• Tuesday 4th August 2015

Interim Statement for the six months ended 30th June 2015

Interim Statement for the six months ended 30th June 2015

Griffin Mining Limited (“Griffin” or “the Company”) has today released its results for the six months ended 30th June 2015.

Highlights:

  • Revenues of $35.2 million (2014: $33.2 million)
  • Operating profit of $6.4 million (2014: $7.6 million)
  • Profit before tax of $3.7 million (2014: $5.8 million)
  • Profit after tax of $2.2 million (2014: $3.7 million)

Financial and Trading:

Throughput of 418,950 tonnes of ore in the six months to 30th June 2015 at Griffin’s Caijiaying Mine was up 2.5% on that achieved of 408,671 tonnes in the six months to 30th June 2014. With effort directed to improving precious metal recoveries, metal in concentrate production in the period was:

  • 20,081 tonnes of zinc (2014: 19,147 tonnes);
  • 962 tonnes of lead (2014: 609 tonnes);
  • 193,098 ounces of silver (2014: 147,901 ounces); and
  • 6,274 ounces of gold (2014: 5,999 ounces), a record high.

Metal in concentrate production in the six months to 30th June 2015 compared to that in the six months to 30th June 2014 benefited from better grades and better lead and gold recoveries.

Zinc revenues before royalties and resource taxes in the six months to 30th June 2015 were $26,288,000 (2014 $24,860,000) having benefited from higher prices achieved whilst lead and precious metals revenues were $10,799,000 (2014: $10,222,000) with increased quantities sold albeit at lower prices.

Cost of sales in the six months to 30th June 2015 was up on the same period in 2014 mainly as a result of increased processing costs with efforts directed at improving precious metal recovery rates. Net operating costs were up with increased regulatory, environmental and social security costs in China.

Profits before tax were impacted by: Foreign exchange losses of $24,000 (2014: $26,000) 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 $2,480,000 (2014: $1,629,000); finance lease interest of $392,000 (2014: $411,000); interest receivable of $106,000 (2014: $126,000); and other income of $36,000 ( 2014: $62,000).

Taxation of $1,442,000 (2014:$2,009,000) has been provided resulting in profits after tax of $2,220,000 (2014: $3,749,000).

Basic earnings per share were 1.27 cents (2014: 2.09 cents) and diluted earnings per share 1.27 cents (2014: 2.09 cents). At 30th June 2015, attributable net assets per share amounted to 82 cents (2013: 84 cents).

Funds continue to be repatriated from China to cover central costs whilst leaving sufficient working capital within Hua Ao for the completion of the upgrade of the processing facilities and the further development of the Caijiaying mine. During the period: $8,589,000 was expended on mine development and plant upgrade work, and $3,875,000 was incurred in buying in Griffin shares held in treasury. Bank loans in China of $3,328,000 were drawn down; whilst cash balances throughout the Group have increased by $977,000 (2014: $1,968,000 decrease).

Administrative state issues in China outside the Company’s control continue to delay the grant of a new mining licence over the unmined Zone III deeps, Zone II and adjacent areas at Caijiaying. Development of the mine at Zone III continues and the main drive between Zone III and Zone II has almost been completed.

A new additional power line to the Caijiaying mine has almost been completed and will be connected immediately thereafter allowing the commissioning of the new primary ball mill. The new power line and ball mill will increase the capacity of the Caijiaying processing facilities to 1.5 million tonnes per annum.

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, “Operationally, the Company continues to achieve very good results in light of the current downturn in commodity prices with, period to period, increased zinc, lead, silver and gold production, including record gold output, better grades and good recoveries, all this without the imminent commissioning of the new 1.5 million tonnes per annum processing facilities. Nevertheless, the continuing severe weakness in commodity prices coupled with the fixed cost nature of mining production inevitably means any costs increases, such as the increased regulatory costs in the first half, impact the profitability of the Company. The Company eagerly looks forward to any or all of the following occurring: The increased processing and production profile, the long awaited Mining Licence over new production areas and/or a rise in commodity prices.”

