Griffin Mining - golden future! http://www.basemetals.com/

GFM deserves a new thread after todays AGM. For the first time the venue was packed with shareholders, a tribute to the interest and support the company has for what the Board has achieved. For those unable to be at the meeting here are some of the points I noted which may interest folk on this BB.

Production: dry and wet testing now completed and zinc concentrate comes through the smelter next week. Zinc price on the LME is currently $1300/ton. GFM is being offered $1700/ton at the mine gate. This premium reflects the demand and difficulty local industry has in sourcing this basic metal ( As an aside the chairman reported that zinc is not easily and efficiently extracted as a recycled metal so newly mined zinc is always required). Cost of production is $595/ton ($700/ton if all depreciation costs are included). Labour costs are $1000/worker pa cf an Aussie underground worker of $130,000/worker pa. Apparently the 20m.pa worker migration from agricultural to industrial jobs means that there are queues of applicants wanting jobs at the mine; wage inflation is not an issue. 240+ employees on site to run the mine on a 24/7 basis.
Production can be increased w/o further investment for a throughput of 400,000 tons of ore pa; An increase to 500,000tons pa would require further investment of between $1m and $2m . All plant has been purposely over-engineered to ensure capacity can rise reliably and with back-up facilities (eg 3 boilers, 2 of which are back-up)
H&S is to world stds., setting an example to the rest of the Chinese mining industry which has a poor record currently because of the number of small private mines.

Reserves: 14.5years supply on current zone rising to 25 years in zone 3. Chairman showed an independent report which believes that the closure of many existing zinc mines is now producing a supply gap which will continue to improve the zinc price cycle to year 2012.

Profits: No problems known or foreseen to the repatriation of profits. However the chairman stated that the profits might achieve more for shareholders if the company uses these for further exploration and possibly buying back the companys shares. The latter move might help resolve the current shorting problem where it is thought that between 6 or 7 million shares are currently being shorted. This move could have a highly geared effect on increasing the share price and help deter the shorters/stock bashers from further activity.

Exploration: Chairman says company will be drilling a further 18,000m over the coming summer months and in his personal view he expects the company to steadily move towards becoming a gold mining concern, with some of the profits from the zinc smelting funding that work. An RC rig which costs 33% of the cost of a diamond drilling rig has been brought on to site.
Future exploration areas always being looked at + changes in Chinese Ministry of Land & Resources policy towards funding means that GFM will likely be offered many more prime government held assets in the near future.

Personal view is that GFM is a well and responsibly run mining company which is now likely to really grab a lot more attention as the profits start to flow as of next week. I am sure others on this BB at the meeting can fill the gaps where I have missed anything.

Greatly undervalued here, compared to the rest of the stockmarket !

.... paying a dividend .... no debt ... producing gold as well .... expanding production .... large cash reserve .... if that isn't a bargain at 72p

Griffin seems to mirror the price of zinc which has been falling over the last few months. It's reported that zinc supply is more than keeping pace with demand. So the production of gold has come along at the right time.

IT would be nice to see the price pick up from what it is at the moment to the levels at what they were before they started to drop

producing, selling cash on collection, money in the bank, paying a dividend and now digging gold, when gold is the flavour of the month, but still the market ignores it's merits dreaming of fabulous bore hole readings making fortunes in year 20??

Still can't understand why this little gem of a company is at such a low price, zinc is now starting to rise, so is gold and they have a fortune in the bank, even though they will have to start paying taxes soon, the sp should not be as low as this.

GFM gets a nice kick in the morning today breaks thow 25 dam next stop yellow 50 dam i can fill some news coming thats all we need 1 here we come .

If Zinc could hold above $2500 a ton and stay there, with results coming, there might be a 10p gain on here !

The cold weather disruptions might have been a blessing in disguise for Griffin Mining as the price of zinc is climbing rapidly, $2800 and rising !, therefore anything stockpiled will be sold at a better rate than if they had sold it earlier.

Am pretty sure gfm hedges their output so do not think cold weather is an issue either way

I'm not so sure about that, in previous RNS's they said that they were not hedging anything, perhaps this has changed, but with a rising zinc stockpile and price... the last thing you want : is hedging.

Hope you are right, but I can not see any financial controller agreeing to not knowing predicted revenue stream. After all GFM is a producing company and not a trading company. (By the way and if they hedged I hope they did not emply the guy who did the hedges for Biofuels Company (BFC)

GFM is selling into the local market , it does not need to hedge as its sales are priced at the factory gate and they often receive cash in advance. Results due fairly soon.

not too bothered either way as i am currently not a holder but how can they receive cash in advance when the buyer does not know the ultimate price. If they know the ultimate price then gfm has hedged future production

The price is the price the local market is prepared to pay. In December 2007 GFM suspended zinc sales as the market price was too low, sales resumed at the end of December when the price recovered.

Please refer now back to post 1100 !

GOOES BACK TO APPOX LAST OCT WHEN THEY STATED TO DROP THINK WHEN RESULTS WERE ISSUED THEN THEY STARTED TO DROP

It must be all down to the talks they are having with their Chinese partners.

Griffin Mining 6 April 2008, 12:50pm


But even in troubled times there are companies whose long-term prospects are immune from the turmoil. One such is likely to be Griffin Mining.

Industry sources say the firm, which operates a mine in north-east China, is set to announce a major mineral find close to its existing site. The new find could amount to thousands of tons of zinc, lead, silver and gold, with a total value of about 300m, all on top of its already profitable operations.

Quite what the new find will add its profits will depend on extraction costs and whether commodity prices stay high. But this unexpected news comes just as Griffin's shares hit a one-year low of 65p on Friday, valuing the group at just 171m.

A bounce seems likely.

http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=438032&in_page_id=3&position=moretopstories