• Wednesday 3rd September 2014

Interim Statement for the six months ended 30th June 2014

Interim Statement for the six months ended 30th June 2014

Below are the interim results for Griffin Mining Limited (“Griffin” or “the Company”) for the six months ended 30th June 2014.

Highlights:

  • Revenues of $33.2 million (2013: $33.7 million)
  • Operating profit of $9.2 million (2013: $7.3 million)
  • Profit before tax of $7.4 million (2013: $5.8 million)
  • Profit after tax of $5.4 million (2013: $4.0 million)

Financial and Trading:

Throughput of 408,671 tonnes of ore in the six months to the 30th June 2014 at Griffin’s Caijiaying Mine was in line with that achieved of 412,799 tonnes in the six months to 30th June 2013, resulting in metal in concentrate production of:

  • 19,147 tonnes of zinc (2013: 19,077 tonnes);
  • 609 tonnes of lead (2013: 903 tonnes);
  • 147,901 ounces of silver (2013: 151,921 ounces); and
  • 5,999 ounces of gold (2013: 3,869 ounces).

Metal in concentrate production in the six months to 30th June 2014 compared to that in the six months to 30th June 2013 was impacted by lower lead and silver grades but better gold grades and recoveries. Zinc grades were marginally better with recoveries in line with previous years.

Revenues in the six months to 30th June 2014 were down 1.2% on that achieved in the first six months of 2013 with less zinc, lead and silver in concentrate sold, whilst more gold was sold at lower prices.

Operating costs and expenses were down on that incurred in the six months to 30th June 2014 following the appointment of a new management team at Caijiaying with savings achieved across most areas of operations.

Profits before tax were impacted by: Foreign exchange losses of $26,000 (2013: $20,000) arising from a weaker Renminbi offset by gains on Sterling deposits against the US dollar in the period; interest payable on Chinese bank loans of $1,629,000 (2013: $1,577,000); finance lease interest of $411,000 (2013: $nil); interest receivable of $126,000 (2013: $59,000); and other income of $62,000 ( 2013: $33,000).

Chinese income taxes and withholding taxes of $1,754,000 (2013: $1,724,000) and deferred taxation of $255,000 (2013: $nil) have been charged to profit resulting in profits after tax of $5,350,000 (2012: $4,035,000).

Provision of $1,601,000 (2013: $584,000) has been made for the minority interests in the profit of Griffin’s Chinese subsidiary, Hebei Hua Ao Mining Industry Company Limited (“Hua Ao”). Profit attributable to Griffin amounted to $3,749,000 (2013: $3,451,000).

Basic earnings per share were 2.09 cents (2013: 1.97 cents) and diluted earnings per share 2.09 cents (2013: 1.95 cents). At 30 th June 2014, attributable net assets per share on issue amounted to 84 cents (2013: 81 cents).

Funds continue to be repatriated from China to cover central costs whilst leaving sufficient working capital within Hua Ao for the upgrade of the processing facilities and the further development of the Caijiaying mine. During the period: $6,548,000 was expended on mine development and plant upgrade work; $2,072,000 of bank loans in China were repaid; whilst cash balances throughout the Group have decreased by $2,519,000 (2013: $7,740,000 increase).

Despite this delay, work is continuing with the upgrade of the processing facilities and underground development to increase throughput capacity to 1.5 million tonnes of ore per annum. Considerable progress has been made to date with the above ground work expected to be completed by the end of October. Whilst the mining and haulage of ore has continued unabated during the expansion, the processing of ore has been suspended since 12th August for a scheduled 2 month period. Once the expanded processing capacity has been commissioned, it is expected that the stockpiled ore will be processed and the annual budgeted production targets met by year end.

In line with previous years practice and the Company’s policy of determining annual dividends at the time of the Company’s full year results, no interim dividend has been declared by the Board of Griffin.

Chairman’s Statement

Chairman Mladen Ninkov commented, “these are very pleasing results with a 26% increase in operating profit and a 35% increase in net profit with no real change in revenues. In effect, this means that management has been able to successfully implement real, substantial cuts in costs at Caijiaying with all the benefits that will ensue in the future with the predicted rise in the zinc price. Added to these positive results is the further good news of the doubling of our processing capacity in the near future from 750,000 tonnes per annum to 1.5 million tonnes per annum. All these factors point to 2015 being a watershed year for the Company.”

