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.

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.

Web site has been up-dated, looks very encouraging!

Largish holder here. :)

rayrac, what do you consider to be a largeish holding, e.g. amount of shares held or amount of money shares are worth ?

Its relative.

dividing by two is hardly rocket science

rayrac, thanks for the reminder. The update under 'Presentations' would seem to confirm that the 14m pa gross profit over a full year is more than likely to be met if they are already putting through 3850 tonnes of ore/week; could be it will be exceeded depending on whether the ore is higher grade than 12% plus there is the by-product of gold - admittedly likely to be very small amounts at this stage. Also interesting to see that they mention copper - I don't recall that having ever been on their agenda before.
Also zinc price seems to be still travelling north - now $1715/tonne.

Thanks aldwickk..You are right! I hold somewhere between 1 and 100,000 shares!

Sharesure, Same here, copper is a new one for me.

Hope this all 'pans out' for us. :)

Just looking at the last three pages http://www.griffinmining.com/gmpres.htm Griffin show epithermal gold targets these are in a north-east direction possibly a spur...... Also final page of report "summary" one bullet point "Large zinc & gold resource defined"... The Caijiaying site was also when designed and built included features to on site smelt gold, separate gold through gravity separation... Also the figure for silver isn't bad.

China to ban smaller new lead and zinc smelters
CHANGSHA, China: China will ban new contruction of small lead and zinc smelters as part of its policy to limit unrestrained growth in energy-intensive and polluting industries, an official with the country's economic planner said on Thursday.

He Xiaowen, division chief of the industrial policy department at the National Development and Reform Commission, said China would ban new primary lead smelters producing less than 50,000 tonnes a year and new secondary smelters producing less than 10,000 tonnes a year of recycled lead.

Beijing would also ban new zinc smelters with annual capacities of less than 100,000 tonnes, he told delegates at a zinc conference in Hunan, a central province.

He did not offer a timeframe for the new policy.

The newswires are full of Chinese zinc smelters putting expansion projects on hold due to the shortage of raw materials, while further fuel to the bullish flames was added in the form of reports that the government is moving to ban any new zinc smelter project with annual capacity of less than 100,000tpy.



Icing on the bulls' party cake came with the announcement from Korea Zinc it was mothballing its Big River Zinc refinery in the US due to the tightness in the concentrates market.



That takes another 90,000tpy of refined capacity out of the equation, following on from the (permanent) closure of the 90,000tpy Duisburg refinery in Germany and the 130,000tpy being closed by Belgian producer Umicore.



More may well follow with few significant additions to mined zinc production in the pipeline. So will new cycle highs with this market in full bull mode right now. The correction is still overdue but there are plenty of players just itching to join the bandwagon at lower numbers. Weakness, if it comes, will almost certainly be triggered by copper, but with zinc back in the party mood, it's not going to let anyone spoil things for too long.

Hello Honey-bunnies!
I went back into GFM about 2-3 weeks ago, nice rise today, I take it
you guys think this is a result of the news posted above?
:>)

Evening all, I wonder whether we are finally chasing the zinc price or have news on the way?
Drilling news can't be far away now even with the lab backlogs?

the next set of results should prove awesome - dont miss the boat

Been on board for ages now and this share keeps getting better. I'm sure we'll see 60p for Christmas.