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.

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.

ZOX up 4p now.

Zinc & Gold motoring a bit today.

Not sufficient turnover to draw any inference on possible stake building today.

Sharesure,

To the best of my knowledge, griffin have not confirmed the price they are receiving for their zinc, so it may be presumptious to assume $1,700 per ton!

I was at the AGM, and heard it too, but I would like to see it in writing.

I still hold.

Andy,

Thats a fair enough view but why would management state that publicly if they didn't at least expect to get higher than the LME price?
They could have just kept quiet and surprised everyone on results day rather than leave themselves open to criticism if they don't get that price.

Andy, agree with you. Their new brokers ought to give a revised forecast so that it would be possible to extrapolate the mine gate price. Suspect it could well be $1700/ton, give or take the recent reval. of the remnimbi + the slight fluctuation on the LME price since the mgt. have usually been accurate in what they say. In any case, I have a suspicion any report after a 3 month period of production may already have been overtaken by other events on this one. It's only a hunch at this stage, but like you I am not selling until it has run its course. If there is any weakness in price, which I doubt there will be, I would be very tempted to buy more. We'll see. For the moment I'm more focussed on Chaco (CHP) It looks like a quick win.

Hi Sharesure, will be buying Chaco tomorrow, are you expecting a price slip as I understand the issued shares come onto the market or do they already have a home?

dibbles, I only consider an easing of the price as being possible as it seems a number of shareholders are probably thinking that they have seen all the good news in the last RNS and might be tempted to 'BORSON' the stock. If CHP get the deal they are hoping to achieve they will fly. My source says Friday, 19 August is when things become clearer. I don't think this date is subject to any vagaries which usually bedevil August, eg holidays.

Dibbles,
Was that your 100,000 buy this morning ? and ZOX is up again.

How about we leave this thread to GFM. CHP has one already. If that was your 100k buy dibbles, I think you'll end up next week showing a good profit.

How about we leave this thread to GFM. CHP has one already. If that was your 100k buy dibbles, I think you'll end up next week showing a good profit.

The Agency X at 39p looks like the buy order limit on someone who is mopping up stock as it becomes available. Its the same level as the large sweep up order which went through after hours on Wednesday. Anyone any other views?