Half-year Report

RNS Number : 3172M

Griffin Mining Ld

16 September 2019

 

8^th Floor, 54 Jermyn Street, London, SW1Y 6LX. United Kingdom

Telephone: + 44 (0)20 7629 7772  Facsimile:  + 44 (0)20 7629 7773

E mail: [e-mail]

 

16^th September 2019

INTERIM STATEMENT

for the six months ended 30^th June 2019

Griffin Mining Limited ("Griffin" or "the Company") has today released its unaudited results for the six months ended 30th June 2019.

Highlights:

·     Revenues of $38.6 million (30^th June 2018 - $54.1 million)

·     Operating profit of $6.0 million (30^th June 2018 - $21.1 million)

·     Profit before tax of $6.3 million (30^th June 2018 - $21.3 million)

·     Profit after tax of $4.1 million (30^th June 2018 - $15.3 million)

·     Basic earnings per share of 2.36 cents (30^th June 2018 - 8.95 cents)

Financial and Trading:

The first six months of 2019 has seen falling zinc metal prices and significantly higher smelter treatment charges resulting in the average zinc metal in concentrate prices received in the first six months of 2019 of $1,591 per tonne compared with $2,522 per tonne in the first six months of 2018, a 36.5% reduction.

In the six months to 30^th June 2019, 432,592 tonnes (30^th June 2018 - 448,530 tonnes) of ore were processed to produce:

·     16,692 tonnes of zinc (30^th June 2018 - 16,873 tonnes);

·     494 tonnes of lead (30^th June 2018 - 459 tonnes);

·     141,306 ounces of silver (30^th June 2018 - 132,689 ounces); and

·     9,099 ounces of gold (30^th June 2018 - 9,492 ounces).  

Zinc revenues before royalties and resource taxes in the six months to 30^th June 2019 were $27,159,000 (30^th June 2018 - $42,573,000) with 17,072 tonnes of zinc metal in concentrate sold (30^th June 2018 - 16,881 tonnes).   Lead and precious metals revenues were $13,036,000 (30^th June 2018 - $14,045,000) with less gold in concentrate sold. 

 

During the six months to 30^th June 2019:

·     410,819 tonnes of ore were mined (30^th June 2018 - 400,167 tonnes);

·     426,070 tonnes of ore were hauled (30^th June 2018 - 437,734 tonnes); and

·     432,592 tonnes of ore were processed (30^th June 2018 - 448,530 tonnes).

Costs of sales (mining, haulage and processing costs) of $22,671,000 in the first six months of 2019 were down 2.8% on that incurred in 2018 of $23,336,000. Whilst enhanced safety requirements in China have caused an increase in mining costs, haulage and processing costs have been reduced with less waste materials hauled and sent to tailings and crushing efficiencies.

Net operating expenses (including those of the Caijiaying site) have risen from $9,663,000 in the first six months of 2018 to $9,955,000 in 2019. This includes fees to the Group's Chinese partners of $1,820,000 (2018 $2,186,000), equivalent to their equity interest in Hebei Hua Ao's profits.  Whilst these fees have fallen, other operating costs within China have increased with higher fees and costs in dealing with stricter environmental, health and safety regulations and in applying for the mining licence over Zone II. 

Basic earnings per share were 2.36 cents (30^th June 2018: 8.95 cents).  At 30^th June 2019, attributable net assets per share amounted to 124 cents (30^th June 2018: 119 cents).

Cash flows from operations in the period have been directed at paying down outstanding creditors and further development of the Caijiaying Mine.

Chairman's Statement

Chairman Mladen Ninkov commented, "Although all stakeholders in the Company will be disappointed with the financial results for the first half of 2019, they are directly, and practically solely, attributable to the fall in the zinc price and the tremendously higher smelter treatment charges in the first 6 months of the year.  Operations and metal production were generally in line with budget.  As is often said, mining is a fixed cost business and, as such, a reduction is sales revenues has a direct and significant effect on the margin of profit. We continue to hope for a higher zinc price and lower treatment charges for 2019 into 2020."

