Griffin Mining Limited (“Griffin”) has today been advised that Trellus Co. LLC in which Mr Adam Usdan, a non-executive director of Griffin, has an interest, has purchased 350,000 ordinary shares in Griffin at a price of 37.5 pence per share. Following this purchase Mr. Adam Usdan, through both direct and indirect interests, has a beneficial interest in 29,144,113 shares in Griffin, representing 16.3% of the Company’s issued share capital.
Below are the interim results for Griffin Mining Limited (“Griffin” or “the Company”) for the six months ended 30th June 2014.
Highlights:
Financial and Trading:
Throughput of 408,671 tonnes of ore in the six months to the 30th June 2014 at Griffin’s Caijiaying Mine was in line with that achieved of 412,799 tonnes in the six months to 30th June 2013, resulting in metal in concentrate production of:
Metal in concentrate production in the six months to 30th June 2014 compared to that in the six months to 30th June 2013 was impacted by lower lead and silver grades but better gold grades and recoveries. Zinc grades were marginally better with recoveries in line with previous years.
Revenues in the six months to 30th June 2014 were down 1.2% on that achieved in the first six months of 2013 with less zinc, lead and silver in concentrate sold, whilst more gold was sold at lower prices.
Operating costs and expenses were down on that incurred in the six months to 30th June 2014 following the appointment of a new management team at Caijiaying with savings achieved across most areas of operations.
Profits before tax were impacted by: Foreign exchange losses of $26,000 (2013: $20,000) arising from a weaker Renminbi offset by gains on Sterling deposits against the US dollar in the period; interest payable on Chinese bank loans of $1,629,000 (2013: $1,577,000); finance lease interest of $411,000 (2013: $nil); interest receivable of $126,000 (2013: $59,000); and other income of $62,000 ( 2013: $33,000).
Chinese income taxes and withholding taxes of $1,754,000 (2013: $1,724,000) and deferred taxation of $255,000 (2013: $nil) have been charged to profit resulting in profits after tax of $5,350,000 (2012: $4,035,000).
Provision of $1,601,000 (2013: $584,000) has been made for the minority interests in the profit of Griffin’s Chinese subsidiary, Hebei Hua Ao Mining Industry Company Limited (“Hua Ao”). Profit attributable to Griffin amounted to $3,749,000 (2013: $3,451,000).
Basic earnings per share were 2.09 cents (2013: 1.97 cents) and diluted earnings per share 2.09 cents (2013: 1.95 cents). At 30 th June 2014, attributable net assets per share on issue amounted to 84 cents (2013: 81 cents).
Funds continue to be repatriated from China to cover central costs whilst leaving sufficient working capital within Hua Ao for the upgrade of the processing facilities and the further development of the Caijiaying mine. During the period: $6,548,000 was expended on mine development and plant upgrade work; $2,072,000 of bank loans in China were repaid; whilst cash balances throughout the Group have decreased by $2,519,000 (2013: $7,740,000 increase).
Despite this delay, work is continuing with the upgrade of the processing facilities and underground development to increase throughput capacity to 1.5 million tonnes of ore per annum. Considerable progress has been made to date with the above ground work expected to be completed by the end of October. Whilst the mining and haulage of ore has continued unabated during the expansion, the processing of ore has been suspended since 12th August for a scheduled 2 month period. Once the expanded processing capacity has been commissioned, it is expected that the stockpiled ore will be processed and the annual budgeted production targets met by year end.
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, “these are very pleasing results with a 26% increase in operating profit and a 35% increase in net profit with no real change in revenues. In effect, this means that management has been able to successfully implement real, substantial cuts in costs at Caijiaying with all the benefits that will ensue in the future with the predicted rise in the zinc price. Added to these positive results is the further good news of the doubling of our processing capacity in the near future from 750,000 tonnes per annum to 1.5 million tonnes per annum. All these factors point to 2015 being a watershed year for the Company.”
