NEWS

Interim Statement

Griffin Mining Limited (“Griffin” or “the Company”) is pleased to publish its interim results for the six months ended 30th June 2010.

Financial and Trading:

The results for the six months ended 30 June 2010 show a pre-tax profit of US$8,658,000 compared to a loss in the six months to 30 June 2009 of US$1,354,000, when operations at Griffin’s Caijiaying Zinc Gold Mine in Northern China were suspended for much of the period.

An operating profit of $11,201,000 was achieved in the first six months of 2010 compared to a loss of $4,696,000 in the first six months of 2009, when operations were suspended. 260,317 tonnes of ore were processed at Caijiaying in the six months to 30th June 2010, compared with 81,281 tonnes of ore in the first six months of 2009, to produce 15,101 tonnes of zinc metal in concentrate (2009 3,243 tonnes), 4,570 ounces gold (2009 617 ounces), 105,475 ounces silver (2009 20,003 ounces) and 441 tonnes of lead (2009 144 tonnes). Zinc and gold production in the first six months of 2010 was a record for any six month period at Caijiaying, with increased ore mined and processed and better grades.

Upgrade of the processing facilities to a minimum capacity of 750,000 tonnes of ore per annum is on schedule and virtually complete with commissioning of all the main items of equipment in August 2010. Subject to the temporary suspension of mining operations from 9th August 2010 following the tragic death of two employees of the mine contractor at Caijiaying, mining and haulage rates are being increased to meet the increase in processing capacity.

With the lower levels of the mine being accessed, costs have increased with increased development work ahead of planned increase in extraction rates. As extraction and process rates increase with the completion of the upgrade of the processing facilities, the cost per tonne of ore mined and processed and metal produced is expected to fall.

The results for the first six months of 2010 have been impacted by foreign exchange losses of $3,061,000 arising mainly on sterling bank deposits.

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 of $127,000.

Griffin held cash balances of $67.1m as at 30 June 2010. 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

“We have been delighted by the return to profitability following the global financial crisis in 2008 / 2009 and the continued firmness in metal prices. With the granting of the licence to mine below the 1300 level, new stopes are being developed to push mining rates to meet the increase in processing capacity on recently upgraded mill, crushing and tailings facilities and to access the increased gold available at these levels.

Unfortunately, the recent tragic fatalities at Caijiaying have caused a short term delay in increasing mine production. However, with the expectation that mining will be allowed to begin in the near future and the upgrade of the processing plant being completed, Griffin is poised to significantly increase production and revenues at Caijiaying in the near future.

Extraordinary developments continue to occur in China, including the development of major new cities through massive construction, new factories, power stations, wind farms, roads, railways and other associated infrastructure. This construction, continues to cause the very strong demand for concentrate from Caijiaying and is evidenced by the continuing recent falls in smelter charges by zinc smelters and metals traders.

Griffin’s directors and management remain committed to an unerring search for other mines or companies which hold premium mining assets. Unfortunately, with diminishing exploration expenditure, good projects that can provide economic returns to shareholders are scarce, exacerbated by predatory Chinese groups with almost limitless financial resources. We continue the search undeterred by these developments.”

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

  6 months
to 30/06/2010
Unaudited
6 months
to 30/06/2009
Unaudited
Year
to 31/12/2009
Audited
  $000 $000 $000
Revenue 27,014 2,366 25,368
Cost of sales (9,984) (3,484) (11,909)
Gross profit / (loss) 17,030 (1,118) 13,459
Net operating expenses (5,829) (3,578) (7,940)
Profit / (loss) from operations 11,201 (4,696) 5,519
Share of losses of associated company (127) (210) (517)
Foreign exchange (losses) / gains (3,061) 3,340 1,956
Finance income 614 167 253
Other income 31 45 35
Profit / (loss) before tax 8,658 (1,354) 7,246
Income tax expense (1,809) (1,013)
Profit / (loss) after tax 6,849 (1,354) 6,233
Attributable to minority interests 4,815 2,621
Attributable to equity owners of parent 2,034 (1,354) 3,612
  6,849 (1,354) 6,233
Basic earnings / (loss) per share (cents) 1.12 (0.75) 1.99
Diluted earnings / (loss) per share (cents) 1.10 (0.75) 1.97