 

Further information

Griffin Mining Limited

Mladen Ninkov - Chairman                           Telephone: [phone]

Roger Goodwin - Finance Director

Panmure Gordon (UK) Limited                               Telephone: [phone]

             Dominic Morley

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014

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

Condensed Consolidated Income Statement

(expressed in thousands US dollars)

	6 months to 30/06/2019 Unaudited		6 months to 30/06/2018 Unaudited		Year to 31/12/2018 Audited
	$000		$000		$000
Revenue	38,619		54,058		99,067
Cost of sales	(22,671)		(23,336)		(45,798)
Gross profit	15,948		30,722		53,269
Net operating expenses	(9,955)		(9,663)		(17,714)
Profit from operations	5,993		21,059		35,555
Losses on disposal of equipment	(59)		(18)		(939)
Foreign exchange (losses) / gains	(4)		133		42
Finance income	82		102		223
Finance costs	(122)		(144)		(283)
Other income	386		179		200
Profit before tax	6,276		21,311		34,798
Income tax  expense	(2,202)		(6,005)		(9,321)
Profit after tax	4,074		15,306		25,477
Basic earnings per share (cents)	2.36		8.95		14.83
Diluted earnings per share (cents)	2.17		8.42		13.35

 

 

Griffin Mining Limited

Condensed Consolidated Statement Of Comprehensive income

(expressed in thousands US dollars)

	6 months to 30/06/2019 Unaudited		6 months to 30/06/2018 Unaudited		Year to 31/12/2018 Audited
	$000		$000		$000
Profit for the financial period	4,074		15,306		25,477
Other comprehensive income
Prior period adjustment (note 6)	(33)		-		-
Exchange differences on translating foreign operations	(297)		(1,498)		(5,856)
Other comprehensive income for the period, net of tax	(330)		(1,498)		(5,856)
Total comprehensive income for the period	3,744		13,808		19,621

 

Griffin Mining Limited

Condensed Consolidated Statement Of Financial Position

 (expressed in thousands US dollars)

	30/06/2019		30/06/2018		31/12/2018
	Unaudited		Unaudited		Audited
	$000		$000		$000
ASSETS
Non-current assets
Property, plant and equipment	219,937		213,920		213,140
Intangible assets - Exploration interests	2,021		2,031		2,016
	221,958		215,951		215,156
Current assets
Inventories	3,793		4,065		4,951
Receivables and other current assets	3,959		5,546		2,819
Cash and cash equivalents	19,293		27,841		28,452
	27,045		37,452		36,222
Total assets	249,003		253,403		251,378
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital	1,727		1,725		1,727
Share premium	68,442		68,329		68,442
Contributing surplus	3,690		3,690		3,690
Share based payments	2,072		2,072		2,072
Shares held in treasury	(917)		(300)		(917)
Chinese statutory re-investment reserve	2,382		2,177		2,386
Other reserve on acquisition of non-controlling interests	(29,346)		(29,346)		(29,346)
Foreign exchange reserve	3,734		8,306		4,027
Profit and loss reserve	163,202		149,278		159,161
Total equity attributable to equity holders of the parent	214,986		205,931		211,242
Non-current liabilities
Long-term provisions	2,182		2,387		2,302
Deferred taxation	2,389		2,830		2,393
Finance leases	413		-		258
	4,984		5,217		4,953
Current liabilities
Trade and other payables	28,469		39,116		33,632
Finance leases	564		3,139		1,551
Total liabilities	29,033		42,255		35,183
Total equities and liabilities	249,003		253,403		251,378
Number of shares in issue	172,748,728		172,512,061		172,748,728
Attributable net asset value / total equity per share	$1.24		$1.19		$1.22

Griffin Mining Limited

Condensed Consolidated Statement of Changes in Equity

(expressed in thousands US dollars)

	Share	Share	Contributing	Share	Shares	Chinese	Other	Foreign	Profit	Total
	Capital	Premium	surplus	based payments	held in treasury	re investment reserve	reserve on acquisition of non-controlling interests	exchange reserve	and loss reserve	attributable to equity holders of parent
	$000	$000	$000	$000	$000	$000	$000	$000	$000	$000
At 31st December 2017	1,700	67,295	3,690	2,072	-	2,204	(29,346)	9,777	133,972	191,364
Issue of shares on exercise of share options	25	1,034	-	-	-	-	-	-	-	1,059
Purchase of shares for treasury	-	-	-	-	(300)	-	-	-	-	(300)
Transaction with owners	25	1,034	-	-	(300)	-	-	-	-	759
Retained profit for the 6 months	-	-	-	-	-	-	-	-	15,306	15,306
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(27)	-	(1,471)	-	(1,498)
Total comprehensive income for the period	-	-	-	-	-	(27)	-	(1,471)	15,306	13,808
At 30th June 2018 (Unaudited)	1,725	68,329	3,690	2,072	(300)	2,177	(29,346)	8,306	149,278	205,931
Regulatory transfer for future investment	-	-	-	-	-	288	-	-	(288)	-
Issue of shares on exercise of options	2	113	-	-	-	-	-	-	-	115
Purchase of shares for treasury	-	-	-	-	(617)	-	-	-	-	(617)
Transaction with owners	2	113	-	-	(617)	288	-		(288)	(502)
Retained profit for the 6 months	-	-	-	-	-	-	-	-	10,171	10,171
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(79)	-	(4,279)	-	(4,358)
Total comprehensive income for the period	-	-	-	-	-	(79)	-	(4,279)	10,171	5,813
At 31st December 2018	1,727	68,442	3,690	2,072	(917)	2,386	(29,346)	4,027	159,161	211,242
Retained profit for the 6 months	-	-	-	-	-	-	-	-	4,074	4,074
Prior period adjustment									(33)	(33)
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(4)	-	(293)	-	(297)
Total comprehensive income for the period	-	-	-	-	-	(4)	-	(293)	4,041	3,744
At 30th June 2019 (Unaudited)	1,727	68,442	3,690	2,072	(917)	2,382	(29,346)	3,734	163,202	214,986

