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.

Dibbles, Don't think they have to, and as a way of building in a better rise in sp for the future its not a bad move. after all if a co. thinks its shares are too cheap, which they do, it is putting their money where their mouth is.

Dibbles, Just had a longer look at those trades; there is definitely someone sweeping up all the stock that gets offered. It underpins 39p as a price but what will get it to move ahead through 40p. Each week for the last 3 we've ended up at 39p. Maybe that's the picture until a drilling result get issued.

I did say some time ago that GFM could start a buyback sooner rather than later
with a growing cashpile burning a hole in their pockets and concerns about a weaker sp in these early stages, they also stated they wanted to stuff the shorters.

dibbles, agree that is highly likely. GFM suffered at the hands of shorters last year so have a score to settle plus it makes good sense to use spare cash in this way. It should improve the sp leaving investors with the option of whether and when they want a dividend and giving the ability to plan that at a time when their taper relief on CGT may be lower - no one wants to give Gordon Brown more money than necessary to blow on the civil service

dibbles,

I would seriously doubt they would have started to buy back shares so soon after minestart.

I would think they will want to accumulate a cash pile, and they spoke of "other opportunities", so they will want to keep some in hand for those I would have thought.

I would also think most of the shorters woul have closed by now!

With regards to dividends , a dividend payment would show the investers who keep on about no foreign company ever takes money out of China that it may have been true in the past but not now.

Andy,

Just looking at different possibilities for the large buying in the background.

A couple of large T-trades gone through.

Same routine; end of day in comes a sweep-up T trade at 39p; someone is building a position in my view.

I wonder how much longer before we find out who???????

Aldwickk, Dividends are not tax efficient with AIM stocks. Far better for companies to use the money they would release for dividends to buy in and cancel shares, inflating the value of the remaining stock, and let investors, who need some income, sell a portion of their shares after 2 years ownership and pay 10% tax cf 40% tax on dividends.

Looks like our end of day sweeper is going to be able to pick up another chunk of stock. With zinc prices again strengthening and gold drilling in progress, and some news on that only weeks away, why would anyone be happy to sell at today's price?

Day traders hoping to get back in lower is my guess.
It will be interesting to watch the trades later.

Don't we have interims next month, that should give us a good progress report whilst waiting for gold news.

GFM runs accounts on a calendar basis. The annual statement was delayed this year to report on the mine commissioning. That came out in May. So you could be right about interims next month; maybe they will want to wait 'til late Sept. to include some RC drilling news on the gold areas. All the indications still point to them being confident on that front.
Our sweeper seems to have mopped any sells a couple of times today.

Looks like their is no stopping zinc at the moment.

Dibbles, where do you get the price from during the day?
Did you see on the news today that China are meant to be doing a moon shot ny 2007; hope they zinc coat their space craft!

Sharesure, the GFM bb on advfn has access to daily price.
www.kitcometals.com $0.5944/1b -up 0.0074.

Dibbles, thanks. If that is UK lbs and 2240lbs/ton then it looks like $1331/ton; quite a rise in one day. Is that the right coversion or are there different tonnes, in the same way that troy ozs are different from normal ozs.

Sharesure, not sure but the 30 day chart sure looks good.
Stock levels falling also, 60 day chart has dropped from 620000 tonnes to 568000 tonnes.