REG - Griffin Mining Ltd - 2023 FINAL RESULTS
15/05/2024 07:00
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RNS Number : 4386O Griffin Mining Limited 15 May 2024
Royal Trust House, 54 Jermyn Street, London SW1Y 6LX, United Kingdom
Telephone: + 44 (0)20 7629 7772 Facsimile: + 44 (0)20 7629 7773
E mail: griffin@griffinmining.com
15(th) May 2024
2023 Final Results
Griffin Mining Limited ("Griffin" or the "Company") has today published its
annual report and accounts for the year ended 31 December 2023 which will be
available shortly on the Company's web site wwww.griffinmining.com and will be
posted to shareholders on 28(th) May 2024.
In 2023 the Company and its subsidiaries (together the "Group") recorded
· Revenues of $146,023,000 (2022: $94,397,000);
· Gross profit of $51,842,000 (2022: $38,252,000);
· Earnings before depreciation, interest and tax of $51,863,000
(2022: $35,215,000)
· Operating profit of $23,837,000 (2022: $15,625,000);
· Profit before tax of $24,486,000 (2022: $15,272,000);
· Profit after tax of $15,236,000 (2022: $7,704,000); and
· Basic earnings per share of 8.03 cents (2022: 4.41 cents).
Record amounts of ore were mined, hauled and processed in 2023, with
throughput reaching mill name plate capacity of 1.5 million tonnes per annum,
resulting in record zinc metal in concentrate production.
Ore mined was up 76.6% to 1,505,642 tonnes on that in 2022, all of which was
extracted from Zone III at Caijiaying, and ore processed up 82.1% to
1,513,977 tonnes on that in 2022, resulting in:
· Zinc metal concentrate production up 25,146 tonnes (79.1%) on that
achieved in 2022;
· Gold in concentrate production up 6,915 ozs (68.2%) on that
achieved in 2022;
· Silver in concentrate production up 90,080 ozs (40.1%) on that
achieved in 2022; and
· Lead in concentrate production up 606 tonnes (64.5%) on that
achieved in 2022.
Whilst market prices for zinc fell in 2023, smelter treatment charges and
transport costs fell from 27.9% of LME in 2022 to 27.0% in 2023 with
significant falls in the last quarter of 2023 to 21.8% and to 15.3% in March
2024. Gold prices have increased throughout 2023 as have silver and lead
prices with Hebei Hua Ao receiving a premium price on lead and gold in
concentrate sales.
With increased ore mined, hauled and processed, production (mining, haulage,
and processing) costs increased by $38,036,000 (67.7%) from that in 2022 with
production costs per tonne of ore processed falling from $65.8 per tonne in
2022 to $62.6 per tonne in 2023.
Operating (administration) expenses, excluding the Chinese partners profit
share and share incentive scheme charges, rose by $854,000 (4.2%) from that in
2022. The Chinese partners share of Hebei Hua Ao's profits increased by
$1,505,000 (62.7%) from that in 2022, which was subject to force majeure
provisions. The results for 2023 include a charge of $3,019,000 (2022 nil)
relating to a share incentive plan.
The Group benefited from interest receipts on bank deposits of $1,394,000 in
2023 compared with $369,000 in 2022.
As a result, Group profits before tax increased from $15,272,000 in 2022 to
$24,486,000 in 2023.
TURNOVER
Turnover in 2023 of $146,023,000 was up $51,626,000 (54.7%) on that achieved
in 2022 of $94,397,000. This reflects zinc in concentrate sales up
$35,552,000 (46.5%) with 57,998 tonnes of zinc metal in concentrate sold in
2023 compared with 30,422 tonnes in 2022, an increase of 90.6% reflecting
higher production whilst the average zinc metal in concentrate prices received
fell from $2,513 in 2022 to $1,931 in 2023, a fall of 23.2%.
This reflects a fall in the average LME price from $3,488 in 2022 to $2,647
in 2023, whilst smelter treatment charges and transport costs have fallen from
27.9% of LME in 2022 to 27.0% in 2023 with significant falls in the last
quarter of 2023 to 21.8%.
Lead and precious metal in concentrate sales in 2023 of $42,428,000 were up
$18,875,000 (80.1%) on that achieved in 2022 of $23,553,000. This reflects
increased lead and precious metals sold, with higher production, and higher
metal prices received.
