NEWS

Share Buy Back

Griffin Mining Limited (“Griffin” or the “Company”) announces that on 7th June 2010 it purchased 150,000 of its own ordinary shares (“Ordinary Shares”) at an average price of 40p per share. The Ordinary Shares have been purchased for cancellation.

The purchase represents 0.08% of the Ordinary Shares in issue and is pursuant to the bye laws of the Company and a resolution passed by the directors.

The purchase and cancellation will reduce the number of Ordinary Shares in issue to 181,838,496.

Preliminary Results

Griffin Mining Limited (“Griffin” or “the Company”) has today published its preliminary results for the year ended 31 December 2009.

Highlights:

  • Return to profitability following suspension of operations in first five months of 2009.
  • Profit before tax and minority interests of $7.2 million, compared with $7.0m in 2008.
  • 17,167 tonnes of zinc in concentrate produced in 2009, compared to 22,922 tonnes in 2008.
  • 3,726 ounces of gold in concentrate produced in 2009, compared to 2,421 ounces in 2008.
  • 89,227 ounces of silver in concentrate produced in 2009, compared to 171,888 ounces in 2008.
  • 500 tonnes of lead in concentrate produced in 2009, compared to 1,127 tonnes in 2008.
  • 276,880 tonnes ore mined in 2009, compared to 433,274 tonnes in 2008
  • 320,883 tonnes of ore processed in 2009, compared with 491,848 tonnes in 2008

Overview

Griffin Mining Limited (the “Company”) and its subsidiaries (together the “Group”) recorded a profit before tax for the year of $7,246,000 (2008: $6,959,000). This was a commendable performance in light of the suspension of operations in the first half of 2009 and the dramatic fall in commodity prices in late 2008.

Although the Global Financial Crisis caused a dramatic and sustained fall in commodity prices in 2008/2009, the Company was able to weather these economic conditions to place itself in an enviable position to benefit from an improved economic climate. This was foreseen by suspending operations at Caijiaying in the first half of 2009, when the opportunity cost of a shut-down was relatively low, which allowed for ore block modelling, long term structural maintenance and an operational efficiency review to be completed at Caijiaying. The rewards of this work were felt immediately on resumption of production with increased ore grades, production and revenues, resulting in the Group returning rapidly to profitability in the second half of 2009. The full benefit of this foresight will be felt when production rates are increased in the second half of 2010 with the completion of the plant upgrade.

The maximization of operational productivity failed to be achieved throughout 2009 due to the continuing delay in obtaining a mining permit to mine below the 1300 level at Caijiaying. This restricted mining operations to the upper levels of the mine where the ore lenses are less continuous than below the 1300 level. Such continuity allows for more mechanised mining and higher extraction rates. Accordingly, the permitting delays lessened the immediate need to upgrade the processing plant to a planned throughput capacity of 750,000 tonnes of ore per annum. With the receipt of the new mining licence in January 2010, the Group began immediately with the completion of the plant upgrade including the installation of a second primary ball mill, new crushing circuit, thickener and third tailings storage facility, construction of which should be completed by the autumn 2010.

Group profitability benefited from an increasing zinc price throughout 2009, as quoted on the London Metals Exchange (“LME”), beginning the year at $1,200 per tonne and ending the year at $2,500 per tonne. Whilst historically Griffin has never hedged its zinc production, to protect the Company from any adverse effects of any future fall in the zinc rice, Griffin has purchased put options over a significant portion of its next 12 month zinc production from Caijiaying.

Griffin benefited from interest receipts of $253,000 during 2009 (2008: $4,670,000). Interest receipts have declined from that received in 2008 as a result of reduced interest rates and a reduction in cash balances following the buy-back of shares in the Company from Citadel Equity Fund Ltd in May 2008.

Foreign exchange gains of $1,956,000 were recorded in 2009 (2008: losses of $3,221,000) primarily on sterling deposits held to cover sterling commitments. The gains follow the increase in the value of sterling in the later part of 2009, since reversed in early 2010.