| 6 months to 30/06/2014 Unaudited | 6 months to 30/06/2013 Unaudited | Year to 31/12/2013 Audited | |||
| $000 | $000 | $000 | |||
| Revenue | 33,226 | 33,651 | 71,071 | ||
| Cost of sales | (18,217) | (20,534) | (40,078) | ||
| Gross profit | 15,009 | 13,117 | 30,993 | ||
| Net operating expenses | (5,772) | (5,808) | (10,700) | ||
| Profit from operations | 9,237 | 7,309 | 20,293 | ||
| Share of losses of associated company | – | (45) | – | ||
| Loss on disposal of interest in associated company | – | – | (2,229) | ||
| Foreign exchange (losses) / gains | (26) | (20) | 107 | ||
| Finance income | 126 | 59 | 145 | ||
| Finance costs | (2,040) | (1,577) | (3,651) | ||
| Other income | 62 | 33 | 162 | ||
| Profit before tax | 7,359 | 5,759 | 14,827 | ||
| Income tax expense | (2,009) | (1,724) | (5,071) | ||
| Profit after tax | 5,350 | 4,035 | 9,756 | ||
| Attributable to non-controlling interests | 1,601 | 584 | 1,599 | ||
| Attributable to equity share owners of the parent | 3,749 | 3,451 | 8,157 | ||
| 5,350 | 4,035 | 9,756 | |||
| Basic earnings per share (cents) | 2.09 | 1.97 | 4.63 | ||
| Diluted earnings per share (cents) | 2.09 | 1.95 | 4.63 |
| 6 months to 30/06/2014 Unaudited | 6 months to 30/06/2013 Unaudited | Year to 31/12/2013 Audited | |||
| $000 | $000 | $000 | |||
| Profit for the financial period | 5,350 | 4,035 | 9,756 | ||
| Other comprehensive income | |||||
| Exchange differences on translating foreign operations | (401) | 211 | 841 | ||
| Other comprehensive income for the period, net of tax | (401) |
211 |
841 |
||
| Total comprehensive income for the period | 4,949 | 4,246 | 10,597 | ||
| Attributable to non-controlling interests | 1,567 | 614 | 1,683 | ||
| Attributable to equity share owners of the parent | 3,382 | 3,632 | 8,914 | ||
| 4,949 | 4,246 | 10,597 |
| 30/06/2014 Unaudited | 30/06/2013 Unaudited | 31/12/2013 Unaudited | |||
| $000 | $000 | $000 | |||
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 195,301 | 178,433 | 193,444 | ||
| Intangible assets – Exploration interests | 1,833 | 1,766 | 1,852 | ||
| Investment in associated company | – | 3,552 | – | ||
| 197,134 | 183,751 | 195,296 | |||
| Current assets | |||||
| Inventories | 8,501 | 4,949 | 7,981 | ||
| Other current assets | 2,456 | 1,568 | 4,214 | ||
| Cash and cash equivalents | 24,310 | 24,504 | 26,278 | ||
| 35,267 | 31,021 | 38,473 | |||
| Total assets | 232,401 | 214,772 | 233,769 | ||
| EQUITY AND LIABILITIES | |||||
| Equity attributable to equity holders of the parent | |||||
| Share capital | 1,790 | 1,754 | 1,791 | ||
| Share premium | 71,310 | 70,016 | 71,339 | ||
| Contributing surplus | 3,690 | 3,690 | 3,690 | ||
| Share based payments | 2,896 | 3,055 | 2,748 | ||
| Chinese statutory re-investment reserve | 1,667 | 1,538 | 1,683 | ||
| Other reserve on acquisition of non-controlling interests | (29,346) | (29,346) | (29,346) | ||
| Foreign exchange reserve | 10,861 | 10,655 | 11,212 | ||
| Profit and loss reserve | 88,363 | 80,034 | 84,614 | ||
| Total equity attributable to equity holders of the parent | 151,231 | 141,396 | 147,731 | ||
| Non-controlling interests | 4,571 | 1,957 | 3,004 | ||
| Total equity | 155,802 | 143,353 | 150,735 | ||
| Non-current liabilities | |||||
| Long-term provisions | 2,567 | 3,228 | 2,591 | ||
| Deferred taxation | 1,886 | 1,316 | 1,646 | ||
| Finance lease | 10,908 | – | 12,012 | ||
| 15,361 | 4,544 | 16,249 | |||
| Current liabilities | |||||
| Taxation payable | 1,321 | 393 | 2,878 | ||
| Trade and other payables | 11,783 | 13,073 | 14,215 | ||
| Finance lease | 1,001 | – | 487 | ||
| Bank loans | 47,133 | 53,409 | 49,205 | ||
| Total liabilities | 61,238 | 66,875 | 66,785 | ||
| Total equities and liabilities | 232,401 | 214,772 | 233,769 | ||
| Number of shares in issue | 179,041,830 | 175,401,830 | 179,091,830 | ||
| Attributable net asset value / total equity per share | $0.84 | $0.81 | $0.84 |
