DEVELOPMENT

Griffin has held an interest in Hebei Hua Ao since 1997 having financed and managed the development of the Caijiaying Mine from initial exploration to the extraction and processing of the equivalent of 1.5 million tonnes of ore per annum to produce primarily zinc but also gold, silver, and lead in concentrate.

Griffin has invested over $380m on acquiring its interest in Caijiaying and in the development and construction of the mine and processing facilities, financed mainly from internally generated funds. The Caijiaying Mine was commissioned on time and on budget in 2005.

Numerous upgrades to the Caijiaying Mine have taken place since commissioning leading to the current name plate mill throughput capacity of 1.5 million tonnes of ore per annum.

Mining rates from the Zone III alone have recently reached the equivalent of 1.5 million tonnes of ore per annum. The development of the Zone II area at Caijiaying commenced in 2023, which will enable sustained production at these rates.

Exploration and resource definition work is ongoing at Caijiaying. There are eight known areas (zones) of mineralisation within Hebei Hua Ao’s tenement areas with Zone III currently being mined and development work expected to commence at Zone II in 2023 and in the area between Zones II and III. The latest JORC reported Mineral Resource Estimate for Caijiaying Zones II & III amended for mining depletion totals 88 million tonnes, representing a 45 plus year mine life at current extraction and throughput rates.

Griffin’s Chinese Joint Venture – Hebei Hua Ao

Hebei Hua Ao is a contractual co-operative joint venture company established under PRC law in 1994 with an operating term of 25 years on formation.

Griffin’s Chinese joint venture partner in Hebei Hua-Ao is the Zhangjiakou Yuanrun Enterprise Management Consulting Service Co. Ltd (formerly the Zhangjiakou Caijiaying Lead Zinc Mining Company) (“Yuanrun”), a partnership comprising the Zhangjiakou City Government and the Third Geological Brigade of Hebei Province.

Griffin maintains good relations with the Chinese authorities at township, county, provincial, and state levels, which has perhaps enabled Griffin to advance its Caijiaying project further than any other foreign controlled mining project in China.

Initially, Griffin held 60% of Hebei Hua Ao (through its wholly owned subsidiary China Zinc) with the remaining 40% held by Yuanrun.

In 2012 the operating term of Hebei Hua Ao was due to expire in 2019. In light of the continuing increase in the resources base and production profile of the Caijiaying Mine, the Company, through China Zinc, purchased an additional 28.8% interest in Hebei Hua Ao from Yuanrun in 2012. Griffin now holds an 88.8% equity interest in Hebei Hua Ao and Yuanrun retains an 11.2% residual interest, resulting in Hebei Hua Ao being in the nature of a wholly owned subsidiary of the Company.

In addition, and as part of the purchase agreement, the term of the Hebei Hua Ao joint venture was extended to October 2037.

In order to comply with the new PRC law on Chinese-Foreign Equity Joint Ventures, Hebei Hua Ao will be required to convert to a limited liability equity company with an indefinite life by 1 January 2025.

Hebei Anglo

In January 2004, a second contractual joint venture company, Hebei Anglo, was formed to hold the mineral rights to the area surrounding the original Hebei Hua Ao licence area and any other areas of interest in Hebei Province.

Griffin, through its wholly owned UK subsidiary Panda Resources Limited (“Panda”), has a 90% interest in Hebei Anglo whilst Yuanrun holds 10%. As Griffin investigates other areas of interest and projects in China, Hebei Anglo may be used to invest in any such projects.

The Company continues to aggressively explore, expand, and develop the Caijiaying Mine whilst also investigating potential acquisitions of mining projects that are capable, through either advanced exploration or mining expertise held within the company, of being brought into production to meet the Company’s criteria for economic returns to shareholders.