Sales may be summarised as follows:
2023 2022
Zinc metal in concentrate revenue before royalties ($000s) 112,008 76,456
Lead metal in concentrate revenue before royalties ($000s) 3,949 2,052
Silver metal in concentrate revenue before royalties ($000s) 6,172 3,829
Gold metal in concentrate revenue before royalties ($000s) 32,306 17,672
Royalties (8,413) (5,612)
Zinc metal in concentrate sold (tonnes) 57,998 30,422
Lead metal in concentrate sold (tonnes) 1,557 926
Silver in concentrate sold (ozs) 317,348 221,506
Gold in concentrate sold (ozs) 17,107 10,649
Average price received per tonne (zinc) ($) 1,931 2,513
Average price received per tonne (lead) ($) 2,535 2,216
Average price received per ounce (silver) ($) 20.1 17.9
Average price received per ounce (gold) ($) 1,952 1,814
COST OF SALES
Total cost of sales (mining, haulage, and processing) costs increased by
$38,036,000 (67.7%) from $56,145,000 in 2022 to $94,181,000 in 2023 with
production costs per tonne of ore processed falling from $65.8 per tonne in
2022 to $62.6 per tonne in 2023. This in the main reflects the impact of the
suspension of operations in 2022.
Costs of sales may be summarised as follows:
2023 Per tonne 2022 Per tonne
ore ore
$000 $ $000 $
Mining costs 25,579 17.0 16,782 19.7
Haulage costs 18,098 12.0 10,377 12.2
Processing costs 23,197 15.4 14,390 16.9
Depreciation depletion and amortisation 25,385 17,757
Stock and WIP movements 1,922 (3,161)
94,181 62.6 56,145 65.8
Mining
1,505,642 tonnes of ore were mined in 2023, up 76.5% on that mined in 2022 of
852,579 tonnes, reflecting near continuous production in 2023. Mining costs in
2023 were up $8,797,000 (52.4%) on that in 2022, resulting in a reduction in
unit costs from $19.7 per tonne mined in 2022 to $17.0 per tonne in 2023,
reflecting economies of scale with fixed mine service costs.
Haulage
1,509,098 tonnes of ore were hauled in 2023, up 79.7% on that hauled in 2022
of 839,685 tonnes, tracking ore mined. Haulage costs in 2023 were up
$7,721,000 (74.4%) on that in 2022, resulting in a reduction in unit costs
from $12.2 per tonne hauled in 2022 to $12.0 per tonne in 2023.
Processing
1,513,977 tonnes of ore were processed in 2023, up 82.1% on that processed in
2022 of 831,549 tonnes, tracking ore mined and hauled. Processing costs in
2023 were up $8,807,000 (61.2%) on that in 2022, resulting in a reduction in
unit costs from $16.9 per tonne processed in 2022 to $15.4 per tonne in 2023.
Depreciation
Depreciation charges in 2023 were up $7,628,000 (42.9%) on that incurred in
2022 reflecting increased ore mined with depreciation calculated on a unit of
production basis.
OPERATING EXPENSES
Operating (administration) costs (excluding the minority interest charges and
share incentive scheme charges) in 2023 of $21,083,000 were up $854,000 (4.2%)
on that incurred in 2022 of $20,229,000.
Hebei Hua Ao's operating costs in 2023 of $14,393,000 were up $1,161,000
(8.7%) on that incurred in 2022 of $13,232,000. Renminbi denominated
administration costs increased by 14.5%, primarily on increased personnel
costs and ongoing increased environmental and safety regulatory compliance
costs.
Griffin and Griffin Mining (UK Services) Limited company corporate costs of
$5,880,000 (excluding share incentive scheme charges) were down $536,000
(8.4%) on that incurred in 2022 of $6,416,000 with the termination of investor
relations services, lower directors' bonuses, lower travel costs and reduced
directors' and officers' liability insurance premiums.
China Zinc's operating costs in Hong Kong of $723,000 were up $244,000 (50.8%)
on that in 2022 of $479,000, with the engagement of additional personnel to
investigate potential projects.
$3,903,000 has been charged to profit and loss in respect of service fees
based upon the profits of Hebei Hua Ao in 2023 compared with $2,399,000 in
2022, which was adjusted for force majeure days when operations were
suspended.
A charge of $3,019,000 has been made in respect of the share incentive scheme
instigated in March 2023 which allocates the value of the shares granted at
date of grant over the period of return in the event of personnel leaving.
