Preliminary Results

RNS Number : 7321B

Griffin Mining Ld

06 April 2017

 

Griffin Mining Limited

Royal Trust House, 54 Jermyn Street, London SW1Y 6LX, United Kingdom

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

E mail: [e-mail]

6th April 2017

PRELIMINARY RESULTS

Griffin Mining Limited ("Griffin" or the "Company") has today published its preliminary results for the year ended 31st December 2016. Griffin and its subsidiaries (together the "Group") recorded:

·     Revenues of $66,270,000 in 2016 (2015 $59,779,000);

·     Operating profit of $15,201,000 in 2016 (2015 $4,301,000);

·     Profit before tax of $10,382,000 in 2016 (2015 loss $940,000); and

·     Profit after tax of $5,914,000 in 2016 (2015 Loss $2,186,000)

Although record throughput was achieved in 2016, lower zinc, lead and silver head grades caused by restricted mine access following the suspension in mining operations, resulted in lower zinc, lead and silver in concentrate being produced and sold than in 2015.  However, gold in concentrate production was up 22.1% on 2015 to a record 12,654 ozs.

Metal in concentrate prices received were significantly higher in 2016 than in 2015 with zinc metal in concentrate prices received of $1,520 per tonne up 27.6% on that received in 2015 of $1,191; silver of $13.25 per oz was up 10.9% from that received in 2015 of $11.95; and gold of $1,154 per oz up 10.6% on that received in 2015 of $1,043. This reflects higher market prices and a tightening of concentrate supply in China.

In summary, metal in concentrate sales in 2016 were:

·     31,864 tonnes zinc compared with 38,514 tonnes in 2015;

·     1,439 tonnes lead compared with 1,800 tonnes in 2015;

·     310,611 ozs silver compared with 346,711 ozs in 2015; and

·     12,654 ozs gold compared with 10,406 ozs in 2015.

Cost of sales of $37,851,000 in 2016 was down on that incurred in 2015 of $42,948,000.  This reflects some economies of scale following the installation of the new ball mill and non productive costs during the suspension in mining in 2015.

874,983 tonnes of ore were processed in 2016 up 35,270 tonnes (4.2%) from 2015 of 839,713 tonnes. Despite this increase in throughput processing costs fell by 5.8% in 2016 with costs per tonne of ore processed down by 9.6%.

817,506 tonnes of ore were mined in 2016 up 245,691 (43.0%) from 2015 of 571,815. Mining costs rose 4.8% which with increased tonnage resulted in significantly lower costs per tonne of ore mined. Much of this reduction in costs may be attributed to non productive mine service costs during the suspension in mining activities in the later part of 2015 with no ore extracted.

817,506 tonnes of ore were hauled in 2016 up 220,445 (36.9%) from 2015 of 597,061. Haulage costs rose 26.5% which again with increased tonnage resulted in significantly lower costs per tonne of ore hauled. Much of this cost reduction reflects shorter distances hauled from higher mine levels.

Administration expenses (including those of the Caijiaying site) have risen 5.5% from $12,530,000 in 2015 to $13,218,000 in 2016. Underlying administration costs have fallen 12.5% with lower share based option charges, a fall in the value of the Renminbi and other cost savings. However, service fees to Guoxin based upon on Hebei Hua Ao's profits have increased from a credit of $307,000 in 2015 to a charge of $1,983,000 in 2016.

With a return to profitability, bank loans are being repaid as quickly as possible resulting in finance charges falling from $5,084,000 in 2015 to $4,286,000 in 2016.

A fall in the value of the Chinese Renminbi and British Pound in 2016, caused foreign exchange losses of $532,000 (2015 $447,000) to be incurred.

Losses on the disposal of plant and equipment of $224,000 were recorded in 2016 compared to $48,000 in 2015.

Income taxes of $4,468,000 (2015 $1,246,000) have been charged in 2016.  This includes a deferred taxation provision of $151,000 (2015 $813,000) and a charge of $573,000 in respect of deductions made in prior years since disallowed by the Chinese tax authorities.

