life.
With the past behind us, I look forward to the next year of this
incredible journey.
Further information
Griffin Mining Limited Telephone: +44 (0)20 76290 7772
Mladen Ninkov - Chairman
Roger Goodwin - Finance Director
Panmure Gordon (UK) Limited Telephone: +44 (0)20 7886 2500
John Prior
Joanna Langley
Berenberg Telephone: +44 (0)20 3207 7800
Matthew Armitt
Jennifer Wyllie
Deltir Elezi
Blytheweigh Telephone: +44(0)20 7138 3205
Tim Blythe
Swiss Resource Capital AG Telephone: + 41(0)71 354 8501
Jochen Staiger
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
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No.596/2014.
Griffin Mining Limited
Summarised Consolidated Income Statement
For the year ended 31 December 2020
(expressed in thousands US dollars)
2020 2019
Audited Audited
$000 $000
Revenue 75,403 82,267
Cost of sales (42,737) (48,609)
Gross profit 32,666 33,658
Administration expenses (17,518) (19,433)
Profit from operations 15,148 14,225
Losses on disposal of plant and equipment (1,129) (305)
Provisions against intangible assets (10) (1,985)
Foreign exchange gains / (losses) 22 (93)
Finance income 108 171
Finance costs (359) (377)
Other income 735 76
Profit before tax 14,515 11,712
Income tax expense (5,605) (5,628)
Profit for the year 8,910 6,084
======== ========
Basic earnings per share (cents) 5.16 3.52
======== ========
Diluted earnings per share (cents) 4.88 3.24
======== ========
Griffin Mining Limited
Summarised Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
(expressed in thousands US dollars)
2020 2019
Audited Audited
$000 $000
Profit for the year 8,910 6,084
-------- ---------
Other comprehensive income / (expenses)
that will be reclassified to profit or loss
Exchange differences on translating foreign
operations 9,662 (2,324)
Other comprehensive income / (expenses)
for the year, net of tax 9,662 (2,324)
-------- ---------
Total comprehensive income for the year 18,572 3,760
======== =========
Griffin Mining Limited
Summarised Consolidated Statement of Financial Position
As at 31 December 2020
(expressed in thousands US dollars)
2020 2019
Audited Audited
$000 $000
ASSETS
Non-current assets
Property, plant and equipment 266,709 228,287
Intangible assets - exploration interests 325 322
-------- --------
267,034 228,609
-------- --------
Current assets
Inventories 5,333 3,839
Receivables and other current assets 6,675 1,861
Cash and cash equivalents 16,435 19,885
-------- --------
28,443 25,585
-------- --------
Total assets 295,477 254,194
======== ========
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 1,728 1,728
Share premium 68,470 68,455
Contributing surplus 3,690 3,690
Share based payments 2,072 2,072
Shares held in treasury (917) (917)
Chinese statutory re-investment reserve 2,830 2,500
Other reserve on acquisition of non controlling
interests (29,346) (29,346)
Foreign exchange reserve 11,365 1,703
Profit and loss reserve 173,814 165,059
-------- --------
Total equity attributable to equity holders of
the parent 233,706 214,944
-------- --------
Non-current liabilities
Other Payables 13,487 -
Long-term provisions 2,200 2,150
Deferred taxation 3,359 2,731
Finance leases - 479
-------- --------
19,046 5,360
-------- --------
Current liabilities
Trade and other payables 42,342 31,769
Finance leases 383 2,121
Total current liabilities 42,725 33,890
-------- --------
Total equities and liabilities 295,477 254,194
======== ========
Attributable net asset value per share to equity
holders of parent 1.35 1.24
Griffin Mining Limited
Summarised Consolidated Statement of Changes in Equity.