PROFIT BEFORE TAX
After interest, foreign exchange adjustments and other income, a profit before
tax of $24,486,000 was recorded for 2023 compared to $15,272,000 in 2022.
The profit before tax in 2023 was after charging / crediting;
· FX losses of $136,000 (2022: losses, $387,000);
· Bank interest charges of $24,000 (2022: $nil);
· Lease interest $43,000 (2022: $48,000);
· Interest in respect of rehabilitation provisions $110,000 (2022:
$87,000;)
· Interest receipts of $1,394,000 (2022: $369,000);
· Losses on the disposal of fixed assets of $784,000 (2022:
$404,000); and
· Other income of $352,000 (2022: $204,000).
TAXATION
Taxation of $9,250,000 was provided for in 2023 (2022 $7,568,000) being; 25%
of Hebei Hua Ao's profits under Chinese GAAP amounting to $10,881,000;
withholding taxes of $897,000, primarily of 5% on inter company dividends
received; UK corporation tax of $179,000 on Griffin Mining (UK Services)
Limited profits; and a deferred tax credit of $2,694,000.
Earnings Per share
Basic earnings per share increased from 4.41 cents per share in 2022 to 8.03
cents per share and diluted earnings per share from 4.11 cents in 2022 to 7.98
cents in 2023.
CASH FLOW
In the year ended 31(st) December 2023 cash balances increased by
$25,869,000.
$48,377,000 (2022: $15,734,000) was generated from operations in 2023. Capital
expenditure, net of disposals, of $23,279,000 (2022: $21,301,000), was
incurred in 2023. Interest on bank deposits of $1,394,000 (2022: $369,000) was
received in 2023 and interest incurred on bank loans and lease payments of
$182,000 (2022:167,000) were incurred in 2023. $373,000 (2022: $nil)was
incurred on the buy back of the Company's shares.
Net Assets
Attributable net assets per share at 31st December 2023 was $1.40 (2022:
$1.40).
Whilst the directors do not recommend the payment of a dividend at this time,
all possible alternatives will be considered in 2023 by the board of directors
to either return excess cash to shareholders, or increase shareholder value.
Chairman's Statement:
2023 proves, beyond any reasonable doubt, that the founding directors of the
Company have been proven correct. Contrary to all the naysayers throughout the
long years, the Company has established a world class, environmentally
friendly mining operation, developed and operated in the People's Republic of
China ("PRC" or "China"), on a self-generating cash flow basis, without
seeking continual capital from shareholders or incurring debt. Put simply, in
the words of Helen Keller, "While they were saying it couldn't be done, it was
done."
It is hard to know where to start, the news is so overwhelmingly positive and
we are just at the start of the Year of the Dragon!
Financially, record revenues were generated in 2023. The Company and its
subsidiaries (together the "Group") recorded
· Revenues up 54.7% at $146,023,000;
· Gross profit up 35.5% at $51,842,000;
· EBIT up 47.3% at $51,863,000;
· Operating profit up 52.5% at $23,837,000;
· Profit before tax up 60.3% at $24,486,000;
· Profit after tax up 97.8% at $15,236,000; and
· Basic earnings per share up 82.1% at 8.03 cents.
Operationally, a record amount of ore was mined, hauled and processed, with
throughput reaching mill design capacity of 1.5 million tonnes per annum. This
led, inter alia, to record zinc metal production:
· Ore mined was up 76.6% to 1,505,642 tonnes (all from Zone III);
· Ore processed was up 82.1% to 1,513,977 tonnes;
· Zinc metal in concentrate produced was up 79.1% to 56,933 tonnes;
· Gold in concentrate produced was up 68.2% to 17,052 ounces;
· Silver in concentrate produced was up 40.1% to 314,677 ounces; and
· Lead in concentrate produced was up 64.5% to 1,546 tonnes.
These results are all the more impressive in light of the fact that no ore is
yet being delivered from Zone II, which remains under full speed
development. Underground workings, services and the 3(rd) Portal all remain
under construction and near completion. Grade control drilling continues
unabated and the South Ventilation Shaft has been sunk almost 250 metres. Ore
extraction from Zone II remains on schedule for the 1(st) Quarter of 2025.
Drilling continues in both Zones II and III with a record 7 diamond drill rigs
in continual operation. This number of operating rigs is yet another record
for the Caijiaying Mine. With the volume and quality of the drilling
information being produced, it is our expectation that a new JORC resource
will be announced in 2024.
