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.

A chartist poster on another bb who has been watching GFM closely because of the pennant forming is now a buyer.
Positive if you believe in chart signals only I suppose.

Sharesure, Wednesday's dip does not satisfy my call for a pullback as I was looking for it to trade under the 45.75p low. It is 'possible' that the correction could be over as it had already met initial corrective objectives when it reached 45.75p, but the length of time that pullback took represented a problem for me (ie. too quick). Therefore, I assumed a most likely scenario for the pullback (detailed elsewhere on this bb) and came up with 45.75~42p as a buying zone.
I'm still not entirely convinced though and will either venture long below 45.75p or above 55p.
The pennant idea seems to be a bit of a mess. We broke the topside when we traded 53.5p and the downside when we traded 47.25p, so how many times do people want to redraw the lines?

Note, the longer-term bull remains intact over 38p.

still trading well under the vol 50d ma

Lynnzal, I will look fwd. to GFM going over 55p then! As of next monday, 24/10 news on gold drilling progress should come through as the directors return from their hols. By my estimtion the actual drilling will have been finished and so it is down to how soon the results can be interpreted. Independent assay results are likely to take longer.

Thanks for the info Sharesure, is there any standard timescale for these results to be published by?

Lynnzal, Not to my knowledge, but if drill results are available and are such that they would affect the sp either way then GFM would have to publish them under SE rules.

According to the Times zinc is higher yet again. I'd understand GFM's sp if the shares were ahead of events but in my view they aren't; so the constant rises followed by weakness seems at odds with reality. I am expecting to see GFM issue more gold drilling news early next week.

Just nervous times Sharesure imo.
Also gfm must be a daytraders dream with the way its been fluctuating this year, even I've predicted many of the moves and I'm no chartist, just been too nervous to trade it in case news comes in and I miss the big move...

Lynnzal, hows our chart looking today? TIA.

Arent we due some news from this one?.

cheers GF.

Looks like its ready to tick up.

cheers GF.

Goldfinger, my source says that the gold drilling programme is virtually complete but no news will come out on those cores until after a visit to the mine by the directors in early November. GFM apparently does have some laboratory facilities on site to do some testing but it will not carry the same weight as an independent firm doing that work. As far as independent assays are concerned GFM, like every other mining company, is caught by the current worldwide shortage of independent assay laboratory facilities, so those results will possibly take until into December.
If the drilling results for the recent intermediate bore holes show the same gold bearing strata continuing between the previous drill holes at the extremities of the area it would be unusual in my view if some info. didn't either leak out or get announced fairly quickly.

A Bid is possible as muted by the Mail, before the results as it's currently valued at only 66m, and could see a big jump on further results.

I've heard bid rumours from more than one source.
Dont really know if this is good or bad at this position. I think it woul be a bit of a shame as we have just got going and it seems like we have some gold news on the way.
I feel it would be better to have bid speculation once we had hit 70p or above

robstuff, agree that certainly looks a possibility as GFM seems to be undervalued even based on its zinc production let alone the prospect of major gold finds. Suspect the Results time will be used to announce that zinc production will be increased further + a rapid timeframe.

Sharesure,

I think the prospest of a mojor gold find is good also...... The XinQiao Gold Mine is situated in one of the most prolific gold producing regions od China. The Henan Province located in the east-central China is the second largest gold producing province in China with annual poduction of approimatly 864,213 ounces.

Have a look at the below link and website

"http://www.asianstardev.com/project_images/xinqiao.gif"

Its worth noticing that Griffins mine is in the Hebei Province located directly northeast of the Henah Province. The major feature of the XinQiao Gold Mine is a large fracture, which consists of three sets of crack belts. Movement of auriferous molten metallic lava through this fracture resulted in the formation of several gold ore veins. The majority of the quartz veins trend to the northwest, with a small number trending to the notheast. To date, 29 ore veins and 32 ore bodies have been located in the mine.

