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.

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.

Dibbles, This morning looks more promising for GFM. I think the recent dip has probably shaken out a few of the smaller punters and hopefully replaced them with some larger, and more medium term, shareholders. Each month that goes by just ticks up more cash in GFM's bank and brings nearer the prospect of further good drilling news.

Surprised to see sp rise so early on todays trades.
Can we expect to see a larger buy later in the day I wonder?

Zinc price up today.

Aldwickk, do you have a link to a zinc price site where it is quoted in $/ton. This morning it was $1349/ton in the Times, but you didn't say what it had gone to today in your last post. Every rise is virtually all profit.

http://www.kitcometals.com/charts/Zinc.html

Aldwick,

That's the price per LB, not per ton!

I looked on Kitco too!

http://www.basemetals.com/

Aldwick,

Well done, perhaps sharesure can now add the link to the header please?

1118 GMT [Dow Jones] Vedanta Resources (VED.LN) +2.5% at 578p amid concerns Hurricane Katrina may have impacted zinc warehousing in New Orleans, says London-based mining analyst. "If it's underwater there could be a squeeze in the zinc market," he adds. LME zinc currently $1,404/ton, +2.8% from the previous PM kerb. (JR)

That explains the recent rapid rise for zinc...
Shame GFM's sp isn't benefiting yet.

Sharesure, as you speak to the co. I thought I'd ask you, have they mentioned when the interims or update may be this month?