Last checked at 1 Sep 2008 08:56
1st September 2008
INTERIM STATEMENT FOR THE SIX MONTHS ENDED 30th JUNE 2008
Griffin Mining Limited ("Griffin" or "the Company") is pleased to publish its interim results for the six months ended 30th June 2008.
Highlights:
Profit before tax of US$13.0 million (30 June 2007 US$18.0 million)
Turnover US$22.2 million (30 June 2007 US$26.4 million)
Ore processed 237,435 tonnes (30 June 2007 202,840 tonnes)
11,748 tonnes zinc metal in concentrate produced (30 June 2007 10,983 tonnes)
806 ozs gold, 98,843 ozs silver and 550 tonnes lead produced (30 June 2007 none)
Break fee of C$2.5m received on aborted Yukon Zinc acquisition
Completion of buy back of 79,851,818 shares from Citadel
Attributable net assets per share $0.75 (30 June 2007 $0.46)
Increased cash balances with $84m held at 30 June 2008
Financial and Trading:
The results for the six months ended 30 June 2008 show pre-tax profits of US$13,047,000, compared to that achieved in the six months to 30 June 2007 of US$18,010,000. This has been achieved despite a 47% reduction in the average price received for zinc concentrate from that received in the six months to 30 June 2007, as a result of falling world market prices for zinc and increased smelter charges.
Turnover amounted to US$22,201,000 compared with US$26,404,000 in the six months to 30 June 2007. 15,789 tonnes of zinc metal in concentrate were sold, including that stockpiled at the end of 2007, compared with 10,893 tonnes in the six months to 30 June 2007. In addition with the precious metals circuit being commissioned, 354 ozs gold, 76,363 ozs silver and 483 tonnes lead were sold.
Record amounts of zinc metal in concentrate were produced with increased ore processed at marginally lower head grade. Whilst throughput has been increased, further increases are dependent upon the upgrade of the processing plant, progress on which has been slower than anticipated with delivery of critical items of plant, most notably a second primary ball mill, delayed as a result of disruptions to transport and manufacturing in the Beijing area with the Olympic and Paraplegic Olympic Games. Completion of the upgrade of the processing facilities at the Caijiaying Mine to a capacity of 750,000 tonnes of ore per annum is not now expected until the end of 2008.
A backfill plant has been installed at Caijiaying enabling waste material to be returned to the mine to be used in filling voids, improving safety and mine support, enabling more ore to be extracted whilst reducing material sent to the tailings dams, minimising the need for additional tailings capacity. This has resulted in some increase in mining costs. The construction of a workshop and purchase of additional equipment has enabled haulage rates to be increased in line with processing rates. Mine production has been affected by delays in accessing and developing the lower levels of the mine where higher grade, particularly gold, mineralisation is expected and which are more amenable to bulk mining.
Whilst production quantities in the second half of 2008 are not expected to exceed those achieved in the first half of 2008, 2009 should see a rise in production towards 750,000 tonnes of ore per annum and an improvement in grades. Whilst the Company anticipates further short term falls in the price of zinc, the lower zinc prices are likely to lead to other mine closures and reduction in supply in the long term which should give rise to future increases in zinc prices. Griffin remains a low cost producer of zinc metal in concentrate and with increasing revenues from gold, silver and lead is able to continue in production at a time of low prices. With a substantial resource and expected long mine life Griffin is also well positioned to reap the benefit of future higher prices.
In accordance with the joint venture terms, the Company's share of the profits from the Caijiaying mine reduced from 100% to 60% with effect from 25th July 2008.
In June the Company completed the buy back for cancellation of 79,851,818 shares at £0.765 ($1.52) per share (68,181,818 of which were issued at £1.10 ($2.23) per share in July 2007) from Citadel Equity Fund Ltd ("Citadel"), for a total sum payable of £61.1 million ($121.5m), realising a net gain to the Company being reflected in the Company's share premium account. This transaction reduced the number of outstanding shares in the Company from 261,509,549 to 181,657,731.