MINERAL RESOURCE ESTIMATE

Caijiaying Zone III Remaining Mineral Resources

Zone III Domain 1: Zn Resources > 1% Zn

Zone III Domain 2: Au Resources > 0.5 g/t Au

Zone III: Total

Caijiaying Zone II Mineral Resources

Zone II Oxide: Zn Resources > 1% Zn

Zone II Fresh: Zn Resources > 1% Zn

Zone II Total

Caijiaying Zone V Mineral Resources

Zone V Zn Resources > 1% Zn

Caijiaying Zone VIII Mineral Resources

Zone VIII Domain 1: Zn Resources > 1% Zn

Zone VIII Domain 2: Au Resources > 0.5 g/t Au

Zone VIII Total

Caijiaying Combined Global Mineral Resources February 2022

Notes:
The Caijiaying Mineral Resources are based on resource modelling work completed by CSA Global Pty Ltd and reported in 2022 in accordance with JORC 2012 guidelines. The information in this report that relates to Mineral Resources is based on, and fairly reflects, information compiled by Dr. Maxim Seredkin a Competent Person, who is a Member of the Australian Institute of Geoscientists. Dr. Maxim Seredkin is a full-time employee of CSA Global Pty Ltd. Dr. Maxim Seredkin has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Dr. Maxim Seredkin consents to the disclosure of the information in this report of the matters based on his information in the form and context in which it appears.

GEOLOGY

OPERATIONS

2022 was one of the most disrupted and challenging years in the history of the Group with ongoing Covid-19 pandemic issues and 143 days of lost production due to restrictions imposed by the PRC authorities during the Winter and Paralympic Olympics and the Chinese Communist Party 20th National Congress. Despite the loss of 143 days’ production, the commercial benefits of higher production and sound cost management were realised financially in 2022.

Despite these extreme challenges, the persistence and resilience of the operational team delivered all required objectives to achieve an annualised 1.5 million tonnes of ore per annum production capability by the conclusion of 2022 with a record 136,000 tonnes of ore processed in December 2022.

The operational improvements to reach the capability of processing 1.5 million tonnes of ore per annum was the result of a culmination of a three-year mine capability project to improve mine safety, planning, mechanisation, and automation, including modernisation of contractor equipment and skills.

Sustained improvements throughout 2022 continued with a fully modernised fleet of trucks, Jumbos and production drills supported by optimised paste back fill systems resulting in a record 150,000 tonnes of ore blasted and 138,000 tonnes of ore hauled in December 2022.

Sustainable safe performance is the foundation of the Company’s commitment to our employees, contractors and stakeholders and developing a unique, beneficial relationship with all the communities, including the 80% of all employees who reside locally.

Mine safety improvements have been critical to supporting the push for higher production with the implementation of digital reporting systems and culturally appropriate safe production bonuses further aligning all workers and contractors to the Company operating objectives with safe production.

Griffin, through Hebei Hua Ao, seeks to support the local rural community by providing access to advanced training, education through scholarships, community support programs and stable employment with the benefit of giving Hebei Hua Ao ongoing access to employees of the requisite calibre.

Sustainable production for the foreseeable future is secure. Zone III, above the 1000RL, has all infrastructure and ore access fully developed providing access to over 6 million tonnes of ore. The focus of development now rests on Zone II which has a current mine life of over 20 years.

Following the grant of the new mining licence to include Zone II, all technical design specifications for the mine design of Zone II were submitted by 17 December 2022 with final PRC approval received in March 2023.

Diamond drilling with 3 rigs commenced in Zone II in 2022 with the recommencement of operations after the Chinese Communist Party National Congress in March 2022.

The Zone II diamond drilling program is focused on the conversion of inferred and indicated resources to proven status ahead of production and drilling will increase with 5 rigs in 2023 as development expands the drilling horizons.

Zone III diamond drilling comprising of 2 rigs will focus on expanding the 6 million tonnes of accessible ore and extending the life of mine significantly.

To support future growth strategies and sustained production the construction of a new tailings storage facility (“TSF4”) was successfully achieved in November 2022. TSF4 will utilise the existing dry stack system with industry leading safety techniques eliminating water containment and thereby preventing dam failures.

The dry stack method of tailings storage is environmentally and socially responsible with tailings upcycled into bricks and reclaimable to its original condition as grazing land at the end of its service life.

In 2022, Griffin committed to supporting renewable energy providing access to land on the closed tailings facilities 1 and 2 for a 6 megawatt solar farm and committing to local wind power projects as a consumer.

2023 will see further optimisation benefits of the 1.5 million tonne per annum growth strategy in what is expected to be the first uninterrupted year of production since the isolation of China due to Covid-19 in early 2020.

In 2023 the mine will enter its next phase of growth by seeking to progress approvals for mining in Zone V and Zone VIII and the expansion of operations below the 1000RL for ongoing sustained production out to 2050 at equivalent or higher production rates.