Griffin Mining Limited (“Griffin” or the “Company”) has today published its preliminary results for the year ended 31st December 2015. Griffin and its subsidiaries (together the “Group”) recorded:

  • Revenues of $59,779,000 in 2015 (2014 $45,564,000);
  • Operating profit of $4,301,000 in 2015 (2014 $6,732,000);
  • Loss before tax of $940,000 in 2015 (2014 Profit $1,021,000); and
  • Loss after tax of $2,186,000 in 2015 (2014 Profit $190,000)

With increased throughput and production, more metal in concentrate was sold in 2015 compared with 2014, however, metal in concentrate prices were significantly lower in 2015 than in 2014 with zinc metal in concentrate prices received averaging $1,191 per tonne, down 11.5% from that received in 2014 of $1,345, silver $11.90 per oz down 30% from that received in 2014 of $17.10, and gold $1,043 per ounce down 17% on that received in 2014 of $1,251.

Cost of sales of $42,948,000 increased from that incurred in 2014 of $25,345,000, which had been impacted by the suspension in production from August to November 2014 due to the upgrade of the processing facilities. 267,313 (47%) more tonnes of ore were processed in 2015 than in 2014. With processing costs increasing by 35%, costs per tonne of ore processed fell by 8%.

Mining and haulage costs were down on that incurred in 2014 as a result of the suspension in mining for three months following the two fatal incidents in 2015. However, mine servicing costs continued to be incurred during the suspensions.

Net operating costs have fallen 7% from $13,487,000 in 2014 to $12,530,000 in 2015. This reduction in costs has been achieved despite higher share based option charges of $1,047,000 (2014 $316,000), inflationary pressures; and fines and penalties incurred following the mine fatalities.

With lower metal prices and increased cost of sales, profits from operations fell from $6,732,000 in 2014 to $4,301,000 in 2015.

With bank lines of credit drawn down to finance the cost of the processing plant upgrade, finance costs have increased from $4,165,000 in 2014 to $5,084,000 in 2015.

With a fall in the value of the Chinese Renminbi and Sterling in 2015, foreign exchange losses of $447,000 (2014 $39,000) have been incurred.

Losses on the disposal of plant and equipment of $48,000 were recorded in 2015 compared to $1,835,000 following the disposal of redundant equipment during the plant upgrade in 2014.

As a result of the aforementioned, a loss before tax of $940,000 was recorded in 2015 compared with a profit of $1,021,000 in 2014.

Income taxes of $1,246,000 (2014 $831,000) have been charged in 2015. This includes a deferred taxation provision of $813,000 (2014 $313,000).

Basic and diluted losses per share in 2015 were 1.22 cents (2014 earnings 0.11 cents).

In 2015 8,703,103 ordinary shares in the Company were bought at a cost of $3,875,000 and placed in treasury. In 2014 50,000 ordinary shares were bought back in the market for cancellation at a cost of $30,000.

Cash and cash equivalents increased by $1,520,000 in 2015 (2014 reduction $2,960,000) with:

  • Net cash inflow from operating activities in 2015 of $26,139,000 (2014 $12,754,000);
  • $16,044,000 invested in mine development and plant upgrades in 2015, (2014 $23,204,000); and
  • $7,601,000 expended in financing activities in 2015 mainly on the purchase of the treasury shares and interest payments (2014 received $9,761,000).

Attributable net assets per share at 31st December 2015 amounted to 78 cents (2014 83 cents).

Operations were significantly impacted by two separate fatal incidents at the Caijiaying Mine in 2015. Thorough investigations were carried out by both Hebei Hua Ao and by the local and provincial safety bureaus to fully understand the causes of the incidents. Production was suspended for a total of three months whilst these investigations were taking place. As a consequence, the amount of ore mined in 2015 was considerably less than 2014. Meanwhile the processing facilities were able to continue processing long term surface stockpiles whilst mining operations were suspended.

The installation of the new ball mill with a name plate capacity of 750,000 tonnes of ore per annum was completed in 2015 with commissioning at the beginning of 2016 following the connection of a new grid connected 35kv power line. This was the final stage in the completion of the mill upgrade. Following completion of this upgrade, the processing facilities are capable of processing no less than 1.5 million tonnes of ore per year.