Despite having invested $121.5m in buying back 30.5 per cent of the Company's share capital during the period, Griffin held cash balances of $84m as at 30 June 2008. This places the Company in an enviably strong position to continue its strategy of identifying acquisition opportunities to broaden the resources and geographical profile of the Company.
The Company has benefited from the receipt of a C$2.5m break fee (identified as "other income" in the Company's income statement) following the aborted acquisition of Yukon Zinc Corporation. Whilst it is a disappointment to all concerned that the Company's offer to acquire Yukon Zinc Corporation did not succeed, with another party substantially outbidding Griffin's offer, management continues to investigate and evaluate other potential acquisitions.
As in previous years the Board is not declaring an interim dividend, in line with the Company's policy of determining annual dividends at the time of full year's results.
Chairman's Statement
"These results, for the first six months of 2008, represent an excellent result for shareholders considering the extraordinary fall in both base and precious metals prices during the first half of the year. The continuing unhedged metals policy of the Company inevitably means that Griffin will garner the benfits of a rising commodities market but will also suffer in a declining commodity prices environment. Fortunately, the relatively low cost production profile of Caijiaying ensures that the Company is in a much stronger position than many of our peers in the zinc mining industry and we expect to enjoy the future benfits of a rising mining market. In the interim, the Company continues to expand its operations and production at Caijiaying. I look forward to good news from both Caijiaying and the Company in the near future."
Further information
Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7772
Roger Goodwin - Finance Director
Griffin Mining Limited
Adrian Hadden Telephone: +44(0)20 7523 8353
Collins Stewart Europe Limited
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
Griffin Mining Limited
Consolidated Income Statement
(expressed in thousands US dollars)
| 6 months to 30/06/2008 Unaudited | 6 months to 30/06/2007 Unaudited | Year to 31/12/2007 Audited | |||
| $000 | $000 | $000 | |||
| Revenue | 22,201 | 26,404 | 37,989 | ||
| Cost of sales | (10,621) | (5,020) | (7,768) | ||
| Gross Profit | 11,580 | 21,384 | 30,221 | ||
| Net operating expenses | (5,349) | (4,893) | (10,078) | ||
| Profit from operations | 6,231 | 16,491 | 20,143 | ||
| Foreign exchange gains | 723 | 749 | 1,012 | ||
| Finance income | 3,569 | 770 | 5,607 | ||
| Other income | 2,524 | - | - | ||
| Profit before tax | 13,047 | 18,010 | 26,762 | ||
| Income tax expense | (1,135) | - | - | ||
| Profit after tax attributable to equity share owners for the financial period | 11,912 | 18,010 | 26,762 | ||
| Basic earnings per share (cents) | 4.83 | 9.34 | 12.08 | ||
| Diluted earnings per share (cents) | 4.82 | 9.24 | 11.97 |
Griffin Mining Limited
Consolidated Balance Sheet
(expressed in thousands US dollars)
| 30/06/2008 | 30/06/2007 | 31/12/2007 | |||
| Unaudited | Unaudited | Audited | |||
| $000 | $000 | $000 | |||
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 52,851 | 36,189 | 44,381 | ||
| Intangible assets - Exploration interests | 907 | 706 | 751 | ||
| 53,758 | 36,895 | 45,132 | |||