I think that any major gold announcement at this time will see a rapid sp increase and interest from other big players in the area. It could well be that Griffin have stumbled onto one of these gold veins which to estimate reserves would take some time. The announced grades of gold to date are also comarable with the avereage grades found at the XinGiao Mine ranging from 0.6 to 300 grams of gold per tonne, with an average grade of 10.25 grams of gold per tonne.

Has anyone already looked furhter into this or done any research regarding mining projects and gold in the same area/range?

good price to top up, news can't be far away

looks like a few have rs

whoops 4825.00 someones going to be mad. 25k x 8 interesting

FOCUS: Zinc Seen As 06 Price Star But Hampered By Copper

(This story was originally published Thursday)
By Elisabeth Behrmann
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Zinc may be the star on the London Metal Exchange in 2006 yet its outright price performance will be hampered by expected declines among other metals such as copper and nickel, market experts said this week.

ADVERTISEMENT


Speaking ahead of LME Week that kicks off here Monday, analysts and industry participants said price gains in the metal, used primarily to make steel resistant to corrosion, will be restrained because the LME's flagship copper contract is forecast to fall sharply next year, dragging zinc down despite its robust fundamentals.

"Zinc is one of our favorite metals, a late performer in the metal cycle," Robin Bhar, base metals analyst at UBS in London, said. "Supply is constrained while demand is forecast to rise."

The LME's three-month zinc contract has already moved to an eight-year high of $1,530 a metric ton, up a quarter since the beginning of the year, aided by copper's climb but also on its own tightening fundamentals, analysts said. The 2005 average is estimated around $1,300/ton.

Analysts see zinc prices range next year between $1,280 and $1,520/ton. Though little changed in nominal terms against current prices, those forecasts look healthy when compared with expected price declines elsewhere in the LME complex.

Zinc demand is expected to outstrip supply by some 200,000-300,000 tons next year as few new mines are expected to enter production, analysts said.

"The concern for zinc is from collateral damage from copper. I forecast zinc prices at flat into 2006, but that's because copper is forecast to fall by 27% or more," base metals analyst Nick Moore at ABN Amro said.

Miners and refiners tend to firm up negotiations on charges to turn zinc concentrate into refined metal on the sidelines of the International Lead and Zinc Study Group meeting here this week, with benchmark treatment charges emerging weeks later.

Negotiations between zinc metal producers and consumers will also take place over the next few weeks to agree European zinc premiums over the LME cash price for annual contracts.

Early indications point to a hike of between $10 and $20/ton from the 2005 benchmark premium of $95-$105/ton.

"There will be serious negotiations during the next weeks and treatment charges will fall sharply with smelters guarded for double-digit figures," analyst Graham Deller at metals consultancy CRU said, adding that high zinc prices should offer smelters some reprieve.

Some industry sources said charges might even fall below $90/ton.

In 2005, treatment charges have plummeted to record lows of $120-$126/ton, cutting revenues for smelters.

Analysts anticipate a number of closures for 2006, leading to the concentrate shortage easing.

The shortage, due to years of low investment in new mines, recently forced spot treatment charges into negative territory for the first time, even though special contract clauses equated the charge to around $55/ton.

The concentrate shortage is forecast to ease from April 2007, when Apex Silver Mines' (SIL) San Cristobal project in Bolivia is scheduled to start production. Its projected output is 270,000 tons of zinc in concentrate annually.

Fundamentals for zinc improved further in the third quarter as strikes reduced an overhang of exchange and producer stockpiles that had hampered rallies in the price.

An 11-week strike at Teck Cominco Ltd.'s (TEK.MV.A.T) Trail operations in Canada and a labor dispute at Falconbridge's (FAL) Kidd Creek plant in the period helped remove stock and should pave the way for rises, analyst Ingrid Sternby at Barclays Capital said.

However, zinc inventories still remain above critical levels of consumption, ABN Amro's Moore said.

High producer stocks and an estimated further 150,000 tons of off-market stock mean zinc's fundamentals aren't strong enough to resist weakness in other LME metals, Moore added.