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

  6 months
to 30/06/2010
Unaudited
6 months
to 30/06/2009
Unaudited
Year
to 31/12/2009
Audited
  $000 $000 $000
Profit / (loss) for the financial period 6,849 (1,354) 6,233
Other comprehensive income      
Exchange differences on translating foreign operations 343 (58) 87
Other comprehensive income for the period, net of tax 343 (58) 87
Total comprehensive income for the period 7,192 (1,412) 6,320
Attributable to minority interests 4,831 2,616
Attributable to equity share owners of the parent 2,361 (1,412) 3,704
  7,192 (1,412) 6,320

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

  30/06/2010
Unaudited
30/06/2009
Unaudited
31/12/2009
Audited
  $000 $000 $000
ASSETS      
Non-current assets      
Property, plant and equipment 68,847 57,267 63,214
Intangible assets – Exploration interests 1,437 1,327 1,422
Investment in associated company 3,859 4,293 3,986
  74,143 62,887 68,622
Current assets      
Inventories 3,381 2,354 2,780
Financial assets 2,704
Other current assets 5,441 5,715 5,279
Cash and cash equivalents 67,070 64,540 67,630
  78,596 72,609 75,689
Total assets 152,739 135,496 144,311
EQUITY AND LIABILITIES      
Equity attributable to equity holders of the parent      
Share capital 1,815 1,816 1,817
Share premium 75,807 75,942 75,984
Contributing surplus 3,690 3,690 3,690
Share based payments 1,329 6,068 4,790
Other reserves 764 711 759
Foreign exchange reserve 7,556 7,084 7,234
Profit and loss reserve 47,075 33,991 40,440
Total equity attributable to equity holders of the parent 138,036 129,302 134,714
Minority interests 4,831 2,616
Total Equity 142,867 129,302 137,330
Non-current liabilities      
Long-term provisions 1,076 138 743
Current liabilities      
Taxation payable 1,018 1,572
Trade and other payables 7,778 6,056 4,666
Total liabilities 8,796 6,056 6,238
Total equities and liabilities 152,739 135,496 144,311
Number of shares in issue 181,538,496 181,555,164 181,688,497
Attributable net asset value / total equity per share $0.76 $0.71 $0.74

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 attributable to equity holders of parent Minority Interests Total Equity
  $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 31 December 2008 1,816 75,950 3,690 5,826 711 7,142 35,345 130,480 130,480
Purchase of shares for cancellation (8) (8) (8)
Cost of share based payments 242 242 242
Transaction with owners (8) 242 234 234
Retained profit for the 6 months (1,354) (1,354) (1,354)
Other comprehensive income:                    
Exchange differences on translating foreign operations (58) (58) (58)
Total comprehensive income for the 6 month period (58) (1,354) (1,412) (1,412)
At 30 June 2009 (unaudited) 1,816 75,942 3,690 6,068 711 7,084 33,991 129,302 129,302
Regulatory transfer for future investment 48 (48)
Issue of share capital 1 42 43 43
Cost of share based payments 253 253 253
Transfer in respect of the lapsed options (1,531) 1,531
Transaction with owners 1 42 (1,278) 48 1,483 296 296
Retained profit for the 6 months 4,966 4,966 2,621 7,587
Other comprehensive income:                    
Exchange differences on translating foreign operations 150 150 (5) 145
Total comprehensive income for the 6 month period 150 4,966 5,116 2,616 7,732
At 31 December 2009 1,817 75,984 3,690 4,790 759 7,234 40,440 134,714 2,616 137,330
Issue of share capital 3 94 97 97
Purchase of shares for cancellation (5) (271) (276) (276)
Cost of share based payments 1,140 1,140 1,140
Transfer in respect of lapsed options (4,601) 4,601
Transfer other current assets (2,616) (2,616)
Transaction with owners (2) (177) (3,461) 4,601 961 (2,616) (1,655)
Retained loss for the 6 months             2,034 2,034 4,815 6,849
Other comprehensive income:                    
Exchange differences on translating foreign operations 5 322 327 16 343
Total comprehensive income for the 6 month period 5 322 2,034 2,361 4,831 7,192
At 30 June 2010 (unaudited) 1,815 75,807 3,690 1,329 764 7,556 47,075 138,036 4,831 142,867