With continuing operational and financial success, it is easy to become
complacent and fail to deal with non-financial issues which impact the future
viability of the Company. As such, the Company strives to be a fully
responsible corporate citizen to all our relevant stakeholders, including our
shareholders, employees, contractors, the people of China and the global
environment. As such, the Company has committed itself to the generation and
use of 100% renewable energy in the next 12 months, one third of which is
already generated via the solar farm at the Caijiaying Mine. A further two
6.3MW wind turbines generating a total of 12.6MW of wind power will be
constructed within 2.5km of the Caijiaying Mine. Once completed, the
Caijiaying Mine will have 18.6MW of renewable electrical capacity at peak
generation which exceeds the current 18.1MW peak usage. The Company is
currently 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 to achieve 100%
renewable power at all times regardless of light or wind conditions. I know
of no other active mine or operations that can claim to have fully committed
to the switch to 100% renewable energy and already be generating a third of
its energy from its solar farm.
Inevitably the question then arises how to deal with the excess cash being
generated by operations. It was decided by the directors of the Company not
only to continue with the on-market share buy-back scheme operated by the
Company's Nominated Advisor, Panmure Gordon, but to also undertake an offer
for larger blocks of stock held by institutional shareholders through the
Company's joint broker, Berenbergs. As such, well over 10 million shares were
acquired and then cancelled by 26(th) February 2024 at a substantially lower
share price than currently quoted. It is expected both methods of buying back
the Company's stock will continue in 2024, reducing the Company's shares
outstanding and improving the Company's earnings per share. To this end, and
although I rarely comment on the Company's share price, it has been pleasing
to see the market finally seemingly begin to understand the inherent value of
the Company and even perhaps the parlous state of the world mining
environment.
In that vein, I believe it appropriate to mention the very recent indicative
proposal announcement by BHP in relation to Anglo-American, an attempt by BHP
to acquire scarce copper assets. Although this may be a surprise to the
market, it is a logical progression of the failure of the capital markets to
support the mining industry, and in particular the junior miners, who
overwhelmingly discover the orebodies needed to supply the world with the raw
products needed for human existence. We have just begun to feel the effects of
having rare resources and its expression in rising commodity prices. As Mark
Burton at Bloomberg wrote recently, "A successful takeover would make BHP the
biggest copper producer with about 10% of the market, but it won't make any
difference toward meeting the world's supply needs. Production from existing
mines is set to fall sharply in the coming years, and miners would need to
spend more than $150 billion between 2025 and 2032 in order to fulfill the
industry's supply needs, according to CRU Group……One key challenge is that
new mines take years and often decades to build, 'There is a clear and
compelling need for additional mine capacity to be brought online,' said
William Tankard, principal analyst for base metals at CRU. 'The gauntlet is
being laid down at the feet of the miners, and it's going to be exceptionally
challenging to deliver."
I should mention that this year marks the 30(th) anniversary of Hebei Hua Ao
Mining Industry Co Ltd ("Hebei Hua Ao"), the foreign joint venture stock
company formed in 1994 to hold the interest in the Caijiaying Mine, the
majority interest of which was acquired by Griffin almost 4 years later in
1997/8. Nevertheless, celebrations marking the occasion will be held in China
later this year. It is my absolute hope that at these celebrations there will
also be an announcement of Hebei Hua Ao converting its legal status to a
limited liability company, as mandated in the PRC Foreign Investment Law
(Article 42), bringing all the benefits of that legal structure to the parties
involved.
All that remains for me to conclude is that the old adage remains as true
today as when it was written so long ago by Tacitus and re-imagined by John F
Kennedy, "Success has many fathers, but failure is an orphan." An operation of
the size, complexity and in the location of the Caijiaying Mine, has depended
on, and will continue to depend on, the intelligence, expertise, dedication,
discipline and sacrifice of a large number of individuals. I can't and won't
name them as to do so would inevitably exclude someone who has deserved to be
in that pantheon of champions. Suffice it to say I regularly refer to some
current success which rests either on our founding directors' feet, our
current operational staff and/or our relatively new directors. All have played
or continue to play their vital part and we owe them our sincerest thanks. It
needs to be understood by all involved that what they all do is beyond the
responsibilities of ordinary corporate employment and it deserves our
acknowledgment.