| Current assets | |||||
| Inventories | 2,431 | 1,427 | 4,639 | ||
| Other current assets | 5,370 | 2,207 | 4,155 | ||
| Cash and cash equivalents | 83,919 | 48,397 | 199,949 | ||
| 91,720 | 52,031 | 208,743 | |||
| Total assets | 145,478 | 88,926 | 253,875 | ||
| EQUITY AND LIABILITIES | |||||
| Equity attributable to equity holders of the parent | |||||
| Share capital | 1,817 | 1,933 | 2,615 | ||
| Share premium | 75,967 | 45,557 | 196,637 | ||
| Contributing surplus | 3,690 | 3,690 | 3,690 | ||
| Share based payments | 5,131 | 2,977 | 4,426 | ||
| Other reserves | 634 | 305 | 579 | ||
| Foreign exchange reserve | 7,467 | 1,180 | 3,109 | ||
| Profit and loss reserve | 41,009 | 28,615 | 37,106 | ||
| Total equity | 135,715 | 84,257 | 248,162 | ||
| Non-current liabilities | |||||
| Long-term provisions | - | 394 | - | ||
| Current liabilities | |||||
| Trade and other payables | 9,763 | 4,275 | 5,047 | ||
| Short term bank overdrafts | - | - | 666 | ||
| Total liabilities | 9,763 | 4,669 | 5,713 | ||
| Total equities and liabilities | 145,478 | 88,926 | 253,875 | ||
| Number of shares in issue | 181,657,731 | 193,327,731 | 261,509,549 | ||
| Attributable net asset value / total equity per share | $0.75 | $0.46 | $0.95 |
Griffin Mining Limited
Consolidated Statement of Changes in Equity
(expressed in thousands US dollars)
| Share | Share | Contributing | Share | Other | Foreign | Profit | ||
| Capital | Premium | surplus | Based | Reserves | Exchange | and loss | Total | |
| Payments | Reserve | Reserve | ||||||
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | |
| At 31 December 2006 | 1,841 | 39,166 | 3,690 | 2,553 | 297 | 479 | 16,432 | 64,458 |
| Exchange differences on translating foreign operations | - | - | - | - | 8 | 701 | - | 709 |
| Net income recognised directly in equity | - | - | - | - | 8 | 701 | - | 709 |
| Retained Profit for the 6 months | - | - | - | - | - | - | 18,010 | 18,010 |
| Total recognised income and expenses in the 6 months | - | - | - | - | 8 | 701 | 18,010 | 18,010 |
| Dividend paid | - | - | - | - | - | - | (5,827) | (5,827) |
| Transfer | - | 1,042 | - | (1,042) | - | - | - | - |
| Issue of share capital | 92 | 5,349 | - | - | - | - | - | 5,441 |
| Cost of share based payments | - | - | - | 1,466 | - | - | - | 1,466 |
| At 30 June 2007 | 1,933 | 45,557 | 3,690 | 2,977 | 305 | 1,180 | 28,615 | 84,257 |
| Exchange differences on translating foreign operations | - | - | - | - | 12 | 1,929 | - | 1,941 |
| Net income recognised directly in equity | - | - | - | - | 12 | 1,929 | - | 1,941 |
| Profit for the 6 months | - | - | - | - | - | - | 8,753 | 8,753 |
| Total recognised income and expenses in the year | - | - | - | - | 12 | 1,929 | 8,753 | 10,694 |
| Transfer | - | - | - | - | 262 | - | (262) | - |
| Issue of share capital | 682 | 151,080 | - | - | - | - | - | 151,762 |
| Cost of share based payments | - | - | - | 1,449 | - | - | - | 1,449 |
| At 31 December 2007 | 2,615 | 196,637 | 3,690 | 4,426 | 579 | 3,109 | 37,106 | 248,162 |
| Exchange differences on translating foreign operations | - | - | - | - | 55 | 4,358 | - | 4,413 |
| Net income recognised directly in equity | - | - | - | - | 55 | 4,358 | - | 4,413 |
| Retained Profit for the 6 months | - | - | - | - | - | - | 11,912 | 11,912 |
| Total recognised income and expenses in the 6 months | - | - | - | - | 55 | 4,358 | 11,912 | 16,325 |
| Dividend paid | - | - | - | - | - | - | (8,009) | (8,009) |