Griffin’s 39.2% share of the losses of Spitfire Oil Limited (“Spitfire”) of $517,000 has been recognised. In the autumn of 2009, testwork and investigations into Spitfires’ proprietary L2VTM process to extract oil and other products from the lignite at Salmon Gums highlighted the need for additional research in refining and finalising the process for commercial production. As a result, active development work was suspended pending the conclusion of a full technical and economic review including all viable options being evaluated for the project including the use of alternative technologies, technical and financial joint venture partners and the sale of the Salmon Gums lignite tenements.

Chairman’s Statement:

Following the unforeseeable catastrophe of the Global Financial Crisis in the final quarter of 2008 and the subsequent collapse in commodity prices, the Company decided to shut down mining operations at Caijiaying, place staff on temporary leave and undertake long term maintenance and extensive geological work whilst the economic opportunity cost of doing so was minimal. Further, a concerted effort was made at this time to ensure the economic performance of the mine was enhanced once production restarted by seeking to cut any extraneous costs. Whilst these measures are not apparent in the 2009 results, which were impacted by the suspension of mining, costs have been declining per tonne of metal produced since the restart of operations.

Operations recommenced after a five month shutdown in the first week of June 2009. This led to an immediate return to profitability with profit before tax in the secondhalf of 2009 being $8.6 million compared to a loss of $6.1 million in the second half of 2008.

There were a number of momentous developments for the Company in 2009/2010. The first was the receipt of the new mining licence to mine below the 1300 level. This immediately enabled larger and higher grade ore lodes to be accessed via more extensive mechanised mining which led to increased extraction rates. The new licence also justified the decision to complete the processing plant upgrade, including the installation of a new primary ball mill, a new crushing circuit, the construction of a very large third tailings dam and all ancillary equipment, to allow a minimum throughput capacity of 750,000 tonnes per annum. This upgrade is scheduled to be completed by the 10th of August 2010. The economic benefits which should flow should be substantial. Needless to say, the Company decided not to declare a dividend for the 2009 year to enable the retention of funds in China to finance this plant upgrade and expansion of operations.

Secondly, the publication of the new JORC reported Mineral Resource for Zone III at Caijiaying, confirmed the very extensive mine life available at Zone III at the higher production levels expected to be obtained in the late summer of 2010. This does not even take into account the ore believed to be contained at the lower levels of Zone III, the known ore at Zone II and the significant resources believed to be housed in the area between Zones II and III.

Of course, mining continues to be a fixed cost business whose profitability continues to be governed by the swings inherent in commodity prices. Although the zinc price has been stable since the recommencement of operations, serious concerns still exist in the global economy with huge public debt levels, rising interest rates, a liquidity and associated housing bubble in China and world zinc supply outstripping demand. To lessen the impact to the Company’s financial health should some economic shock reoccur and zinc prices deteriorate as in 2008/2009, in 2010 the Company purchased put options over the next year’s production at a very modest cost. This was considered to be a prudent course of action whilst not in any way limiting the upside potential to the Company should the zinc price continue to rise.

As has come to be expected, the Company continues to aggressively investigate, evaluate and negotiate a myriad of mining companies and projects to find the next long life, profitable mine for its shareholders. The task continues to be a difficult one with many poor quality assets and companies available, but few projects uncovered of the standard which the shareholders of the Company have come to deserve and expect. The Company will continue to undertake this task energetically in 2010.

With respect to the Company’s investment in Spitfire Oil Limited (“Spitfire”), enough progress has been made to recognise the need to bring in a strategic partner capable of providing, primarily, the technical expertise needed to progress the development of the process for the commercial production of oil from the Salmon Gums lignite deposit. In the interim, overhead costs have been minimised and all efforts have been placed on the strategic path needed to make Spitfire a commercial success.

