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.

Sharesure:
Why are surprised at attitude of Shares mag? Sometimes they are allowed to behave like stock market gamblers, surely - that's what they are! If a stock, however interestin, speculative, intriguing, if it doesn't do anything for a while, despite making sign gains previously, they move on. Most have the attention span of a flea, surely. Personally I agree with you, the stock is a little more than pure speculation.

Sharesure:
Why are surprised at attitude of Shares mag? Sometimes they are allowed to behave like stock market gamblers, surely - that's what they are! If a stock, however interestin, speculative, intriguing, if it doesn't do anything for a while, despite making sign gains previously, they move on. Most have the attention span of a flea, surely. Personally I agree with you, the stock is a little more than pure speculation.

Hello all

I dipped my toe in the water today with a 20k buy. I will be paying for them and keeping them until the bull run in commodities is over in about 2015.

Alfred

Not got long to go then its 15:22 already.

Silvermead - Thanks for your post 859, I agree...

TheFrenchConnection - post 854 "Zinc is virtually unrecyclable." Now when I first read this in your post 854 I was unaware if this statement was indeed true. On further investigation if would seam zinc is recyclable and has been recycled for decades as per below link.

http://www.zinc.org/publications/recycledforever.html

Now either your post is incorrect on this matter or I'm missing something. Can anyone clarify??

The last update from shares mag was all to play for and lots more to come?

Amazing turnabout by them although to be fair they do still state positive for long-termers!!!!!!!!!

Explosive, It is generally reckonned that there are many practical and economic reasons why zinc is not capable of being economically recycled - unless of course the price rockets - at which point maybe some of the drawbacks will be overcome.
Dibbles, Shares mag. also suggested locking in some profits - not advice I would follow on GFM at this stage as I have come to doubt how good some of their current team are.

Recycled zinc, thats what ZOX does.

ZincOx Resources plc is pleased to announce the completion of the first part of
the feasibility study for the Aliaga Recycling Project (Turkey) being undertaken
by SNC- Lavalin Europe. The work to date has included a technical review of the
process, plant layout, engineering design and an estimation of capital and
operating costs to an accuracy of +/-15%.

The Aliaga project envisages the production of high quality zinc oxide from
waste material (EAFD) generated by the steel recycling industry.

aldwickk - that's interesting. My comment arose from a conversation with the chairman of GFM at the last AGM. I'll have that discussion with him again. Do you know ZOX's operating costs/tonne?

Sharesure - thanks for your post however I'll look further into this and come back to the bb...

Aldwickk - Any others companies like ZOX to your knowledge?

http://www.galvanizeit.org/showContent,299,343.cfm

Amities / When i stated the fact that ZINC is virtually unreyclable. That is perfectly true.And the volatility in zinc on the futures exchange backs me out . Prohibitive costs make the long laborious process economically unviable.( unike a number of metals like copper or gold which are cheap and easy to seperate} Recycled zinc makes up for no more than 2% annualized production. !! Perhaps you understnd my meaning better now when i use the words "Virtually lmpossible" to recyclable.. ...RE; VOX ,-l have known the attraction to this stock for ages; as it was i who reckied it to Aldwick a while back . ....Lets get it right here. @+ J.....

As for GFM i have held these since those heady days of the "hi tec" , dot com bubble . Tip- Source-a man in a bar,,,blah blah ,, ,,,, They were a mere 2p and what with mines out of favour with institutions but very much in favour at govermment level i bought 500,000 ...Sounds a lot NOW ! But was 10k plus expenses back in 2000 ,,,or so if my memory serves me right .....went to 16 ,,,,,,went back to 2p ,,,,,,,,( gets worse ! ) Then zooms up to 29/22p and then back down to 15/16p ,,,,,,Slowly climbs back to 30,,,and the mention of that damned word "GOLD" and the whole trading community and his dog is buying it . ...Dont get me wrong i was buying again at 57p last week .,,,,,,Dont forget ,China is short on certain commodoties . But contrary to my data overcapacity exists in Steel ,Aliminium ,Coke, Calcium Carbide ,Cement , Coal and cross sector to even Textiles ...BUT China is desperately short of zinc which gives steel its tenstile strength ,,,Zinc is not mined quickly . and whatever anyone tells you that exists warehousefuls of the stuff in Rotterdam they are lying . lf anything zinc is underpriced !! ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,All the volatility was quite understandable ; and not assisted by thier early attempts at web design ..lol What a joke ! A man standing in a field pointing at a muddy hole about six meters deep ..lol LOL ,,,,We have come a LONG way since then . . As time passed and pre requisite infrastructures appeared until it bagan to on the appearance of a" new generation" of "hi tec mine " ( and with spares of every moving piece of moving machinery and the s/p consolidated in the mid 30s awaiting a rerating from an expo to a producer ...,,,,,,,,,,,,,,,,,,,,,,,,,,,,Theses a ighly specialist mining book out there, costs 32 grand, and when you purchase it ,you have to "sign" you will not pass any informations by whatever media to any third parties . And i agree . Why should something that cost someone 32k be passed around the internet willy nilley ,,,,But back to GFM ... l dont think a holding would be regretted. .Juste a hunch ,@+ J

Amities / lf zinc even falls below 2000 this year i will drop my boxers on the steps of The Royal court of Justice ,,,,,,,( better class of judge than those common ones found at the old bailey ,,,,,@+ J ...............Also among the drilling assayal while all eager eyes were on the gold and zinc ,,,But what of the silver ? Chinas mass exportation of "hi tec" gadgets to USA and Europe is virtually based on the stuff . For every database in every day devices use silver as choice of weld........and this mine has as much as 100g/pt in long pockets interspersed but gives the impression that large parts of the acreage are host to a number of minerals including a deposit of silver ....@J .

