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.

Theres always a critic.(lol)

Hi all, here are a few responses to some of your posts

Firstly, I wouldnt know how to use charts to pick stocks. I just use them to decide where certain stocks are within their bull/bear cycle and then ascertain risk reward before entering the market. As far as news sensitivity I could argue that news provides the catalyst for what the charts are telling me.

The way I see the GFM chart, it is still within a corrective phase. The scenario I outlined before is still the most likely, albeit the third leg lower is likely to be more complex than the previous two waves. I could come up with a couple of alternative scenarios to the current position, but wont bore you with the details.
Therefore I will still be looking to buy down towards 42p or may consider going long if the market trades over 55p. Note only above 55p would change current thinking.

To see if the charts would have called for todays bounce, you would have to take a more detailed look at the intraday price movements (60 mins and less). Having said that, it is not uncommon for charts to stall around 79% retracement (pretty much where 48p is in the 45.75/55p recovery). I personally wouldnt trade this mornings move because after paying away the mms spread Id be lucky to get much more than 4% return.

Regards
Lynnzal

have to agree.
I'm certainly no expert and use charts as a part of stock selection. I think GFM has great fundamentals now it is a producing mine, so I'm not sure if charts have much relevance. But they often mean that theres a few chartists following patterns who follow the buy and sell signals and this therefor sways the market price... IMHO DYOR!!

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Forget the bloody charts for god sake.

Zinc will rise by the day and the NAV on this one will go up accordingly.

Please please get your thinking caps on.

cheers GF.

Apparently some of the rebound last week was because there was newspaper comment that a bid was being prepared. Believe it was the Mail, but they were not certain. If this is correct, it is interesting as they have been close followers of GFM since the very early days (when they were 5p/share) and since. Latterly the Mail on Sunday did articles on China, featuring GFM two weeks running. Did anyone else see the comment last week?

Dibbles,

Your recent personal comment was unneccessary IMO!

I DID NOT predict 42p!

I DID defent the right of all posters to have their own opinions, without being attacked by other posters, that don't like to see contrarian views on a stock they own.

If you take the trouble to read back, you will see that for yourself.

Your post above is a perfect example of what I was talking about!

I use charts to determine trends, that's all.

Clearly any news, good or bad, can have a dramatic effect on the price, but until that happens a chart is a nice indicator of trend IMO.

I would not buy a stock without consulting the chart, unless I knew something about the stock not already in the public domain.

dibbles,

grow up mate!!!

Andy, If you re-read my post you will see I didn't say you did suggest 42p.
Also re-read and you may see it was meant in humour not personal abuse.
If it offended you that much then I appologize.

aimtrader, who rattled your cage!!!!!!! lol.

dibbles,

Ok thanks, fair enough!


No predictions from me this week, NY looked a tad shaky last week, and there are some serious concerns about GM's debts and junk bond status, so all UK stocks may be in for a bumpy ride, but let's hope not.

Chartwise, do we have a pennant forming?

Current sentiment is bullish, so it should be positive.

Yes Andy, nice bullish pennant forming and could end up as a triangle correction (a,b,c,d,e) as opposed to an irregular flat correction (a,b,c). That said, I cannot entirely discount a last push to the downside (45.75~42p). As I mentioned before, the rules only change for me if and when we trade over 55p.
Regards
Lynnzal

volume?

Volume is distinctly underwhelming, hence scope for final push lower.

hoped you had noticed :-)))

typical pennant...should gap with large volume. target 74p imho dyor and all that!
(sorry GF!)

Nice to see the Bulls win the day on a shocker again.

cheers GF.

yes, and 2 large 150k buys at the close.
Bit of mileage left in the old girl yet!