Dividend

In view of the suspension of operations at Caijiaying in the first half of 2009 and requirement to finance the expansion of operations at Caijiaying, a dividend is not being paid.

Griffin Mining Limited Summarised Consolidated Income Statement For the year ended 31 December 2009 (expressed in thousands US dollars)

  2009 2008
  $000 $000
Revenue 25,368 32,061
Cost of sales (11,909) (18,438)
Gross profit 13,459 13,623
Net operating expenses (7,940) (10,517)
Profit from operations 5,519 3,106
Share of losses of associated company (517) (39)
Foreign exchange gains / (losses) 1,956 (3,221)
Finance income 253 4,670
Other income 35 2,533
Interest payable (90)
Profit before tax 7,246 6,959
Income tax expense (1,013) (637)
Profit after tax 6,233 6,322
Attributable to minority interests 2,621
Attributable to equity share owners of the parent 3,612 6,322
  6,233 6,322
Basic earnings per share (cents) 1.99 2.87
Diluted earnings per share (cents) 1.97 2.83

Griffin Mining Limited
Summarised Consolidated Statement of Comprehensive Income
For the year ended 31 December 2009
(expressed in thousands US dollars)

  2009 2008
  $000 $000
Profit for the year 6,233 6,322
Other comprehensive income    
Exchange differences on translating foreign operations 87 4,090
Other comprehensive income for the period, net of tax 87 4,090
Total comprehensive income for the year 6,320 10,412
Attributable to minority interests 2,616
Attributable to equity owners of the parent 3,704 10,412
  6,320 10,412

Griffin Mining Limited
Summarised Consolidated Statement of Financial Position
As at 31 December 2009
(expressed in thousands US dollars)

  2009 2008
  $000 $000
ASSETS    
Non-current assets    
Property, plant and equipment 63,214 56,885
Intangible assets – Exploration interests 1,422 1,313
Investment in associated company 3,986 4,503
  68,622 62,701
Current assets    
Inventories 2,780 3,227
Other current assets 5,279 5,564
Cash and cash equivalents 67,630 67,193
  75,689 75,984
Total assets 144,311 138,685
EQUITY AND LIABILITIES    
Equity attributable to equity holders of the parent    
Share capital 1,817 1,816
Share premium 75,984 75,950
Contributing surplus 3,690 3,690
Share based payments 4,790 5,826
Other reserves 759 711
Foreign exchange reserve 7,234 7,142
Profit and loss reserve 40,440 35,345
Total equity attributable to equity of the parent 134,714 130,480
Minority interests 2,616
Total equity 137,330 130,480
Non-current liabilities    
Long-term provisions 743 98
Current liabilities    
Taxation payable 1,572
Trade and other payables 4,666 8,107
Total liabilities 6,238 8,107
Total equities and liabilities 144,311 138,685
Number of shares in issue 181,688,497 181,589,731
Attributable net asset value / total equity per share $0.74 $0.72

Griffin Mining Limited
Summarised Consolidated Statement of Changes in Equity.
For the year ended 31 December 2009
(expressed in thousands US dollars)

  Share Capital Share Premium Contributing surplus Share based payments Other reserves Foreign Exchange Reserve Profit and loss reserve Total attributable to equity holders of parent Minority Interests Total Equity
  $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 31 December 2007 2,615 196,637 3,690 4,426 579 3,109 37,106 248,162 248,162
Regulatory transfer for future investment 75 (75)
Dividend paid (8,008) (8,008) (8,008)
Purchase of shares for cancellation (799) (120,687) (121,486) (121,486)
Cost of share based payments 1,400 1,400 1,400
Transaction with owners (799) (120,687) 1,400 75 (8,083) (128,094) (128,094)
Retained profit for the year 6,322 6,322 6,322
Other comprehensive income:                    
Exchange differences on translating foreign operations 57 4,033 4,090 4,090
Total comprehensive income for the year 57 4,033 6,322 10,412 10,412
At 31 December 2008 1,816 75,950 3,690 5,826 711 7,142 35,345 130,480 130,480
Regulatory transfer for future investment 48 (48)
Dividend paid
Issue of share capital 1 41 42 42
Purchase of shares for cancellation (7) (7) (7)
Cost of share based payments 495 495 495
Transfer (1,531) 1,531
Transaction with owners 1 34 (1,036) 48 1,483 530 530
Retained profit for the year 3,612 3,612 2,621 6,233
Other comprehensive income:                    
Exchange differences on translating foreign operations 92 92 (5) 87
Total comprehensive income for the year 92 3,612 3,704 2,616 6,320
At 31 December 2009 1,817 75,984 3,690 4,790 759 7,234 40,440 134,714 2,616 137,330