Trading statement makes good reading as far as zinc production is concerned. GFM looks set to increase still further its profitability. As for more information on the gold assays, that must be the subject of another RNS some time soon.

That's the news we needed! Upward and onwards now....

Griffin Mining Ld
20 February 2006





GRIFFIN MINING LIMITED
60 St James's Street, London SW1A 1LE, United Kingdom
Telephone: + 44 (0)20 7629 7772 Facsimile: + 44 (0)20 7629 7773
E mail: griffin@griffinmining.com




20th February 2006

TRADING STATEMENT



Griffin Mining Limited ("Griffin" or the "Company") is pleased to announce that,
following the successful commissioning of the Caijiaying Mine and processing
facilities ("the Mine") in June 2005, 92,096 tonnes of ore have been processed
at the Mine in the six months to 31st December 2005, to produce 6,676 tonnes of
zinc metal in concentrate. Following commissioning, steady improvements have
been made in recovery rates, concentrate and tailings grades. Production rates
are being increased and throughput is expected to be increased in the near
future.



Operating costs in the period to 31st December 2005 were higher than envisaged
for in the long term budgets due to inevitable initial teething problems in
commissioning the plant. However, these have now been rectified with the
skilled labour force, and equipment and spares on site.



Unit costs were also higher than allowed for in the long term budgets for the
Mine due to a lower head grade being fed to the plant and lower initial
production rates. With the plant now fully commissioned, improved efficiencies
in production and increasing production rates are being reflected in falling
unit costs.



Underground mine development has progressed ahead of schedule with the main
production decline completed to a depth of 200 vertical metres. Access has been
constructed to the Fu Long, Jin Long and Chang Long lodes allowing stoping to
commence at each of these lodes. Access has also been gained to the Hong Long
lode and initial access gained to the main Ju Long lode. During mine
development, economic mineralisation was found at shallower levels than
previously expected. As a result, ore was extracted during mine development
with 53,350 tonnes of ore stockpiled as at 31st December 2005.



Management has taken a conscious decision to slightly lower the zinc head grade
being fed into the mill from that envisaged in the feasibility. This has been
done to fully utilise the ore discovered at shallower levels during driving the
decline at the Mine and lowering the cut off grade to increase the Mine tonnage
and increase throughput at the mill.



A combination of supply shortages and high demand in China has helped to drive
up the price of zinc in 2005 and should maintain the upward pressure on the zinc
price in 2006 and subsequent years. The price of refined zinc on the London
Metals Exchange ("LME") grew by 71.71% in 2005. Impacted by the growth in
international markets, the price of Shanghai zinc soared to RMB19,650 ($2,465)
per tonne in January 2006. This compares to a zinc price at the time Griffin
completed its feasibility study on the Mine in August 2003 of $760 per tonne.



Zinc concentrate is currently being sold by monthly tender from the Mine to
Chinese smelters and metals traders. The successful bidder is required to pay
for the concentrate in advance prior to collection of the concentrate from the
Mine. After taking due account of indicative smelter charges and transportation
costs, the prices received for zinc concentrate in 2005 have been in excess of
indicative prices on the London Metals Exchange.



In view of the current high zinc prices and the ready availability of zinc ore
at shallower levels, management has focused on the extraction and processing of
zinc ore without, at this stage, extracting and processing gold rich ore. Should
that situation change, or as the mine develops to lower levels where the bulk of
the higher grade gold is located, then processing of gold ore will take place.
At that point, precious metal dore will be produced at the Mine.



Extremely high health and safety standards to western specifications have been
implemented at the Mine. As a result, the successful commissioning of the Mine
has been achieved without any serious safety incidents and with no deaths at the
Mine.



Over 350 people are now engaged on the Mine of which 160 are full time employees
of the joint venture company operating the Mine and the remainder provide
contracting services for the provision of mining, ore haulage and other
supporting services.



Griffin has been able to defer the commencement of the two year Chinese
corporate tax holiday on income derived from the Mine to start from 1st January
2006. With income expected to significantly increase from the Mine in 2006 and
2007, this should have a positive financial impact for the Company.