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

 

  6 months to 30/06/2014 Unaudited   6 months to 30/06/2013 Unaudited   Year to 31/12/2013 Audited
  $000   $000   $000
         
Revenue 33,226   33,651   71,071
         
Cost of sales (18,217)   (20,534)   (40,078)
         
         
Gross profit 15,009   13,117   30,993
         
Net operating expenses (5,772)   (5,808)   (10,700)
         
         
Profit from operations 9,237   7,309   20,293
         
Share of losses of associated company   (45)  
Loss on disposal of interest in associated company     (2,229)
Foreign exchange (losses) / gains (26)   (20)   107
Finance income 126   59   145
Finance costs (2,040)   (1,577)   (3,651)
Other income 62   33   162
         
         
Profit before tax 7,359   5,759   14,827
         
Income tax expense (2,009)   (1,724)   (5,071)
         
         
Profit after tax 5,350   4,035   9,756
       
Attributable to non-controlling interests 1,601   584   1,599
Attributable to equity share owners of the parent 3,749   3,451   8,157
5,350   4,035   9,756
       
Basic earnings per share (cents) 2.09   1.97   4.63
       
Diluted earnings per share (cents) 2.09   1.95   4.63

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

 

  6 months to 30/06/2014 Unaudited   6 months to 30/06/2013 Unaudited   Year to 31/12/2013 Audited
  $000   $000   $000
         
Profit for the financial period 5,350   4,035   9,756
       
Other comprehensive income        
       
Exchange differences on translating foreign operations (401)   211   841
       
Other comprehensive income for the period, net of tax (401)    

211

   

841

       
Total comprehensive income for the period 4,949   4,246   10,597
       
Attributable to non-controlling interests 1,567   614   1,683
Attributable to equity share owners of the parent 3,382   3,632   8,914
         
  4,949   4,246   10,597

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

 

  30/06/2014 Unaudited   30/06/2013 Unaudited   31/12/2013 Unaudited
  $000   $000   $000
         
ASSETS        
Non-current assets        
Property, plant and equipment 195,301   178,433   193,444
Intangible assets – Exploration interests 1,833   1,766   1,852
Investment in associated company   3,552  
  197,134   183,751   195,296
Current assets        
Inventories 8,501   4,949   7,981
Other current assets 2,456   1,568   4,214
Cash and cash equivalents 24,310   24,504   26,278
  35,267   31,021   38,473
         
Total assets 232,401   214,772   233,769
         
EQUITY AND LIABILITIES        
Equity attributable to equity holders of the parent        
Share capital 1,790   1,754   1,791
Share premium 71,310   70,016   71,339
Contributing surplus 3,690   3,690   3,690
Share based payments 2,896   3,055   2,748
Chinese statutory re-investment reserve 1,667   1,538   1,683
Other reserve on acquisition of non-controlling interests (29,346)   (29,346)   (29,346)
Foreign exchange reserve 10,861   10,655   11,212
Profit and loss reserve 88,363   80,034   84,614
Total equity attributable to equity holders of the parent 151,231   141,396   147,731
         
Non-controlling interests 4,571   1,957   3,004
         
Total equity 155,802   143,353   150,735
         
Non-current liabilities        
Long-term provisions 2,567   3,228   2,591
Deferred taxation 1,886   1,316   1,646
Finance lease 10,908     12,012
  15,361   4,544   16,249
Current liabilities        
Taxation payable 1,321   393   2,878
Trade and other payables 11,783   13,073   14,215
Finance lease 1,001     487
Bank loans 47,133   53,409   49,205
Total liabilities 61,238   66,875   66,785
         
Total equities and liabilities 232,401   214,772   233,769
         
Number of shares in issue 179,041,830   175,401,830   179,091,830
         
Attributable net asset value / total equity per share $0.84   $0.81   $0.84

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

 

  Sharecapital Share premium Contributing surplus Share Based Payments Chinese re-investment Reserve Other reserve on acquisition of non-controlling Interests Foreign Exchange Reserve Profit and loss Reserve Total attributable to equity holders of parent Non Controlling Interests Total Equity
  $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 31 December 2012 1,755 70,037 3,690 3,055 1,313 (29,346) 10,485 77,966 138,955 4,904 143,859
Prior period adjustment re deferred taxation (1,169) (1,169) (147) (1,316)
At 1st January 2013 restated 1,755 70,037 3,690 3,055 1,313 (29,346) 10,485 76,797 137,786 4,757 142,543
                       
Regulatory transfer for future investment 214 (214)
Purchase of shares for cancellation (1) (21) (22) (22)
Transfers in respect of distributions (3,414) (3,414)
                       
Retained profit for the 6 months 3,451 3,451 584 4,035
Other comprehensive income:                      
Exchange differences on translating foreign operations 11 170 181 30 211
Total comprehensive income for the period 11 170 3,451 3,632 614 4,246
At 30 June 2013 restated (unaudited) 1,754 70,016 3,690 3,055 1,538 (29,346) 10,655 80,034 141,396 1,957 143,353
                       
Regulatory transfer for future investment 126 (126)
Purchase of shares for cancellation (2) (95) (97) (97)
Issue of shares on exercise of options 39 1,228 1,267 1,267
Transfer on exercise of options 190 (190)
Buy out of share purchase options (117) (117) (117)
Transfers in respect of dividends (22) (22)
Transaction with owners 37 1,323 (307) 126 (126) 1,053 (22) 1,031
                       
