The directors of Griffin Mining Limited (“Griffin” or “the Company”) are very pleased to confirm the approval for the doubling of mining and processing of ore at Caijiaying from 750,000 to 1.5 million tonnes per annum. The increase will include an expansion of the processing facilities, the underground development of Zone II and an expansion of the existing mining operations at Zone III. These developments are all subject to the successful granting of a mining licence over Zone II which is not expected to occur prior to the end of the first quarter of 2014.
Application for a mining licence over and including the area between Zone II and Zone III has commenced with the Geological Report and Resources Statement for Zone II being accepted by the Ministry of Land and Resources on the 28th of January 2013. Work has subsequently commenced on the boundary survey, feasibility study and environmental impact study which are all scheduled to be completed by the end of this calendar year. Application for the new Safety Permit tied to the expansion has begun and is expected to be completed during the fourth quarter of 2013. Work to access the new mining licence area via underground access has also already begun and underground development work will follow later this year to enable ore to be extracted upon granting of the mining licence. Development work has also already commenced to access the lower levels of the Zone III mine to further increase the amount of ore extracted. Preliminary works for the upgrade of the processing facilities will be undertaken in 2013 with the expectation of completing the upgrade by the end of 2014.
The development of the Zone II deposit and upgrade of the processing facilities is not expected to result in any interruption to existing operations. Development and plant upgrade costs will be funded from cash flow from existing operations with surplus cash flow directed to repaying existing Chinese banking facilities created to fund the acquisition of additional equity in, and the extension of, the joint venture in 2012. As a consequence of this need for internally generated cash flow, the Company does not anticipate paying a dividend in 2013.
Griffin’s Chairman, Mladen Ninkov, commented: “I am well aware of certain individual shareholders desire for the Company to begin paying dividends both for personal income requirements and the financial discipline such an action imposes upon management. No-one would be more pleased to do so. However, shareholders short term desire to have cash returned to them cannot cause an under investment in the future growth of the Company. In this light, Griffin’s directors have concluded that further investment in Caijiaying represents the best use of Griffin’s available resources. With a number of major world zinc mines reaching the end of their economic lives, the supply of zinc is expected to diminish and, hopefully, a rise in zinc prices will follow. Accordingly, it is expected that this further investment at Caijiaying will result in significant returns to the Company and to its shareholders in the future at which time the Company’s dividend policy will be reassessed.”