Mladen Ninkov, Griffin's Chairman, commented as follows:


"The Mine has been commissioned with the absolute minimum of teething problems
for a completely new mine with all the ancillary facilities and services, which
is a huge credit to the professional and supporting staff at the Company and the
Mine. The Company is now set to reap the financial benefits of the current
extraordinarily strong base metals market. "







Further information


Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7772
Roger Goodwin - Finance Director
Griffin Mining Limited

Andrew Smith/Martin Eales Telephone: +44(0)20 7523 8350
Collins Stewart Limited

Hugo de Salis Telephone: +44(0)20 7242 4477
St Brides Media & Finance Ltd



Griffin Mining Limited's shares are quoted on the Alternative Investment Market
(AIM) of the London Stock Exchange (symbol GFM).

The Company's news releases are available on the Company's web site:
www.griffinmining.com


What a great RNS, shame griffin can't mine both the zinc and gold resources creating two revenue lines! Having said that '06 will be the first full year of revenue...

Griffin Mining Has A Gold Card Up Its Sleeve.

Anyone looking back at the history of AIM listed Griffin Mining will be amazed that it has got into production in China so quickly and smoothly. In fact it was the first western company to achieve this, having taken its Caijiaying zinc project all the way through from exploration to production. The Australian listed company Sino Gold beat it by a year into production, but it had the advantage of taking over an existing mine. In its first period of trading from June 5 to 31 December 2005 Griffin processed 92,096 tonnes of ore to produce 6,676 tonnes of zinc metal in concentrate. The only hiccup was that operating costs in this period were higher than expected due to the teething problems that inevitably occur when new plant is being commissioned , but these have now been cured.

Unit costs were also higher than allowed for in the long term budgets for the mine due to a lower head grade being fed to the plant and lower initial production rates. With the plant now fully commissioned, improved efficiencies in production and increasing production rates are being reflected in falling unit costs. Moreover throughput is expected to be increased in the near future. The secret to Griffins success seems to lie in the fact that the company used the Beijing Engineering Non-Ferrous Institute as its design and engineering consultants and construction managers. It always pays to use local expertise when operating in countries such as China and Russia as a number of companies who relied on ex-pats have found to their cost.

Now that the company is reporting steady improvements in recovery rates, concentrate and tailings grades and ongoing improvements in production rates, it can take full advantage of the price of zinc which is a lot higher than the US$760/tonne used in the feasibility study. Agreed the price of zinc fell from its peak US$2,390 a tonne to US$2,028 last week, but the 349,000 tonnes in LME warehouse stocks is still low on a historic basis. The key to the strength of the zinc market lies, like most metals but more so, on weak growth of refined supply even if mine output moves sharply ahead, which cannot be assumed. The average price last year was US$1,380/tonne, so even if it falls below US$2,000 it will still prove very profitable for Griffin

With this in mind Mladen Ninkov and Roger Goodwin, the two- man management team at Griffin decided to lower the zinc head grade being fed into the mill from that envisaged in the feasibility. This has been done to utilise fully the economic mineralisation found at shallower levels while driving the decline at the mine. The decline was the first step towards developing the underground mine at Caijiaying and the decision to lower the cut-off grade will increase the mine tonnage and boost throughput at the mill.

The underground mine development has progressed ahead of schedule with the main production decline already completed to a depth of 200 vertical metres which is a credit to the Beijing Engineering Non-Ferrous Institute. Access has been constructed to the Fu Long, Jin Long and Chang Long lodes allowing stoping to commence at each of these lodes. Access has also been gained to the Hong Long lode and initial access gained to the main Ju Long lode. The fact that economic ore was extracted during mine development means that an extra 53,350 tonnes has been stockpiled for processing when capacity is available.

In view of the current high zinc prices and the ready availability of zinc ore at shallower levels, Griffin has focused on the extraction and processing of zinc ore without, at this stage, extracting and processing gold rich ore. That is a treat to come as most of the higher grade gold is at lower levels, but a switch to this ore could be made if the price of zinc dropped significantly. Processing of the gold ore would then take place and precious metal dore would be produced. In the meantime the zinc concentrate is being sold by monthly tender to Chinese smelters and metals traders who are required to pay in advance of collection. So far the prices received have been in excess of indicative prices on the LME after taking due account of smelter charges and transportation costs.

Griffin has been able to defer the commencement of the two year Chinese corporate tax holiday so that it now runs until 1 January 2008. This will boost cash flow so the company should be able to expand its exploration programmes. Earlier this month it announced that a new zinc target had been discovered at Zone 11 East which is close to the mine. Drilling intersected 52 metres grading 5.45% zinc from 72 metres and this included an initial intersection of 12 metres at 12.35% zinc. The main part of Zone 11 has also been confirmed as a precious metals prospect with 10 metres assaying 2.21g/t gold and 8 metres at 228 g/t silver from 171 metres. At the major F45 Fault zone two holes drilled 900 metres apart and just over 1 km south of the mine graded 4 metres at 3.96 g/t gold and 3 metres at 4.24 g/t at 150 metres depth. As this is about the same depth as the gold rich ore a t the mine it looks as if Griffin is onto something.

Succintly put aldwickk - a great mining share IMHO with plenty more upside.

Ever thought of starting a thread on HEP (Ofex) on the 'Investors' side??