Griffin Mining Limited
Summarised Cash Flow Statement
For the year ended 31 December 2009
(expressed in thousands US dollars)

  2009 2008
  $000 $000
Net cash flows from operating activities    
Profit before taxation 7,246 6,959
Share of associated company losses 517 39
Foreign exchange (gains) / losses (1,956) 3,221
Finance income (253) (4,670)
Adjustment in respect of share based payments 495 1,400
Depreciation, depletion and amortisation 1,533 2,844
Provisions 98
Decrease in inventories 446 1,412
Decrease / (increase) in other current assets 285 (1,101)
(Decrease) / increase in trade and other payables (2,882) 3,059
Net cash inflow from operating activities 5,431 13,261
Taxation paid (637)
Cash flows from investing activities    
Interest received 253 4,670
Payments to acquire intangible fixed assets – exploration interests (105) (388)
Payments to acquire tangible fixed assets – mineral interests (5,944) (9,393)
Payments to acquire tangible fixed assets – plant and equipment (1,298) (1,681)
Payments to acquire interest in associated company (4,542)
Net cash (outflow) from investing activities (7,094) (11,334)
Cash flows from financing activities    
Issue of ordinary share capital 42
Purchase of shares for cancellation (7) (121,486)
  35 (121,486)
Dividends paid (8,008)
(Decrease) in cash and cash equivalents (1,628) (128,204)
Cash and cash equivalents at the beginning of the year 67,193 199,283
Effects of exchange rates 2,065 (3,886)
Cash and cash equivalents at the end of the year 67,630 67,193
Cash and cash equivalents comprise bank deposits.    
Bank deposits 67,630 67,193
Short term bank overdrafts
Total 67,630 67,193

Included within net cash flows of $1,628,000 (2008 $128,204,000) are foreign exchange gains of $1,956,000 (2008 losses $3,221,000) which have been treated as realised.

Notes:

  1. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Company.
  2. 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 summarised consolidated statement of financial position at 31 December 2009 and the summarised consolidated income statement, summarised statement of comprehensive income, 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 2009 statutory financial statements upon which the auditors’ opinion is unqualified. The results for the year ended 31 December 2008 have been extracted from the statutory accounts for that period, which contain an unqualified auditors’ report.
  3. The annual report and accounts for 2009 are being sent by post to all registered shareholders. Additional copies of the annual report and accounts are available from the Company’s London office, 6th Floor, 60 St James’s Street, London, SW1A 1LE.
  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 year. 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:

  2009 2008
  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 3,612 181,560,512 2.87 6,322 220,587,242 2.87
Dilutive effect of securities
Options   1,906,603     3,090,342  
Diluted earnings per share 3,612 183,467,115 2.83 6,322 223,677,584 2.83

Grant of Options

With the recent lapse of unexercised options over 10,000,000 ordinary shares in Griffin Mining Limited (“Griffin” or the “Company”), the Company has today agreed to grant a new set of options (the “new options”) over 10,000,000 new ordinary shares to directors and key employees of the Company in order to retain and incentivize key personnel with managerial and operating experience in non-standard jurisdictions in a tight mining employment market.