| Sharecapital | Share premium | Contributing surplus | Share Based Payments | Chinese re-investment Reserve | Other reserve on acquisition of non-controlling Interests | Foreign Exchange Reserve | 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 2012 | 1,755 | 70,037 | 3,690 | 3,055 | 1,313 | (29,346) | 10,485 | 77,966 | 138,955 | 4,904 | 143,859 |
| Prior period adjustment re deferred taxation | – | – | – | – | – | – | – | (1,169) | (1,169) | (147) | (1,316) |
| At 1st January 2013 restated | 1,755 | 70,037 | 3,690 | 3,055 | 1,313 | (29,346) | 10,485 | 76,797 | 137,786 | 4,757 | 142,543 |
| Regulatory transfer for future investment | – | – | – | – | 214 | – | – | (214) | – | – | – |
| Purchase of shares for cancellation | (1) | (21) | – | – | – | – | – | – | (22) | – | (22) |
| Transfers in respect of distributions | – | – | – | – | – | – | – | – | – | (3,414) | (3,414) |
| Retained profit for the 6 months | – | – | – | – | – | – | – | 3,451 | 3,451 | 584 | 4,035 |
| Other comprehensive income: | |||||||||||
| Exchange differences on translating foreign operations | – | – | – | – | 11 | – | 170 | – | 181 | 30 | 211 |
| Total comprehensive income for the period | – | – | – | – | 11 | – | 170 | 3,451 | 3,632 | 614 | 4,246 |
| At 30 June 2013 restated (unaudited) | 1,754 | 70,016 | 3,690 | 3,055 | 1,538 | (29,346) | 10,655 | 80,034 | 141,396 | 1,957 | 143,353 |
| Regulatory transfer for future investment | – | – | – | – | 126 | – | – | (126) | – | – | – |
| Purchase of shares for cancellation | (2) | (95) | – | – | – | – | – | – | (97) | – | (97) |
| Issue of shares on exercise of options | 39 | 1,228 | – | – | – | – | – | – | 1,267 | – | 1,267 |
| Transfer on exercise of options | – | 190 | – | (190) | – | – | – | – | – | – | – |
| Buy out of share purchase options | – | – | – | (117) | – | – | – | – | (117) | – | (117) |
| Transfers in respect of dividends | – | – | – | – | – | – | – | – | – | (22) | (22) |
| Transaction with owners | 37 | 1,323 | – | (307) | 126 | – | – | (126) | 1,053 | (22) | 1,031 |
| Retained profit for the 6 months | – | – | – | – | – | – | – | 4,706 | 4,706 | 1,015 | 5,721 |
| Other comprehensive income: | |||||||||||
| Exchange differences on translating foreign operations | – | – | – | – | 19 | – | 557 | – | 576 | 54 | 660 |
| Total comprehensive income for the period | – | – | – | – | 19 | – | 557 | 4,706 | 5,282 | 1,069 | 6,351 |
| At 31 December 2013 | 1,791 | 71,339 | 3,690 | 2,748 | 1,683 | (29,346) | 11,212 | 84,614 | 147,731 | 3,004 | 150,735 |
| Cost of share based payments | – | – | – | 148 | – | – | – | – | 148 | 148 | |
| Purchase of shares for cancellation | (1) | (29) | – | – | – | – | – | – | (30) | – | (30) |
| Transaction with owners | (1) | (29) | – | 148 | – | – | – | – | 118 | – | 118 |
| Retained profit for the 6 months | – | – | – | – | – | – | – | 3,749 | 3,749 | 1,601 | 5,350 |
| Other comprehensive income: | |||||||||||
| Exchange differences on translating foreign operations | – | – | – | – | (16) | – | (351) | – | (367) | (34) | (401) |
| Total comprehensive income for the period | – | – | – | – | (16) | – | (351) | 3,749 | 3,382 | 1,567 | 4,949 |
| At 30 June 2014 (unaudited) | 1,790 | 71,310 | 3,690 | 2,896 | 1,667 | (29,346) | 10,861 | 88,363 | 151,231 | 4,571 | 155,802 |
| 6 months to 30/06/2014 Unaudited | 6 months to 30/06/2013 Unaudited | Year to 31/12/2013 Audited | |||
| $000 | $000 | $000 | |||
| Net cash flows from operating activities | |||||
| Profit before taxation | 7,359 | 5,759 | 14,827 | ||
| Share of associated company losses | – | 45 | – | ||
| Loss on disposal of interest in associated company | – | – | 2,229 | ||
| Foreign exchange losses / (gains) | 26 | 20 | (107) | ||
| Finance (income) | (126) | (59) | (145) | ||
| Finance costs | 2,040 | 1,577 | 3,651 | ||
| Adjustment in respect of share based payments | 148 | – | – | ||
| Depreciation, depletion and amortisation | 3,701 | 3,098 | 7,184 | ||
