NEWS

Mining Licence Application Update

Further to the announcements made on 24th November and 27th October 2009 concerning the formal application for a new mining licence to mine below the 1300 level at Caijiaying, Griffin Mining Ltd (“Griffin” or “the Company”) is pleased to announce that it has been informed that the Ministry of Land and Resources (“MLR”) has accepted the supplemental information provided in support of the new mining licence application.

Unfortunately, although the suspension of the 28 working day period for the application for a new licence has been lifted, the suspension was lifted too late for the licence application to be considered at the December meeting of the “combined examination committee” of 8 departments of the MLR. The next expected meeting of the MLR combined committee is now expected to be held immediately prior to the Chinese new year in February 2010. As a result, approval of the mining licence application to mine below the 1300 level is not now expected until this time.

Option Exercise

Griffin Mining Limited (“Griffin” or the “Company”) has been notified of the exercise of share purchase options over 133,333 new ordinary shares in Griffin at an exercise price of 20 pence per share. These options were granted in October 2008 as part of the grant of options to key employees.

Application has today been made for the new ordinary shares issued on the exercise of the aforementioned options to be admitted to trading on AIM, which is expected to occur on 4th December 2009. Following the issue of these new ordinary shares there will be 181,688,497 Griffin ordinary shares in issue.

Griffin Mining announces that a Mining License application has been statutorily completed, lodged and accepted.

Griffin Mining Ltd (“Griffin” or “the Company”) has had its formal application for a new mining licence to mine below the 1300 level accepted (number 100000222220090369) and is now working on having that application approved within the statutorily stipulated 28 working day period. A new JORC compliant updated mineral resource estimate will be announced upon the granting of the new mining licence.

Further, the Caijiaying zinc-gold mine has returned to profitability in the quarter ended 30th September 2009 having processed 114,233 tonnes of ore to produce 6,783 tonnes of zinc, 1,351 ounces of gold, 38,019 ounces of silver and 218 tonnes of lead. This follows 33,152 tonnes of ore being processed in June immediately after recommencement of operations following the suspension of production in the first 5 months of 2009.

In further developments, work will shortly commence on improving ventilation and other underground work to facilitate access to the lower levels of the mine in anticipation of being permitted to extract ore from below the 1300 level. Upgrade work continues with the installation of a second primary ball mill, new crushing circuit, tailings dam uplifts and construction of a new tailings dam to facilitate production increases in 2010.

Exploration work is being undertaken with, inter alia, a 950 metre surface drilling programme over the Ershilli Naobao target approximately 2.5 kilometres to the east of the existing mine at Zone III. Underground drilling has recommenced from Zone III, 1.5 kilometres to the south towards the undeveloped ore deposits at Zone II.

Chairman’s Statement

“Although the delays in obtaining a permit to mine below the 1300 level have been frustrating, I have been very happy with the performance of Caijiaying since the recommencement of operations. With the benefit of the maintenance work, cost reviews and ore block re-modelling undertaken earlier this year, performance since recommencement of production, coupled with the increase in the zinc price, has enabled Caijiaying to return to profitability.”

Interim results for 6 months to 30th June 2009.

Griffin Mining Limited (“Griffin” or “the Company”) is pleased to publish its interim results for the six months ended 30th June 2009. During most of this period, mining operations at the Caijiaying zinc-gold mine were suspended.

Financial and Trading:

The results for the six months ended 30 June 2009, during which operations were suspended for most of this period at Caijiaying, show a pre-tax loss of US$1,354,000 compared to a profit in the six months to 30 June 2008 of US$13,047,000.

Operations at Caijiaying were suspended from January to May 2009 inclusive to allow for upgrade and maintenance work. 48,129 tonnes of low grade ore was processed in the first two months of 2009 from stockpiles mined and hauled in 2008. 33,152 tonnes of ore was processed in June following recommencement of operations. The site upgrade is continuing with ongoing work on the third tailings dam, new crushing circuit and installation of a delivered, second primary ball mill. Whilst further increases in throughput are expected during 2009, the Company does not anticipate processing rates will reach 750,000 tonnes of ore per annum until the upgrade process has been completed

In light of the fall in commodity prices in 2008/2009, a comprehensive review of costs and procedures was undertaken during the suspension of operations with a view to see if it was possible to further reduce the already very low operating costs at Caijiaying. This included the opportunity to renegotiate terms with contractors and to retrench superfluous personnel.

Since the recommencement of operations, zinc and silver metal in concentrate production has been ahead of expectations with record gold production in July. This has been the result of improved head grades and production throughput resulting from ore-body re-modelling and maintenance undertaken during the suspension of operations. Costs have, in many cases, been reduced from that incurred in 2008. Revenues have also benefited from a rise in the price of zinc since the recommencement of operations with the zinc price having reached a recent high of $1,930 per tonne compared with $1,250 at the beginning of 2009.

All further documentation required to permit mining below the 1300 level at Caijiaying has now been submitted to the Chinese authorities.