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

 

  6 months to

30/06/2015

Unaudited

  6 months to

30/06/2014

Restated

Unaudited

  Year to

31/12/2014

Audited

  $000   $000   $000
           
Revenue 35,216   33,226   45,564
           
Cost of sales (20,676)   (18,217)   (25,345)
           
           
Gross profit 14,540   15,009   20,219
           
Net operating expenses (8,124)   (7,373)   (13,487)
           
           
Profit from operations 6,416   7,636   6,732
           
Losses on disposal of equipment     (1,835)
Foreign exchange (losses) (24)   (26)   (39)
Finance income 106   126   223
Finance costs (2,872)   (2,040)   (4,165)
Other income 36   62   105
           
           
Profit before tax 3,662   5,758   1,021
           
Income tax expense (1,442)   (2,009)   (831)
           
           
Profit after tax 2,220   3,749   190
           
           
Basic earnings per share (cents) 1.27   2.09   0.11
           
Diluted earnings per share (cents) 1.27   2.09   0.11

 

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

 

  6 months to

30/06/2015

Unaudited

  6 months to

30/06/2014

Restated

Unaudited

  Year to

31/12/2014

Audited

  $000   $000   $000
           
Profit for the financial period 2,220   3,749   190
           
Other comprehensive income          
           
Exchange differences on translating foreign operations 10   (367)   (281)
           
 

Other comprehensive income for the period, net of tax

 

10

   

(367)

   

(281)

           
Total comprehensive income for the period 2,230   3,382   (91)
           

 

Griffin Mining Limited
Condensed Consolidated Statement Of Financial Position

(expressed in thousands US dollars)

 

  30/06/2015   30/06/2014   31/12/2014
      Restated    
  Unaudited   Unaudited   Audited
  $000   $000   $000
           
ASSETS          
Non-current assets          
Property, plant and equipment 213,186   195,301   208,339
Intangible assets – Exploration interests 1,946   1,833   1,914
  215,132   197,134   210,253
Current assets          
Inventories 16,797   8,501   17,477
Other current assets 3,293   2,456   3,540
Cash and cash equivalents 24,348   24,310   23,371
  44,438   35,267   44,388
           
Total assets 259,570   232,401   254,641
           
EQUITY AND LIABILITIES          
Equity attributable to equity holders of the parent          
Share capital 1,790   1,790   1,790
Share premium 71,310   71,310   71,310
Contributing surplus 3,690   3,690   3,690
Share based payments 388   2,896   3,064
Shares held in treasury (3,875)    
Chinese statutory re-investment reserve 1,688   1,667   1,686
Other reserve on acquisition of non-controlling interests (29,346)   (29,346)   (29,365)
Foreign exchange reserve 10,946   10,861   10,957
Profit and loss reserve 89,762   88,363   84,794
Total equity attributable to equity holders of the parent 146,353   151,231   147,926
           
Non-current liabilities          
Long-term provisions 2,584   2,567   2,582
Deferred taxation 1,954   1,886   1,953
Finance lease 10,693   10,908   10,720
  15,231   15,361   15,255
Current liabilities          
Taxation payable   1,321  
Trade and other payables 30,197   16,354   26,563
Finance lease 725   1,001   1,161
Bank loans 67,064   47,133   63,736
Total liabilities 97,986   65,809   91,460
           
Total equities and liabilities 259,570   232,401   254,641
           
Number of shares in issue 179,041,830   179,041,830   179,041,830
           
Attributable net asset value / total equity per share $0.82   $0.84   $0.83

 

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

 

  Share capital Share premium Contributing surplus Share based payments Shares held in treasury 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 $000
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
Prior period adjustment re non controlling interests

Interests

(3,004) (3,004)
At 1st January 2013 restated 1,791 71,339 3,690 2,748 1,683 (29,346) 11,212 84,614 147,731 147,731
                         
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 3,749
Other comprehensive income:                      
Exchange differences on translating foreign operations (16) (351) (367) (367)
Total comprehensive income for the period (16) (351) 3,749 3,382 4,949
At 30 June 2014 (unaudited) 1,790 71,310 3,690 2,896 1,667 (29,346) 10,861 88,363 151,231 151,231
                         
Regulatory transfer for future investment 10 (10)
Cost of share based payments 168 168 168
Transaction with owners 168 10 (10) 168 168
                         
Retained profit for the 6 months (3,559) (3,559) (3,559)
Other comprehensive income:                        
Exchange differences on translating foreign operations 9 (19) 96 86 86
Total comprehensive income for the period 9 (19) 96 (3,559) (3,473) (3,473)
At 31 December 2014 1,790 71,310 3,690 3,064 1,686 (29,365) 10,957 84,794 147,926 147,926
                         
