DEVELOPMENT

Hebei Hua Ao is a contractual co-operative joint venture company established in 1994 under PRC law. Griffin now holds an 88.8% equity interest in Hebei Hua Ao (through its wholly owned subsidiary China Zinc), with the remaining 11.2% held by Yuanrun, the shareholders of which are the Zhangjiakou City People’s Government and the Third Geological Brigade of Hebei Province (the “Third Brigade”). Yuanrun’s interest is recognized via a service contract (for accounting purposes) for services rendered, resulting in Hebei Hua Ao being in the nature of a wholly owned subsidiary of the Company. 

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%.

On 1 January 2020, the new PRC Foreign Investment Law was enabled which sought to repeal the Sino Foreign Joint Venture Law. Pursuant to Article 42 therein, all Joint Venture companies established under the previous law were required to be converted into limited liability companies by 1 January 2025 followed by an application for a new business licence to replace the current Business Licence.

In addition, for the conversion to be registered, new Articles of Association needed to be agreed with the Chinese Partners to replace the provisions of the original Agreements.

Irrespective that the statutorily mandated conversion date has passed, the new PRC Foreign Investment Law contains no enforcement provisions for non-compliance with the new law and the PRC regulatory authorities have granted blanket extensions for the process to be completed. As such, the Company remains in compliance with all PRC legislation and continues to negotiate with Yuanrun in good faith to allow the conversion of both Hebei Hua Ao and Hebei Anglo to take effect in due course.

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 mill throughput capacity of 1.5     million tonnes of ore per annum. The development of Zone II at the Caijiaying Mine will enable current, and possibly higher, production rates in the future.

To date, Griffin has invested over $450 million in the Caijiaying Mine through the acquisition, development and construction of the below ground and above ground infrastructure, the majority of which has been financed from internally generated funds.

With the grant of a new mining licence in January 2026 over the combined Zone II and Zone III areas and consequent approval of the extension of the mine design into the Zone II area, the development of Zone II is now being completed. Full production from Zone II is expected to commence in the first half of 2026. This will allow sustained production of at least 1.5 million tonnes of ore per annum to be extracted from the Caijiaying Mine for the duration of its current resource base.

MINERAL RESOURCE ESTIMATES

The Caijiaying Mine, inter alia, comprises four mineralised zones containing significant Zinc, Gold, Lead and Silver resources. Zones II, III and VIII are contiguous and aligned along a north–south trend extending approximately 3 km. Zone V is located approximately 1 km west of Zone II. Zones II and III are situated within the current mining licence which covers an area of 3.13 km² and is valid until 28 August 2054. Zones V and VIII are held under a retention licence covering 2.23 km² valid until July 2029. The retention licence represents the first step toward obtaining a mining licence and allows the Company to maintain tenure over these 4 zones while completing technical and regulatory requirements for conversion.Mining operations at Zone III commenced in 2005 and have continued to the present day with progressive growth in both mineral resources and production rates. During 2025, mining continued at Zone III alongside significant mine development activities to access the Zone II mineral resource.

The Global Mineral Resource that encompasses the entire area has been classified in accordance with guidelines contained in the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”) and totals 80.8 million tonnes at 3.5% Zinc, 0.6% Lead, 26.8g/t Silver and 0.4g/t Gold resulting in total contained metal of approximately 2.9 million tonnes of Zinc metal, 0.45 million tonnes of Lead, 69.4 million ounces of Silver and 1.1 million ounces of Gold. This applies a Zinc cut-off grade of 1% and is amended for mining depletion at Zone III as of 31 December 2025.

Zone II and Zone III

Advanced underground mining at Zone III continues across all operational levels with active primary, secondary and remnant production fronts.

At Zone II, five primary levels of capital development between the 1420 metres relative above sea level (“mRL”) and 1020 mRL are being established, while 3 existing upper levels from 1400 mRL to 1380 mRL will enable the initial phase of production.

Exploration and resource definition diamond drilling continues with 8 underground diamond drill rigs operating to define near-mine mineralisation adjacent to active mining areas and beyond the current resource envelope.

The updated 2025 Mineral Resource Estimate at Zone II and III at a Zinc cut-off grade of 1%, using drill data as of July 2025 and amended for mining depletion up to 31 December 2025, totals 68 million tonnes at 3.5% Zinc, 0.5% Lead, 23.2g/t Silver and 0.4g/t Gold. This results in total metal of approximately 2.4 million tonnes of zinc metal, 0.32 million tonnes of lead metal, 50.4 million ounces of silver metal and 0.84 million ounces of gold metal. The Mineral Resource estimate is based on 6,032 underground diamond drill holes and 636 surface drill holes. Surface drilling comprised angled diamond core holes on nominal 40 metres x 40 metres pattern. Underground drilling was carried out using nominal fan patterns of 20 metres x 20 metres, increasing to a 40 metres x 40 metres pattern at depth.

Zone V and VIII

Zones V and VIII contain Inferred Mineral Resources within the retention licence, offering strong potential to support future exploration success and mine expansion. The Zone V Mineral Resource Estimate, located to the west of the main lode line, remains unchanged at 6 million tonnes grading 3.2% Zinc, 1.4% Lead, 56.0 g/t Silver and 0.6 g/t Gold. This estimate contains approximately 0.2 million tonnes of Zinc metal, 0.08 million tonnes of Lead metal, 10.8 million ounces of Silver and 0.12 million ounces of Gold. The Zone V deposit is defined by 34 surface diamond drillholes and three reverse circulation surface drillholes, drilled at an average spacing of approximately 25 metres x 100 metres, for a combined total of 15,242 metres of historical drilling.