Griffin has a 39.2% equity interest in Spitfire Oil Ltd (“Spitfire”). Full provision has been made in the interim results for Griffin’s share of Spitfire’s losses. Spitfire continues to make good progress having announced a 69% increase in the previously reported resource for its 100% owned Salmon Gums lignite deposit in the south-east of Western Australia on 16 July 2009. The new reported Resource of lignite (at 4m coal thickness & 45% ashdb cut-off) is estimated to be:

  • Indicated: 406 million tonnes.
  • Inferred: 470 million tonnes.
  • Total: 876 million tonnes

The estimate was made in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (The JORC Code, 2004).

Spitfire has reported that, if the current oil yields achieved with the test reactors in the Curtin University laboratory can be maintained at an industrial scale, then the reported resource of lignite would correspond to an in-situ pyrolysis oil resource in the range of 330 to 420 million barrels, an increase in the range of 65% to 110% over the 200 million barrels in-situ oil volumes which supported Spitfire’s admission onto AIM. Spitfire is now focusing its efforts on completing its technology definition work with the emphasis now shifting from the generation of oil to the upgrading of the pyrolysis oil into its maximum saleable form and completing its pre-feasibility studies.

Griffin held cash balances of $64.5m as at 30 June 2009. 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.

In line with previous years and the Company’s policy of determining annual dividends at the time of the Company’s full year results, the Board of Griffin has not declared an interim dividend.

Chairman’s Statement

“These results, for the first six months of 2009 were to be expected considering Caijiaying was shut down during most of the reporting period. Much has been achieved in the first six months of 2009 to improve operations at Caijiaying. The full benefits of the maintenance work, cost review and ore block re-modelling earlier this year, together with the increase in commodity prices, should be reflected in the results for the second half of 2009.”

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

  6 months to
30/06/2009
Unaudited
6 months to
30/06/2008
Unaudited
Year to
31/12/2008
Audited
  $000 $000 $000
Revenue 2,366 22,201 32,061
Cost of sales (3,484) (10,621) (18,438)
Gross (loss) / profit (1,118) 11,580 13,623
Net operating expenses (3,578) (5,349) (10,517)
(Loss) / profit from operations (4,696) 6,231 3,106
Share of losses of associated company (210) (39)
Foreign exchange gains / (losses) 3,340 723 (3,221)
Finance income 167 3,569 4,670
Other income 45 2,524 2,533
Interest payable (90)
(Loss) / profit before tax (1,354) 13,047 6,959
Income tax expense (1,135) (637)
(Loss) / profit after tax attributable to equity share owners for the financial period (1,354) 11,912 6,322
Basic (loss) / earnings per share (cents) (0.75) 4.83 2.87
Diluted (loss) / earnings per share (cents) (0.75) 4.82 2.83

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

  6 months to
30/06/2009
Unaudited
6 months to
30/06/2008
Unaudited
Year to
31/12/2008
Audited
  $000 $000 $000
(Loss) / profit after tax attributable to equity share owners for the financial period (1,354) 11,912 6,322
Other comprehensive income      
Exchange differences on translating foreign operations (58) 4,413 4,090
Other comprehensive income for the period, net of tax (58) 4,413 4,090
Total comprehensive income for the period attributable to equity shareholders (1,412) 16,325 10,412

Griffin Mining Limited
Condensed Consolidated Statement Of Financial Position
(expressed in thousands US dollars)

  30/06/2009 30/06/2008 31/12/2008
  Unaudited Unaudited Audited
  $000 $000 $000
ASSETS      
Non-current assets      
Property, plant and equipment 57,267 52,851 56,885
Intangible assets – Exploration interests 1,327 907 1,313
Investment in associated company 4,293 4,503
  62,887 53,758 62,701
Current assets      
Inventories 2,354 2,431 3,227
Other current assets 5,715 5,370 5,564
Cash and cash equivalents 64,540 83,919 67,193
  72,609 91,720 75,984
Total assets 135,496 145,478 138,685
EQUITY AND LIABILITIES      
Equity attributable to equity holders of the parent      
Share capital 1,816 1,817 1,816
Share premium 75,942 75,967 75,950
Contributing surplus 3,690 3,690 3,690
Share based payments 6,068 5,131 5,826
Other reserves 711 634 711
Foreign exchange reserve 7,084 7,467 7,142
Profit and loss reserve 33,991 41,009 35,345
Total equity 129,302 135,715 130,480
Non-current liabilities      
Long-term provisions 138 98
Current liabilities      
Trade and other payables 6,056 9,763 8,107
Short term bank overdrafts
Total liabilities 6,056 9,763 8,107
Total equities and liabilities 135,496 145,478 138,685
Number of shares in issue 181,555,164 181,657,731 181,589,731
Attributable net asset value / total equity per share $0.71 $0.75 $0.72