Cost of share based payments 72   72 72
Transfer on expiry of options       (2,748) 2,748
Purchase of shares for treasury   (3,875) (3,875) (3,875)
Transaction with owners (2,676) (3,875)   2,748 (3,803) (3,803)
                         
Retained profit for the 6 months 2,220 2,220 2,220
Other comprehensive income:                        
Exchange differences on translating foreign operations  

2 19 (11) 10 10
Total comprehensive income for the period 2 19 (11) 2,220 2,230 2,230
At 30 June 2015 (unaudited) 1,790 71,310 3,690 388 (3,875) 1,688 (29,346) 10,946 89,762 146,353 146,353

 

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

 

  6 months to

30/06/2015

Unaudited

  6 months to

30/06/2014

Restated

Unaudited

  Year to

31/12/2014

Audited

  $000   $000   $000
Net cash flows from operating activities          
Profit before taxation 3,662   5,758   1,021
Foreign exchange losses 24   26   39
Finance (income) (106)   (126)   (223)
Finance costs 2,872   2,040   4,165
Adjustment in respect of share based payments 72   148   316
Depreciation, depletion and amortisation 3,823   3,701   6,211
Losses on disposal of equipment     1,835
Decrease / (increase) in inventories 680   (520)   (9,496)
Decrease in receivables and other current assets 29   3,346   1,256
Increase / (decrease) / in trade and other payables 3,654   (3,510)   7,630
           
Net cash inflow from operating activities 14,710   10,863   12,754
           
Taxation paid (1,223)   (2,231)   (2,271)
           
Cash flows from investing activities          
Interest received 106   126   223
(Payments) to acquire / receipts from intangible fixed assets – exploration interests (30)   3   (90)
Payments to acquire – mine development (4,012)   (2,459)   (6,041)
Payments to acquire – plant & equipment (4,547)   (4,089)   (17,296)
Net cash (outflow) from investing activities (8,483)   (6,419)   (23,204)
           
Cash flows from financing activities          
Purchase of shares for cancellation   (30)   (30)
Purchase of shares for treasury (3,875)    
Interest paid (2,480)   (2,040)   (3,342)
Finance lease (866)   (590)   (1,398)
Proceeds from bank loans 3,328     21,186
Repayment of bank loans   (2,072)   (6,655)
Net cash (outflow) / inflow from financing activities (3,893)   (4,732)   9,761
           
Increase / (decrease) in cash and cash equivalents 1,111   (2,519)   (2,960)
           
Cash and cash equivalents at beginning of the period 23,371   26,278   26,278
Effects of exchange rate changes (134)   551   53
Cash and cash equivalents at end of the period 24,348   24,310   23,371
           
Cash and cash equivalents comprise bank deposits          
Bank deposits 24,348   24,310   23,371

 

Griffin Mining Limited
Notes to the Interim Statement

 

  • 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 2014. Since 31 December 2014 8,703.103 ordinary shares in the Company have been purchased and held in treasury. These shares are shown within equity at cost.
  • 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.
  • 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 2014 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 2014 statutory financial statements upon which the auditors’ opinion is unqualified.
  • The summary accounts have been prepared on a going concern basis. As at 30th June 2015, Hebei Hua Ao (a subsidiary of the Company) had bank loans outstanding of $67,064,000 (30th June 2014 $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.
  • 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

30/06/2015

Unaudited

6 months to

30/06/2014

Unaudited

Year to

31/12/2014

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  

 

 

2,220

174,203,017 1.27  

 

 

3,749

179,091,830 2.09  

 

 

190

 

 

 

175,066,140

 

 

 

0.11

Dilutive effect of securities    
Options
Diluted earnings per share  

2,220

174,203,017 1.27  

3,749

179,091,830 2.09  

190

 

175,066,140

 

0.11

 

  • The condensed consolidated financial statements have been have been drawn up and the 2014 condensed consolidated interim financial statements have been restated to include amounts due to Griffin’s Chinese partners of $2,044,000 (30th June 2014 $1,601,000) in net operating costs rather than being attributable to non controlling interests in the Consolidated Income Statement, with the amounts due at 30th June 2015 of $6,090,000 (30th June 2014 $4,571,000) treated as other payables rather than as amounts due to non-controlling interests within equity within the Consolidated Statement of Financial Position. This follows the acquisition of the Chinese partner’s equity interests in 2012 and subsequent review of the arrangements with Griffin’s Chinese partners in the Hebei Hua Ao Joint Venture reflecting their relationship being in the nature of a service provider.