August 2015

Griffin Mining Limited (“Griffin” or “the Company”) has today released its results for the six months ended 30th June 2015.

Highlights:

• Revenues of $35.2 million (2014: $33.2 million)
• Operating profit of $6.4 million (2014: $7.6 million)
• Profit before tax of $3.7 million (2014: $5.8 million)
• Profit after tax of $2.2 million (2014: $3.7 million)

Financial and Trading:

Throughput of 418,950 tonnes of ore in the six months to 30th June 2015 at Griffin’s Caijiaying Mine was up 2.5% on that achieved of 408,671 tonnes in the six months to 30th June 2014. With effort directed to improving precious metal recoveries, metal in concentrate production in the period was:

• 20,081 tonnes of zinc (2014: 19,147 tonnes);
• 962 tonnes of lead (2014: 609 tonnes);
• 193,098 ounces of silver (2014: 147,901 ounces); and
• 6,274 ounces of gold (2014: 5,999 ounces), a record high.

Metal in concentrate production in the six months to 30th June 2015 compared to that in the six months to 30th June 2014 benefited from better grades and better lead and gold recoveries.

Zinc revenues before royalties and resource taxes in the six months to 30th June 2015 were $26,288,000 (2014 $24,860,000) having benefited from higher prices achieved whilst lead and precious metals revenues were $10,799,000 (2014: $10,222,000) with increased quantities sold albeit at lower prices.

Cost of sales in the six months to 30th June 2015 was up on the same period in 2014 mainly as a result of increased processing costs with efforts directed at improving precious metal recovery rates. Net operating costs were up with increased regulatory, environmental and social security costs in China.

Profits before tax were impacted by: Foreign exchange losses of $24,000 (2014: $26,000) 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 $2,480,000 (2014: $1,629,000); finance lease interest of $392,000 (2014: $411,000); interest receivable of $106,000 (2014: $126,000); and other income of $36,000 ( 2014: $62,000).

Taxation of $1,442,000 (2014:$2,009,000) has been provided resulting in profits after tax of $2,220,000 (2014: $3,749,000).

Basic earnings per share were 1.27 cents (2014: 2.09 cents) and diluted earnings per share 1.27 cents (2014: 2.09 cents). At 30th June 2015, attributable net assets per share amounted to 82 cents (2013: 84 cents).

Funds continue to be repatriated from China to cover central costs whilst leaving sufficient working capital within Hua Ao for the completion of the upgrade of the processing facilities and the further development of the Caijiaying mine. During the period: $8,589,000 was expended on mine development and plant upgrade work, and $3,875,000 was incurred in buying in Griffin shares held in treasury. Bank loans in China of $3,328,000 were drawn down; whilst cash balances throughout the Group have increased by $977,000 (2014: $1,968,000 decrease).

Administrative state issues in China outside the Company’s control continue to delay the grant of a new mining licence over the unmined Zone III deeps, Zone II and adjacent areas at Caijiaying. Development of the mine at Zone III continues and the main drive between Zone III and Zone II has almost been completed.

A new additional power line to the Caijiaying mine has almost been completed and will be connected immediately thereafter allowing the commissioning of the new primary ball mill. The new power line and ball mill will increase the capacity of the Caijiaying processing facilities to 1.5 million tonnes per annum.

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, “Operationally, the Company continues to achieve very good results in light of the current downturn in commodity prices with, period to period, increased zinc, lead, silver and gold production, including record gold output, better grades and good recoveries, all this without the imminent commissioning of the new 1.5 million tonnes per annum processing facilities. Nevertheless, the continuing severe weakness in commodity prices coupled with the fixed cost nature of mining production inevitably means any costs increases, such as the increased regulatory costs in the first half, impact the profitability of the Company. The Company eagerly looks forward to any or all of the following occurring: The increased processing and production profile, the long awaited Mining Licence over new production areas and/or a rise in commodity prices.”

Griffin Mining Limited
Condensed Consolidated Income Statement
(expressed in thousands US dollars)

Griffin Mining Limited
Condensed Consolidated Statement Of Comprehensive income
(expressed in thousands US dollars)

Griffin Mining Limited
Condensed Consolidated Statement Of Financial Position

(expressed in thousands US dollars)

Griffin Mining Limited
Condensed Consolidated Statement of Changes in Equity
(expressed in thousands US dollars)

Griffin Mining Limited
Condensed Consolidated Cash Flow Statement
(expressed in thousands US dollars)

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 2014. Since 31 December 2014 8,703.103 ordinary shares in the Company have been purchased and held in treasury. These shares are shown within equity at cost.
• 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 2014 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 2014 statutory financial statements upon which the auditors’ opinion is unqualified.
• The summary accounts have been prepared on a going concern basis. As at 30th June 2015, Hebei Hua Ao (a subsidiary of the Company) had bank loans outstanding of $67,064,000 (30th June 2014 $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.
• 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:

• The condensed consolidated financial statements have been have been drawn up and the 2014 condensed consolidated interim financial statements have been restated to include amounts due to Griffin’s Chinese partners of $2,044,000 (30th June 2014 $1,601,000) in net operating costs rather than being attributable to non controlling interests in the Consolidated Income Statement, with the amounts due at 30th June 2015 of $6,090,000 (30th June 2014 $4,571,000) treated as other payables rather than as amounts due to non-controlling interests within equity within the Consolidated Statement of Financial Position. This follows the acquisition of the Chinese partner’s equity interests in 2012 and subsequent review of the arrangements with Griffin’s Chinese partners in the Hebei Hua Ao Joint Venture reflecting their relationship being in the nature of a service provider.