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

  Share Capital Share Premium Contributing surplus Share Based Payments Other Reserves Foreign Exchange Reserve Profit and loss Reserve Total
  $000 $000 $000 $000 $000 $000 $000 $000
At 31 December 2007 2,615 196,637 3,690 4,426 579 3,109 37,106 248,162
Dividend paid (8,009) (8,009)
Purchase of shares for cancellation (798) (120,670) (121,468)
Cost of share based payments 705 705
Transaction with owners (798) (120,670) 705 (8,009) (128,772)
Retained profit for the 6 months 11,912 11,912
Other comprehensive income:                
Exchange differences on translating foreign operations 55 4,358 4,413
Total comprehensive income for the 6 month period 55 4,358 11,912 16,325
At 30 June 2008 1,817 75,967 3,690 5,131 634 7,467 41,009 135,715
Regulatory transfer for future investment 75 (75)
Purchase of shares for cancellation (1) (17) (18)
Cost of share based payments 695 695
Transaction with owners (1) (17) 695 75 (75) 677
Retained loss for the 6 months (5,589) (5,589)
Exchange differences on translating foreign operations 2 (325) (323)
Total comprehensive income for the 6 month period 2 (325) (5,589) (5,912)
At 31 December 2008 1,816 75,950 3,690 5,826 711 7,142 35,345 130,480
Purchase of shares for cancellation (8) (8)
Cost of share based payments 242 242
Transaction with owners (8) 242 234
Retained loss for the 6 months (1,354) (1,354)
Other comprehensive income:                
Exchange differences on translating foreign operations (58) (58)
Total comprehensive income for the 6 month period (58) (1,354) (1,412)
At 30 June 2009 1,816 75,942 3,690 6,068 711 7,084 33,991 129,302

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

  6 months to
30/06/2009
Unaudited
6 months to
30/06/2008
Unaudited
Year to
31/12/2008
Audited
  $000 $000 $000
Net cash flows from operating activities      
(Loss) / profit before taxation (1,354) 13,047 6,959
Share of associated company loss 210 39
Foreign exchange (gains) / losses (3,340) (723) 3,221
Taxation paid (1,135) (637)
Finance income (167) (3,569) (4,670)
Adjustment in respect of share based payments 242 705 1,400
Depreciation, depletion and amortisation 384 953 2,844
Provisions 41 98
Decrease in inventories 873 2,208 1,412
(Increase) in other current assets (152) (1,215) (1,101)
(Decrease) / increase in trade and other payables (2,051) 4,716 3,059
Net cash (outflow) / inflow from operating activities (5,314) 14,987 12,624
Cash flows from investing activities      
Interest received 167 3,569 4,670
Payments to acquire intangible fixed assets (12) (388)
Payments to acquire tangible fixed assets (827) (5,249) (11,074)
Payments to acquire interest in associated company (4,542)
Net cash (outflow) from investing activities (672) (1,680) (11,334)
Cash flows from financing activities      
Purchase of shares for cancellation (8) (121,469) (121,486)
  (8) (121,469) (121,486)
Dividends paid (8,008) (8,008)
(Decrease) in cash and cash equivalents (5,994) (116,170) (128,204)
Cash and cash equivalents at beginning of the period 67,193 199,283 199,283
Effects of exchange rate changes 3,341 806 (3,886)
Cash and cash equivalents at end of the period 64,540 83,919 67,193
Cash and cash equivalents comprise      
Bank deposits 64,540 83,919 67,193
Total 64,540 83,919 67,193

Griffin Mining Limited Notes to the Interim Statement

 

  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 31December2008 except for the adoption of IAS1 Presentation of Financial Statements (Revised 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 435 of the UK Companies Act 2006. The condensed consolidated statement of financial position at 31 December 2008 and the condensed consolidated income statement, 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 2008 statutory financial statements upon which the auditors’ opinion is unqualified. The condensed consolidated statement of comprehensive income has been prepared using information extracted from the Group’s 2008 statutory financial statements.
  4. 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. There is no dilutive earnings per share in the 6 months to 30 June 2009 due to the incidence of losses. Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below:

 

6 months to 30/06/2009 Unaudited
  Earnings $000 Weighted average number of shares Per share amount (cents)
Basic earnings per share
(Loss) / earnings attributable to ordinary shareholders (1,354) 181,555,355 (0.75)
Dilutive effect of securities
Options    
Diluted earnings per share (1,354) 181,555,355 (0.75)

 

6 months to 30/06/2008 Unaudited
  Earnings $000 Weighted average number of shares Per share amount (cents)
Basic earnings per share
(Loss) / earnings attributable to ordinary shareholders 11,912 246,509,760 4.83
Dilutive effect of securities
Options   66,198  
Diluted earnings per share 11,912 246,575,958 4.82

 

Year to 31/12/2008 Audited
  Earnings $000 Weighted average number of shares Per share amount (cents)
Basic earnings per share
(Loss) / earnings attributable to ordinary shareholders 6,322 220,587,242 2.87
Dilutive effect of securities
Options   3,090,342  
Diluted earnings per share 6,322 223,677,584 2.83