With near continuous processing in 2015, mill throughput was significantly better than in 2014 when the processing facilities were shut for several weeks for upgrade works. Slightly better grades and recoveries have assisted in lifting metal in concentrate production in 2015.

In summary, production in 2015 was as follows:

  • 571,815 tonnes of ore were mined, compared to 747,775 tonnes in 2014;
  • 839,713 tonnes of ore were processed, compared to 572,390 tonnes in 2014;
  • 38,560 tonnes of zinc metal in concentrate were produced, compared to 25,901 tonnes in 2014;
  • 10,363 ounces of gold in concentrate were produced, compared to 7,623 ounces in 2014;
  • 343,575 ounces of silver in concentrate were produced, compared to 201,982 ounces in 2014; and
  • 1,785 tonnes of lead in concentrate were produced, compared to 857 tonnes in 2014.

A significant milestone in the plan to move from labour intensive airleg development to modern jumbo development was passed in 2015 with the successful commissioning of the first jumbo at the Caijiaying Mine. It is being used to advance development of the new lower link drive between Zones II and III, ore cross-cuts and the main decline. The new jumbo contributed significantly to a record 1,333 metres of development achieved in May 2015. A new Manitou Integrated Tool Carrier was also introduced in 2015 to boost the efficiency of underground service installation.

The North and South Declines were pushed down to the 1175 level and are now joined by a new 470 metre long link drive.

Underground development work was significantly increased from previous years, with 4,081 metres of capital development and 7,920 metres of operational development completed in 2015.

Long hole open stoping continues to be the predominant mining method with remote bogging ensuring ore recovery from the open stopes is maximised.

Caijiaying continues to grow in size and stature with increased processing capacity, continuing mine development and ongoing exploration work identifying more targets and potential for significant additional resources. Whilst the existing Mineral Resource Estimate confirms the availability of extensive ore resources at the Caijiaying Mine for increased production, the potential for further resources may provide an opportunity to further increase production at the Caijiaying Mine. This will require further licences and permits from various Chinese authorities which is proving increasingly complex and time consuming to obtain.

Currently with the 1.5 million tonne upgrade completed, every effort is being made to obtain enhanced production permits and a new mining licence at Zone II. This will allow all the known resources at and between Zones II and III to be extracted. Development work has continued underground from the main Zone III area towards Zone II enabling further resource definition underground drilling in these areas. A new decline is also expected to be driven in 2016 enabling more haulage movements at the Caijiaying Mine. Development work at Zone II is planned to begin as soon as the new mining licence is received. It is estimated that this work will be completed in 2016 enabling production to be doubled in 2017 from that currently being achieved.

The directors have recommended that no dividend be declared at this time in view of the need for the use of the Company’s financial resources for further investment in the Caijiaying Mine, and repayment of bank loans.

Chairman’s Statement:

2015 was a year of major achievements but also significant difficulties. Although the Company was able to generate an operating profit of $4.3 million, it still eventuated in the first loss after tax in the Company’s operating history. A difficult, emotional event for all concerned at Griffin.

The year contained many disappointments, none of which was more significant than the deaths of two contractors in separate events in June and October of 2015. The loss of life in any enterprise is debilitating, to staff, the enterprise and most of all to the families left behind. The deaths were also a disaster for the Company as mining operations were suspended for over 3 months, effectively only allowing low grade, stockpiled ore to be processed with the consequential erosion to profit margins.

Yet in 9 months of operations, in comparison to 2014, the Company was still able to increase throughput from 572,390 to 839,713 tonnes, revenues from $46 million to $59 million, metal in concentrate of zinc from 25,901 tonnes to 38,560 tonnes, gold from 7,623 ounces to 10,363 ounces, silver from 201,982 ounces to 343,575 ounces and lead from 857 tonnes to 1,785 tonnes . All this bodes extraordinarily well for when the Caijiaying Mine is up and running at full capacity.

Unfortunately, and as so often I have written in the past, mining is substantially a fixed cost business and metals prices were again decimated in 2015. Prices received by the Company for metal in concentrate were significantly lower in 2015 than in 2014 with zinc prices down 11.5%, gold down 17% and silver down 30%.

The last major disappointment of the year was the continuing delay in obtaining the new Mining Licence over Zone II. It is now years overdue and restricts the Company’s ability to reach a 1.5 million tonne throughput. Needless to say, a huge amount of management time is dedicated daily to ensure this process reaches a successful conclusion in 2016.