| Provisions | – | 671 | – | ||
| (Increase) / decrease in inventories | (520) | 1,283 | (1,750) | ||
| Decrease in receivables and other current assets | 1,745 | 2,008 | 563 | ||
| (Decrease) / increase in trade and other payables | (3,510) | (1,160) | 1,545 | ||
| Net cash inflow from operating activities | 10,863 | 13,242 | 27,997 | ||
| Taxation paid | (2,231) | (3,528) | (5,692) | ||
| Cash flows from investing activities | |||||
| Interest received | 126 | 59 | 145 | ||
| Payments to acquire intangible fixed assets – exploration interests | 3 | (48) | (110) | ||
| Payments to acquire – mineral interests | (2,459) | (2,305) | (4,883) | ||
| Payments to acquire – plant & equipment | (4,089) | (399) | (2,499) | ||
| Net cash (outflow) from investing activities | (6,419) | (2,693) | (7,347) | ||
| Cash flows from financing activities | |||||
| Issue of ordinary shares on exercise of options | – | – | 1,150 | ||
| Purchase of shares for cancellation | (30) | (22) | (119) | ||
| Interest paid | (2,040) | (1,577) | (3,651) | ||
| Finance lease | (590) | – | (354) | ||
| Distributions to non-controlling interests | – | (3,414) | (3,436) | ||
| Proceeds from bank loans | – | 6,297 | 15,508 | ||
| Repayment of bank loans | (2,072) | – | (13,415) | ||
| (4,732) | 1,284 | (4,317) | |||
| (Decrease) / increase in cash and cash equivalents | (2,519) | 8,305 | 10,641 | ||
| Cash and cash equivalents at beginning of the period | 26,278 | 16,764 | 16,764 | ||
| Effects of exchange rate changes | 551 | (565) | (1,127) | ||
| Cash and cash equivalents at end of the period | 24,310 | 24,504 | 26,278 | ||
| Cash and cash equivalents comprise bank deposits and loans | |||||
| Bank deposits | 24,310 | 24,504 | 26,278 |
1. 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 2013.
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 434 of the UK Companies Act 2006. The condensed consolidated statement of financial position at 31 December 2013 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 2013 statutory financial statements upon which the auditors’ opinion is unqualified.
4. The summary accounts have been prepared on a going concern basis. As at 30th June 2014, Hebei Hua Ao (a subsidiary of the Company) had bank loans outstanding of $47,133,000. Having previously rolled over each of the bank facilities Hebei Hua Ao expects to roll over the existing facilities for a further 12 months. 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 30/06/2014 Unaudited | 6 months to 30/06/2013 Unaudited | Year to 31/12/2013 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 | 3,749 | 179,091,830 | 2.09 | 3,451 | 175,442,576 | 1.97 | 8,157 | 176,015,707 | 4.63 |
| Dilutive effect of securities | |||||||||
| Options | – | – | – | – | 1,582,970 | (0.02) | – | – | – |
| Diluted earnings per share | 3,749 | 179,091,830 | 2.09 | 3,451 | 177,025,546 | 1.95 | 8,157 | 176,015,707 | 4.63 |
6. A prior year adjustment of $1,316,000 has been charged to profit and loss reserve, and deferred taxation in respect of financial periods to 31st December 2010. The impact of this is reflected in the statement of changes in equity and deferred taxation set out below. The Statement of Financial Position at 30th June 2013 has been restated to reflect this. This charge relates to deferred taxation at 25% on accelerated depreciation for Chinese tax purposes during which time Hebei Hua Ao enjoyed advantageous tax rates in the PRC tax.
| Deferred taxation | $000 |
| At 31st December 2012 | – |
| Prior period adjustment | 1,316 |
| At 1st January 2013 restated | 1,316 |
| Charge for the period | – |
| At 30th June 2013 restated | 1,316 |
| Charge for the period | 297 |
| Foreign exchange adjustments | 33 |
| At 31st December 2013 | 1,646 |
| Charge for the period | 256 |
| Foreign exchange adjustments | (16) |
| At 30th June 2014 | 1,886 |
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