Basic earnings per share in 2016 was 3.30 cents (2015 loss 1.22 cents) and diluted earnings per share was 3.26 cents (2015 loss 1.22 cents).

Bank loans of $14,891,000 were repaid in 2016 (2015 $3,171,000 drawn down) whilst cash and cash equivalents fell by $10,711,000 in 2016 (2015 reduction $1,520,000) with:

·     Net cash inflow from operating activities in 2016 of $21,903,000 (2015 $25,165,000);  and

·     $11,104,000 invested in mine development and plant upgrades in 2016, (2015 $16,044,000).

Attributable net assets per share at 31st December 2016 was 80 cents ( 2015 78 cents).   

With cash flows from operations directed to repaying banking facilities the directors do not recommend the payment of a dividend at this time.

Chairman's Statement:

2016 was a year when the aberration of our first loss in a decade in 2015 was cast aside and profitability was restored. 

Financially, the Company made an operating profit of $15.2 million, profit before tax of $10.4 million and after profit tax of almost $6 million.  Operationally, a record number of tonnes were mined and processed whilst cost of sales fell significantly, even though only low grade ore could be processed via stockpiles during the cessation of mining activity and, upon recommencement of mining, only from residual low grade ore in the higher mine levels.  Notably, gold production reached a new record high of 12,654 ounces in concentrate.

Further good news included the completion of the upgrade on the 28^th January 2016 to the mine and processing facilities to a 1.5 million tonne throughput capacity, the addition of a second 35,000 volt grid power line to site, a new safety permit over the lower levels of Zone III and the continuing drive to improve efficiencies with the commissioning of a new, electro hydraulic longhole drill rig.

Non-operationally, almost $15 million of debt was repaid in 2016.  And although I believe share price is a very poor indicator of a Company's value and performance, it is pleasing to see that the share price has increased over 115% in the past 12 months.

Critically, the fundamental outlook for zinc continues to improve.  According to the International Lead and Zinc Study Group, the zinc market continues to register a supply deficit, short 268,000 tonnes in 2016 and, in January 2017, already short 27,000 tonnes with storage at the London Metal Exchange declining 31,000 tonnes.  This is being reflected in lower smelter charges and a higher overall zinc price.

Most pleasing, on the 14^th December 2016 and in the presence of the Australian Ambassador to China and senior officials from the Ministry of Land and Resources and Zhangjiakou City, an agreement was signed whereby the Company was granted the right to explore, in particular, the Shitouhulun and Sangongdi areas near the Caijiaying Mine.  Both areas share the same geological signatures as the known orebodies at the Caijiaying Mine and high hopes exist for exploration success once work begins on these regions.

It would, of course, be disingenuous of me to hide the fact that our overwhelming, continuing, disappointment lies in the failure to be granted a mining licence over Zone II and thereby increase our throughput to our now expanded processing capacity.  It has become a frustrating reality in the mining world that mining licences are taking ever longer to obtain due to administrative labyrinths, constant legislative changes, environmental issues needing over-addressing and native concerns being constantly satisfied. China is no different in this respect.  The overwhelming question asked by shareholders is when will the licence be granted?  I have made predictions in the past and have been proved horribly wrong.  I will merely state I have high hopes for 2017.

It would be unfair of me not to thank the directors, staff and contractors who continue to strive to make the Company an even greater success than it has already become.  Any organization is only as competent and dynamic as the people who work, think and act solely in the best interest of the Company.  Ours are some of the best in the industry, and in country, and we thank them for their outstanding efforts.

Further information

Griffin Mining Limited

Mladen Ninkov - Chairman                                               Telephone: [phone]

Roger Goodwin - Finance Director

Panmure Gordon (UK) Limited                                                           Telephone: [phone]

               Dominic Morley

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

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No.596/2014.