Lastly, and always most importantly, thank you to you, the shareholders and
owners of the Company. Everyone can "talk the talk" but few can "walk the
walk." It is your capital, patience and continued support which allows the
Company to have the stability and confidence to continue to move forward at an
ever quicker pace. We will continue to honour the commitment you have all made
by moving heaven and earth to give you the returns you so richly deserve.
About Griffin Mining Limited
Griffin Mining Limited's shares are quoted on the Alternative Investment
Market (AIM) of the London Stock Exchange (symbol GFM). Griffin Mining Limited
owns and operates in China, through its 88.8% owned Joint Venture stock
company, the Caijiaying Zinc Gold Mine, a profitable mine producing zinc,
gold, silver, and lead metals in concentrates. For more information, please
visit the Company's website www.griffinmining.com.
Further information
Griffin Mining Limited
Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7772
Roger Goodwin - Finance Director
Panmure Gordon (UK) Limited Telephone: +44 (0)20
7886 2500
Dominic Morley
Dougie McLeod
Berenberg Telephone: +44(0)20 3207 7800
Matthew Armitt
Jennifer Lee
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").
Griffin Mining Limited's shares are quoted on the Alternative Investment
Market (AIM) of the London Stock Exchange (symbol GFM).
The Company's news releases are available on the Company's web site:
www.griffinmining.com (http://www.griffinmining.com/)
Griffin Mining Limited
Consolidated Income Statement
For the year ended 31 December 2023
(expressed in thousands US dollars)
2023 2022
$000 $000
Revenue 146,023 94,397
Cost of sales (94,181) (56,145)
Gross profit 51,842 38,252
Administration expenses (28,005) (22,627)
Operating Profit 23,837 15,625
Losses on disposal of plant and equipment (784) (404)
Foreign exchange (losses) (136) (387)
Finance income 1,394 369
Finance costs (177) (135)
Other income 352 204
Profit before tax 24,486 15,272
Income tax expense (9,250) (7,568)
Profit for the year 15,236 7,704
Basic earnings per share (cents) 8.03 4.41
Diluted earnings per share (cents) 7.98 4.11
Griffin Mining Limited
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
(expressed in thousands US dollars)
2023 2022
$000 $000
Profit for the year 15,236 7,704
Other comprehensive income / (expense) that will be reclassified to profit or
loss
Exchange differences on translating foreign operations (2,912) (15,498)
Other comprehensive (expense) for the year, net of tax (2,912) (15,498)
Total comprehensive income / (expense) for the year 12,324 (7,794)
Griffin Mining Limited
Consolidated Statement of Financial Position
As at 31 December 2023
(expressed in thousands US dollars)
2023 2022
$000 $000
ASSETS
Non-current assets
Property, plant and equipment 250,370 258,041
Intangible assets - exploration interests 575 407
Other non-current assets 1,554 1,494
252,499 259,942
Current assets
Inventories 5,828 8,077
Receivables and other current assets 2,886 3,433
Cash and cash equivalents 60,007 34,138
68,721 45,648
Total assets 321,220 305,590
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 1,928 1,749
Share premium 78,550 69,334
Contributing surplus 3,690 3,690
Share based payments 3,109 168
Shares held in treasury (2,017) (1,644)
Chinese statutory re-investment reserve 3,529 2,992
Other reserve on acquisition of non-controlling interests (29,346) (29,346)
Foreign exchange reserve (3,480) (618)
Profit and loss reserve 213,789 199,140
Total equity attributable to equity holders of the parent 269,752 245,465
Non-current liabilities
Other payables 3,106 6,317
Long-term provisions 3,929 2,649
Deferred taxation - 2,717
Lease liabilities 570 683
7,605 12,366
Current liabilities
Trade and other payables 38,308 44,910
Business taxation payable 5,386 2,680
Lease liabilities 169 169
Total current liabilities 43,863 47,759
Total equities and liabilities 321,220 305,590
Attributable net asset value per share to equity holders of parent 1.40 1.40
Griffin Mining Limited
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
(expressed in thousands US dollars)
Share Share Contributing Share Shares Chinese Other Foreign Profit Total
Capital Premium surplus Based held in statutory reserve on exchange and loss reserve attributable to equity holders of parent
