Interim Results

RNS Number : 4108C

Griffin Mining Ld

01 September 2008

 



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: [phone]

Roger Goodwin - Finance Director

Griffin Mining Limited

Adrian Hadden                                               Telephone: [phone]

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

 

1.       This statement has been prepared using accounting policies and presentation consistent with those applied in the  preparation of the accounts of the Group for the year ended 31December 2007.

 

2.       Copies of this interim report are being sent to all registered shareholders. Additional copies are available from the Company’s London office, 60 St James’s Street, London, SW1A 1LE.

 

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 240 of the UK Companies Act 1985. The summarised consolidated balance sheet at 31 December 2007 and the summarised consolidated income statement, summarised 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 2007 statutory financial statements upon which the auditors’ opinion is unqualified.

 

4.       A dividend of 3 cents per ordinary share in issue at 9 May 2008, was paid on 6 June 2008.

 

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 30/06/2008 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.

 

END

 

 

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