For all the negatives of 2015, there have been some major victories. The first was the successful conclusion to the mine and processing plant upgrade. The new, 750,000 tonne nameplate capacity ball mill, in conjunction with the pre-existing ball mills, provides the Company with a minimum of 1.5 million tonnes of throughput capacity and more. In addition, the completion of the new grid connected 35,000 volt power line and sub-station ensures sufficient power to now run a full capacity plant, all underground mining operations and administration and camp facilities.

Secondly, the North and South Declines were joined by a new, 470 metre link drive which combines the Zones II and III orebodies for ease of mining and haulage in the future. A new, second portal to access the Zone II area is expected to be completed in 2016.

Thirdly, a new master agreement was signed between the Third Geological Brigade of Hebei Province with the Company to examine their extensive data base for existing, known deposits and prospective mining areas and enter into commercial arrangements on those projects. This new partnership is particularly attractive in light of the Company’s better knowledge of the geological controls of the Caijaiying Mine. In particular, this agreement may have significant benefit for all areas within trucking distance of the Caijiaying Mine and its existing processing facilities. It goes without saying that the Company continues to evaluate numerous projects worldwide on a daily basis in this depressed mining market to find the hidden gem.

Lastly, and most excitingly, on the drilling and geological work completed to date, it seems certain that there exists the potential for significant additional resources to be added to the known resource at the Caijiaying Mine. Although work has been suspended for the moment on the new JORC resource estimate due to other priorities for our human and capital resources, it is expected a new resource estimate will be announced at some point in 2016.


Griffin Mining Limited
Summarised Consolidated Income Statement
For the year ended 31 December 2015
expressed in thousands US dollars)


  2015   2014
  Audited   Audited
  $000   $000
Revenue 59,779   45,564
Cost of sales (42,948)   (25,345)
Gross profit 16,831   20,219
Net operating expenses (12,530)   (13,487)
Profit from operations 4,301   6,732
Losses on disposal of plant and equipment (48)   (1,835)
Foreign exchange (losses) / gains (447)   (39)
Finance income 202   223
Finance costs (5,084)   (4,165)
Other income 136   105
(Loss) / profit before tax (940)   1,021
Income tax expense (1,246)   (831)
(Loss) / profit after tax (2,186)   190
Basic (loss) / earnings per share (cents) (1.22)   0.11
Diluted (loss) earnings per share (cents) (1.22)   0.11

Griffin Mining Limited
Summarised Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
(expressed in thousands US dollars)


    2015   2014
    Audited   Audited
    $000   $000
(Loss) / profit for the year   (2,186)   190
Other comprehensive income that will be reclassified to profit or loss      
Exchange differences on translating foreign operations   (2,967)   (281)

Other comprehensive income for the period, net of tax




Total comprehensive income for the period



Griffin Mining Limited
Summarised Consolidated Statement of Financial Position
As at 31 December 2015
(expressed in thousands US dollars)


  2015   2014
    Audited   Audited
    $000   $000
Non-current assets      
Property, plant and equipment   210,252   208,339
Intangible assets – Exploration interests   1,870   1,914
    212,122   210,253
Current assets      
Inventories   7,182   17,477
Receivables and other current assets   3,194   3,540
Cash and cash equivalents   24,062   23,371
    34,438   44,388
Total assets   246,560   254,641
Equity attributable to equity holders of the parent      
Share capital   1,790   1,790
Share premium   71,310   71,310
Contributing surplus   3,690   3,690
Share based payments   1,363   3,064
Shares held in treasury   (3,875)  
Chinese statutory re-investment reserve   1,595   1,686
Other reserve on acquisition of non controlling interests   (29,346)   (29,365)
Foreign exchange reserve   8,068   10,957
Profit and loss reserve   85,350   84,794
Total equity attributable to equity holders of the parent   139,945   147,926
Non-current liabilities      
Long-term provisions   2,433   2,582
Deferred taxation   2,630   1,953
Finance lease   7,454   10,720
    12,517   15,255
Current liabilities      
Trade and other payables   28,977   26,563
Finance lease   1,982   1,161
Bank loans   63,139   63,736
Total current liabilities   94,098   91,460
Total equities and liabilities   246,560   254,641
Attributable net asset value per share to equity holders of parent   $0.78   $0.83