Griffin Mining Limited

Condensed Consolidated Cash Flow Statement

 (expressed in thousands US dollars)

	6 months to 30/06/2019 Unaudited		6 months to 30/06/2018 Unaudited		Year to 31/12/2018 Audited
	$000		$000		$000
Net cash flows from operating activities
Profit  before taxation	6,276		21,311		34,798
Foreign exchange losses / (gains)	4		(133)		(42)
Finance income	(82)		(102)		(223)
Finance costs	122		144		283
Depreciation, depletion and amortisation	5,000		4,964		10,328
Losses on disposal of equipment	59		18		939
Decrease / (increase) in inventories	1,157		1,803		917
(Increase) / decrease in receivables and other current assets	(1,140)		(1,206)		(1,059)
Increase / (decrease) in trade and other payables	2,032		(6,880)		(12,917)
Taxation paid	(9,469)		(12,275)		(12,585)
Net cash inflow from operating activities	3,959		7,644		20,439
Cash flows from investing activities
Interest received	82		102		223
Proceeds on disposal of equipment	-		-		351
Payments to acquire - mineral interests	(10,318)		(4,597)		(10,669)
Payments to acquire - plant & equipment	(1,519)		(1,323)		(6,134)
Payments to acquire - office equipment	-		(1)		-
Payments to acquire - intangible assets - exploration interests	(8)		(21)		(81)
Net cash (outflow) from investing activities	(11,763)		(5,840)		(16,310)
Cash flows from financing activities
Purchase of shares for treasury	-		(300)		(917)
Issue of shares on exercise of share purchase options	-		1,059		1,174
Interest paid	(52)		-		-
Finance lease	(1,304)		(1,365)		(2,728)
Net cash (outflow) from financing activities	(1,356)		(606)		(2,471)
(Decrease) / increase in cash and cash equivalents	(9,160)		1,198		1,658
Cash and cash equivalents at beginning of the period	28,452		26,518		26,518
Effects of exchange rate changes	1		125		276
Cash and cash equivalents at end of the period	19,293		27,841		28,452
Cash and cash equivalents comprise bank deposits
Bank deposits	19,293		27,841		28,452

 

Griffin Mining Limited

Notes to the Interim Statement

1.     These unaudited condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31^st December 2018.  

2.     This interim report will be available on the Company's web site, www.griffinmining.com. Hard copies are available from the Company's London office, 8^th Floor, Royal Trust House, 54 Jermyn Street, London. SW1Y 6LX.

3.     The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 434 of the UK Companies Act 2006.  The condensed consolidated statement of financial position at 31^st December 2018 and the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and the condensed consolidated cash flow statement for the year then ended have been extracted from the Group's 2018 statutory financial statements upon which the auditors' opinion is unqualified.

4.     The summary accounts have been prepared on a going concern basis.  Having considered the cash resources, banking facilities and forecasts for the remainder of the Hebei Hua Ao joint venture term, the directors do not expect any going concern issues to arise.

5.     The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of diluted earnings per share is based on the basic earnings per share on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below:

	6 months to 30/06/2019 Unaudited			6 months to 30/06/2018 Unaudited				Year to 31/12/2018 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	4,074	172,748,728	2.36	15,306	170,991,849	8.85	25,477		171,842,166	14.83
Dilutive effect of securities
Options	-	14,823,528	(0.19)	-	17,086,523	(0.43)	-		16,494,541	(1.48)
Diluted earnings per share	4,074	187,572,256	2.17	15,306	188,078,102	8.42	43,321		188,336,707	13.35

6.     The prior year adjustment relates to the capitalisation of leases following the introduction of International Financial Reporting Standard 16, on leases.

 

END

 

 

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