payments treasury re-investment acquisition of non-controlling interests reserve
reserve
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 1 January 2022 1,749 69,334 3,690 2,072 (1,644) 2,896 (29,346) 14,635 199,190 262,576
- - - - 341 - (341) -
Regulatory transfer for future investment - -
Transfer on surrender of options (note 19) - - - (1,904) - - - - (7,413) (9,317)
Transaction with owners - - - (1,904) - 341 - - (7,754) (9,317)
Profit for the year - - - - - - - - 7,704 7,704
Other comprehensive income:
Exchange differences on translating foreign operations - - - - (245) (15,253) - (15,498)
- -
Total comprehensive income - - - - - (245) - (15,253) 7,704 (7,794)
At 31 December 2022 1,749 69,334 3,690 168 (1,644) 2,992 (29,346) (618) 199,140 245,465
- - - - 587 - (587) -
Regulatory transfer for future investment - -
Issue of shares on cancellation of share purchase options 101 9216 - - - - - 9,317
- -
Share based payments (19) 78 - - 2,941 - - - - 3,019
Purchase of shares for treasury (note 20) - - - - (373) - - - - (373)
Transaction with owners 179 9,216 - 2,941 (373) 587 - - (587) 11,963
- - - - - - 15,236 15,236
Profit for the year - -
Other comprehensive income:
Exchange differences on translating foreign operations - - - - (50) (2,862) - (2,912)
- -
Total comprehensive income - - - - - (50) - (2,862) 15,236 12,324
At 31 December 2023 1,928 78,550 3,690 3,109 (2,017) 3,529 (29,346) (3,480) 213,789 269,752
Griffin Mining limited
Consolidated Cash Flow statement
For the year ended 31 December 2023
(expressed in thousands US dollars)
2023 2022
$000 $000
Net cash flows from operating activities
Profit before taxation 24,486 15,272
Share based payments 3,019 -
Foreign exchange losses 136 387
Finance income (1,394) (369)
Finance costs 177 135
Depreciation 28,026 19,590
Losses on disposal of equipment 784 404
Decrease / (increase) in inventories 2,249 (3,561)
Decrease / (increase) in receivables and other assets 547 (1,807)
(Decrease) in trade and other payables (415) (6,284)
Taxation paid (9,238) (8,033)
Net cash inflow from operating activities 48,377 15,734
Cash flows from investing activities
Interest received 1,394 369
(Costs) on disposal of equipment (263) (178)
Payments to acquire - mineral interests and development (16,792) (7,348)
Payments to acquire - property, plant, and equipment (6,056) (13,749)
Payments to acquire - office lease, furniture & equipment - (6)
Payments to acquire - intangible fixed assets - exploration interests (168) (20)
Net cash outflow from investing activities (21,885) (20,932)
Cash flows from financing activities
Issue of ordinary shares on exercise of options - -
Interest paid (27) -
Purchase of shares for treasury (373) -
Bank loan advances 4,271 -
Repayment of bank loans (4,271) -
Lease liability repayments including interest (155) (167)
Net cash outflow from financing activities (555) (167)
Increase / (decrease) in cash and cash equivalents 25,937 (5,365)
Cash and cash equivalents at the beginning of the year 34,138 38,159
Effects of foreign exchange rates (68) 1,344
Cash and cash equivalents at the end of the year 60,007 34,138
Notes to the Summarised Financial Statements:
This statement has been prepared using accounting policies and presentation
consistent with those applied in the preparation of the statutory financial
statements of the Group.
The summary financial statements set out above do not constitute statutory
financial statements 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 31 December 2023 and the
Summarised Consolidated Income Statement, Summarised Consolidated Statement of
Comprehensive Income, Summarised 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 2023 statutory financial
statements.
The annual report and accounts for 2023 is being sent by post to all
registered shareholders. Additional copies of the annual report and accounts
are available from the Company's London office, 8(th) Floor, 54 Jermyn Street,
London, SW1Y 6LX and are available on Griffin Mining Ltd.'s web site
www.griffinmining.com
The Group has one business segment, the Caijiaying zinc gold mine in the
People's Republic of China. All revenues and costs of sales in 2023 and 2022
were derived from the Caijiaying zinc gold mine.
