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.

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.

Griffin Shows Promise in China After Opening New Zinc Mine

By Stephen Clayson
20 Jun 2005 at 11:07 AM EDT


LONDON (ResourceInvestor.com) -- Griffin Mining [AIM:GFM] has commenced production at its 60% owned Caijiaying zinc-gold mine located to the north west of Beijing, China, and hopes that further exploration of its wider concession area will yield gratifying rewards.

The new mine at Caijiaying has been constructed at close to its budgeted cost of around $15 million, and in the process, has wisely utilised significant amounts of Chinese equipment and technical expertise.




The operation will initially process around 200kt of ore per annum, but Griffins Finance Director Roger Goodwin says that the company will look to ramp this up to around 500 kilo-tonnes per annum as soon as possible. This will require an expansion in the capacity of the processing plant and further development of the underground mine itself to allow ore to be extracted at a sufficient rate. Both should be easily achievable, according to Goodwin.

Griffin sells a zinc concentrate at the mine gate, so to speak, to two Chinese smelters who are hence responsible for transporting it from the mine to their smelting facilities. The company projects its lowest quartile operating costs at approximately $595/t of zinc metal produced, which compares rather well to a zinc price that seems set to remain upwards of $1200/t as demand growth continues to outpace that of supply. In addition, the Caijiaying mine will produce around 5,000 ounces of gold per annum, half of which is free and the other half of which is extracted via a cyanide leach.

The company is actually able to sell its zinc concentrate at a premium to the world price, due to the savings on shipping and taxation as well as the relative security of supply available to the smelters by purchasing within China.

Production at a rate of 500kt of ore processed per annum would, according to Goodwin, make Griffin Chinas third largest zinc producer, although admittedly this is more a testament to the fragmented nature of Chinas mining industry than to the sheer size of the companys operation.

The Caijiaying project area is split into three licences: a mining licence covering the current mining operation; an original exploration licence surrounding it; and a larger regional exploration licence in turn surrounding that. A JORC compliant zinc resource of 23.6mt at 8.08% (with a cut off point of 4% zinc) and gold resource of 2.61mt at 6.78g/t (using a 3g/t cut off point) have already been established for the Caijiaying project, but the full potential of the area is as yet unknown and will require further exploration to determine.

An expanded reserve statement for the current mining operation will be issued later this year, based largely upon the results of underground delineation drilling from within the mines workings, which will take place over the coming months. However, more intriguingly, several exceptional epithermal gold targets are reported by Goodwin to have been identified within the project area via aero magnetic surveying, and investigation of these is likely to become a substantial focus of the company in the coming years.

Griffin believes that these targets may potentially denote gold deposits of sufficient magnitude to justify one or more additional mines, though obviously the fruition of any such resources is years away. A clearer indication of the Caijiaying areas gold potential will be available after an upcoming programme of surface based reverse circulation drilling and underground exploration drilling, conducted concurrently with mining from within the workings to be completed later this year.

Shares in Griffin mining have been regarded favourably by the market in recent times, approximately doubling in value since September of last year. Though they have lost ground over the past couple of months in common with many mining stocks as part of a sector wide downward correction, this month they have slightly appreciated in value and may have begun to build upward momentum again in recognition of the initiation of production at Caijiaying.

Looking further forward, as production is increased at the Caijiaying mine from the initial rate of 200kt per annum towards Griffins target of 500kt per annum, and if upbeat news on the mining potential of the wider Caijiaying project area is forthcoming, then barring a macroeconomic induced vertiginous decline in the value of zinc, Griffins share price could now be at the outset of a renewed upward trend.

Dynamite, Great post. The bit about needing further construction to increase capacity is at odds with what was said at the AGM where the chairman said that everything had been constructed with that in mind, 'over-engineered ' was the term used. Anyway the profit/ton on zinc at their mine should easily pay for anything else they need to do as it looks like they are going to achieve about $1000/ton at current levels, rising directly if zinc prices go the way they may do.

whoosh and up we go...come on Griffin!!

That's a nice hike for the day! at last maybe some folk out there are actually believing in GFM at last; what's more encouraging is that there is a potential for some good news to come out at any time now that they are getting cash from production to prove the gold deposit. The chairman seemed pretty confident that it is there because of the similarity of the geology with other zinc/gold co-located deposits.
Looks good at last!

Bid price down 1p, why ?

Spread fluctuations aldwickk, nothing more hopefully.

hi all, just in - hope to have a good ride!

Not a bad end to the day. It will be interesting to see if Shares magazine reports on GFM as they have not yet even commented on the Results. If they think ZOX is so good, they ought to rate GFM very well since it has all that ZOX has going for it without the need to raise capital to build the mine to get into production. Looking fwd. to Thursday.

Does anyone on this thread take RHPSG; I am interested to know if they have yet picked up on GFM, it's their sort of company. Does anyone know when it is published?

Can't help you there sharesure - but things are looking good
in the GFM camp! :>)

Stockbunny, thanks. On another thread I was told that RHPSG is out on the first sat. each month so maybe 2/7/05 will feature it.I reckon the rest of this week should see the price strengthen even more anyway. Even if Shares mag. or RHPSG do not pick up on it, the Times and Mail on Sunday are supporters.

And a bit of support certainly wouldn't hurt matters!
may be a bit slow in arriving...but any time is better
then never.
:>)

Didn't they say at the AGM that there would be a full page spread on GFM in
the Mail on Sunday soon?

Well sooner would be better as the price is moving nicely and a
graph at the moment would look pretty nice to anyone considering
investing, especially if they always and only invest in rising shares.