• Wednesday 14th August 2013

Interim Statement

Interim Statement

Below are the interim results for Griffin Mining Limited (“Griffin” or “the Company”) for the six months ended 30th June 2013.

Highlights:

  • Revenues of $33.7 million (2012: $39.7 million)
  • Operating profit of $7.3 million (2012: $16.7 million)
  • Profit before tax of $5.8 million (2012: $15.0 million)
  • Profit after tax of $4.0 million (2012: $11.4 million)
  • Attributable profit after tax of $3.5 million (2012: $7.5 million)

Financial and Trading:

In the six months to the 30 th June 2013, throughput at Griffin’s Caijiaying Mine increased from 386,313 to 412,799 tonnes to produce in concentrate:

  • 19,077 tonnes of zinc (2012: 20,336 tonnes);
  • 903 tonnes of lead (2012: 1,364 tonnes);
  • 151,921 ounces of silver (2012: 215,773 ounces);
  • 3,869 ounces of gold (2012: 3,769 ounces).

Revenues and operating profits were impacted by lower metal prices for all metals produced and lower metal production for zinc, lead and silver resulting from lower mined grades at the Caijiaying Mine.

During the six months to 30 th June 2013, the average price received declined from that in the six months to 30th June 2012 for zinc by 7.5%, gold by 5%, lead by 5% and silver by 10%. In addition, during the six months to 30 th June 2013, priority was given to extracting the remaining economic mineralization at the upper levels of the Caijiaying Mine prior to being able to access lower levels resulting in a reduction in the zinc head grade of 0.66% from that recorded in the six months to 30th June 2012.

Throughput increased despite mining and haulage being impacted by the Chinese Spring Festival holidays in February 2013 and during the Chinese National Party congress in March 2013 with restricted delivery of explosives.

Progress has been made in improving gold recoveries with the expectation of higher gold recoveries in the second half of 2013.

Increases in costs of sales reflect operational mine development work and increased ore processed. Operating expenses have been reduced as the Group strives to minimise administration costs.

Profits before tax have been impacted by: Foreign exchange losses of $20,000 (2012: $684,000) arising as a result of a stronger US Dollar against Sterling in the period; interest payable on Chinese bank loans of $1,577,000 (2012: $1,385,000); Griffin’s 39.2% equity share of Spitfire Oil Ltd’s losses of $45,000 (2012: $88,000); and interest receivable of $59,000 (2012: $399,000) with lower interest receipts following the utilisation of cash resources in June 2012 to fund the extension of the local Chinese joint venture licence and purchase of non controlling interests.

Chinese income taxes and withholding taxes of $1,724,000 (2012: $3,617,000) have been charged to profit resulting in profits after tax of $4,035,000 (2012: $11,379,000).

Provision of $584,000 (2012: $3,840,000) has been made for the minority interests in the profit of Griffin’s Chinese subsidiary, Hebei Hua Ao Mining Industry Company Limited (“Hua Ao”) of 11.2% (2012: 40% to 25th June 2012). Profit attributable to Griffin amounted to $3,451,000 (2012: $7,539,000).

Basic earnings per share were 1.97 cents (2012: 4.3 cents) and diluted earnings per share 1.95 cents (2012: 4.26 cents). At 30 th June 2013, attributable net assets per share in issue amounted to 81 cents (2012: 75 cents).

Repatriation of funds from China was achieved, whilst still providing sufficient working capital within Hua Ao, by drawing down an additional $6,297,000 from banking facilities in China which were more than matched by cash balances throughout the Group increasing by $7,740,000 since 31 st December 2012.

Application for a mining licence over the Zone II area at Caijiaying and the area between the Zone II and III areas is progressing as expected.

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 t he Board of Griffin .

Chairman’s Statement

Chairman Mladen Ninkov commented, “Although in absolute terms the interim results are disappointing, they should come as no surprise in light of the recently released results by other small to large mineral producers. All miners continue to struggle with maintaining profitability in the light of falling commodity prices coupled with a mainly fixed cost business. Griffin’s results have also been further specifically impacted by the scheduling of major mine development work in the first half of 2013 to extract the remaining lower grade mineralization at the highest levels at Caijiaying before accessing the mineralization at lower levels. Assuming commodity prices remain at least constant and no ‘Black Swan’ event materializes, I expect significantly better results for the second half of 2013.”

