Final Results

Griffin Mining Ld 09 May 2005 GRIFFIN MINING LIMITED 9 MAY 2005 GRIFFIN MINING LIMITED PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 Griffin Mining Limited ('Griffin' or the 'Company') has today published its results for the year ended 31 December 2004. The Company recorded a profit for the year to 31 December 2004 of $398,000 compared to a loss of $20,000 in 2003. Foreign exchange gains of $939,000 were achieved on foreign currency deposits in 2004 compared to $476,000 in 2003, whilst interest income increased to $507,000 in 2004 compared to $90,000 in 2003. Operating costs in 2004 increased to $1,048,000 (2003 $586,000) as a result of increased activity with the development of the Caijiaying zinc gold mine in China. Shareholders' funds increased from $13,365,000 at 31 December 2003 to $29,336,000 at 31 December 2004, with the benefit of the profit for the year, a placing of 35,000,000 new ordinary shares, and the exercise of options and warrants over 7,100,000 new ordinary shares, to raise a total of $15,630,000 after expenses. With completion of these capital raisings, which fully fund construction of Griffin's zinc gold mine and processing facilities at Caijiaying, exploration and development costs incurred to date of $6,419,000 have been reclassified as tangible fixed assets in accordance with International Financial Reporting Standards. Further expenditure of $10,037,000 was incurred in constructing the mine and processing facilities to 31 December 2004. Dry commissioning has now commenced and construction costs are in line with that estimated in the feasibility study produced in August 2003. Mladen Ninkov, Chairman commented as follows: After a long, arduous and frantic 7 years, having weathered the doom merchants and scaremongers, the Company stands ready to deliver on its promises with completion of construction of the Caijiaying processing facilities and the development of the underground mine workings at Caijiaying. As we go to press, dry commissioning has begun at Caijiaying and, by the time of the Annual General Meeting of the Company, full production should have commenced. To our knowledge, Caijiaying will be the first foreign owned and built, new hard rock mining operation in China in over 100 years. The last 7 years have shown management to have made some significant and positive decisions. The Company now has a project almost in production with no debt on its balance sheet, no hedging commitments and substantial cash balances. This is a unique and extremely strong financial position for the Company to find itself in. The Company is not hampered by penury commercial bank covenants, nor the need to pay interest on any debt and has not been hamstrung by the obligation to sell forward its base and precious metals production. Significantly, the Company was able to avoid the need to appoint an EPCM contractor to build the Caijiaying facilities on a 'fixed price' contract basis, a usual requirement of bank financing. Instead the Company itself has controlled the building of Caijiaying due to its strong balance sheet position. The cost savings to shareholders have been substantial. This does not mean, of course, that the Company will rest on its laurels. The Company operates on the well known expression, 'If you are not moving forwards, then you are moving backwards.' However, unlike so many other mining companies, the success of Caijiaying will not be dissipated by leveraging into an unwise acquisition or joint venture. Caijiaying still has enormous, untapped potential. In the first instance, the Company will immediately start examining the viability of expanding its production to 150% of its planned first year throughput. That will be a primary focus of the Company. Secondly, a huge amount of ground within the Company's licence areas at Caijiaying require both primary and secondary exploration for precious and base metals. That also remains another primary focus of the Company. Thirdly, the Company will continue to investigate, conduct due diligence and make calculated decisions on any future mining acquisitions. These may occur anywhere the management believes it can find extraordinary value with a project which can weather a commodities downturn and provide the necessary shareholder returns. Inevitably, our first country of interest has been, and will remain, China. Although we have examined many acquisitions in China, none has yet met the mining, metallurgical and financial criteria we have set for the Company. The Company remains optimistic that such a project will be offered in due course following the commissioning of Caijiaying. Further information Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7772 Roger Goodwin - Finance Director Griffin Mining Limited Philip Davies Telephone: +44(0)20 7953 2000 Charles Stanley & Company 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 CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2004 (expressed in thousands US dollars) 2004 2003 $000 $000 Turnover - - Cost of sales - - ----------- ----------- Gross Profit - - Net operating expenses (1,048) (586) ----------- ----------- Operating (loss) (1,048) (586) Foreign exchange gains 939 476 Interest receivable and similar income 