Each Option will entitle the holder to subscribe for new ordinary shares in the Company at an exercise price of £0.45 per new ordinary share on or before 28th February 2015. The Options will vest with each option holder in 3 separate and equal instalments as follows:

I.The first third of each holder’s options will vest immediately;

II.The second third of each holder’s options will vest on 31st December 2010; and

III.The last third of each holder’s options will vest on 31st December 2011.

The Options will not vest if an employee or a director resigns or leaves the Company for cause prior to the vesting event taking place. All the Options will vest immediately upon a takeover offer being made or a change in control of the Company taking place prior to the Options expiring.

Upon exercise of these and existing options granted, the resulting new ordinary shares will represent approximately 7.5 per cent of the Company’s enlarged issued share capital. Existing options currently vested represent approximately 1.6 per cent of the Company’s enlarged share capital.

These Options have been allocated as follows:

Number of Options to subscribe for one new ordinary share in the Company:

Directors New Options granted Total number of Options now held Total number of Options vested
Mladen Ninkov
(Chairman)
6,000,000 9,000,000 4,000,000
Roger Goodwin
(Finance Director)
1,200,000 1,800,000 800,000
Dal Brynelsen
(Director)
400,000 600,000 266,667
William Mulligan
(Director)
400,000 600,000 266,667
Management:
Key personnel 2,000,000 2,400,000 900,000
Total 10,000,000 14,400,000 6,233,334

Updated Jorc Mineral Resource For Zone III at Caijiaying

Griffin Mining Limited (“Griffin” or the “Company”) is very pleased to announce the latest JORC reported Mineral Resource for Zone III at its Caijiaying Mine in the People’s Republic of China. The results confirm increased grade and Measured Resources from that previously reported in the Micromine 2002 Mineral Resource Estimate, and extensive resources and long mine life for the continuing mining operations at Zone III.

Highlights include:

  1. The addition of 4.7 million tonnes @ 6.7% Zinc, 0.9 g/t Gold, 34.3g/t Silver and 0.4% Lead to the Measured Resource at Zone III, containing:
    • 318,000 tonnes of Zinc metal
    • 19,000 tonnes of Lead metal
    • 131,000 ounces of Gold
    • 5,200,000 ounces of Silver
  2. The following increase in the grade of the Indicated Resources in Zone III:
    • 36% Increase in the Zinc grade
    • 16% Increase in the Gold grade
  3. 3.The following increase in the grade of the Inferred Resources in Zone III:
    • 51% Increase in the Zinc grade
    • 90% Increase in the Gold grade

This Mineral Resource estimate includes a conservative recalculation of the resource at Zone III in light of the grade control drilling undertaken during the 5 years of successful mining operations at Caijiaying, with a reinterpretation of the structure of the ore bodies. The deeper Mineral Resources have not been included and will be evaluated in light of the proposed drilling program to be undertaken in 2010 which will provide a better understanding of the deeper mineralisation at Zone III.

Drilling along strike and south of Zone III, towards Zone II, is having success with several holes intersecting mineralisation over the IP anomalies that were located in the 2008 IP survey program. The results have provided the necessary confidence to commit to a 25,000 metre surface and underground drilling program in 2010 which may enable an estimate to be made to JORC reporting standards on the Mineral Resource located in the area between Zones III and II.

The 2010 Mineral Resource was estimated at a zinc cut-off of 1%. Tabled below is the summary of the recent up-dated 2010 Mineral Resource.