For the year ended 31 December 2020
(expressed in thousands US dollars)
Share Share Contributing Share Shares Chinese Other Foreign Profit Total
Capital Premium surplus Based held in statutory reserve on Exchange and attributable
re-investment loss to
Payments Treasury Reserve acquisition Reserve reserve equity
of holders
non-controlling of parent
interests
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 1(st)
January 2019 1,727 68,442 3,690 2,072 (917) 2,386 (29,346) 4,027 159,161 211,242
------- ------- ------------ -------- -------- ------------- --------------- -------- ------- ------------
Regulatory
transfer for
future
investment - - - - - 153 (153) -
Issue of
shares on
exercise
of options 1 13 - - - - - - - 14
Transaction
with owners 1 13 - - - 153 - - (153) 14
------- ------- ------------ -------- -------- ------------- --------------- -------- ------- ------------
Profit for
the year - - - - - - - - 6,084 6,084
Adjustment for
adoption of
IFRS 16
leases - - - - - - - - (33) (33)
Other
comprehensive
income
:
Exchange
differences
on
translating
foreign
operations - - - - - (39) - (2,324) - (2,363)
------- ------- ------------ -------- -------- ------------- --------------- -------- ------- ------------
Total
comprehensive
income - - - - - (39) - (2,324) 6,051 3,688
------- ------- ------------ -------- -------- ------------- --------------- -------- ------- ------------
At 31st
December
2019 1,728 68,455 3,690 2,072 (917) 2,500 (29,346) 1,703 165,059 214,944
======= ======= ============ ======== ======== ============= =============== ======== ======= ============
Regulatory
transfer for
future
investment - - - - - 155 - - (155) -
Issue of
shares on
exercise
of options - 15 - - - - - - - 15
Transaction
with owners - 15 - - - 155 - - (155) 15
------- ------- ------------ -------- -------- ------------- --------------- -------- ------- ------------
Profit for
the year - - - - - - - - 8,910 8,910
Other
comprehensive
income:
Exchange
differences
on
translating
foreign
operations - - - - - 175 - 9,662 9,837
------- ------- ------------ -------- -------- ------------- --------------- -------- ------- ------------
Total
comprehensive
income - - - - - 175 - 9,662 8,910 18,747
------- ------- ------------ -------- -------- ------------- --------------- -------- ------- ------------
At 31st
December
2020 1,728 68,470 3,690 2,072 (917) 2,830 (29,346) 11,365 173,814 233,706
======= ======= ============ ======== ======== ============= =============== ======== ======= ============
Griffin Mining Limited
Summarised Consolidated Cash Flow Statement
For the year ended 31 December 2020
(expressed in thousands US dollars)
2020 2019
Audited Audited
$000 $000
Net cash flows from operating activities
Profit before taxation 14,515 11,712
Foreign exchange (gains) / losses (22) 93
Finance income (108) (171)
Finance costs 359 377
Depreciation, depletion and amortisation 12,801 12,343
Provisions against intangible assets 10 1,985
Losses on disposal of equipment 1,129 305
(Increase) / decrease in inventories (1,494) 1,112
(Increase) / decrease in receivables and other
current assets (4,814) 959
Increase in trade and other payables 5,666 4,016
Taxation paid (3,644) (11,092)
-------- --------
Net cash inflow from operating activities 24,398 21,639
-------- --------
Cash flows from investing activities
Interest received 108 171
(Costs) / proceeds on disposal of equipment (44) 1
Payments to acquire - mineral interests (18,691) (18,883)
Payments to acquire - plant and equipment (5,684) (8,193)
Payments to acquire office, office furniture &
equipment (5) (69)
Payments to acquire intangible fixed assets -
exploration interests (11) (308)
-------- --------
Net cash outflow from investing activities (24,327) (27,281)
-------- --------
Cash flows from financing activities
Issue of ordinary shares on exercise of options 15 14
Interest paid (112) (52)
Finance lease advance - 65
Finance lease repayments (2,469) (2,762)
Net cash outflow from financing activities (2,566) (2,735)
-------- --------
(Decrease) / increase in cash and cash equivalents (2,495) (8,377)
Cash and cash equivalents at the beginning of
the year 19,885 28,452
Effects of exchange rates (955) (190)
-------- --------
Cash and cash equivalents at the end of the year 16,435 19,885
-------- --------
Cash and cash equivalents comprise bank deposits.
Bank deposits 16,435 19,885
======== ========
Included within net cash flows of $2,495,000 (2019 $8,377,000)
are foreign exchange losses of $22,000 (2019: gains $93,000) which
have been treated as realised.
Notes:
This statement has been prepared using accounting policies and
presentation consistent with those applied in the preparation of
the statutory financial statements of the Company.
The summary financial statements set out above do not constitute
statutory financial statements 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 2020 and the Summarised Consolidated Income
Statement, Summarised Consolidated Statement of Comprehensive
Income, Summarised 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 audited 2020 statutory
financial statements.
The annual report and accounts for 2020 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,
8(th) Floor, 54 Jermyn Street, London, SW1Y 6LX and are available
on Griffin Mining Ltd's web site www.griffinmining.com
The Group has one business segment, the Caijiaying zinc gold
mine in the People's Republic of China. All revenues and costs of
sales in 2020 and 2019 were derived from the Caijiaying zinc gold
mine.
2020 2019
$000 $000
REVENUES
China 75,403 82,267
======== ========
Zinc concentrate sales 53,095 55,627
Lead and precious metals concentrate sales 25,999 29,850
Royalties and resource taxes (3,691) (3,210)
-------- --------
75,403 82,267
======== ========
COST OF SALES: CHINA
Mining costs 16,056 17,652
Haulage costs 7,282 8,277
Processing costs 8,868 10,019
Depreciation (excluding depreciation in administration
costs) 11,780 11,462
Stock movements (1,249) 1,199
-------- --------
42,737 48,609
======== ========
ADMINISTRATION EXPENSES
China 12,939 14,253
Australia 312 414
UK / Bermuda 4,267 4,766
-------- --------
17,518 19,433
======== ========
All revenues, cost of sales and operating expenses charged to
profit relate to continuing operations.