 

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

 

  6 months to
30/06/2013
Unaudited
  6 months to
30/06/2012
Unaudited
  Year to
31/12/2012
Audited
  $000   $000   $000
         
Revenue 33,651   39,747   76,860
         
Cost of sales (20,534)   (16,494)   (34,795)
         
         
Gross profit 13,117   23,253   42,065
         
Net operating expenses (5,808)   (6,508)   (10,891)
         
         
Profit from operations 7,309   16,745   31,174
         
Share of losses of associated company (45)   (88)   (163)
Foreign exchange losses (20)   (684)   (904)
Finance income 59   399   495
Finance costs (1,577)   (1,385)   (3,411)
Other income 33   9   48
         
         
Profit before tax 5,759   14,996   27,239
         
Income tax expense (1,724)   (3,617)   (7,532)
         
         
Profit after tax 4,035   11,379   19,707
         
Attributable to non controlling interests 584   3,840   4,872
Attributable to equity share owners of the parent 3,451   7,539   14,835
  4,035   11,379   19,707
         
Basic earnings per share (cents) 1.97   4.30   8.46
         
Diluted earnings per share (cents) 1.95   4.26   8.36

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

 

  6 months to
30/06/2013
Unaudited

  6 months to

30/06/2012
Unaudited

  Year to
31/12/2012
Audited
  $000   $000   $000
         
Profit for the financial period 4,035   11,379   19,707
         
Other comprehensive income        
         
Exchange differences on translating foreign operations 211   (478)   545
         
 

Other comprehensive income for the period, net of tax

211    

(478)

   

545

         
Total comprehensive income for the period 4,246   10,901   20,252
         
Attributable to non controlling interests 614   3,704   4,960
Attributable to equity share owners of the parent 3,632   7,197   15,292
         
  4,246   10,901   20,252

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

 

  30/06/2013
Unaudited
  30/06/2012
Unaudited
  31/12/2012
Audited
  $000   $000   $000
         
ASSETS        
Non-current assets        
Property, plant and equipment 178,433   171,617   177,470
Intangible assets – Exploration interests 1,766   1,572   1,707
Investment in associated company 3,552   3,670   3,596
  183,751   176,859   182,773
Current assets        
Inventories 4,949   5,538   6,231
Other current assets 1,568   2,740   4,168
Cash and cash equivalents 24,504   28,720   16,764
  31,021   36,998   27,163
         
Total assets 214,772   213,857   209,936
         
EQUITY AND LIABILITIES        
Equity attributable to equity holders of the parent        
Share capital 1,754   1,755   1,755
Share premium 70,016   70,061   70,037
Contributing surplus 3,690   3,690   3,690
Share based payments 3,055   3,043   3,055
Chinese statutory re-investment reserve 1,538   1,288   1,313
Other reserve on acquisition of non controlling interests (29,346)   (29,336)   (29,346)
Foreign exchange reserve 10,655   9,711   10,485
Profit and loss reserve 81,203   70,670   77,966
Total equity attributable to equity holders of the parent 142,565   130,882   138,955
         
Non controlling interests 2,104   16,202   4,904
         
Total equity 144,669   147,084   143,859
         
Non-current liabilities        
Long-term provisions 3,228   1,422   2,535
         
Current liabilities        
Taxation payable 393   4,548   3,840
Trade and other payables 13,073   14,288   12,590
Bank loans 53,409   46,515   47,112
Total liabilities 66,875   65,351   63,542
         
Total equities and liabilities 214,772   213,857   209,936
         
Number of shares in issue 175,401,830   175,501,830   175,451,830
         
Attributable net asset value / total equity per share $0.81   $0.75   $0.79

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

 

  Share
capital
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 2011 1,755 70,061 3,690 3,030 1,300 10,041 63,131 153,008 12,523 165,531
                       
Cost of share based payments 13   13 13
Purchase of minority interests (29,336) (29,336) (25) (29,361)
Transaction with owners 13 (29,336) (29,323) (25) (29,348)
                       