Griffin Mining Limited
Summarised Consolidated Statement of Changes in Equity.
For the year ended 31 December 2015
(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
  $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

Regulatory transfer for future investment


10   (10)
Purchase of shares for cancellation (1) (29) (30)
Cost of share based payments 316 316
Transactions with owners (1) (29) 316 10 (10) 286
Profit for the year 190 190
Other comprehensive income:                    
Exchange differences on translating foreign operations  



(255) (281)
Total comprehensive income (7) (19) (255) 190 (91)
At 31st December 2014 1,790 71,310 3,690 3,064 1,686 (29,365) 10,957 84,794 147,926
Purchase of shares for treasury   (3,875) (3,875)
Transfer of share based payments on expiry (2,748) 2,748
Cost of share based payments 1,047 1,047
Transactions with owners (1,701) (3,875) 6 2,742 (2,828)
(Loss) / profit for the year (2,186) (2,186)
Other comprehensive income:                    
Exchange differences on translating foreign operations  



(2,889) (2,967)
Total comprehensive income (97) 19 (2,889) (2,186) (5,153)
At 31st December 2015 1,790 71,310 3,690 1,363 (3,875) 1,595 (29,346) 8,068 85,350 139,945


Griffin Mining Limited
Summarised Cash Flow Statement
For the year ended 31 December 2015
(expressed in thousands US dollars)


    2015   2014
    Audited   Audited
    $000   $000
Net cash flows from operating activities      
(Loss) / profit before taxation   (940)   1,021
Foreign exchange losses   447   39
Finance income   (202)   (223)
Finance costs   5,084   4,165
Adjustment in respect of share based payments   1,047   316
Depreciation, depletion and amortisation   6,808   6,211
Losses on disposal of equipment   48   1,835
Decrease / (increase) in inventories   10,295   (9,496)
Decrease in receivables and other current assets   804   1,256
Increase in trade and other payables   2,748   7,630
Net cash inflow from operating activities   26,139   12,754
Taxation paid   (974)   (2,271)
Cash flows from investing activities      
Interest received   202   223
Payments to acquire – mineral interests   (8,960)   (6,041)
Payments to acquire – plant and equipment   (7,215)   (17,285)
Payments to acquire – office equipment   (3)   (11)
Payments to acquire intangible fixed assets – exploration interests   (68)   (90)
Net cash outflow from investing activities   (16,044)   (23,204)
Cash flows from financing activities      
Purchase of shares for cancellation     (30)
Purchase of shares for treasury   (3,875)  
Interest paid   (4,324)   (3,342)
Finance lease   (2,573)   (1,398)
Proceeds from bank loans   3,171   21,186
Repayment of bank loans     (6,655)
Net cash inflow from financing activities   (7,601)   9,761
Increase / (decrease) in cash and cash equivalents   1,520   (2,960)
Cash and cash equivalents at the beginning of the year   23,371   26,278
Effects of exchange rates   (829)   53
Cash and cash equivalents at the end of the year   24,062   23,371
Cash and cash equivalents comprise bank deposits.      
Bank deposits   24,062   23,371

Included within net cash flows of $1,520,000 (2014 $2,960,000) are foreign exchange losses of $447,000 (2014 losses $39,000) which have been treated as realised.


  1. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Company.
  2. The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 435 of the UK Companies Act 2006. The summarised consolidated statement of financial position at 31st December 2015 and the summarised consolidated income statement, summarised statement of comprehensive income, consolidated statement of changes in equity and the summarised consolidated cash flow statement for the year then ended have been extracted from the Group’s audited 2015 statutory financial statements.
  3. The annual report and accounts for 2015 are being sent by post to all registered shareholders. Additional copies of the annual report and accounts are available from the Company’s London office, 6th Floor, 60 St James’s Street, London, SW1A 1LE.
  4. The calculation of the basic loss / earnings per share is based on the losses / earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted losses / earnings per share is based on the basic losses / earnings per share on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Reconciliation of the loss / earnings and weighted average number of shares used in the calculations are set out below:

  2015       2014    



Average number of shares

Per share amount (cents)   Earnings





Average number of shares

  Per share amount (cents)
Basic loss / earnings per share            
Loss / earnings attributable to ordinary shareholders (2,186) 179,041,830 (1.22)    






Dilutive effect of securities            
Diluted loss / earnings per share (2,186) 179,041,830 (1.22)