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,

Well all the sidnificant trades all look like buys.

I don't pay much attention to 'X' trades, as there is a willing buyer and seller, so it's nuetral IMO.

Sharesure,

I'm looking forward to the RC drilling results, but I expect nothing to October, as there always seems to be some slippage with mining juniors.

Andy,

I agree with you to a point on X- trades except that its possible the seller is selling for a significant profit, but the buyer is showing enough confidence to purchase say 500k as we've seen recently at new levels.
I still look at it as a good sign personally.

Andy, You will probably be right. I'm having that problem on CHP. As certain as I can be (without being an insider) it will all happen, but it is just requiring a lot of patience waiting for the RNS

Sharesure,

I'll take a good result on the RC gold drilling for Xmas now!

Now that would bring home the turkey!

Can't believe we haven't broken 40p yet, zinc piling up, cash piling up and gold news to come.
This game doesn't make sense sometimes!!!!!!!!!

Dibbles, totally agree. If you reckon on even doing a min. of 200,000 tons pa, that gives a profit of about 40,000/day, each and every day. Knowing that they are trying to build up to 500,000 tons pa, when they reach that it will be about 100,000/day profit. Then, as you point out, there is the good prospect of a major gold find as mentioned by the company recently.

Australasian Investment Review The impact of Hurricane Katrina has extended beyond the oil market, with zinc prices rising on concerns stockpiles of the metal held in New Orleans would be impacted. While reports indicate there was no damage to the metal being held, GFMS Metals Consulting suggests there are other reasons to be optimistic regarding zincs outlook.

The 15 month zinc price seems to have gone ballistic ($1790/ton) in the Times unless that is a misprint. If correct that means $1200/ton profit to GFM's account.

Thats quite a trade gone through at 37.5p, is that a discount for volume?

Dibbles, if you look at the timing of that trade and at the adjacent ones at that time it looks like a buy; almost like it should have been an Agencty X deal. Beats me why this stock is not stronger given the prospects for zinc and the likelyhood of a drilling announcement in a few weeks.

There's a bit of life in the old girl yet then.

I still think Griffin will be like JKX...sit there for ages whilst everyone wonders why and then suddenly shoot up double or more....patience, we will all be rewarded I'm sure.
Di

Dynamite, funny you should say that as I was thinking the same thing...
I traded JKX a number of times in the 40p range, made a few bob and missed the important bit but have been comparing GFM with JKX potential ever since and promised myself I would be more patient this time....

Two large trades today at 37.5p, 616k & 750k.
Do we have another fund topping-up I wonder?

Snap Dibbles I did the same with JKX and I am determined to be patient with GFM...the potential is huge.
Di

Today's sells are puzzling. Does anyone know if someone is slagging off GFM somewhere?As far as I know nothing has changed with the business, except that zinc prices have hardened. So why the weakness and why the selling pressure?

Hardly any buys and the sp recovers, looks like someone has their hoover out again.

Sharesure, a poster on the other bb said he sold 2x20k because he can see the sp dropping back a couple of pence.
I think some see sells going thru so they sell, no bad news as far as I know.

Dibbles, dumb isn't it? selling just because a few others do! Glad it has steadied up, it shouldn't be as low as this sp anyway. When I last spoke to the mgt. they were still hoping to get out some drilling news around the end of this month so there is scope for some wider interest then.