Interim Statement for the six months ended 30th June 2012
Griffin Mining Limited (“Griffin” or “the Company”) is pleased to publish its interim results for the six months ended 30th June 2012.
Highlights:
- Record production of zinc, lead and silver in concentrate at Caijiaying for any six month period
- Revenues of $39.7m (2011 $33.9m)
- Operating profit of $16.7m (2011 $15.4m)
- Profit before tax of $15.0m (2011 $17.9m)
- Profit after tax of $11.4m (2011 $13.6m)
- Attributable profit after tax of $7.5m (2011 $8.5m)
Financial and Trading:
Operating profit in the six months to the 30th June 2012 has benefited from increased throughput at Griffin’s Caijiaying Mine with 386,313 tonnes (2011 319,525 tonnes) processed to produce:
- 20,336 tonnes (2011 16,069 tonnes) of zinc metal in concentrate;
- 1,364 tonnes (2011 602 tonnes) of lead in concentrate;
- 215,773 ounces (2011 117,036 ounces) of silver in concentrate;
- 3,769 ounces (2011 4,493 ounces) of gold in concentrate.
Production of zinc, lead and silver in concentrate in the six months to the 30th June 2012 was a record for any six month period at Caijiaying despite production being impacted by the Chinese Spring Festival holidays in January / February and restricted delivery of explosives during the Chinese National Party Congress. Metallurgical configuration is continuing to help improve gold recoveries. In the interim, mining of high grade gold areas has been deferred until metallurgical improvements have been consolidated.
Increases in costs of sales and net operating costs mainly reflect increased ore processed and concentrate produced with unit costs per tonne of ore processed and zinc metal in concentrate produced in line with the equivalent period in 2011.
Profits before tax have been impacted by foreign exchange losses of $684,000 (2011 gains of $2,221,000) arising as a result of a stronger US Dollar against both the Chinese Renminbi and British Pound Sterling in the period and interest payable on Chinese bank loans of $1,385,000 (2011 nil).
Griffin has a 39.2% equity interest in Spitfire Oil Ltd (“Spitfire”). Griffin’s share of Spitfire’s losses of $88,000 (2011 profits $28,000) have been recognised in the interim results.
Interest receivable of $399,000 (2011 $228,000) was recorded in the period.
Chinese income taxes and withholding taxes of $3,617,000 (2011 $4,273,000) have been charged to profit resulting in profits after tax of $11,379,000 (2011 $13,598,000).
The minority interest in the profit of Griffins Chinese subsidiary, Hebei Hua Ao Mining Industry Company Limited (“Hua Ao”), of 40% to 21st May 2012 and 11.2% from the 22nd May to the 30th June of $3,840,000 (2011 $5,102,000), have been ascribed to the non-controlling interest and $7,539,000 (2011 $8,496,000) attributable to Griffin’s interest.
As announced on 10th May 2012, 28.8% of the existing joint venture partner’s interest in Hua Ao was acquired, and the term of the joint venture’s business licence extended to 2037, by the outlay of $117,444,000. In accordance with International Financial Reporting Standards 75% of this amount has been attributed to the extension of the joint venture term and capitalised to non-current assets and 25% attributed to buying out the minority interests and charged directly to reserves within other reserves on acquisition of non controlling interests. The allocation has been based upon estimated future discounted cash flows from the Caijiaying mine. The purchase price has been financed from undistributed retained dividends in Hua Ao, banking facilities in China and Griffin’s existing cash resources.
At 30th June 2012, attributable net assets per share on issue amounted to 75 cents (48p) compared with 82 cents (52.5p) at 30th June 2011.
In line with previous years practice and the Company’s policy of determining annual dividends at the time of the Company’s full year results, no interim dividend has been declared by the Board of Griffin.
Chairman’s Statement
Chairman Mladen Ninkov commented, “The interim results are very pleasing in the face of falling commodity prices and only minor financial benefits flowing at the 30th of June from the Company moving to an 88.8% interest in Hua Ao. Assuming commodity prices stay at or above these levels, we expect to see a significant improvement in the full year results.”