Notes (continued):
TOTAL ASSETS 2020 2019
$000 $000
China 290,147 248,119
Australia 967 686
UK / Bermuda 4,363 5,389
-------- --------
295,477 254,194
======== ========
CAPITAL EXPITURE 2020 2019
$000 $000
China 24,375 27,076
Australia - 65
UK / Bermuda 5 4
-------- --------
24,380 27,145
======== ========
FINANCE INCOME 2020 2019
$000 $000
Interest on bank deposits 108 171
===== =====
FINANCE COSTS 2020 2019
$000 $000
Interest payable on short term bank loans 111 51
Interest on rehabilitation provisions 77 -
Finance lease interest 171 326
----- -----
359 377
===== =====
OTHER INCOME 2020 2019
$000 $000
Scrap and sundry other sales 735 76
===== =====
Income Tax Expense
2020 2019
$000 $000
Profit for the year before tax 14,515 11,712
------- -------
Expected tax expense at a standard rate of PRC income
tax of 25% (2018 25%) 3,629 2.929
Adjustment for tax exempt items :
- Income and expenses outside the PRC not subject
to tax 567 746
Adjustments for short term timing differences :
- In respect of accounting differences (298) (234)
Adjustments for permanent timing differences other 1,051 1,757
Withholding tax on intercompany dividends and charges 232 50
Current taxation expense 5,181 5,248
------- -------
Deferred taxation expense
Correction of provision brought forward - 18
Origination and reversal of temporary timing differences 424 362
424 380
------- -------
Total tax expense 5,605 5,628
======= =======
Notes (continued):
INCOME TAX EXPENSE (continued)
The parent company is not resident in the United Kingdom for
taxation purposes. Hebei Hua-Ao paid income tax in the PRC at a
rate of 25% in 2020 (25% in 2019) based upon the profits calculated
under Chinese generally accepted accounting principles (Chinese
"GAAP").
EARNINGS PER SHARE
Reconciliation of the earnings and weighted average number of
shares used in the calculations are set out below:
2020 2019
Earnings Weighted Per share Earnings Weighted Per share
Average amount Average amount
$000 number (cents) number (cents)
of shares $000 of shares
Basic earnings per
share
Earnings attributable
to ordinary
shareholders 8,910 172,788,420 5.16 6,084 172,748,831 3.52
Dilutive effect of
securities
Options - 9,861,227 (0.28) - 15,107,500 (0.28)
--------- ------------- ---------- --------- ------------- ----------
Diluted earnings
per share 8,910 182,649,647 4.88 6,084 187,856,331 3.24
========= ============= ========== ========= ============= ==========
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.
Notes (continued):
Property, plant and equipment
Mineral Mill and Offices furniture Total
Interests mobile & equipment
mine equipment
At 1 January 2019 167,338 45,747 55 213,140
Foreign exchange adjustments (1,611) (786) - (2,397)
Additions during the year 18,883 8,193 69 27,145
Change in estimate of mine
closure costs (115) - - (115)
Adjustment for adoption of
IFRS16 leases - - 370 370
Adjustment for change in lease
accounting estimate. - 2,792 - 2,792
Disposals - (305) - (305)
Depreciation charge for the
year (6,912) (5,268) (163) (12,343)
----------- ---------------- ------------------ ----------
At 1 January 2020 177,583 50,373 331 228,287
Foreign exchange adjustments 8,292 3,408 5 11,705
Additions during the year 18,691 5,684 5 24,380
Provision for licence transfer
fees 16,338 - - 16,338
Change in estimate of mine
closure costs (115) - - (115)
Transfer of rehabilitation
provision 697 (697) - -
Disposals - (1,085) - (1,085)
Depreciation charge for the
year (6,542) (6,084) (175) (12,801)
----------- ---------------- ------------------ ----------
At 31 December 2020 214,944 51,599 166 266,709
=========== ================ ================== ==========
At 31 December 2018
Cost 205,840 72,028 134 278,002
Accumulated depreciation (38,502) (26,281) (79) (64,862)
----------- ---------------- ------------------ ----------
Net carrying amount 167,338 45,747 55 213,140
=========== ================ ================== ==========
At 31 December 2019
Cost 222,589 80,935 573 304,097
Accumulated depreciation (45,006) (30,562) (242) (75,810)
----------- ---------------- ------------------ ----------
Net carrying amount 177,583 50,373 331 228,287
=========== ================ ================== ==========
At 31 December 2020
Cost 267,763 90,173 583 358,519
Accumulated depreciation (52,819) (38,574) (417) (91,810)
----------- ---------------- ------------------ ----------
Net carrying amount 214,944 51,599 166 266,709
=========== ================ ================== ==========
Mineral interests comprise the Group's interest in the
Caijiaying ore bodies including costs on acquisition, plus
subsequent expenditure on licences, concessions, exploration,
appraisal and construction of the Caijiaying mine including
expenditure for the initial establishment of access to mineral
reserves, commissioning expenditure, and direct overhead expenses
prior to commencement of commercial production and together with
the end of life restoration costs.
