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.

Aldwickk - Another gloomy economists review on things to come... Mind you there reports always sound like this LOL.....

I see it's been a bit quiet here since I've been away on vacation. Still it's not suprising given the sideways meandering of GFM. Needless to say, my analysis has not changed..here's a re-cap from a couple of weeks ago.

lynnzal - 20 Oct 2005 14:59 - 671 of 690
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.

Morning lynnzal,
I hope you are right as I now have further funds itching to find a good home..
As far as quiet here goes, I can't speak for everyone but I've been busier with CHP recently, thanks to Sharesure encouraging me to research them.

Thanks dibbles,
I'll take a look at CHP and post any view on the relevant BB.

Lead and zinc seen in deficit through 2006 - ILZSG
LONDON: The deficit in the zinc market is expected to grow in 2006 to 430,000 tonnes as global usage rises to 11.12 million tonnes and China continues to be a major consumer, the International Lead and Study Group said in a statement.

Global demand for refined zinc metal, used mainly in galvanising steel for protecting against corrosion, will remain at around 10.5 million tonnes in 2005 but will increase by 5.7 percent next year due to the rapid rise in China's galvanised steel consumption, the group said in a statement after its October session in London.

ILZSG's report said zinc demand was set to grow by 9 percent in China, 9.2 percent in India and 6.4 percent in the Republic of Korea in 2005, offsetting declines in Europe and the United States.

Chinese imports of refined zinc metal exceeded exports for the first time since 1988 and the study group said it expected this trend to continue in 2005 and 2006.

Global zinc mine supply will rise by 3.6 percent in 2005 by a further 4.2 percent in 2006 to reach 10.47 million tonnes.

''The rises are largely due to recent expansions and mine openings in Australia, China and India,'' it said.

London Metal Exchange (LME) zinc futures for delivery in three months touched an 8-1/4-year high on Monday of $1,566 a tonne as speculative investors bought the metal anticipating stronger prices next year.

Zinc hit a cyclical low of $742 in August 2002. On Tuesday it was trading at $1,521 a tonne.

LEAD ILZSG said rises in battery production were the main driver behind a forecast increase in Chinese lead demand of 19.8 percent in 2005 and 8.7 percent in 2006.

Global lead demand was seen 3.9 percent higher at 7.45 million tonnes in 2005 and 3 percent up at 7.66 million in 2006.

European demand was expected fall, while in the U.S. it would rise.

Refined lead production in 2005 was seen at 7.37 million tonnes, 7.6 percent up from the previous year.

''This will be mainly due to increases in China, India and the Republic of Korea and a 6.6 percent rise in Europe, where increases in Belgium, Bulgaria and the United Kingdom are expected to exceed reductions in France and Germany.'' In 2006 refined lead output was predicted to be 7.62 million tonnes.

The report said that by the end of 2006 it was likely that all of the lead held in the United States Defense National Stockpile (DNSC) would be sold.

''Since the start of disposals in 1993, deliveries of refined lead from the DNSC have averaged just over 40,000 tonnes per year,'' ILZSG said.

Lead was trading at $963 a tonne on Tuesday. The metal touched a contract high of $1,017 in December 2004, versus a low of $412 in August 2002.

A bit of buying suddenly today, down to zinc's performance perhaps?

or news on the way??

More GOLD than they expected

heres hoping, either way, griffin looks good medium to long term....

3 Nov 11:30
MARKET TALK: Zinc Bull Market "Only Just Beginning"
Dow Jones - Zinc bull market "only just beginning" on back of strong fundamentals going forward, should peak in '07, says Standard Bank. Concentrate availability to remain tight till '07, '08 when new mine supply comes through, while robust demand coming from galvanized steel sector, but warns unreported stocks could be at substantial levels which will bring downside risk...

Data is due, has probably been leaked. Expect an RNS very soon.

rob,

If it's been leaked, that damages the credibility of the company.

Happens all the time though, very difficult to stop it

rob,

I agree, it is difficult to stop, but some leak, and some don't!

I prefer those that don't, but this may not be a leak at all IMO.

GFM mentioned gold results by end of October, so people may just be speculating they are now due, and presuming they will be good.