Griffin Mining Limited
Condensed Consolidated Income Statement
(expressed in thousands US dollars)
| 6 months to
30/06/2012 Unaudited |
6 months to
30/06/2011 Unaudited |
Year to
31/12/2011 Audited |
|||
| $000 | $000 | $000 | |||
| Revenue | 39,747 | 33,938 | 79,062 | ||
| Cost of sales | (16,494) | (13,087) | (31,918) | ||
| Gross profit | 23,253 | 20,851 | 47,144 | ||
| Net operating expenses | (6,508) | (5,469) | (10,312) | ||
| Profit from operations | 16,745 | 15,382 | 36,832 | ||
| Share of (losses) / profits of associated company | (88) | 28 | (118) | ||
| Foreign exchange (losses) / gains | (684) | 2,221 | 2,588 | ||
| Finance income | 399 | 228 | 616 | ||
| Finance (losses) | – | (14) | (14) | ||
| Finance costs | (1,385) | – | – | ||
| Other income | 9 | 26 | 49 | ||
| Profit before tax | 14,996 | 17,871 | 39,953 | ||
| Income tax expense | (3,617) | (4,273) | (12,256) | ||
| Profit after tax | 11,379 | 13,598 | 27,697 | ||
| Attributable to non controlling interests | 3,840 | 5,102 | 11,882 | ||
| Attributable to equity share owners of the parent | 7,539 | 8,496 | 15,815 | ||
| 11,379 | 13,598 | 27,697 | |||
| Basic earnings per share (cents) | 4.30 | 4.79 | 8.96 | ||
| Diluted earnings per share (cents) | 4.26 | 4.65 | 8.76 |
Griffin Mining Limited
Condensed Consolidated Statement Of Comprehensive income
(expressed in thousands US dollars)
| 6 months to
30/06/2012 Unaudited |
6 months to
30/06/2011 Unaudited |
Year to
31/12/2011 Audited |
|||
| $000 | $000 | $000 | |||
| Profit for the financial period | 11,379 | 13,598 | 27,697 | ||
| Other comprehensive income | |||||
| Exchange differences on translating foreign operations | (478) | 903 | 2,417 | ||
|
Other comprehensive income for the period, net of tax |
(478) |
903 |
2,417 |
||
| Total comprehensive income for the period | 10,901 | 14,501 | 30,114 | ||
| Attributable to non controlling interests | 3,704 | 5,452 | 12,691 | ||
| Attributable to equity share owners of the parent | 7,197 | 9,049 | 17,423 | ||
| 10,901 | 14,501 | 30,114 |
Griffin Mining Limited
Condensed Consolidated Statement Of Financial Position
(expressed in thousands US dollars)
| Unaudited | Unaudited | Audited | |||
| 30/06/2012 | 30/06/2011 | 31/12/2011 | |||
| $000 | $000 | $000 | |||
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 171,617 | 80,368 | 85,291 | ||
| Intangible assets – Exploration interests | 1,572 | 1,537 | 1,573 | ||
| Investment in associated company | 3,670 | 3,905 | 3,759 | ||
| 176,859 | 85,810 | 90,623 | |||
| Current assets | |||||
| Inventories | 5,538 | 4,277 | 4,608 | ||
| Other current assets | 2,740 | 2,248 | 2,505 | ||
| Cash and cash equivalents | 28,720 | 74,652 | 91,089 | ||
| 36,998 | 81,177 | 98,202 | |||
| Total assets | 213,857 | 166,987 | 188,825 | ||
| EQUITY AND LIABILITIES | |||||
| Equity attributable to equity holders of the parent | |||||
| Share capital | 1,755 | 1,755 | 1,755 | ||
| Share premium | 70,061 | 70,061 | 70,061 | ||
| Contributing surplus | 3,690 | 3,690 | 3,690 | ||
| Share based payments | 3,043 | 2,775 | 3,030 | ||
| Chinese statutory re-investment reserve | 1,288 | 959 | 1,300 | ||
| Other reserve on acquisition of non controlling interests | (29,336) | – | – | ||
| Foreign exchange reserve | 9,711 | 9,011 | 10,041 | ||
| Profit and loss reserve | 70,670 | 56,127 | 63,131 | ||
| Total equity attributable to equity holders of the parent | 130,882 | 144,378 | 153,008 | ||
| Non controlling interests | 16,202 | 9,642 | 12,523 | ||
| Non-current liabilities | |||||