2023 2022
$000 $000
REVENUES
China 146,023 94,397
Zinc concentrate sales 112,008 76,456
Lead and precious metals concentrate sales 42,428 23,553
Royalties and resource taxes (8,413) (5,612)
146,023 94,397
2023 2022
$000 $000
COST OF SALES: CHINA
Mining costs 25,579 16,782
Haulage costs 18,098 10,377
Processing costs 23,197 14,390
Depreciation (excluding depreciation in administration expenses) 25,385 17,757
Stock movements 1,922 (3,161)
94,181 56,145
2023 2022
$000 $000
ADMINISTRATION EXPENSES
China / Hong Kong 19,023 16,136
Australia 77 75
UK / Bermuda 5,886 6,416
24,986 22,627
Fair value of shares issued under share incentive plan 3,019 -
28,005 22,627
2023 2022
$000 $000
TOTAL ASSETS
China 299,094 299,810
Australia 1,201 1,044
UK / Bermuda 20,925 4,736
321,220 305,590
2023 2022
$000 $000
CAPITAL EXPENDITURE
China 23,016 21,117
UK / Bermuda - 6
23,016 21,123
Finance Income
2023 2022
$000 $000
Interest on bank deposits 1,394 369
Finance Costs
2023 2022
$000 $000
Interest payable on short term bank loans 24 -
Interest on rehabilitation provisions 110 87
Lease interest 43 48
177 135
Other Income
2023 2022
$000 $000
Scrap and sundry other revenues 352 204
Income Tax Expense
2023 2022
$000 $000
Profit for the year before tax 24,486 15,272
Expected tax expense at a standard rate of PRC income tax of 25% (2022 25%) 6,121 3,818
Adjustment for tax exempt items:
- Income and expenses outside the PRC not subject to tax 1,985 1,054
Adjustments for short term timing differences:
- In respect of accounting differences 2,851 1,862
- In respect of other timing differences (25) -
Adjustments for permanent timing differences other 129 291
Withholding tax on intercompany dividends and charges 897 803
Prior period tax credit (14) -
Current taxation expense 11,944 7,828
Deferred taxation expense (credit)
Origination and reversal of temporary timing differences (2,694) (260)
(2,694) (260)
Total tax expense 9,250 7,568
The parent company is not resident in the United Kingdom for taxation
purposes. Hebei Hua-Ao paid income tax in the PRC at a rate of 25% in 2023
(25% in 2022) based upon the profits calculated under Chinese Generally
Accepted Accounting Principles (Chinese "GAAP").
Earnings per share
The calculation of the basic earnings per share is based upon the earnings
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the year. 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:
2023 2022
Earnings Weighted Per share amount (cents) Earnings Weighted Per share amount (cents)
Average number of shares Average number of shares
$000
$000
Basic earnings per share
Basic earnings attributable to ordinary shareholders
15,236 189,771,884 8.03 7,704 174,892,894 4.41
Dilutive effect of securities
Options - 1,234,740 (0.05) - 12,384,576 (0.30)
Diluted earnings per share 15,236 191,006,624 7.98 7,704 187,277,470 4.11
Property, plant and equipment
Mineral Mill and mobile mine equipment Offices furniture & equipment Total
Interests
$000 $000 $000 $000
At 1 January 2022 220,832 53,487 977 275,296
Foreign exchange adjustments (12,832) (4,836) 8 (17,660)
Transfer re rehabilitation deposit (1,012) - - (1,012)
Change in mine closure costs 130 - - 130
Additions during the year 7,348 13,749 6 21,103
Disposals - (226) - (226)
Depreciation charge for the year (13,328) (6,104) (158) (19,590)
56,070
At 31 December 2022 201,138 833 258,041
Foreign exchange adjustments (2,269) (929) - (3,198)
Change in mine closure costs 1,226 - - 1,226
Additions during the year 16,792 6,056 - 22,848
Disposals - (521) - (521)
Depreciation charge for the year (21,505) (6,380) (141) (28,026)
54,296
At 31 December 2023 195,382 692 250,370
At 1 January 2022
Cost 285,471 97,910 1,544 384,925
Accumulated depreciation (64,639) (44,423) (567) (109,629)
Net carrying amount 220,832 53,487 977 275,926
At 31 December 2022
Cost 275,250 101,763 1,106 378,119
Accumulated depreciation (74,112) (45,693) (273) (120,078)
Net carrying amount 201,138 56,070 833 258,041
At 31 December 2023
Cost 290,077 103,479 1,558 395,114
Accumulated depreciation (94,695) (49,183) (866) (144,744)
Net carrying amount 195,382 54,296 692 250,370
Mineral interests comprise the Group's interest in the Caijiaying ore bodies
including costs on acquisition, plus subsequent expenditure on licences,
concessions, exploration, appraisal and construction of the Caijiaying mine
including expenditure for the initial establishment of access to mineral
reserves, commissioning expenditure, and direct overhead expenses prior to
commencement of commercial production and together with the end of life
restoration costs.
