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
15th 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 28th 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 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 31st
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 3rd
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 1st 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
26th 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 30th 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
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
payments
|
held
in
treasury
|
statutory
re-investment
reserve
|
reserve
on
acquisition of non-controlling interests
|
exchange
reserve
|
and loss
reserve
|
attributable to equity holders of parent
|
|
$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
|
Regulatory transfer for future
investment
|
-
|
-
|
-
|
-
|
-
|
341
|
-
|
-
|
(341)
|
-
|
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
|
Regulatory transfer for future
investment
|
-
|
-
|
-
|
-
|
-
|
587
|
-
|
-
|
(587)
|
-
|
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
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15,236
|
15,236
|
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, 8th 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
$000
|
|
Weighted
Average number of
shares
|
|
Per share amount
(cents)
|
|
Earnings
$000
|
|
Weighted
Average
number of shares
|
|
Per share
amount (cents)
|
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
Interests
|
|
Mill and mobile mine
equipment
|
|
Offices furniture &
equipment
|
|
Total
|
|
$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)
|
At 31 December 2022
|
201,138
|
|
56,070
|
|
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)
|
At 31 December 2023
|
195,382
|
|
54,296
|
|
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).