| Long-term provisions | 1,422 | 1,197 | 806 | ||
| Current liabilities | |||||
| Taxation payable | 4,548 | 2,939 | 11,631 | ||
| Trade and other payables | 14,288 | 8,831 | 10,857 | ||
| Bank loans | 46,515 | – | – | ||
| Total liabilities | 65,351 | 11,770 | 22,488 | ||
| Total equities and liabilities | 213,857 | 166,987 | 188,825 | ||
| Number of shares in issue | 175,501,830 | 175,501,830 | 175,501,830 | ||
| Attributable net asset value / total equity per share | $0.75 | $0.82 | $0.87 |
Griffin Mining Limited
Condensed Consolidated Statement of Changes in Equity
(expressed in thousands US dollars)
| Share capital | Share premium | Contributing surplus | Share based payments | Chinese re-investment Reserve | Other reserve on acquisition of non controlling interests | Foreign exchange | Profit and loss reserve | Total attributable to equity holders of parent | Non controlling interests | Total equity | |
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | |
| At 31 December 2010 | 1,804 | 74,948 | 3,690 | 2,513 | 938 | – | 8,480 | 47,631 | 140,004 | 6,218 | 146,222 |
| Issue of share capital | 1 | 40 | – | – | – | – | – | – | 41 | – | 41 |
| Purchase of shares for cancellation | (50) | (4,927) | – | – | – | – | – | – | (4,977) | – | (4,977) |
| Cost of share based payments | – | – | – | 262 | – | – | – | – | 262 | – | 262 |
| Transfer in respect of distributions | – | – | – | – | – | – | – | – | – | (2,028) | (2,028) |
| Transaction with owners | (49) | (4,887) | – | 262 | – | – | – | – | (4,674) | (2,028) | (6,702) |
| Retained profit for the 6 months | – | – | – | – | – | – | – | 8,496 | 8,496 | 5,102 | 13,598 |
| Other comprehensive income: | |||||||||||
| Exchange differences on translating foreign operations | – | – | – | – | 21 |
– |
531 | – | 552 | 350 | 902 |
| Total comprehensive income for the 6 month period | – | – | – | – | 21 |
– |
531 | 8,496 | 9,048 | 5,452 | 14,500 |
| At 30 June 2011 (unaudited) | 1,755 | 70,061 | 3,690 | 2,775 | 959 | – | 9,011 | 56,127 | 144,378 | 9,642 | 154,020 |
| Regulatory transfer for future investment investment | – | – | – | – | 315 | – | – | (315) | – | – | – |
| Cost of share based payments | – | – | – | 255 | – | – | – | – | 255 | – | 255 |
| Transfers in respect of distributions | – | – | – | – | – | – | – | – | – | (4,358) | (4,358) |
| Transaction with owners | – | – | – | 255 | 315 | – | – | (315) | 255 | (4,358) | (4,103) |
| Retained profit for the 6 months | – | – | – | – | – | – | – | 7,319 | 7,319 | 6,780 | 14,099 |
| Other comprehensive income: | |||||||||||
| Exchange differences on translating foreign operations | – | – | – | – | 26 |
– |
1,030 | – | 1,056 | 459 | 1,515 |
| Total comprehensive income for the 6 month period | – | – | – | – | 26 |
– |
1,030 | 7,319 | 8,375 | 7,239 | 15,614 |
| At 31 December 2011 | 1,755 | 70,061 | 3,690 | 3,030 | 1,300 | – | 10,041 | 63,131 | 153,008 | 12,523 | 165,531 |
| Cost of share based payments | – | – | – | 13 | – | – | – | 13 | – | 13 | |
| Purchase of minority interests | – | – | – | – | – | (29,336) | – | – | (29,336) | (25) | (29,361) |
| Transaction with owners | – | – | – | 13 | – | (29,336) | – | – | (29,323) | (25) | (29,348) |
| Retained profit for the 6 months | – | – | – | – | – | – | – | 7,539 | 7,539 | 3,840 | 11,379 |
| Other comprehensive income: | |||||||||||
| Exchange differences on translating foreign operations | – | – | – | – | (12) |
– |
(330) | – | (342) | (136) | (478) |
| Total comprehensive income for the 6 month period | – | – | – | – | (12) |