Mill and mobile mine equipment include $3,872,000 (2019:
$1,997,000) of assets under construction yet to be depreciated.
Notes (continued):
Property, plant and equipment (continued)
The offices, furniture and equipment disclosed above relates
solely to the fixed assets, including leased offices, of Griffin
Mining (UK Services) Limited and China Zinc Pty Limited.
During 2013 plant and equipment with a deemed value of
$11,381,000, revalued in 2019 to $14,150,000, were acquired under a
finance lease, upon which depreciation of $6,712,000 (2019:
$5,123,000) has been provided. At 31 December 2019 the net carrying
amount of this equipment was $8,417,000 (2019: $9,027,000). In 2019
the London office lease was capitalised to comply with IFRS16 with
a deemed value of $371,000 upon which depreciation of $248,000 has
been provided. At 31 December 2020 the net carrying amount of this
office was $124,000 (2019:$247,000).
The Group assesses the carrying value of the mineral interests,
mill and mobile mine equipment at least annually, and more
frequently in the event of any indications of impairment, by
reference to discounted cash flow forecasts of future revenue and
expenditure for each business segment. These forecasts are based
upon both past and expected future performance, available resources
and expectations for future markets. Management determined that
there were no impairment indicators at 31 December 2020. However,
as best practice management have updated the impairment model.
In determining any indications of impairment in the carrying
value of the Caijiaying Mine the directors have reassessed the net
carrying value of capitalised costs at 31 December 2020 by
reference to the estimated mineral resources at Caijiaying that may
be extracted by 2056 and 2037 when the current business licence of
Hebei Hua Ao expires. However, it is expected that Hebei Hua Ao
will be converted to an equity joint venture company with an
indefinite life before then. Accordingly, a Life of Mine plan
("LOM") has been prepared by the Company that indicates the
continued extraction of ore until 2056. In estimating the
discounted future cash flows from the continuing operations at the
Caijiaying mine the following principal assumptions have been
made:
-- Future market prices for zinc of $2,500 per tonne, gold of
$1,800 per troy ounce and silver of $20 per troy ounce;
-- Zinc treatment charges of 30% of market prices;
-- Extraction of measured and indicated resources of 25.5
million tonnes to 2037 when the current business licence of Hebei
Hua Ao expires, with ore mined and processed rising to a maximum
rate of 1.6 million tonnes of ore per annum;
-- Operating costs, recoveries and payables based upon past
performance and that budgeted for 2021;
-- Capital costs based upon that initially scheduled with
sustaining capital based on future scheduling:
-- Discount rate of 10%; and
-- Continued maintenance and grant of applicable licences and permits.
Notes (continued):
Intangible Assets
China - mineral exploration interests
$000
At 1 January 2019 2,016
Foreign exchange adjustments (17)
Additions during the year 308
Impairment during the year (1,985)
At 1 January 2020 322
Foreign exchange adjustments 2
Additions during the year 11
Impairment during the year (10)
At 31 December 2020 325
========
Intangible assets represent cost on acquisition, plus subsequent
expenditure on licences, concessions, exploration, appraisal and
development work in respect to regional exploration in China. Where
expenditure on an area of interest is determined as unsuccessful
such expenditure is written off to profit or loss. The
recoverability of these assets depends, initially, on successful
appraisal activities, details of which are given in the report on
operations. The outcome of such appraisal activity is uncertain.
Upon economically exploitable mineral deposits being established,
sufficient finance will be required to bring such discoveries into
production. At 31 December 2020 impairment charges of $10,000
(2019: $1,985,000) had been provided and charged to the income
statement in respect of the above exploration costs previously
capitalised by Hebei Sino Anglo.
POST BALANCE SHEET EVENTS
As at 31 December 2020 there were no adjusting post balance
sheet events (2019: none). Since 31 December 2020 the Company has
bought in 316,840 shares to be held in treasury at a cost of
$584,000.
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END
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(END) Dow Jones Newswires
May 13, 2021 02:00 ET (06:00 GMT)
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