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

  6 months to
30/06/2010
Unaudited
6 months to
30/06/2009
Unaudited
Year to
31/12/2009
Audited
  $000 $000 $000
Net cash flows from operating activities      
Profit / (loss) before taxation 8,658 (1,354) 7,246
Share of associated company loss 127 210 517
Foreign exchange losses / (gains) 3,061 (3,340) (1,956)
Finance income (614) (167) (253)
Adjustment in respect of share based payments 1,140 242 495
Depreciation, depletion and amortisation 1,282 384 1,533
Provisions 333 41
(Increase) / decrease in inventories (601) 873 446
(Increase) / decrease in other current assets (2,777) (152) 285
Increase / (decrease) in trade and other payables 3,111 (2,051) (2,882)
Net cash inflow / (outflow) from operating activities 13,720 (5,314) 5,431
Taxation paid (2,363)
Cash flows from investing activities      
Interest received 148 167 253
Payments to acquire intangible fixed assets (7) (12) (105)
Payments to acquire tangible fixed assets (6,501) (827) (7,242)
Payments to acquire financial assets (2,238)
Net cash (outflow) from investing activities (8,598) (672) (7,094)
Cash flows from financing activities      
Issue of ordinary share capital 97 42
Purchase of shares for cancellation (276) (8) (7)
  (179) (8) 35
Dividends paid
Increase / (decrease) in cash and cash equivalents 2,580 (5,994) (1,628)
Cash and cash equivalents at beginning of the period 67,630 67,193 67,193
Effects of exchange rate changes (3,140) 3,341 2,065
Cash and cash equivalents at end of the period 67,070 64,540 67,630

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 31December2009.
  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 2009 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 2009 statutory financial statements upon which the auditors’ opinion is unqualified.
  4. Since 31 December 2009, the Company has purchased zinc put options to hedge against falls in the price of zinc. These options have been classified as a derivative financial asset at fair value with any gains or losses recognised in the Income Statement as part of finance income. The fair value of derivative financial assets are determined by reference to active market transactions or using a valuation technique where no active market exists.
  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
30/06/2010
Unaudited
6 months to
30/06/2009
Unaudited
Year to
31/12/2009
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 / (Loss) attributable to ordinary shareholders 2,034 181,836,513 1.12 (1,354) 181,555,355 (0.75) 3,612 181,560,512 1.99
Dilutive effect of securities
Options 2,602,740         1,906,603  
Diluted earnings per share 2,034 184,439,253 1.10 (1,354) 181,555,355 (0.75) 3,612 183,467,115 1.97

Caijiaying Upgrade Commissioning

Griffin Mining Limited is very pleased to announce that the commissioning of the new second primary ball mill, the new primary crusher and the third tailings dam have begun and all components are operating to specification in the commissioning phase. The new processing facilities will raise the minimum processing throughput capacity to 750,000 tonnes per annum.

Caijiaying Operations

riffin Mining Limited (the “Company” or “Griffin”) is very sad to report the death yesterday of two employees of the mining contractor whilst working underground at the Caijiaying Mine. As a result, operations at Caijiaying have been temporarily suspended pending an investigation by both the Company and a committee of Chinese authorities into the circumstances causing these deaths. Needless to say, the safety of the Caijiaying mine site is a priority for all parties concerned and any weaknesses found in any safety procedures will be acted upon immediately to ensure that such incidents cannot happen again. In the interim, the Company’s thoughts and concerns rest with the deceased and their families.

Record Production

Griffin Mining Limited (“Griffin” or “the Company”) is pleased to report that in the first half of 2010 record zinc, gold and silver production had been achieved. 260,317 tonnes of ore had been processed at Griffin’s Caijiaying zinc gold mine in Northern China in the six months to 30th June 2010, compared with 81,281 tonnes of ore in the first six months of 2009 (when operations were suspended), to produce 15,101 tonnes of zinc metal in concentrate (2009 3,243 tonnes), 4,570 ounces gold (2009 617 ounces), 105,475 ounces silver (2009 20,003 ounces) and 441 tonnes of lead (2009 144 tonnes).

Mladen Ninkov Chairman commented that Caijiaying continued to perform at or above expectations and, with the production upgrade to be completed in early August, production and financial results are expected to improve even further.

Results of AGM

The Board of Griffin Mining Ltd (“the Company”) is pleased to announce that all the resolutions put to the shareholders of the Company at the Annual General Meeting held today were duly passed.

Annual General Meeting

Notice of the Annual General Meeting of Griffin Mining Ltd (“the Company”) to be held on 12th July 2010 has been sent to shareholders and is available on the Company’s web site on www.griffinmining.com

 

Share Buy Back

Griffin Mining Limited (“Griffin” or the “Company”) announces that on 15th 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 181,838,346

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