 

Griffin Mining Limited

Summarised Consolidated Income Statement

For the year ended 31 December 2016

(expressed in thousands US dollars)

	2016		2015
	Audited		Audited
	$000		$000
Revenue	66,270		59,779
Cost of sales	(37,851)		(42,948)
Gross profit	28,419		16,831
Administration expenses	(13,218)		(12,530)
Profit from operations	15,201		4,301
Losses on disposal of plant and equipment	(224)		(48)
Foreign exchange (losses)	(532)		(447)
Finance income	178		202
Finance costs	(4,286)		(5,084)
Other income	45		136
Profit / (loss) before tax	10,382		(940)
Income tax  expense	(4,468)		(1,246)
Profit / (Loss) after tax	5,914		(2,186)
Basic earnings / (loss) per share (cents)	3.30		(1.22)
Diluted earnings / (loss) per share (cents)	3.26		(1.22)

Griffin Mining Limited

Summarised Consolidated Statement of Comprehensive Income

For the year ended 31 December 2016

(expressed in thousands US dollars)

 

		2016		2015
		Audited		Audited
		$000		$000
Profit / (Loss) for the year		5,914		(2,186)
Other comprehensive income that will be reclassified to profit or loss
Exchange differences on translating foreign operations		(3,299)		(2,967)
Other comprehensive income for the period, net of tax		(3,299)		(2,967)
Total comprehensive income for the period		2,615		(5,153)

 

Griffin Mining Limited

Summarised Consolidated Statement of Financial Position

As at 31 December 2016

(expressed in thousands US dollars)

		2016		2015
		Audited		Audited
		$000		$000
ASSETS
Non-current assets
Property, plant and equipment		204,491		210,252
Intangible assets - Exploration interests		1,792		1,870
		206,283		212,122
Current assets
Inventories		6,148		7,182
Receivables and other current assets		8,232		3,194
Cash and cash equivalents		13,218		24,062
		27,598		34,438
Total assets		233,881		246,560
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital		1,790		1,790
Share premium		71,310		71,310
Contributing surplus		3,690		3,690
Share based payments		2,072		1,363
Shares held in treasury		(3,875)		(3,875)
Chinese statutory re-investment reserve		1,583		1,595
Other reserve on acquisition of non controlling interests		(29,346)		(29,346)
Foreign exchange reserve		4,871		8,068
Profit and loss reserve		91,174		85,350
Total equity attributable to equity holders of the parent		143,269		139,945
Non-current liabilities
Long-term provisions		2,277		2,433
Deferred taxation		2,607		2,630
Finance lease		3,791		7,454
		8,675		12,517
Current liabilities
Trade and other payables		34,466		28,977
Finance lease		2,783		1,982
Bank loans		44,688		63,139
Total current liabilities		81,937		94,098
Total equities and liabilities		233,881		246,560
Attributable net asset value per share to equity holders of parent		$0.80		$0.78

Griffin Mining Limited

Summarised Consolidated Statement of Changes in Equity.

For the year ended 31 December 2016

(expressed in thousands US dollars)

	Share	Share	Contributing	Share	Shares	Chinese	Other	Foreign	Profit	Total
	capital	premium	surplus	based	held in	re-investment	reserve on	exchange	and loss	attributable to
				payments	treasury	reserve	acquisition of	reserve	reserve	equity holders
							non controlling			of parent
							Interests
	$000	$000	$000	$000	$000	$000	$000	$000	$000	$000
At 31st December 2014	1,790	71,310	3,690	3,064	-	1,686	(29,365)	10,957	84,794	147,926
Regulatory transfer for future investment	-	-	-	-	-	6	-	-	(6)	-
Purchase of shares for treasury		-	-	-	(3,875)	-	-	-	-	(3,875)
Transfer of share based payments on expiry	-	-	-	(2,748)	-	-	-	-	2,748	-
Cost of share based payments	-	-	-	1,047	-	-	-	-	-	1,047
Transaction with owners	-	-	-	(1,701)	(3,875)	6	-	-	2,742	(2,828)
Loss for the year	-	-	-	-	-	-	-	-	(2,186)	(2,186)
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(97)	19	(2,889)	-	(2,967))
Total comprehensive income	-	-	-	-	-	(97)	19	(2,889)	(2,186)	(5,153)
At 31st December 2015	1,790	71,310	3,690	1,363	(3,875)	1,595	(29,346)	8,068	85,350	139,945
Regulatory transfer for future investment	-	-	-	-	-	90	-	-	(90)	-
Cost of share based payments	-	-	-	709	-	-	-	-	-	709
Transaction with owners	-	-	-	709	-	90	-	-	(90)	709
Profit for the year	-	-	-	-	-	-	-	-	5,914	5,914
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(102)	-	(3,197)	-	(3,299)
Total comprehensive income	-	-	-	-	-	(102)	-	(3,197)	5,914	2,615
At 31st December 2016	1,790	71,310	3,690	2,072	(3,875)	1,583	(29,346)	4,871	91,174	143,269