Retained profit for the 6 months 4,706 4,706 1,015 5,721
Other comprehensive income:                      
Exchange differences on translating foreign operations 19 557 576 54 660
Total comprehensive income for the period 19 557 4,706 5,282 1,069 6,351
At 31 December 2013 1,791 71,339 3,690 2,748 1,683 (29,346) 11,212 84,614 147,731 3,004 150,735
                       
Cost of share based payments 148 148   148
Purchase of shares for cancellation (1) (29) (30) (30)
Transaction with owners (1) (29) 148 118 118
                       
Retained profit for the 6 months 3,749 3,749 1,601 5,350
Other comprehensive income:                      
Exchange differences on translating foreign operations (16) (351) (367) (34) (401)
Total comprehensive income for the period (16) (351) 3,749 3,382 1,567 4,949
At 30 June 2014 (unaudited) 1,790 71,310 3,690 2,896 1,667 (29,346) 10,861 88,363 151,231 4,571 155,802

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

 

  6 months to 30/06/2014 Unaudited   6 months to 30/06/2013 Unaudited   Year to 31/12/2013 Audited
  $000   $000   $000
Net cash flows from operating activities        
Profit before taxation 7,359   5,759   14,827
Share of associated company losses   45  
Loss on disposal of interest in associated company     2,229
Foreign exchange losses / (gains) 26   20   (107)
Finance (income) (126)   (59)   (145)
Finance costs 2,040   1,577   3,651
Adjustment in respect of share based payments 148    
Depreciation, depletion and amortisation 3,701   3,098   7,184
Provisions   671  
(Increase) / decrease in inventories (520)   1,283   (1,750)
Decrease in receivables and other current assets 1,745   2,008   563
(Decrease) / increase in trade and other payables (3,510)   (1,160)   1,545
         
Net cash inflow from operating activities 10,863   13,242   27,997
         
Taxation paid (2,231)   (3,528)   (5,692)
       
Cash flows from investing activities        
Interest received 126   59   145
Payments to acquire intangible fixed assets – exploration interests 3   (48)   (110)
Payments to acquire – mineral interests (2,459)   (2,305)   (4,883)
Payments to acquire – plant & equipment (4,089)   (399)   (2,499)
Net cash (outflow) from investing activities (6,419)   (2,693)   (7,347)
         
Cash flows from financing activities        
Issue of ordinary shares on exercise of options     1,150
Purchase of shares for cancellation (30)   (22)   (119)
Interest paid (2,040)   (1,577)   (3,651)
Finance lease (590)     (354)
Distributions to non-controlling interests   (3,414)   (3,436)
Proceeds from bank loans   6,297   15,508
Repayment of bank loans (2,072)     (13,415)
  (4,732)   1,284   (4,317)
         
(Decrease) / increase in cash and cash equivalents (2,519)   8,305   10,641
         
Cash and cash equivalents at beginning of the period 26,278   16,764   16,764
Effects of exchange rate changes 551   (565)   (1,127)
Cash and cash equivalents at end of the period 24,310   24,504   26,278
         
Cash and cash equivalents comprise bank deposits and loans        
Bank deposits 24,310   24,504   26,278

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 31 December 2013.

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 2013 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 2013 statutory financial statements upon which the auditors’ opinion is unqualified.

4. The summary accounts have been prepared on a going concern basis. As at 30th June 2014, Hebei Hua Ao (a subsidiary of the Company) had bank loans outstanding of $47,133,000. Having previously rolled over each of the bank facilities Hebei Hua Ao expects to roll over the existing facilities for a further 12 months. Having considered the cash resources, banking facilities and forecasts for the remainder of the Hebei Hua Ao joint venture term, the directors do not expect any going concern issues to arise.

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 30/06/2014 Unaudited 6 months to 30/06/2013 Unaudited Year to 31/12/2013 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 attributable to ordinary shareholders 3,749 179,091,830 2.09 3,451 175,442,576 1.97 8,157 176,015,707 4.63
Dilutive effect of securities
Options 1,582,970 (0.02)
Diluted earnings per share 3,749 179,091,830 2.09 3,451 177,025,546 1.95 8,157 176,015,707 4.63

 

6. A prior year adjustment of $1,316,000 has been charged to profit and loss reserve, and deferred taxation in respect of financial periods to 31st December 2010. The impact of this is reflected in the statement of changes in equity and deferred taxation set out below. The Statement of Financial Position at 30th June 2013 has been restated to reflect this. This charge relates to deferred taxation at 25% on accelerated depreciation for Chinese tax purposes during which time Hebei Hua Ao enjoyed advantageous tax rates in the PRC tax.

Deferred taxation $000
At 31st December 2012
Prior period adjustment 1,316
At 1st January 2013 restated 1,316
Charge for the period
At 30th June 2013 restated 1,316
Charge for the period 297
Foreign exchange adjustments 33
At 31st December 2013 1,646
Charge for the period 256
Foreign exchange adjustments (16)
At 30th June 2014 1,886