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.

I think the new broker will inevitably produce their own Research note and that it would be a surprise if that did not materially increase the opinion of value of the company now that it is in production. The new broker is in the top three mining brokers so that too should lend weight to the opinion being one investors can take seriously. Also I would think that if the gold exploration proves to be as hoped they may need a more a good specialist mining broker to take that fwd.
I agree about the PR, or lack of it. Maybe they'll be swapped next.

Hadn't rec'd my copy of Shares before my last post on here. Steven Frazer's article seems to agree with all that we have been saying on here for some time. The two elements of additional interest, the gold prospecting seems to have been underplayed; the company seem to know they have got a valuable deposit, but cannot fully evaluate it until they drill some more. The projected sp gives no allowance for the speculative interest there will be as drilling commences over the next month. Also, not mentioned at all, is the possibility that other, larger, mining outfits will wish to to take a stake in GFM as a foothold into China, and use that as a shortcut to take advantage of GFM's mgt's reputation with the Chinese authorities.

Anyone know when the drill rig will be on site, it seems like it's been at the docks forever!!!!!!!!!!!

Dibbles, any day now apparently. Hopefully the real fun starts then.

sharesure, congratulations. you finally got your wish. :)

Thanks, bosley. It tok a long time! Just hoping I've not missed anything - it's always a concern when the outlook appears so promising. Hope you are in on this one too; I have always reckoned the real action starts now they get their drilling programme underway; the zinc is really just a 'travel & meal ticket' to what should prove to be bigger things to come,

With a mine in China , GFM does not have to export zinc so how will the Chinese revaluation effect the local zinc price ?

I see that ZOX is flat lining and GFM as overtaken them.

aldwick,

That may be due to news from one, and a (current) lack of news from the the other!

I have seen a ZOX presentation, and it was very impressive IMO, and when I have some spare funds am going to buy.

I hold GFM.

Aldwickk, I puzzled that one. GFM stated that now they have bought all the capital equipment the remnimbi/dollar rate has little effect since they now sell the product locally at rates which can exceed the LME price. Conversion of those proceeds into dollars will get them more dollars after the reval. but on the negative side they will find local inflation slightly higher. My guess is that the current small reval. of the remnimbi will have little effect either way. Would be interested in anyone else's thoughts.
Andy, re ZOX, I heard that they were going to have raise a load of extra capital to do what GFM has already done. If that is true it does mean a time delay while they build the smelter, risk and some sp volatility whilst they raise cash in a mkt. that is looking less inclined to want to put cash into mines? Just some thoughts; I would rather be in GFM w/o those uncertainties plus the spice of the gold exploration.

now griffin have done what they promised, there must be a conslidation in the proce soon as the good news is already in the market in my view...

there will probably be a delay of a few months before we hear the results of the gold drills, so it may retrace a little...

late september should be the start of the xmas run up in the market i reckon, not before...

aimtrader, Agree that Sept. or poss. Oct. are going to be the interesting months. However, I don't expect too much consolidation because the sp at this level is still a conservative valuation of their current zinc business; the gold exploration and any threats of a bid are thrown in for nothing. The bid possibility looks to be way over the horizon for a number of reasons but I think there are bound to be leaks of information on the gold prospecting over the next few weeks as it is impossible to keep that sort of news quiet. It only needs a couple of successful drillings
(assuming that happens) to increase the possibility that the earlier finds were not isolated outbreaks. The AGM comments on this were encouraging enough anyway to believe that the mgt. already have a reasonable degree of confidence in what they will find.

I'd be surprised to see us retrace too much, now that we are mining and earning we are already seeing increased press coverage and as Sharesure said recently we can probably expect a fairly tasty new broker note anytime soon.

Are we likely to see production updates this soon?

GFM have said that the production is going to plan, so presumably each week they produce around 1000/1500 tons of concentrate, depending on the ore grade. If they are making $500/$700 per ton, the cash in the bank should be building up nicely, subject to what they spend on exploration. I would think the newly appointed broker would want to issue an early review of how they view progress to date.

Sharesure, if they are still getting around $1700 p/t at the gate wouldn't profit per ton be nearer $1000?

Dibbles, yes, it would. I thought it might be better to be more conservative until the mgt. or their brokers ( which really are a leap fwd. as they do not just take just any companies onto their books and probably not usually ones with this size of mkt. cap., so they obviously are looking ahead to bigger things happening.) are prepared to issue a statement. With the chairman in town this week, maybe the announcement, forecast by the chairman at the AGM, will come out. I can't think what could be announced at this time, it would seem too early for any production or exploration updates; perhaps news of new exploration assets from the Chinese government?

dibbles,

They have already changed brokers!

Andy,

I know we've changed brokers, thats why I'd hope to see a new broker note soon.