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.

After that summary, I can't see why the Independent rates Griffin as a 'speculative' buy. Surely its proving itself.

One other little gem of info that most reports seem to omit. Griffin has developed the current site alongside the Chinese government who have expressed their complete satisfaction with progress and with the management of Griffin. The Chinese government have already indicated that if Griffin bidded for future mining development sites within their territory they would be looked on very favourably. IMHO this alone justifies huge upside potential in this stock.

Starfrog,

I think you mean 'proven' in the first line!

With regard to The Independent article, it makes you wonder if the writer knows anything about GFM at all, or just copied a few notes from someone else.

As you rightly say, GFM are in collaberation with the Chinese government, who must be impressed with the mine that GFM have built, and they are already in talks about other potential projects.

It failed to mention that GFM are in fact selling their zinc to a local factory at $300 HIGHER per ton than the LME price!

That there is such a shortage of zinc in China that the local factory is sending it's own trucks to pick up the zinc, gaining GFM a further $24 per ton!

Nice gently steady movement upwards last few days..
:>)

Any views on 5% drop at a time when we are expecting upwards ? Must be tree shaking as I cannot see it finishing the day in red figures.

Oakapples,

Just spoke to Griffin, minestart did not occur yesterday due to an unexpected Chinese VIP visit, and the contractors running some last minute checks.

there sre no serious problems, and production commencement is imminent.

Griffin WILL RNS as soon as production commences.

Many thanks Andy - you really are handy (sorry!)

I do my best! :-)

A small retracement today, not a surprise in this market.

Andy,

Whats your view on when the RNS will be issued, monday morning ?

aldwick,

Monday would be my best guess, gives them the weekend to work through all the tests.

The directors are flying out there next week, so they may even delay until they have seen it for themselves I suppose, but I'll be looking for an RNS Monday, China is seven hours ahead so (hopefully) they will already have completed some production by the time our market opens.

Isn`t it more likely that the Directors will be on site "When the Zinc hits the Pan !!"

Oakapples,

Well if it was my company, I would be there for sure, so yes, you MAY be right.

It goes against what they said at the recent AGM though, when they said production was due to start "in 5 days". Anyway, once it's confirmed as started, it's all academic, IMO.

I am confident it will commence next week, then we may see a small boost for the price.

As you predicted - here is the RNS

COMMENCEMENT OF PRODUCTION AT CAIJIAYING


Griffin Mining Limited ('Griffin' or the 'Company') is pleased to announce that
production of zinc concentrate has commenced at the Caijiaying mine and
processing plant in China.


Griffin Mining Chairman Mladen Ninkov said: 'The Company has fulfilled its
pledge to its shareholders and the financial community. Griffin has built a
mine and processing plant to budget which is now producing zinc metal and which
will generate significant revenue for the Company. Furthermore the mine and
processing plant at Caijiaying are fully financed, the Company has no debt and
retains a cash position of in excess of US$8million. Excitingly, the Company is
also initiating an extensive reverse circulation drilling programme on the
highly prospective epithermal gold targets and zinc mineralized extensions
within our existing licence areas. It should be an landmark year for all the
shareholders of Griffin.'


Baza

Nicely up beat but not early punters

PCF Last week issues an RNS stating that they had been approached in the early stages of a bid. The current valuation is way to low and is about to rocket with the full bid any day. The company is moving back into profit and several broker/tipster recommended it as a buy prior to the bid news

On top of this there is a rumour of a second bidder in the wings going about

This will reach new highs this week, now is the time to get in before it heads toward 100p, current sp is 32p

IMHO

oakapples, bhunt1910,

Yes nice to see the expected RNS, and the market clearly likes it.

Good news!
:>)

I like the end of the statement (It should be a landmark year for all the shareholders of Griffin!!)
db66

Nice news to come back to.
Andy, happy to take up your suggestion that the header deserves a makeover. Will see what I can do.
Apparently the reason for the slight delay in the announcement about production was to allow Chinese Gov. officials to visit to cut the tape. Important to keep them on side as the Chairman reckons there are alot more mining assets likely to be up for grabs and GFM has now got a track record and the contacts which should give them a head start over the competition.