– |
(330) | 7,539 | 7,197 | 3,704 | 10,901 |
| At 30 June 2012 (unaudited) | 1,755 | 70,061 | 3,690 | 3,043 | 1,288 | (29,336) | 9,711 | 70,670 | 130,882 | 16,202 | 147,084 |
Griffin Mining Limited
Condensed Consolidated Cash Flow Statement
(expressed in thousands US dollars)
| 6 months to
30/06/2012 Unaudited |
6 months to
30/06/2011 Unaudited |
Year to
31/12/2011 Audited |
|||
| $000 | $000 | $000 | |||
| Net cash flows from operating activities | |||||
| Profit before taxation | 14,996 | 17,871 | 39,953 | ||
| Share of associated company losses / (profits) | 88 | (28) | 118 | ||
| Foreign exchange losses / (gains) | 684 | (2,221) | (2,588) | ||
| Finance (income) | (399) | (228) | (616) | ||
| Finance costs | 1,385 | – | – | ||
| Finance losses | – | 14 | 14 | ||
| Adjustment in respect of share based payments | 12 | 262 | 517 | ||
| Depreciation, depletion and amortisation | 3,501 | 2,555 | 5,900 | ||
| Provisions | 623 | 455 | – | ||
| (Increase) in inventories | (929) | (1,141) | (1,472) | ||
| (Increase) in other current assets | (235) | (867) | (1,226) | ||
| Increase in trade and other payables | 3,432 | 719 | 2,746 | ||
| Net cash inflow from operating activities | 23,158 | 17,391 | 43,346 | ||
| Taxation paid | (10,699) | (2,346) | (1,637) | ||
| Cash flows from investing activities | |||||
| Interest received | 399 | 228 | 616 | ||
| Payments to extend joint venture term and acquire non controlling interests | (117,444) |
– |
– |
||
| Payments to acquire intangible fixed assets – exploration interests | (13) | (21) | (19) | ||
| Payments to acquire tangible fixed assets – mineral interests | (2,201) | (3,141) | (6,073) | ||
| Payments to acquire tangible fixed assets – plant & equipment | (350) | (381) | (3,607) | ||
| Net cash (outflow) from investing activities | (119,609) | (3,315) | (9,083) | ||
| Cash flows from financing activities | |||||
| Issue of ordinary share capital | – | 41 | 41 | ||
| Purchase of shares for cancellation | – | (4,977) | (4,977) | ||
| Interest paid | (1,385) | – | – | ||
| Dividends to non controlling interests | – | – | (4,257) | ||
| Proceeds from bank loans | 46,515 | – | – | ||
| 45,130 | (4,936) | (9,193) | |||
| (Decrease)/increase in cash and cash equivalents | (62,020) | 6,794 | 23,433 | ||
| Cash and cash equivalents at beginning of the period | 91,089 | 66,450 | 66,450 | ||
| Effects of exchange rate changes | (349) | 1,408 | 1,206 | ||
| Cash and cash equivalents at end of the period | 28,720 | 74,652 | 91,089 | ||
| Cash and cash equivalents comprise bank deposits and loans | |||||
| Bank deposits | 28,720 | 74,652 | 91,089 |
Griffin Mining Limited
Notes to the Interim Statement
- These 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 December 2011.
- 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.
- 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 December 2011 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 2011 statutory financial statements upon which the auditors’ opinion is unqualified.
- 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 30/06/2012 Unaudited |
6 months to 30/06/2011 Unaudited |
Year to 31/12/2011 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 | 7,539 | 175,501,830 | 4.30 |
8,496 |
177,513,948 | 4.79 |
15,815 |
176,499,620 | 8.96 |
|
Dilutive effect of securities |
|||||||||
| Options | – | 1,374,747 | – | 5,385,5439 | – | 3,981,592 | |||
| Diluted earnings per share | 7,539 | 176,876,577 | 4.26 |
8,496 |
182,899,491 | 4.65 |
15,815 |
180,481,212 | 8.76 |