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.

..and quite a few of the rest of us ethel.....

According to Wirralfinance the directors are doing the rounds with a lot of brokers at the moment.
As to the legal aspect he was accused of ramping and replied vigorously that his broker was very reliable and that they often get snippets of info from companies ahead of the crowd so who knows.
He has posted again today so I'll post it here later but have to go out now.

dibbles,

Please do, but GFM are breaking the law if they are passing on price sensitive information to Wirral's broker before it is released to the market!

Wirral is making a serious allegation here, Griffin should be informed I think.

Way back, either the Mail on Sunday or the Times made reference to there being a substantial gold find. According to a mining expert I have spoken to, it is not unusual for trial drills even in the same area to produce very different profiles, ie content, so it is probably better to let GFM get their RC drill going in that area so that they can announce the results of several drill tests. I doubt they will delay too long in doing that. By my calculation the sp is more than underpinned on their current zinc operation; so really it should be a case of relax and let the news unfold.
As for today's weakness I was told that there are several shorters who obviously want to drive down the price. I think that one day they will get caught out in a big way, so they had better have their fun while they can.

Good rise. Still no 4 week news yet, be patient, it was said at the AGM. Its foolish of someone who thinks they have price sensitive news to put it on the BB. GFM could be investigated by the FSA as Andy has stated.

Perhaps what they are telling the brokers is unconfirmed but very likely hence not yet price sensitive?

Wirralfinance - 18jul'05

Heard from a mate of mine over the weekend and he got same story from his ( different) broker that they believe the amounts of gold are a lot more substantial than they believed earlier, they can't make a statement other than what has already been intimated till they have an official log from the drilling rig which was apparently on the docks awaiting shipment up to the mine, he was told this rig can drill at about 200ft or metres (not sure) per day and the area they wish to drill would take no more than 2 days for the first drill!
The directors are of the opinion that these shares will be more than double quite soon, they are obviously doing the rounds at the moment although it is having little or no effect on the share price.

dibbles,

thanks for putting up the full post.

IMHO they are on VERY thin ice here, either they KNOW they have a substantial amount of gold, which is price sensitive, and they should tell the market first!, or they BELIEVE they have, (which was already stated at the AGM), and IMHO is NOT price sensitive, as it's still an opinion.


However, if it's only an opinion, due to GFM not having done the proper drilling to prove it up, and no samples being sent away to be analysed, then that wouldn't be sufficient to cause much of a price increase, as it's information already in the public domain, as it was said at the AGM, and reported afterwards.

Was that the ONLY post by Wirralfinance?

From my memory at the AGM the chairman stated that it was his personal opinion, (not a company opinion -I'm confused by that as he is the chairman!) that because of his geological experience at other sites around the world and his comparison with the geology at Cayjaying he expected GFM to end up as predominantly a gold mine as opposed to a zinc mine with a bit of gold as a by-product. My Nat. History museum geologist reckons that co-located with zinc, you often not only get gold but copper too (at the moment quite in demand) although I have not heard that mentioned by anyone at GFM. Either way the current sp is cheap for the zinc business, with the exploration potential here, and on other assets when they get them, in for nothing.

Sharesure,

Yes he mentioned that with the type of orebody they think they have, gold is often located in substantial quantities nearby.

IF this is what is being said to the brokers, it's fine, and is what was stated by the chairman at the AGM.

given the current soft market, I wouldn't have thought that this belief alone would move the price much.

Once the RC rig is onsite, and drilling, that may well change of couse!

Can the new plant be used for Gold as well as Zinc ?

Andy, he hasn't posted again since.
He did get attacked by some after the first post but in his defence one or two regulars did say that they had always found him to be honest and reliable.

aldwickk, Yes, it was designed that way, because even the zinc bearing ore they are putting through now has some gold in it which they tap off as a by-product. I don't think the gms./tonne are significant with the ore from this part of the licence area, (0.75gm-1gm. /tonne?), although apparently even that is regarded as commercially worthwhile on its own in most parts of the world. I agree with the other comments here that mining has such a history of inflated claims (Mark Twain's "beside every hole in the ground stands a liar!" comes to mind) the chairman's instinct needs to be treated as just that until more extensive drilling proves him right. It boils down to backing his hunch for the sp to advance strongly. The current sp does not in my view reflect any backing of his instinct although he has had a good track record of being right so far.

dibbles,

Ok. if his broker has become aware of his comments being posted all over Bb's, he may not be too impresessed!

I am sure he's probably reliable, but not all broker originated rumours turn out to be true, they can be victims of market "gossip" ust like the rest of us.



Sharesure,

I know the mine can process gold as a by product of the zinc production, but can it process gold ore?

I'm not sure about that, I will try and find out.

Zinc concentrate stock pile at Caijiaying ready for sale.

aldwick,

thanks, a site for sore eyes.

price is up 0.5p, but the volume is almost non existent today.

Nice start to the day. Think all the questions yesterday re gold throughput will get answered when a new broker is appointed. (Quite soon?). Suspect existing plant can handle by-product gold but if a much more extensive and richer deposit is confirmed there may be a need for additional processing facilities. I think that GFM mgt's caution about being rushed into saying too much too early is in character with their reputation for being a team that comments and then delivers on firm prospects rather than hyping. Given the steady progress over the last year, waiting til Sept?early Oct. seems worthwhile.
Shares look likely to anticipate that time by strengthening between now and that time.

Sharesure,

Apparently GFM is a "BUY" recommendation in Shares Mag!

Someone did read your emails after all.

And that would account for the early flourish then, now retracing.

Andy, Thanks. What took them sooooo looooooooooooong! Maybe they have a new mining commentator? I can't download the magazine this morning for some reason.