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.

A few sells going through again today...
Impatient so & so's...........................

The last few buys have helped restore near equilibrium. I think we can still rely on the sweeper to mop up at the end of trading if there is still unsold stock. Just cannot seem to push through that 40p barrier................yet.

Struggling a bit today, might have a top-up if we go any lower...

Perverse! Zinc reaches new high and GFM sp weakens. That doesn't make any sense

Thats strange, more sells and we tick back up a fraction!!!!!!!!!!!
I wonder if our mystery buyer is back?

Its the same with ZOX, its the zinc price or stocks.

the sweeper hasn't been around the lst few days, but with low volume it probably wasn't worth it. Today it should be so it will be interesting to see if there is an end of day T trade at about the size of the buy/sell difference

With zinc still hitting new highs, all of which is additional profit, does this stock weaken. It doesn't make any sense on the production business, let alone the potential for new finds, both zinc and gold,from 18000m of drilling in progress.
The new brokers seem to be doing too little. No newsflow from them or an updated profit forecast; the last was prepared when zinc was $1100/ton, it is now $1340/ton.

Doesn't make much sense does it.
I guess the traders/impatient see better short-term opportunities elsewhere or see GFM drifting lower on no news.

Sharesure, if you were surprised yesterday, I imagine you must be totally baffled today?
Can't understand all these sellers!!!!!!!

Yes, I am. But with CHP going like a train, perhaps get that out of the way next week and buy some more GFM with the profit? The company have always maintained that the plant is building up well + the drilling is going well, just too soon to give any results.

Its been a while without any news price is drifting down but it could soon change

Haven't seen any mopping-up this week, that hasn't helped.

Anyone got a target price for Griffin?? I know early days an all, production on site has only just begun an still looking for profit forecast!!

Mladen Ninkov, Griffin's Chairman, commented: (RNS 27/07/05)
"Griffin has now left the world of the junior speculative resource companies and
entered the realm of revenue producing mining companies. This is a just reward
for Griffin's loyal shareholders. With the arrival of the RC Rig on site, I
look forward to further enhancing shareholder value with the expectation of the
drill results as they become available in the autumn."

Well the leaves are falling from the trees and looks like autumn is here. The market seams to also be warming to anticipated drill results..... I have a feeling that these will be good and at $1340/tonne lets just hope that sales are higher than Griffins first sale of 1,200 tonnes. Broker PE for the year ending is 46 which explains market recommendation to sell.

The Chairman has always reckoned the zinc find so far to be worth 1/share once in production. Clearly he is ahead of mkt thinking but a possible bid or revised profit forecast could substantially close the gap between the current share price and Ch.'s estimate. We'll see, poss. around end Oct. for that one.
BUT, before that it may be the sp will rise substantially if the current drilling programme firms up on some earlier rich gold assays. That might be confirmed (or otherwise !) around end Sept.
These are all my timing estimates, not backed up by any special knowledge of the company that cannot be gained from looking at what they have said and are doing.
Meanwhile, move over to Chaco (CHP) for some earlier fun!

Sharesure....CHP? -Care to elaborate?

Read the CHP thread.

This week I think GFM should regain the little ground it lost last week. Zinc is holding up well at $1340/ton; all of GFM's forecasts and the former broker estimates were carried out at $1100/ton. All increases in zinc prices are profit since the costs are already what they are, under $700/ton inclusive of depreciation. What a business to be in at this time.

According to a post on other bb, New Stars Patrick Evershed has been buying GFM.
Perhaps he was our mop-up merchant recently.