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.

Andy,
I see you now post on the KYS thread, you told me you were going to take a look at them did you like what you saw, they also have a low risk rating.

Stop Press

Date: October 04, 2005

Griffin Mining Foresees Increasing Importance Of Gold At Its Caijiaying Mine.

Would that all company directors of subscribing companies would follow the example of Roger of Griffin Mining who e-mailed to point out that we had missed out on two consecutive weeks of a rising share price in our "That was the week that was in London" feature. We monitor press releases from subscribing companies as far as possible, but run-of the-mill announcements may camouflage a real bit of news and it helps if directors telephone (44 1797 270014) to bring such things to our attention. The same goes for our London Correspondent who keeps an eye on share prices , but it is always possible for something to come in just below his radar screen.

In the case of Griffin Mining, its shares rose by 6p or 15.7 per cent in the week ending 23 September and followed this up with 14.1 per cent jump last week. That made a 12.25 per cent rise in 2 weeks or 32.2 per cent which is quite a performance, particularly as the price has risen yet again this week.

Minews is not a tipster and tends to avoid comment on share prices, but there has to be a reason for a sustained rise of this proportion. Not too difficult to find, either. On September 27 Griffin announced that a a further exciting gold intersection has been obtained from the underground drilling programme at its Caijiaying mine in China, and that the company has commissioned a study to investigate upgrading production.

Funnily enough it seems to have been the high grade gold intersection that caught the imagination of investors rather than the possible upgrade of production. Once a company is in production it gets a re-rating and respect for what has been achieved in bringing the first western mine into production in China. The Caijiaying mine and processing plant reached practical completion less than 3 months after production began in June of this year and the mine has been consistently producing ore in excess of the required rate of 3,850 tonnes per week in the past month. The process plant has now been fully commissioned for zinc production and has achieved its design recovery rate of 92% and initial production of 45.4 tonnes per day.

The gold drilling results give the company a blue sky element and this is what keeps investors interested. A week or two earlier Griffin announced intercepts of 8.8 metres at 19.2 g/t and 6.2 metres at 14.2 g/t gold in an underground hole. Now it has come out with 22.7 metres at 8.36 g/t and 3.9 metres at 5.28 g/t from an underground hole 210 metres south of the previous one at the southern end of Zone 111 at Caijiaying. As these intersections occur at roughly the same level it is quite possible that, with a bit of infill drilling , the company may be able to come up with a gold resource estimate in quite short order. No wonder the shares have been on the move..

aldwick,

Yes they seem ok to be honest, and Mr Cawkwell seems to be investing quite a lot of his money at market price into it, which gives a degree of confidence, given that he was a director until a short while ago.

I read the thread for his postings as much as anything, I'm fully invested at the moment, and Kyrso looks mor elomg term, but I may well take a chunk when I sell something.

Hi Andy, nice to speak to you again, but unlike others on this thread Im not buying for the gold but thats obviously whats pushed it up so quickly just recently.

My take is on the Zinc and Zinc alone. With prices at 8 years high and far more to come in the next 3 years due to supply/demand imbalance I hope to see this one moving much higher although and no disrepect to anyone I feel rather uneasy being in with the crowd as anyone who sees my posts I always go the other way as a contrarian investor.

Still I see this one yes moving down on bad days but I feel the trend is very strong upwards.

cheers GF.

GF,

I agree the trend is strong, but not sure for how much longer, possibly approaching overvalued now?

I still think the zinc is the value here too, until they properly define the gold, which they have yet to do.

They mentioned at the AGM that they were receiving substantially more than the LME price for zinc, but thay have yet to announce this officially.

not sure how much longer this can last, but good for all those that have held from lower down!!!

where to next for the hot money i wonder???

If and I beleive it will, Zinc continues to rise so will GFM. There will be pull backs nothing rises in a straight line for ever (other than GED Global Energy Development he he.) thats why they invented Viagra.

But seriosly I think theres far more to come and one good thing is theres no stale bulls from previous years as it hits new high after new high.

Anyone selling at present prices must need the money.

cheers Gf.

Daily Express 04/10/05
"Talk of takeover interest for Griffin Mining from Canada's Ivanhoe Mines and Anglo American."

bad news

Agreed but talk is talk and comes cheap in certain newspapers

Streaming prices are allover the place.

aldwikk,

We had some problems earlier can you refresh and let me know if you are still having problems?

Ian

oakapples142,

Agreed, especially in the Daily Express!

Hope it wasn't in the Davis Shand column!

He mentioned "rumours of large deals" for MMD/SCO all the way down from 180p to 2p!

heres hoping... I'd like to see a nice steady climb from the mid 50's to di's 2!

016622...don't forget it is only my opinion so DYOR...however, I think it will get there with dips along the way in the next couple of years...so patience is needed.
Di

noted Di!

No plausible explanation has appeared for yesterday's abnormal price movement and there seemed to be no large buyers; curious. As for GFM being capable of fending off what would be an opportunistic bid even at current levels, I think that the mgt. could convince most PI's and, more importantly a good proportion of their institutional shareholders, that they have and are delivering exactly what they promised. If the gold materialises in the way it increasingly seems possible that it will then some of the price targets on here will look very conservative. If you run some figures based on it costing $70/ton to mine and process the ore at this location, and that yields gold at current find levels, plus possibly some zinc too, it is easy to see an enormous potential for the sp, and maybe not more than 12 months away.

Sharesure,

most of yesterda'y buyers were PI's, I agree, and apart form the Express rumour, seemingly nothing tangible to base it on.

The rise has run out of steam for now it seems, and I have sold half to lock in profits, the remainder are virtuallly free now.

I will be watching to see if there's a valid reason to increase my holding, but nothing goes up in a straight line, so I may be able to take advantage of some retracement.

Andy, You may get away with that strategy most times, but if GFM gets another unexplained rise like yesterdays you might find it difficult to catch any subsequent rise which results from either good drilling results or an approach. The mgt. have always been concerned on the latter front ever since a large Bahamas based stake was sold by RAB capital (?) earlier this year and they were not notified as to who the new owners were.

I was told a while back it went to the Chinese