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.

lynzal , you need a thick skin to call a down move - by the way have you read anything on crowd theory because thats what you where seeing above?.

Lynzal,

Nice post, and succinctly justifies your opinion to those that doubt the credibility of your intentions.

Well from what i have read on this and the other BB's i should top up anywere between 45 and 46 bid

aldwick,

normally I would agree with you, but today is a bad day all round, and US figures due out anytime could drive the whole maret down further, so I am waiting before buying anything else.

Sorry I didn't want to start a war. I apologise for my comment, everyone is entitled to their opinion.

grahamsh,

Thanks, nicely said, I think we can draw a line under this now.

In fact, if you look at the percentage of Griffin's fall, it's in line with many AIM mining juniors today, and more than others, Avocet for example, a company that already produces 220,000 ozs of gold PA.

US figures slightly worse, so no massive selloff yet, although sentiment is negative. (Bloomberg)

Looking at the ticker for the UK, virtually every stock is red today.

Andy I agree (#626)

grahamsh, I don't think you need to appologise for anything. It's open forum and people are free to say what they like. It's good to have debate as it gets all the ideas out in the open.
I'm always happy to explain the reasoning behind my posts because I always think my analysis through (i.e. not just picking numbers out of the air).

maddoctor, I only say what I see and so can qualify my thoughts. And yes I have read all sorts of things on crowd theory, it's what the price movements in a chart reflect isn't it!?

Once things start to turn around, I will post my bullish projections...
Regards
Lynnzal

I ment 45 to 46 offer price.

lynnzal, thanks for your reasoning in post 628; I hope it makes money for you. I am sceptical about charts for small stocks which can be very news sensitive. Still, if it works for you that is all that matters. I just don't think I would like to rely on that as a method of picking small stocks. It takes all sorts!

A good day for GFM...any thoughts? As an EVS holder I need cheering up!!!!!

certainly a sudden jump...smells off leaked news???

Zinc prices rise Rs 1,150 in less than two months

Dilip Kumar Jha / Mumbai October 13, 2005



Zinc slabs price has jumped dramatically by Rs 1,150 to Rs 9,050 per quintal in Mumbai non-ferrous metals market in the last one-and-a-half month on rising demand from the steel galvanising industry.

Galvanised steel is a major component of infrastructure projects such as buildings, bridges, airports and stadiums. Approximately 67 per cent of zinc produced globally is used for steel galvanising. The devastation caused by Hurricane Katrina also added to the surge in zinc price as 50 per cent of global zinc deposits lies in warehouses in New Orleans.

Spot zinc on LME perked up $125 to $1,484 per tonne on October 11 following a supply crunch. LME registered warehouses in New Orleans are holding 2,48,575 metric tonne (mt) of zinc, of which 2,01,375 mt is open tonnage.

The supply of the metal was suspended since good delivery became impossible because of the hurricane. The price movement in the international market and the domestic market is in sync.

An increasing concern in the market is the strike at Belgian metals company Umicore SAs 2,50,000 mt Balen zinc smelter plant. The strike began last Thursday. Analysts believe the prices would increase further, if the company management does not resolve the issues immediately.

Usually the rising prices take a toll on treatment charges fee paid to miners to refine concentrate into zinc metal which is expected to dip to double-digit figure this year due to a persistent concentrate shortage.

In 2005, the benchmark treatment charges fell to a record low of around $126 a mt. In the next year, annual contracts might conclude as low at $95-$110 per mt.

Apart from steel galvanising, zinc is primarily used by the toys industry, which consumes approximately 16 per cent of the world zinc production.

India being one of the largest toys producer and consumer, domestic demand for zinc is expected to grow significantly. Hindustan Zinc is the largest zinc producer in the country with an overall production of 5.75 lakh tonne. Binani Zinc comes at the second slot with a capacity of 33,000 tonne.

The price of zinc slabs is expected to grow further in the domestic market as the production here has failed to meet the rising demand from consumer industries. The demand, which stood at 3.5 lakh tonne in 2003-04, stood at 4 lakh tonne in 2004-05.

The demand is expected to grow 12-15 per cent in the next five years.



