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.

robstuff, thats it, but the rags have been reliable with gfm rumours up to now.

14th - 17th Nov is China Mining 2005 Congress & Exhibition in Beijing. Griffin is a sponsor so may be a release then as all players will be there. Link below FYI....

http://www.china-mining.com/

Could possibly be where the rags are getting info from also as I suspect the normal crowd will be there to report.

Is GFM alone in the zinc mining industry with a sliding sp when zinc is hovering around $1600/tonne? It makes no sense with other news pending as well.

I think it's just the usual impatience before expected news, could be any day now though and could be exciting..

Sharesure,

The whole AIM mining sector is soft IMO.

Good news is simply being absorbed.

Andy / Sharesure, alot of investors got in on Griffin ealier in the year ready for the initial climb. Now is the time they will take profits and move on. For us still in we can only wait for news and everyone on the share is trying to predict what the news will be. The share I think is now coming out of its overbought status... Hench a small slip before any climb can be expected. Griffins sp is also in line with current zinc prices to its asset base. The board have not let us down yet, and I believe thay will furhter deliver for us.

explosive,

I agree completely with your sentiments, and also that the the board have delivered.

AIM mining sector is weak at the moment, I ownder if it's going to be a small blip, or a more general selloff.

Andy - Small blip I think, fund and hedge managers will not be bothered to put down their mince pies to sell out.... We'll see this come end March begining of April.... For now its all the smaller investors getting out, hench no RNS's of big sales....

ZOX is up 1p this week.

5% gain today, should back to 50 for year end...

I believe GFM is a strong buy and should be bought on all dips,as I have been doing for some time. In the coming weeks we will get news of the gold drilling samples. But there IS a delay in this as the company has said, so dont worry.

Hectorp, bought on all dips... Below what price?

Hi,
I believe any dips are only to 46p now, though there is a small chance of the low 40's. But now we are fairly close to gold results the one thing that would drive us down to 40p would ironically, BE that there was not gold !
- I think we all agree thats simply not possible, as there are many good lodes in the general area, so lets be hoping for at least a 3G/T overall resource ( from the r-c drilling thats been happening). My view of the SP is that GRM should be over 60p on zinc alone, and hopefully we will get pleasant news of the zinc output by Xmas.
H.

Hectorp, I think that the directors return from their visit to the mine today so it could be that the update on zinc production will be issued quite soon. It would be good to have news on the gold drilling programme carried out in the summer whether or not independent assay findings have been possible to obtain - currently there is a global backlog caused by a shortage of such facilities.

Lots of sells gon through today. I am surprised people are selling so close to the assay results? You'd think they already know something?

bingobingham, The only people selling are the inexperienced investors who think the assey results might be bad because of the delay.We all know that there are many result delays due to a shortage of facilitys,This does not mean results are bad.
These sellers are are the type of investors that kick themselves when a stock flys.
I for one think GFM will deliver the goods, keep what you got or buy some more, but whatever you do dont sell.

You sound even more like an owner than your name suggests ! - but I believe your point is a good one

Still can't understand why we haven't heard anything about the test results or how the company is trading at the moment - any chance they could be in discussions over selling the company?

Directors have apparently just returned from 2 weeks in China, one week at China Mining Forum and second week at the mine. Just taking the current zinc price at $1675/tonne and production of say 24,000 tonnes from throughput of 200,000 tonnes pa of dirt that would give a gross profit of $24m pa. There is a small extra production result which comes from the gold exraction circuit which probably isn't worth including. $24m pa gross profit translates to say 14m pa. Given the mine's life expectancy is predicted well beyond the original 14 years, what multiple should GFM attract? Surely more than at present without even factoring in the intention to increase production to 60,000 tons of zinc pa and with the rising zinc price expected. Then there is the real prospect of a major gold strike being confirmed.

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

A gold strike is very probable when you consider other such strkes in bordering provinces. There are already some large gold players in China with infrastructure to accomidate a mine of Griffins size. Until results are known and verified for g/pt over life expectancy I don't see an RNS being released.