The Zone VIII Mineral Resource represents the northern extension of the Zone III ore body and can now be accessed from existing mine development at Zone III. The mineral resource remains unchanged at 6.8 million tonnes grading 4% Zinc, 0.7% Lead, 37.0 g/t Silver and 0.7 g/t Gold. This estimate contains approximately 0.3 million tonnes of Zinc metal, 0.05 million tonnes of Lead metal, 8.1 million ounces of Silver and 0.16 million ounces of Gold. The Zone VIII deposit is defined by 44 diamond drillholes drilled at spacings of 50 metres to 100 metres, for a combined total of 32,193 metres of drilling.

Caijiaying Remaining Mineral Resources Estimate

The Caijiaying Deposit is a single large body of mineralisation, which has historically been split into areas or Zones

Caijiaying Zone II / III Mineral Resource Estimate

Zinc Fresh Domain: Zn Resources > 1% Zn

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

Notes:
The information in this report that relates to Mineral Resources is based on information compiled by Mr. Steve Rose. Mr. Steve Rose is a full-time employee of Rose Mining Geology Pty Ltd and is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr. Steve Rose 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 Persons as defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”). Mr. Steve Rose consents to the disclosure of the information in this report in the form and context in which it appears.

GEOLOGY

OPERATIONS

Production at the Caijiaying Mine in 2024 and 2023 may be summarised as follows:

The safety and welfare of Griffin’s workforce remains a priority with underground and surface operations conducted safely and consistently. Unfortunately, the Company recorded the death of a contractor employee and a subsequent disruption to operations in the fourth quarter of 2024.

Throughout 2024 and into 2025 there was a continued focus on safety with significant investment in equipment and systems at six times the legal requirement in China with unrelenting continual training of the Chinese workforce. Despite the major steps forward in recent years to lift safety standards and exceed Chinese regulatory requirements in numerous areas, it is devastating to have experienced a loss of life in 2024.

The continual push to improve mine safety with mechanisation and modernisation of the underground mine has entailed adding a cable bolting jumbo, additional remote emulsion charge units, a new batch plant for mechanised shotcrete, 3 new workshops, underground personnel tracking, digital communications, automated key equipment monitoring, fire suppression on mobile equipment and the ongoing phase out of manual tasks across the business.

Production up to the end of the third quarter of 2024 was on track to achieve a record year in almost all areas, reinforcing the positive steps made in 2023 to sustainably mine and process 1.5 million tonnes per annum (“mtpa”). Unfortunately the contractor fatality resulted in a complete shutdown in production from 11 October 2024 to 1 January 2025, with a knock on effect into the first quarter of 2025.

Mine scheduling is a key area of focus with the ongoing development of Zone II and production from Zone III occurring simultaneously. Zone III has been mined continuously for 20 years and is entering a phase with a high proportion of remnant stopes and awkward production areas. This requires constant work to ensure grades are balanced and managed in highly variable and complex conditions prior to Zone II entering production.

Zone II, currently in development, will provide access to over 36 million tonnes of ore for immediate production securing the future operation of the Caijiaying Mine past 2050 at minimum rates of 1.5 mtpa. With over 100km of underground development in the Caijiaying Mine, it is one of the most significant capital developments in underground zinc global production.

Mine development continued into Zone II in 2024 with 3,226 meters of horizontal and decline development and 444 meters of ventilation shaft development. Work is on track for mine development at Zone II to be completed in 2025 with trial mining to commence immediately thereafter and with full production approval from Chinese regulators expected in the first quarter 2026, full scale production from Zone II is expected in 2026.

Work is ongoing to increase the capacity of the mill to a sustainable 1.7mtpa throughput, the per annum equivalent of which was achieved in the third quarter of 2024. Subject to receipt of appropriate permits, plans are being developed to increase production from Zones II and III to match increased mill capacity.

Numerous optimisation studies are ongoing to assess mineral processing modernisation and automation with the objective of increasing recovery and throughput while decreasing input costs for energy, consumables, wearing components and reagents.

Significant progress was made during 2024 towards the aim of operations at the Caijiaying Mine being carbon neutral following the construction of the solar farm at the Caijiaying Mine in 2023. In April 2024, Hebei Hua Ao entered into an agreement with Zhangjiakou Guoao New Energy Co Ltd for the Caijiaying Mine to be the sole consumer of energy generated from two 6.3MW wind turbines generating a total of 12.6MW of wind power connected via existing 36,000 volt mains electrical power lines. During 2024, 75.9% of energy used at the Caijiaying Mine was from renewable energy resources, being primarily wind and solar generated.

Hebei Hua Ao continues to work towards 100% renewable energy. In addition to renewable energy generation, Hebei Hua Ao is examining the installation of large-scale battery storage capacity and the purchase of wind or solar energy directly from state owned renewable energy projects in close proximity to the Caijiaying Mine.

The Caijiaying Mine is in a period of rapid change with the development of Zone II, which combined with processing plant upgrades and other improvements, will provide a sustainable base for development and growth.

Trading in the first six months of 2025 may be summarised as follows:

In light of the historically high gold prices, record amounts of gold and silver were produced in the second quarter of 2025 providing an indication of the future of production at the Caijiaying Mine.