Griffin Mining Limited

Summarised Consolidated Cash Flow Statement

For the year ended 31 December 2016

(expressed in thousands US dollars)

		2016		2015
		Audited		Audited
		$000		$000
Net cash flows from operating activities
Profit / (loss) before taxation		10,382		(940)
Foreign exchange losses		532		447
Finance income		(178)		(202)
Finance costs		4,286		5,084
Adjustment in respect of share based payments		709		1,047
Depreciation, depletion and amortisation		8,526		6,808
Losses on disposal of equipment		224		48
Decrease in inventories		1,034		10,295
(Decrease) / increase in receivables and other current assets		(6,251)		804
Increase in trade and other payables		3,280		2,748
Taxation paid		(641)		(974)
Net cash inflow from operating activities		21,903		25,165
Cash flows from investing activities
Interest received		178		202
Payments to acquire - mineral interests		(7,361)		(8,960)
Payments to acquire - plant and equipment		(3,776)		(7,215)
Payments to acquire - office equipment		(102)		(3)
Payments to acquire intangible fixed assets - exploration interests		(43)		(68)
Net cash outflow from investing activities		(11,104)		(16,044)
Cash flows from financing activities
Purchase of shares for treasury		-		(3,875)
Interest paid		(3,684)		(4,324)
Finance lease repayments		(2,935)		(2,573)
Proceeds from bank loans		-		3,171
Repayment of bank loans		(14,891)		-
Net cash outflow from financing activities		(21,510)		(7,601)
(Decrease) / increase in cash and cash equivalents		(10,711)		1,520
Cash and cash equivalents at the beginning of the year		24,062		23,371
Effects of exchange rates		(133)		(829)
Cash and cash equivalents at the end of the year		13,218		24,062
Cash and cash equivalents comprise bank deposits.
Bank deposits		13,218		24,062

Included within net cash flows of $10,711,000 (2015 $1,520,000) are foreign exchange losses of $532,000 (2015 losses $447,000) which have been treated as realised.

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 435 of the UK Companies Act 2006.  The summarised consolidated statement of financial position at 31st December 2016 and the summarised consolidated income statement, summarised statement of comprehensive income, consolidated statement of changes in equity and the summarised consolidated cash flow statement for the year then ended have been extracted from the Group's audited 2016 statutory financial statements.

3.   The annual report and accounts for 2016 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, 8^th Floor, 54 Jermyn Street, London, SW1Y 6LX.

4.   The calculation of the basic loss / earnings per share is based on the losses / earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.   The calculation of diluted losses / earnings per share is based on the basic losses / earnings per share on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Reconciliation of the loss / earnings and weighted average number of shares used in the calculations are set out below:

				2016						2015
	Earnings $000			Weighted Average number of shares		Per share amount (cents)		Loss $000		Weighted Average number of shares		Per share amount (cents)
Basic earnings per share
Earnings attributable to ordinary shareholders	5,914			179,091,830		3.30		(2,186)		179,091,830		(1.22)
Dilutive effect of securities
Options	-			2,248,862		(0.04)		-		-		-
Diluted earnings per share	5,914			181,340,692		3.26		(2,186)		179,091,830		(1.22)

 

END

 

 

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