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.

We seem to be getting plenty of coverage on minex type sites.
No doubt we will get our mystery " in 4 weeks " news, double in price and get
positive coverage from shares mag after all the dust has settled.LOL...

Dibbles, re the mystery news, I reckon that is a change of broker to one of the big 3 in the sector, which cannot be bad, plus an updated valuation of the existing business ( not taking account of any drilling potential this summer) I would be surprised if any analyst would value the company at current levels even on that basis. More likely nearer 50p or possibly a shade more. The real fun starts if the gold the chairman thinks is there is located. But that may not be known until maybe Sept/Oct in my reckoning. Only 3 months away!

Sharesure, possibly....
I read an article recently that stated the Chinese Gov. were so impressed with GFM's efforts to date that they were looking to offer them a choice of prime site's.
I still think for the Chairman to virtually say " wait and see what happens in 4 week's " and " the shareprice should start motoring then" suggest's it either has to be something fairly significant or he could be left with egg on his face.
Going on his reliable record to date, I'll hope for the former.

Sharesure,

I seriously doubt whetehr the chairman would consider a change of broker as the "news" he mentioned at the AGM, personallY!

Nice article about GFM in the Mail on Sunday. Labour is obviously dirt cheap in China; workers are paid 800pa and think this is a very good deal which is brilliant for GFM. The article said that a brokers note was that the price should be 46p by the year end.

I saw that article, all very positive which can only help the cause.
I'd expect to see a bit higher than 46p by xmas though personally.

40p by the end of the month.

dibbles,

That would depend on whether or not they find the gold deposit they are looking for IMHO.

The fall in the zinc price as not harmed the share price.

So would I. Very puzzed at zinc price dropping given all the comment about a supply/demand gap. Also disappointing that the price seems so ready to soften. Istill remain convinced that the four week news might include a broker change. It could also be coupled with a small buy back of shares once they are certain that the processing plant is continuing reliably. There is still a massive short position that sometime has to be filled.

Sharesure,

But I don't know why he would announce "news" at the AGM if it's only a change of broker!

I don't see a change of broker as being value enhancing, they put their clients in, and the previous one probably takes his clients out, (more or less) , so not a massive change there.

Personally I would be amazed if they started to buy back shares at this juncture, a new project is far more likely IMHO.

Zinc price falling somewhat from the peak!

not only that but would the gold price come into that with the share price falling
there are several ones that have dropped including african eagle & african gold to name two

Gold seems to have finished the day steady anyway, although a much
bigger producer RRS has been up today and considering the recent fall
in the gold price hasn't fallen as much as I thought it would.
Quite possible the smaller players are being hit harder though.

Sharesure,Andy

One or two on advn bb have suggested that Ninkov's "in 4 weeks" comment might not have been aimed at any specific event coming but just a possible re-rating.
As you were both at the AGM I wondered what your views on it are?

I see we are looking for a new site manager.
I wonder if Stanley Rogers left or have they got another project for him?

dibbles,

Well I had the impression he had a certain event in mind when he made the comment, but of course I could have read it wrongly.

He made the comment in a positive way, and I gained the distinct impression there was a reason for him making it.