Zinc prices rise Rs 1,150 in less than two months

Dilip Kumar Jha / Mumbai October 13, 2005



Zinc slabs price has jumped dramatically by Rs 1,150 to Rs 9,050 per quintal in Mumbai non-ferrous metals market in the last one-and-a-half month on rising demand from the steel galvanising industry.

Galvanised steel is a major component of infrastructure projects such as buildings, bridges, airports and stadiums. Approximately 67 per cent of zinc produced globally is used for steel galvanising. The devastation caused by Hurricane Katrina also added to the surge in zinc price as 50 per cent of global zinc deposits lies in warehouses in New Orleans.

Spot zinc on LME perked up $125 to $1,484 per tonne on October 11 following a supply crunch. LME registered warehouses in New Orleans are holding 2,48,575 metric tonne (mt) of zinc, of which 2,01,375 mt is open tonnage.

The supply of the metal was suspended since good delivery became impossible because of the hurricane. The price movement in the international market and the domestic market is in sync.

An increasing concern in the market is the strike at Belgian metals company Umicore SAs 2,50,000 mt Balen zinc smelter plant. The strike began last Thursday. Analysts believe the prices would increase further, if the company management does not resolve the issues immediately.

Usually the rising prices take a toll on treatment charges fee paid to miners to refine concentrate into zinc metal which is expected to dip to double-digit figure this year due to a persistent concentrate shortage.

In 2005, the benchmark treatment charges fell to a record low of around $126 a mt. In the next year, annual contracts might conclude as low at $95-$110 per mt.

Apart from steel galvanising, zinc is primarily used by the toys industry, which consumes approximately 16 per cent of the world zinc production.

India being one of the largest toys producer and consumer, domestic demand for zinc is expected to grow significantly. Hindustan Zinc is the largest zinc producer in the country with an overall production of 5.75 lakh tonne. Binani Zinc comes at the second slot with a capacity of 33,000 tonne.

The price of zinc slabs is expected to grow further in the domestic market as the production here has failed to meet the rising demand from consumer industries. The demand, which stood at 3.5 lakh tonne in 2003-04, stood at 4 lakh tonne in 2004-05.

The demand is expected to grow 12-15 per cent in the next five years.

This bounce looks like it has more to do with the strength of zinc prices than any leak of drilling news. I doubt that will come out for at least another 10 days since some of the directors of GFM are on holiday for a further week.
Also there is not much volume.
Without stirring up old posters too much, I wonder if the charts which some said were pointing to an sp decline to 42p also predicted today's bounce? Just interested!

ss see 595 & 596?

Sharesure, my thoughts exactly.
Although I can see charting serves a purpose, to call a specific price on a share as volatile as GFM is asking a lot imo.
I'd better not say any more in case Andy comes and tells me off as well.

016622, Interesting, but I still think that more times than not small news sensitive stocks are likely to defy predictions from charts. So each to their own system.
Quite a few of the longer term holders of GFM still have memories of the mauling GFM was given at the hands of the shorting activity that went on in Frankfurt last year, so now are sensitive to having what is a very good small company talked down.

Theres always a critic.(lol)

Hi all, here are a few responses to some of your posts

Firstly, I wouldnt know how to use charts to pick stocks. I just use them to decide where certain stocks are within their bull/bear cycle and then ascertain risk reward before entering the market. As far as news sensitivity I could argue that news provides the catalyst for what the charts are telling me.

The way I see the GFM chart, it is still within a corrective phase. The scenario I outlined before is still the most likely, albeit the third leg lower is likely to be more complex than the previous two waves. I could come up with a couple of alternative scenarios to the current position, but wont bore you with the details.
Therefore I will still be looking to buy down towards 42p or may consider going long if the market trades over 55p. Note only above 55p would change current thinking.

To see if the charts would have called for todays bounce, you would have to take a more detailed look at the intraday price movements (60 mins and less). Having said that, it is not uncommon for charts to stall around 79% retracement (pretty much where 48p is in the 45.75/55p recovery). I personally wouldnt trade this mornings move because after paying away the mms spread Id be lucky to get much more than 4% return.

Regards
Lynnzal

have to agree.
I'm certainly no expert and use charts as a part of stock selection. I think GFM has great fundamentals now it is a producing mine, so I'm not sure if charts have much relevance. But they often mean that theres a few chartists following patterns who follow the buy and sell signals and this therefor sways the market price... IMHO DYOR!!

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