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.

Down to 65.75, I'm actully not that bothered as I'm 95% confident they'll pick up. SP looking very cheap indeed..

Explosive I agree but I am glad I sold my main holding a few weeks ago..it was too dangerous to have 75% of portfolio in one share because of profits and how right I was. I transferred new funds over today to buy more GFM and KMR to add to my holdings once price settles ....I still see these two shares as superstars and this a great buying opportunity.
Di

Dynamite I agree, have also transfered savings to invest, at these prices it seams the MM's are dropping the bid to prevent further sales. Says one thing to me big overhang..

I bought in at 99p do you think I am still onto a winner ?

Thats top whack, yes if you hold long, papers predicting 1.27 see earlier posts..

Good AGM Statement just out: See last Paragraph.


16th JUNE 2006

RESULTS OF ANNUAL GENERAL MEETING

UPDATE ON PROGRESS AT CAIJIAYING


At the annual general meeting held today of the shareholders of Griffin Mining
Limited ('Griffin' or the 'Company'), all resolutions were passed.


At the meeting the Chairman, Mr. Mladen Ninkov, gave a summary report on
progress at the Caijiaying zinc gold mine. The Chairman reported that:


1. Production rates continue to be steadily increased and operating costs
continue to fall. This has been achieved without, at this stage, the need
for any additional capital expenditure. As soon as the increased mill
throughput has been sustained for an extended period of time, a further
announcement will be made.



2. The feasibility study relating to increasing the mill throughput to 500,000
tonnes per annum is continuing and an announcement is to be expected before
the end of the calendar year.



3. Application has been made for further exploration licences over approximately
100 square kilometres in the area surrounding the current mining and
exploration licence areas at Caijiaying, emphasising the Company's opinion
of the extraordinarily highly prospective nature of the region surrounding
the Caijiaying mine.



4. Studies have commenced to examine whether it may be more profitable for
Griffin to produce a precious metals concentrate containing gold, silver,
copper and lead rather than gold dore on site. The results of these studies
will be announced in due course.



Caijiaying continues to out perform management expectations and with the current
strong demand for zinc, is expected to deliver excellent results in the
foreseeable long term.

Yet another excellent RNS from a top board. This share has come along in leaps and bounds, my oly regret is not having the money available to have bought more shares at the beginning of the week!!

See City wire re. the above I believe its in the Express that there maybe a takover
on the books Anglo Gold Ashanti & Ivanhoe of Canada 220Mil.

Parkin,

It's only a rumour, and I personally doubt GFM would be sold for such a low sum.

I attended the recent AGM, and the management stated they do not want to be taken out for a low price, and they are keen to add further resources to enhance existing shareholder value.

It qould not suprise me if the announcement of a share buyback by GFM, and the Express rumour are connected!

Andy

I spoke to Roger Goodwin this morning and he said he was intrigued by the Anglo statement.

If gfm really want to put up the price why not pay a dividend... share options may encourage workers, share buy backs help directors to shine, but dividends make the raising of capital easy and encourage share holders who after all have a use.

am I too cynical a holder perhaps?

Tipton11

deemule,

Ok thanks.

Did he say if he would be contacting them for clarification?

tipton11,

And a share buyback would help defend the company against a hostile takeover.

There are plenty of long investors sat on shares not looking to sell until at least a 130p sp is hit. A dividend would secure more into GFM. I have faith in the board and wouldn't want to see this one be taken by a hostile bid....

Andy

He said that they had no formal discussions, but added that they had spoken informally with various companies at conventions etc and intimated that there could be more than one interested party and GFM would be very attractive to said party or parties , but wouldn't add any more i have to be honest i didn't ask if he was contacting them, if you give him a call he is very easy to chat to, i found him very pleasant.

Andy...surely only if it put up the price of the shares...all bybacks do in my opinion is they make the eps better but seldom effect the price... do you also hold VOD like me?

The Daily Mail Midas column says buy GFM..I'm glad I topped up when GFM @ 68p a few weeks ago. up another 6.75P today :-)
Di

tipton11,

No I don't hold VOD, I tend to concentrate on AIM junior miners, and oil and gas companies.

If they buy back a reasonable tranche of the shares, EPS clearly rises, and I would expect a corresponding rise in P/E, and, therefore, shareprice.

Di,

My top up recently was well timed too!

Makes a change, lol!

Are GFM going because of a buy-out or back to their original high value.
I held them for two+ years but sold in May at 92p and am waiting to back in again probably September