I would like to know how much leveraged money is going into GFM right now, the market does know this of course, and can use that information to it's advantage from time to time.

Miners are habitually late with drilling results, so I would only hold shares that are paid for at the moment personally.

up 2.5% on aday of small sells and a 100k buy after close...looks good for next week,
cheers all!

Just back from a week away. GFM's directors should also be back from China shortly so expect news within 10 days?

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Wednesday November 9, 10:45 AM
INTERVIEW: Zinc Miners Wary Of Foiling Bullish Prospects

By James Attwood
Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Zinc miners are reluctant to expand their operations even as prices of the galvanizing metal surge to cyclical highs on the London Metal Exchange, Zinifex Ltd.'s (ZFX.AU) chief executive said Tuesday.

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In the late 1990s and early this decade, miners poured billions into ramping up output only to see prices collapse to 18-year lows as global demand slowed, forcing some to scale back investments and others to exit altogether.

Melbourne-based Zinifex, the world's second-largest producer of refined zinc, is itself a product of the industry's dark years, emerging from the ashes of the failed Pasminco group.

However, even as improving fundamentals mean zinc is fast becoming the new darling of the metals world, Zinifex and other major producers are wary of again flooding the market with additional supply and forcing prices back down.

"One would like to think producers have learned the lessons of the past, but time will tell," Greig Gailey told Dow Jones Newswires.

"Zinc is one of the late performers in the cycle and it's only in the last couple of months we've begun to see prices, at least in Australian dollar terms, that might encourage you to think of additional production," Gailey said.

"The rundown in LME stocks has been accelerating in the last month or so, so we're very positive about the outlook over the next 12 to 18 months at least," he said.

Most forecasters agree zinc's prospects heading into 2006 are bright, as concentrate tightness holds back refined metal availability and Chinese imports surge, although price expectations beyond 2006-07 are generally lower.

Major Expansion Plans Remain On Hold

Zinc's relatively newfound bullishness and concerns over repeating past mistakes by flooding the market means major expansion plans will remain on hold.

Contributing to the wariness are structural constraints derived from the lack of any significant investment in exploration and development when prices languished below US$800 in 2001-03.

"Even if we were to commit to a (new) mine today, it would be something like five years before you'd see any production, so you have to have a degree of confidence about longer-term prices," he said.

"Then you have to look at what other people might chose to do because you have to bear in mind the total supply-demand picture, not just where one company fits in it."

Other major zinc producers appear similarly wary. Market leader Teck Cominco Ltd. (TEK.MV.A.T) of Canada is understood to be keeping major expansions on hold until global stocks drop to at least 200,000 metric tons from current levels of 475,00 tons.

In fact, the only major zinc development in the pipeline is the San Cristobal mine in southern Bolivia, slated to start producing 200,000 tons a year from mid-2007.

The dearth of new projects has some analysts saying zinc stocks could shrink to record lows next year, which if copper's recent record-breaking performance is anything to go buy, has a potentially explosive implication on prices.

Escalating development and operating costs in the mining industry generally, as a byproduct of the commodities boom, are adding to the constraints on new supply, Gailey said.

He gave the example of Zinifex's A$1.3 billion Century mine in Queensland, Australia that in today's climate would have cost in excess of A$1.5 billion.

Smelters Feeling Concentrates Pinch

Zinifex posted profits of A$234.7 million for the year ended June 30, thanks largely to rising prices in the tightening concentrates market.

But the same situation means smelters like its Clarksville smelter in Tennessee, Zinifex's only unprofitable asset in the fiscal year, are feeling the pinch.

The company depends on concentrates from South America and Ireland for Clarksville, which may be forced to close if it continues to be unprofitable.

Gailey also said Zinifex would consider buying operating mines in South America as part of a global acquisition strategy.

"We've looked at a number of acquisition opportunities in the last 12 months and continue to do so, but (so far) we haven't seen anything we believe could be acquired in a way that would add value to shareholders...resource assets at the moment are very fully priced," he said.

The industry's consolidation potential includes Zinifex itself, Gailey said: "Our view of life is if somebody wants to buy Zinifex the only issue is price."

The company also plans to continue preparing for the future by farming into brownfield projects run by junior explorers in Australia and elsewhere, he said.




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