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 was thinking that earlier, also the other day we had mostly sells then the sp rose and a large trade came through.
I think someone is definately taking some large positions here.

Dibbles, if you look at that last trade of 900,000 shares posted as a Sell, it seems odd. I reckon it is actually a Buy at the mid qoute price. If that is the case that is very good news since it means that not only have a lot of small time investors been shaken out but there is also a big buyer of the stock. There always was talk of this being a vulnerable time for GFM; maybe there is something in the wind?

Sharesure, certainly looks that way.
The 900k & 252k would explain the sp holding up as it did.
Over the last 2-3 weeks we've had a number of large X-trades and buys going through, if they are all finding the same home then its most likely an institution or a predator taking a position imo.
I noticed today that Xstrata said they would be looking for acquisitions to spend their latest profits on, don't know if they are a likely candidate but they can't be the only ones with money to burn.

dibbles, certainly looks that way; my view is still that this is going to turn out well whether GFM stays independent or attracts a bid. Makes interesting watching.
If you have any spare cash available for a two week punt, take a look at the thread on Chaco (CHP). all geared around a decision next Friday. It promises little downside risk, with a lot of potential.

Sharesure, will have a look, thanks.
Assuming a bid comes what price would you be happy with?
If we get production updates and good drilling results I could see us hitting 1+ early next year anyway or am I expecting too much?

diddles, the mgt. have always been on record as saying they wouldn't sell for less than 1/share. I think that even that would not be enough for the company given the drilling programme and the potential for confirming much larger gold deposits than anything that they have been able to announce to date. The 'fly' in all this is how much they can persuade the institutions to back their belief that the gold is going to be proved at greater levels. I suspect that the drilling is being targetted at those areas first to get an answer fast; I don't think they have a lot of time before a bidder emerges, if there is one, because they are in the awkward period where they probably cannot prove what they believe to be possible.

Shares has an article on GFM. Haven't seen it as the download feature seems not to be working. Would guess that it will be positive.

Sharesure...."gfm has beaten expectations for its Caljaying mine in China, getting a difficult country on stream ahead of schedule and under bufget"...nice and positive!

Did Shares mention ZOX, which are up 1p this morning ?

aldwick
Yes it has mentioned the above share if you look on pge 27 you its just below griffin

I don't have Share s , can you paste the mention please.

parkin / aldwick,

Here's the snippet referring to both GFM and ZOX.

-------------------------------

Griffin Mining (GFM:AIM) has beaten expectations for its Caijiaying mine in China,
getting a difficult project in a difficult country on stream ahead of schedule and under
budget.

ZincOx (ZOX:AIM), which aims to produce low cost zinc from unconventional ores and
recycling, has long been a Shares favourite.
-------------------------------

Not exactly earth shattering, but nice to see a brief mention nevertheless.

Andy et al. I think Shares are wrong about their views on zinc. A number of mines are ceasing because of additional H&S burdens; GFM's mgt showed a research doc. at their AGM which had zinc at a crossroads re supply and demand and it showed a growing shortage developing, provided there are no general economic downturns.

I still think some of the recent large trades are the start of someone building a stake. I suspect % notifications might not come through in the normal way if the buyer is offshore.

I read somewhere that there is no significant new zinc production coming on stream till at least 2007.
I think shares mag also fail to note griffins local demand for its zinc or the higher price they are getting.

Shares are new to recognising the merits of GFM;quite a few readers chided them for their oversight, so maybe their mining expert is feeling a little red-faced about it?

Looking at the Sells it will be interesting to see whether there is an end of day 'sweep up' buy like there seemed to be yesterday. If there is then it will give a good indiaction of what we all expect.

Buys/sells look more even today, I wonder if our mystery buyer will show his hand on days like this?

At least the sp has stabilized recently since the day trader stock has been hoovered up, any buying on news now could really move us up.

How will the high cost of fuel effect GFM and other miners?

As one of the cheapest to run mines on the planet and locals collecting from the gate I can't see it effecting GFM much.