Mladen Ninkov at Caijiaying

The Company made a profit before tax of $26.8 million in 2007, a remarkable performance considering the zinc price fell 46% in 2007, from $4,100 in January to $2,200 in December. Yet Griffin was generally able to reproduce its 2006 net profit level and, as such, the Company has been able to maintain its dividend policy of declaring a $0.03 per share dividend for the 2007 financial year.

2007 witnessed exceptional progress in many areas of the Company’s operations and in its preparation for the future. These include:

• 1. Production of ore from Zone III at Caijiaying continued to increase. Mill throughput has now increased over 150% since commissioning with operations currently processing over 500,000 tonnes per annum and expected to reach 750,000 per annum following the installation of the new primary ball mill in 2008. The mining operations are also expanding to cater for this new production schedule;
• 2. Significant effort has been expended in designing, constructing and installing the new infrastructure needed to deal with the planned increased production schedules. A new backfill plant has been completed to enable more efficient extraction of ore, new floatation cells have been installed to handle the increased volume of zinc and precious metals concentrates and a new crushing circuit and ball mill will enable greater throughput to be generated by the Caijiaying mill. In addition, a new accommodation block and administrative offices have been constructed to cater for the additional staff required as the mine continues to expand;
• 3. A new precious metals concentrate containing gold, silver and lead was commissioned in December 2007. This will become ever more important with the increasing production of precious metals as the mine accesses higher grade material and will allow lead to be separated from the zinc concentrate for the production of a higher quality concentrate with a subsequently higher sale price;
• 4. The discovery of a new mineable orebody at Zone II has far reaching consequences and added exceptional value for shareholders. Firstly, it is only 1.5 kilometres from the Caijiaying processing facilities, allowing easy haulage at minimum cost. Secondly, it provides an alternate source of ore to ease the scheduling of mining and haulage timetables at Zone III. Thirdly, and most importantly, it confirms the long held view that Zone II and III are, in effect, one orebody. That prospect opens up the possibility of an additional 1.5 kilometres of mineralization. To prove this hypothesis, a new decline is being driven off the Zone III access directly to the new Zone II orebody, with the necessary underground drilling being undertaken off that drive. This is an exciting prospect for all involved; and
• 5. The continued accumulation of cash by the Company which now has a cash balance exceeding $80 million with no debt.

It should be noted that the Company continues to expend an inordinate amount of time on new acquisitions. These need to be able to meet the financial, political, structural, metallurgical and geological parameters required to provide the shareholders with the returns they have come to expect and deserve. Needless to say, such acquisitions are difficult to find and even more difficult to consummate. It is enough to add that the Company will continue to progress the enormous potential still untapped at Caijiaying whilst continuing to evaluate and undertake acquisitions which meet these set parameters.

An organization of this size could not hope to be successful without a team of highly skilled and dedicated individuals. With the growth in the size of the Company, it is now many years since I could name these individuals specifically. It is enough to say that the line of these exceptional people runs from the directors through to all our on-site personnel. Our sincere thanks go out to them.