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, thanks for that. I am surprised that they have used a broker note to confirm this + the production cost for zinc have increased quite alot as a result of lower grade ore being shunted through. However the predicted gold output more than makes up for that.

Record zinc prices on global shortage

Zinc prices have risen so fast that Robin Bhar, a metals analyst for 22 years, is about to raise his forecast for the second time in two months.

Tuesday, January 31, 2006

Zinc prices have risen so fast that Robin Bhar, a metals analyst for 22 years, is about to raise his forecast for the second time in two months.
"We've all been left behind," said Bhar, who follows the market in London for UBS. "It's just phenomenal. No one in their wildest imagination thought it would get to these levels."

Zinc for delivery in three months on the London Metal Exchange was US$6 (HK$46.8) lower at US$2,244 a tonne in early trade Monday. It traded at US$2,320 Thursday, the 11th consecutive day the metal rose to a record.

Little relief is in sight, as mining companies restrain investment in expanding output and China stops exports and begins imports of the metal. "There is a global shortage," said Greig Gailey, chief executive officer of Melbourne- based Zinifex, the world's second- largest zinc supplier.

"New mine development is a lengthy process and it's difficult to see new mines coming on stream in the short to medium term." His company has no new mines planned until 2008 at the earliest.

Driving the market is China, stoking demand for zinc, used as a rust-resistant coating for steel in buildings, cars and appliances.

Pension funds and speculators are joining the rally in zinc and metals including copper, aluminum and gold, seeking an alternative to stocks and bonds. The Reuters Jefferies CRB Index, which tracks commodity futures, gained 17 percent last year, compared with a 3 percent increase in the Standard & Poor's 500 Index of US companies.

"Two, three, four, five years ago, we would have seen that with the hedge funds, but not the big state pension funds," said Bob Diamond, chief executive officer of Barclays Capital. "We are seeing an asset class shift." The shortage of zinc is a legacy of lower prices in the past and a lack of investment by the industry. Prices dropped to a record low of US$742 a tonne in August 2002, prompting mine closures and leaving producers such as France's Metaleurop bankrupt.

London-based Anglo American and Xstrata are now struggling to meet the world's zinc needs. Labor disputes this month at Mexico's Industrias Penoles and mines run by Peru's Volcan Cia Minera have added to concern that zinc production will lag behind demand this year. Inventory will drop this year as demand outpaces supply from the world's mines. Nick Hatch, an analyst at Investec Securities in London, estimates zinc use will exceed global production this year by 310,000 tonnes. The stockpiles monitored by the LME have declined by 40 percent in the past month to 375,750 tonnes.

"There is a dearth of new projects as a consequence of a lack of exploration," said Alan Heap, Citibank's Sydney-based director of commodity analysis. "Deficits are set to persist."

Heap, who said in 2005 that metal markets were entering a "super cycle" jump in prices, last week raised Citibank's first-half average zinc price forecast 44 percent to 97.5 cents a pound, or US$2,150 a tonne.

Morgan Stanley this month raised its 2006 zinc forecast 12 percent to 95 cents a pound, or US$2,094 a tonne.

Zinc is already up 18 percent this year. The price was forecast to rise 21 percent for the whole of 2006, averaging US$1,666 a tonne, according to the median estimate of 24 analysts polled by Bloomberg.

"We expect the deficit to persist into 2007, implying a price peak may be over a year away," said Simon Toyne, an analyst in London at Dresdner Kleinwort Wasserstein.

China became a net importer of zinc in 2004 as its economy boomed, according to Canada's Teck Cominco.

The nation's zinc demand jumped 16 percent to 2.7 million tonnes in the first 11 months of 2005. BLOOMBERG

As GFM got the ok from the Chinese to export zinc ?

And still no RNS update!! Bloomberg announced this morning Gold at all time high since 1989.

Amities / Always been extremely bullish on GFM but at this moment in time it needs news desperately in order to get these damned "shorters" off thier backs{ known to be in the region of 8 million shares }. .Until then they will trade sideways and downwards. .lf solid assayals of gold are to be believed and zinc prices remain high GFM will break this 60 to 67 parameter with consumate ease. BUT WE NEED NEWS. . But those who know the board know this has never been a company that bolsters thier ebbing s/p with RNS tittle tattle or bow to shareholders s/p concerns { witnesses by thier violatility of the past two years .They juste quitely and dilligently get on with the business . .Rememeber ..Patience is a vitue . ,,,and this is a stock woth being patient about. , @+ J

Zinc pops up another $82/tonne and what does the sp of GFM do? It's perverse.
The directors were hoping that the various pieces of news we are all waiting on would be ready to announce by the end of january although that was caveatted that a number of things needed to be sorted and assessed so the timetable might slip a little. If the sp going down in the last couple of trading days is shareholders viewing that as a bad sign, I doubt that that is a valid conclusion to draw. I still rate this as a great company which should advance a lot more as information on cash flows, assay results etc are available.

holding...

Ditto

Please check out Aim Resources on news which was issued yesterday re: Zinc
& quanties in mine yet to come out of mine.

Parkin, I had a look sometime ago but I think I'll wait for fundraising......

Anyone think we'll get our news soon?

Who knows with this board, I think The FrenchConnection hit the nail on the head with his/her last post. Patience is whats required and personaly haven't even considered selling yet!! A firm hold on my portfolio...