| Issue of share capital | - | - | - | - | - | - | - | - |
| Purchase of shares for cancellation | (798) | (120,670) | - | - | - | - | - | (121,468) |
| Cost of share based payments | - | - | - | 705 | - | - | - | 705 |
| At 30 June 2008 | 1,817 | 75,967 | 3,690 | 5,131 | 634 | 7,467 | 41,009 | 135,715 |
Griffin Mining Limited
Consolidated Cash Flow Statement
(expressed in thousands US dollars)
| 6 months to 30/06/2008 Unaudited | 6 months to 30/06/2007 Unaudited | Year to 31/12/2007 Audited | ||||
| $000 | $000 | $000 | ||||
| Net cash flows from operating activities | ||||||
| Profit before taxation | 13,047 | 18,010 | 26,762 | |||
| Foreign exchange (gains) | (723) | (749) | (1,012) | |||
| Taxation paid | (1,135) | - | - | |||
| Finance income | (3,569) | (770) | (5,607) | |||
| Adjustment in respect of share based payments | 705 | 1,466 | 2,915 | |||
| Depreciation, depletion and amortisation | 953 | 659 | 1,351 | |||
| Decrease / (increase) in inventories | 2,208 | (324) | (3,535) | |||
| (Increase) in other current assets | (1,215) | (1,143) | (3,091) | |||
| Increase / (decrease) in trade and other payables | 4,716 | (61) | 711 | |||
| Net cash inflow from operating activities | 14,987 | 17,088 | 18,494 | |||
| Cash flows from investing activities | ||||||
| Interest received | 3,569 | 770 | 5,607 | |||
| Payments to acquire intangible fixed assets | - | - | (126) | |||
| Payments to acquire tangible fixed assets | (5,249) | (3,494) | (10,910) | |||
| Dividends paid | (8,008) | (5,826) | (5,826) | |||
| Net cash (outflow) from investing activities | (9,688) | (8,550) | (11,255) | |||
| Cash flows from financing activities | ||||||
| Purchase of shares for cancellation | (121,469) | - | - | |||
| Issue of ordinary share capital | - | 5,441 | 157,211 | |||
| Expenses in connection with share issue | - | - | (7) | |||
| (121,469) | 5,441 | 157,204 | ||||
| (Decrease) / increase in cash and cash equivalents | (116,170) | 13,979 | 164,443 | |||
| Cash and cash equivalents at beginning of the period | 199,283 | 34,081 | 34,081 | |||
| Effects of exchange rate changes | 806 | 337 | 759 | |||
| Cash and cash equivalents at end of the period | 83,919 | 48,397 | 199,283 | |||
| Cash and cash equivalents comprise | ||||||
| Bank deposits | 83,919 | 48,937 | 199,949 | |||
| Short term bank overdrafts | - | - | (666) | |||
| Total | 83,919 | 48,397 | 199,283 | |||
Griffin Mining Limited
Notes to the Interim Statement
| 6 months to 30/06/2008 Unaudited | 6 months to 30/06/2007 Unaudited | Year to 31/12/2007 Audited | |||||||||
| Earnings $000 | Weighted average number of shares | Per share amount (cents) | Earnings $000 | Weighted average number of shares | Per share amount (cents) | Earnings $000 | Weighted average number of shares | Per share amount (cents) | |||
| Basic earnings per share | |||||||||||
| Earnings attributable to ordinary shareholders | 11,912 | 246,509,760 | 4.83 | 18,010 | 192,764,563 | 9.34 | 26,762 | 221,441,986 | 12.08 | ||
| Dilutive effect of securities | |||||||||||
| Options | 66,198 | 2,212,230 | 2,153,244 | ||||||||
| Diluted earnings per share | 11,912 | 247,177,958 | 4.82 | 18,010 | 194,976,793 | 9.24 | 26,762 | 223,595,230 | 11.97 | ||
6. The income tax expense comprises a provision for Chinese corporation tax calculated at a rate of 12.5% on the net profits of Hebei Hua Ao Mining Industry Company Limited.