Retained profit for the 6 months 7,539 7,539 3,840 11,379
Other comprehensive income:                      
Exchange differences on translating foreign operations (12)  

(330) (342) (136) (478)
Total comprehensive income for the 6 month period (12)  

(330) 7,539 7,197 3,704 10,901
At 30 June 2012 (unaudited) 1,755 70,061 3,690 3,043 1,288 (29,336) 9,711 70,670 130,882 16,202 147,084
                       
Purchase of shares for cancellation (24) (24) (24)
Cost of share based payments 12 12 12
Transfers in respect of distributions (12,554) (12,554)
Purchase of minority interests (10) (10) (10)
Transaction with owners (24) 12 (10) (22) (12,554) (12,576)
                       
Retained profit for the 6 months 7,296 7,296 1,032 8,328
Other comprehensive income:                      
Exchange differences on translating foreign operations 25  

774 799 224 1,023
Total comprehensive income for the 6 month period – – 25  

774 7,296 8,095 1,256 9,351
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
                       
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)
Transaction with owners (1) (21) 214 (214) (22) (3,414) (3,436)
                       
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 6 month period 11  

170 3,451 3,632 614 4,246
At 30 June 2013 (unaudited) 1,754 70,016 3,690 3,055 1,538 (29,346) 10,655 81,203 142,565 2,104 144,669

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

 

  6 months to
30/06/2013 Unaudited
  6 months to
30/06/2012 Unaudited
  Year to
31/12/2012 Audited
  $000   $000   $000
Net cash flows from operating activities        
Profit before taxation 5,759   14,996   27,239
Share of associated company losses 45   88   163
Foreign exchange losses 20   684   904
Finance (income) (59)   (399)   (495)
Finance costs 1,577   1,385   3,411
Adjustment in respect of share based payments   12   25
Depreciation, depletion and amortisation 3,098   3,501   6,762
Provisions 671   623  
Decrease / increase) in inventories 1,283   (929)   (1,623)
Decrease / (increase) in other current assets 2,008   (235)   (1,663)
(Decrease) / increase in trade and other payables (1,160)   3,432   (2,479)
         
Net cash inflow from operating activities 13,242   23,158   32,244
         
Taxation paid (3,528)   (10,699)   (11,435)
       
Cash flows from investing activities        
Interest received 59   399   495
Payments to extend joint venture term and acquire non controlling interests    

(117,444)

   

(117,459)

Payments to acquire intangible fixed assets – exploration interests (48)   (13)   (117)
Payments to acquire tangible fixed assets – mineral interests (2,305)   (2,201)   (4,206)
Payments to acquire tangible fixed assets – plant & equipment (399)   (350)   (4,132)
Net cash (outflow) from investing activities (2,693)   (119,609)   (125,419)
         
Cash flows from financing activities        
Purchase of shares for cancellation (22)     (24)
Interest paid (1,577)   (1,385)   (3,411)
Distributions to non controlling interests (3,414)     (12,561)
Proceeds from bank loans 6,297   46,515   47,112
  1,284   45,130   31,116
         
Increase / (decrease) in cash and cash equivalents 8,305   (62,020)   (73,494)
         
Cash and cash equivalents at beginning of the period 16,764   91,089   91,089
Effects of exchange rate changes (565)   (349)   (831)
Cash and cash equivalents at end of the period 24,504   28,720   16,764
         
Cash and cash equivalents comprise bank deposits and loans        
Bank deposits 24,504   28,720   16,764

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 2012.
  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 2012 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 2012 statutory financial statements upon which the auditors’ opinion is unqualified.
  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. Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below:

 

  6 months to
30/06/2013
Unaudited
6 months to
30/06/2012
Unaudited
Year to
31/12/2012
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 3,451 175,442,576 1.97 7,539 175,501,830 4.30 14,835 175,456,077 8.46
 

Dilutive effect of securities

   
Options 1,582,970 1,374,747     2,021,897  
Diluted earnings per share 177,025,546 7,539 176,876,577 4.26 14,835 177,477,974 8.36