Strong start today..news due.

looks like its buy em whilst there cheap...

The Colling Stewart extract (see #824 ) might be all we get for a while according to one of my sources. A full resources report is apparently planned for April and in the meantime everything that they had planned to achieve on the zinc and gold production is going according to their schedule. That is a different message to what I had been led to believe in terms of timing of announcements.

Investors seem to have info from to many different scources, No one knows who is accurate, Its better to wait for official news from Griffin.
In the mean time just remember,This company is mining Zinc in a Zinc bull market, with no debt, no hedging, and planning to increase Zinc production, All this with the added bonus of gold.
(Me thinks we should buy some more)

Good write up in this week's IC - probably explains the 4% rise today.

rgrds
gk

Here is the write up from Investors Chronicle,

3 February 2006 62p - Aim - Compared with some of the young upstarts that have jumped on the China bandwagon over the past few years, Griffin Mining is as old as the hills. The company has been trying to get its key Caijiaying zinc-gold asset into production since 1987, after a Griffin director secured the property through personal connections with a notable party bigwig. Production finally started in 2005.
In fact, operating in China hasn't been easy, even for the majors. But things are now improving - several of Aim's juniors are in the country doing good business and China itself is developing a huge thirst for raw materials.
Demand from China has been the primary reason for the recent bull market in metals prices. Zinc, Griffin's primary product, has been something of a laggard, but is now starting to catch up fast. In the past two months, the zinc price has risen to over $2,000 a tonne - more than double the level five years ago. With a 450,000 tonne global demand deficit in 2005, and China now a net importer of zinc, the country is keen to boost home-grown production.
All this has made Griffin's plans to produce 44,000 tonnes a year by 2008 an attractive proposition, both to investors and to local authorities. It also means that cost overruns and other difficulties encountered during the mining start-up phase have been mitigated by the vastly increased margins. Broker Collins Stewart believes that, as Caijiaying hits full production levels in 2008, costs should fall from the current $1,100 a tonne, including smelter charges, to $750 a tonne.In addition, gold production is likely to commence towards the end of next year, so zinc isn't the only string to Griffin's bow. Gold has been exceptionally strong in the past few months, and has acted as a strong support to Griffin's share price in recent years. The planned 40,000 ounces of gold production each year should add $7m a year to top-line revenues from 2007 onwards.
Much depends on metals prices, and some brokers are more cautious than others. HSBC, for example, warns that the current strength in gold isn't sustainable. But, for every bear, there are plenty of bulls, and most analysts have been revising forecasts upwards rather than downwards in recent months.
Collins Stewart's basic scenario for Griffin, working to a long-term zinc price of $1,102 and a long-term gold price of $400 through to 2012, looks sensible. On that basis, assuming a 1.5 times multiple of net present value, the broker sets a target price of 85p. In terms of cash flow, the broker forecasts sales of $45m for 2006, and $57m for 2007 as ore-processing capacity rises, meaning that Griffin trades on a forward cash flow multiple of 16 for this year, dropping to 9 for next year. That's relatively cheap, given that it factors in both exploration expenditure and a maiden dividend.
The company is fully funded, too, carries no debt and will cover all further development costs through its cash flow. And, with 56 sq km of exploration ground around Caijiaying to investigate, there's also some potential speculative upside.
The situation in China may yet change, but with the Olympics coming up and the country wanting to showcase itself as a rising economic power, most analysts think that's unlikely. More serious for Griffin is the possibility that the metals bulls may have it wrong. But even in the unlikely event that gold falls back to $350 and zinc hits $815, Griffin Mining will still be a viable business. Buy.

Sounds good to me,
Regards to all,
Griffin.

well i like grffin, but am not aware they have anounced they have found gold in suffucient quantity to start their own seperate mine!!

is the article being presumptious?

or have i missed some news?

Singapore (Platts)--6Feb2006
China's Shaanxi Baoji Dongling Group is scheduled to start commercial
production on its new 100,000mt/year zinc ingot line in April, and is expected
to ramp up the line to full capacity three months following the startup, a
company official told Platts Monday.
"We are accumulating feed supply now. Concentrates are quite tight, so it
is taking us longer than expected to obtain sufficient raw materials for
startup," he said.
The company completed construction and started trial production on the
line as planned in December 2005. It had orginally aimed to start commercial
production by the end of January 2006. "Our trial runs are completed. We are
only waiting now to ensure we have enough feed for startup," the official
said.
The new line, on which work got underway in November 2003, has lifted the
company's 99.995% zinc ingot capacity to 160,000mt/year from a previous
60,000mt/year, and represents phase one of the company's 300,000mt/year zinc
smelter project. The entire project, to be constructed in three phases, is
slated to be fully completed within five years.
"We are now planning to start work on another 50,000mt/year expansion. We
aim to ready that in about three years to give us a total
200,000-210,000mt/year capacity," the official said. "The remaining
100,000mt/year will be the final phase and we will work on that once all the
earlier lines are completed and working smoothly," he added.
Forn 2006, Baoji Dongling has projected an output of about 80,000mt from
the new line and 60,000mt from the old line, taking the total to 140,000mt for
the year. The company produced between 60,000-70,000mt in 2005. "Our former
capacity was 60,000mt/year but we can always exceed that slightly," the
official said.
Baoji Dongling currently sells its output mainly to the domestic market.