Mill and mobile mine equipment include $3,416,000 (2022: $14,007,000) of
assets under construction yet to be depreciated.
The offices, furniture and equipment disclosed above relates solely to the
fixed assets, including leased offices, of Griffin Mining (UK Services)
Limited and China Zinc Pty Limited.
The Group assesses the carrying value of the mineral interests, mill and
mobile mine equipment at least annually, and more frequently in the event of
any indications of impairment, by reference to discounted cash flow forecasts
of future revenue and expenditure for each Cash Generation Unit. These
forecasts are based upon both past and expected future performance, available
resources and expectations for future markets. Management determined there
were no impairment indicators at 31 December 2023 (2022: nil). However, as
best practice and in response to an updated Life of Mine Plan ("LOM"),
management have updated the impairment model for latest forecast metal prices,
smelter treatment charges , and revisions to mine development costs.
In determining any indications of impairment in the carrying value of the
Caijiaying Mine the directors have reassessed the net carrying value of
property plant and equipment at 31 December 2023 by reference to the estimated
mineral resources at Caijiaying that may be extracted by 2050 (2022: 2050).
While the current business licence of Hebei Hua Ao expires in 2037, Hebei Hua
Ao will be converted to an equity joint venture company with an indefinite
life in order to comply with new PRC legislation. Accordingly, a LOM has been
prepared by the Company that indicates the continued extraction of ore until
at least 2050.
In estimating the discounted future cash flows from the continuing operations
at the Caijiaying mine the following principal assumptions have been made:
• Future market prices for zinc of $2,654 (2022: $3,097) per
tonne, gold of $2,000 (2022: $1,800) per troy ounce and silver of $23.4 (2022:
$22.7) per troy ounce;
• Zinc treatment charges of 25% (2022: 30%) of market prices;
• Extraction of measured and indicated resources of 41.2 million
tonnes (2022: 40.4 million tonnes) to 2050 (2022: 2050) with ore mined and
processed of circa 1.5 million tonnes (2022: 1.5 million tonnes) of ore per
annum;
• Operating costs, recoveries and payables based upon past
performance and that budgeted for 2024 and on internal management forecast,
for future years;
• Capital costs based upon that initially scheduled with
sustaining capital based on future scheduling;
• Discount rate of 10% (2022: 10%);
• Continued maintenance and grant of applicable licences and
permits;
• No significant impact as a result of climate change, earthquakes
or other natural events; and
• A Renminbi to US dollar exchange rate of 7 Rmb to $1 (2022: 7
Rmb to $1)
Having considered the impact of climate change, the directors consider that
there will not be any significant adverse impact on future operations from
climate change.
Whilst the directors consider the assumptions reasonable, sensitivities have
been considered to assess the impact of changes in key assumptions including,
forecast metal prices, foreign exchange and discount rates, and have concluded
that there were no reasonable possible changes to the key assumptions that
could result in an impairment.
Attributable net asset value per share to total equity per holders of parent
shares
The attributable net asset value / total equity per share has been calculated
from the consolidated net assets / total equity of the Group at 31 December
2023 of $269,752,000 ($245,465,000 at 31 December 2022) divided by the number
of ordinary shares in issue at 31 December 2023 of 192,828,420 (174,892,894
at 31 December 2022).
POST BALANCE SHEET EVENTS
On 31 December 2023, options over 1,500,000 new ordinary shares in the Company
exercisable at 30 pence per share and over 500,000 new ordinary shares in the
Company exercisable at 40 pence per share were exercised. These shares were
issued and admitted to trading on AIM on 8 January 2024.
On 5 January 2024 the Company entered into trades committing to purchase,
through its joint broker Joh. Berenberg, Gossler & Co. KG, 8,886,128 of
the Company's own ordinary shares ("Ordinary Shares"), representing 4.6% of
the Company's issued share capital (excluding shares already held in
treasury), at a price of 88 pence per Ordinary Share, for a total
consideration of £7,819,792, excluding brokers fees.
On 15 March 2024 10,297,943 ordinary shares in Griffin Mining Limited ("the
Company") purchased under share buyback programmes and held in treasury were
cancelled. Following the cancellation of these shares, there are 184,530,477
ordinary shares on issue with no outstanding options or warrants.
At 31 December 2023 there were no adjusting post balance sheet events (2022:
none).
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