      Metal Grade Contained Metal
Category Cut off Tonnes Zn Pb Ag Au Zn Pb Ag Au
    ‘000 t % % g/t g/t t t Oz Oz
Measured 1% 4,737 6.73 0.41 34.29 0.87 318,657 19,191 5,221,348 131,761
Indicated 5,999 5.85 0.35 32.48 0.81 351,052 20,787 6,263,912 155,724
Inferred 16,596 4.38 0.24 26.39 0.95 726,957 39,437 14,078,921 508,317
Total: 27,332 5.11 0.29 29.09 0.91 1,396,666 79,416 25,564,182 795,803

The information in this report that relates to the 2010 Mineral Resource estimates for the 2010 is based on information compiled by Mr Luke Marshall BSc Geology , Member AIG. .Mr. Marshall is a full time employee of Hebei Hua Ao Mining Industry Company Limited, a subsidiary of Griffin Mining Limited. Mr. Marshall has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code). Mr Marshall consents to the inclusion in the report of the matters based on his information in the form and context in which they appear.

CSA Global Pty Ltd undertook a high level review of the resource model and found no flaws to the model or estimation.

A Mineral Reserve Statement for Zone III at Caijiaying is currently being calculated for inclusion in the annual report for 2009.

Chairman Mladen Ninkov commented

“The new resource statement provides for a 35 year mine life within just the defined shallow resources at Zone III at the increased throughput level of 750,000 tonnes per annum expected to be reached in the later half of 2010. This new resource statement ignores the deeper ore in Zone III, the new resources at Zone II and the significant resources believed to be contained in the large area between the two zones. This is a wonderful result for shareholders and their continued faith in the Company which, in addition to the cash balances of in excess of $65m in the Group, sets the Company up for a successful and exciting future.”

GLOSSARY OF TECHNICAL TERMS

“cut-off” the grade above which mineralised material is considered to be ore
“grade” the amount of mineral in each tonne of ore
“g/t” gramme/metric tonne
“Indicated Resource” that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.
“Inferred Resource” that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.
“JORC Code” the Australasian Code for Reporting of Mineral Resources and Ore Reserves, 1999. Prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia
“Measured Resources” is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity
“Mineral Resource” a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge
“Mineral Reserve” that part of a Mineral Resource which has been demonstrated to be economically exploitable

Trading Statement- Increased Production

Griffin Mining Limited (“Griffin” or the “Company”) is pleased to report increased production at its Caijiaying Zinc Gold Mine and processing facilities in the quarter to 31st December 2009.

In the fourth quarter of 2009 125,379 tonnes of ore were processed compared to 114,233 tonnes in the third quarter to produce 7,141 tonnes of zinc (3rd quarter 6,783 tonnes), 1,673 ounces of gold (3rd quarter 1,251 ounces), 29,695 ounces of silver (3rd quarter 38,019 ounces) and 138 tonnes of lead (3rd quarter 218 tonnes).

Following the grant of a new mining licence permitting the extraction of ore below the 1300 level, mine development and stope preparation below the 1300 level is now underway with the expectation of ore being extracted from the lower levels later this quarter. Work is also continuing on the upgrade of the processing plant and tailings dams to increase processing capacity to 750,000 tonnes of ore per annum by the autumn of 2010.

Mladen Ninkov, Griffin’s Chairman, commented as follows: “The operating performance of the Caijiaying mine continues to improve and we look forward to even better results as the next levels of the mine are accessed and the plant upgrade is completed.”

New mining license issued.

Griffin Mining Limited (“Griffin” or “the Company”) is very pleased to announce that the Chinese Ministry of Land and Resources (“MLR”) has granted a new mining licence to Griffin’s subsidiary, the Hebei Hua Ao Mining Industry Company Ltd (“Hua Ao”), to mine below the 1300 level at its Caijiaying zinc-gold mine in the People’s Republic of China. The mining licence runs for a period of 16 years until January, 2026.

Griffin’s Chairman, Mladen Ninkov, commented: “Although a long time in the coming, the issue of the new mining licence at Caijiaying is very welcome as it allows the mining of Caijiaying to be guaranteed for the currently known mine life at zone III at a production level optimized by the Company. This is extraordinarily good news for all the shareholders of the Company. I congratulate all the Chinese and ex-pat staff who made this milestone possible.”

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