507 90 ----------- ----------- Profit / (Loss) on ordinary activities before taxation 398 (20) Taxation on profit / (loss) on ordinary activities - - ----------- ----------- Profit / (Loss) for the financial year 398 (20) ----------- ----------- Earnings / (Loss) per share (cents) 0.23 (0.02) ====== ====== CONSOLIDATED SUMMARISED BALANCE SHEET As at 31 December 2004 (expressed in thousands US dollars) 2004 2003 $000 $000 Non-current assets Intangible assets - exploration interests 39 6,285 Tangible assets - mineral interests 11,770 - Tangible assets - plant and equipment 5,109 171 Tangible assets - other 15 3 ----------------- ----------------- 16,933 6,459 ----------------- ----------------- Current assets Portfolio investments 27 62 Accounts receivable 108 33 Prepaid expenses 168 66 Cash and deposits 12,985 6,831 ----------------- ----------------- 13,288 6,992 Current liabilities: Amounts falling due within one year Creditors and accrued expenses (885) (86) ----------------- ----------------- Net current assets 12,403 6,906 ----------------- ----------------- Total net assets 29,336 13,365 ========= ========= Capital and reserves Share capital 1,773 1,352 Share premium 36,594 21,385 Contributing surplus 3,690 3,690 Investment revaluation reserve (846) (811) Foreign exchange reserve (143) (121) Profit & loss account (11,732) (12,130) ----------------- ----------------- Shareholders equity interests 29,336 13,365 ========= ========= Number of shares in issue 177,327,731 135,227,731 Attributable net asset value per share $0.17 $0.10 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 31 December 2004 (expressed in thousands US dollars) 2004 2003 $000 $000 Profit / (Loss) for the financial year 398 (20) Unrealised (losses) / gains on investments (35) 33 Currency translation differences in foreign currency net investments (22) (133) ---------------- ---------------- Total gains and losses recognised in the year 341 (120) ========= ========= Losses and profits for the financial year are the same as those on an historical cost basis. CONSOLIDATED SUMMARISED CASH FLOW STATEMENT For the year ended 31 December 2004 (expressed in thousands US dollars) 2004 2003 $000 $000 Net cash inflow / (outflow) from operating activities 611 (227) --------------- --------------- Investing activities Interest received 507 90 Payments to acquire intangible fixed assets (557) (760) Payments to acquire tangible fixed assets - mineral interests (5,082) - Payments to acquire tangible fixed assets - plant and equipment (4,938) (171) Payments to acquire tangible fixed assets - other (17) (2) --------------- --------------- Net cash (outflow) from investing activities (10,087) (843) --------------- --------------- Net cash (outflow) before financing (9,476) (1,070) --------------- --------------- Financing Issue of ordinary share capital 16,391 6,452 Expenses paid in connection with share issue (761) (288) --------------- --------------- 15,630 6,164 --------------- --------------- Increase in cash and cash equivalents 6,154 5,094 ======== ======== Reconciliation of operating (loss) to net cash inflow / (outflow) from operating activities Operating loss (1,048) (586) Depreciation 5 1 (Increase) in debtors (177) (76) Increase / (decrease) in creditors 799 (1) Exchange differences 1,032 435 --------------- --------------- 611 (227) ======== ======== Notes: 1. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Company. 2. The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 240 of the UK Companies Act 1985. The summarised consolidated balance sheet at 31 December 2004 and the summarised consolidated profit and loss account, summarised consolidated cash flow statement and summarised statement of total recognised gains and losses for the year then ended have been extracted from the Group's 2004 statutory financial statements upon which the auditors' opinion is unqualified. The results for the year ended 31 December 2003 have been extracted from the statutory accounts for that period, which contain an unqualified auditors' report. 3. The annual report and accounts for 2004 together with the notice of the Annual General Meeting to be held on 10 June 2005 are being sent by post to all registered shareholders. Additional copies of the annual report and accounts are available from the Company's London office, 6th Floor, 60 St James's Street, London, SW1A 1LE. 4. Earnings per share have been calculated on the basis of the net profit after taxation of US$398,000 (loss US$20,000 in 2003) and the weighted average number of shares in issue in the year ended 31 December 2004 of 170,646,361 (114,682,774 in 2003). There is no material dilutive effect of share purchase options. 5. Reconciliation of movements in shareholders' funds 2004 2003 $000 $000 Total gains and (losses) recognised in the year 341 (120) Issue of ordinary shares in the year 15,630 6,164 --------------- --------------- Net additions to shareholders' funds 15,971 6,044 Opening shareholders' funds 13,365 7,321 --------------- --------------- Closing shareholders' funds 29,336 13,365 ======== ======== This information is provided by RNS The company news service from the London Stock Exchange

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