TIDMGFM
RNS Number : 3577L
Griffin Mining Ld
13 May 2022
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
13(th) May 2022
2021 Final Results
Griffin Mining Limited ("Griffin" or the "Company") has today
published its annual report and financial statements for the year
ended 31 December 2021 which are available on the Company's web
site wwww.griffinmining.com.
In 2021, the Company and its subsidiaries (together the "Group")
recorded:
-- Revenues increased 61% to $121,648,000 (2020: $75,403,000);
-- Operating profit increased 143% to $36,925,000 (2020: $15,148,000);
-- Profit before tax increased 152% to $36,526,000 (2020: $14,515,000);
-- Profit after tax increased 185% to $25,376,000 (2020: $8,910,000); and
-- Basic earnings per share increased 182% to 14.53 cents per share (2020: 5.16 cents).
Record amounts of ore were mined and processed in 2021 which,
with improved zinc metal market prices and lower smelter treatment
charges ("TCs"), resulted in Group profits before tax increasing
152% from that in 2020 of $14,515,000 to $36,925,000 in 2021. Group
profits after tax increased by 185% from $8,910,000 in 2020 to
$25,376,000 in 2021.
Turnover in 2021 of $121,648,000 was up $46,245,000 (61%) on
that achieved in 2020 of $75,403,000. This reflects zinc in
concentrate sales up $43,856,000 (83%) with: 41,949 tonnes of zinc
metal in concentrate sold in 2021 compared with 32,276 tonnes in
2020, an increase of 30%; and average zinc metal in concentrate
prices received in 2021 of $2,311 per tonne compared with $1,645
received in 2020, an increase of 40%. This price increase reflects
an increase in market prices with the average LME zinc metal price
of $3,007 per tonne in 2021 compared with $2,268 in 2020, but also
a reduction in TCs with average TCs equating to 23.1% of the
average LME zinc price in 2021 compared with 27.5% in 2020.
Lead and precious metal in concentrate sales in 2021 of
$31,915,000 were up 22.7% on that achieved in 2020 of $25,999,000.
This reflects increased gold metal in concentrate sold and
increased lead and silver in concentrate prices received despite
lower gold prices received.
In 2021, metal in concentrate sales were:
-- Zinc 41,949 tonnes (2020: 32,276 tonnes) an increase of 30%;
-- Gold 14,417 ozs (2020: 11,218 ozs) an increase of 29%;
-- Silver 269,505 ozs (2020: 291,756 ozs) a decrease of 8%; and
-- Lead 1,069 tonnes (2020: 1,425 tonnes) a decrease of 25%.
Average prices achieved in 2021 were:
-- Zinc metal per tonne of $2,311 (2020: $1,645);
-- Gold metal per oz of $1,691 (2020: $1,759);
-- Silver metal per oz of $19.8 (2019: $17.7); and
-- Lead metal per tonne of $2,074 (2019: $1,339).
Total cost of sales in 2021 of $63,224,000 was up 47.9% on that
incurred in 2020 of $42,737,000. In the main this reflects more
tonnes mined, hauled and processed in 2021. Further cost increases
occurred with the mine deepening, increasing mine service costs and
the distances ore is hauled, whilst processing costs were impacted
by tailings disposal issues and increased maintenance costs. Costs
were also increased by a 4.5% appreciation of the Renminbi to the
US dollar and pay awards to staff.
Administration expenses rose $3,981,000 (23%) from $17,518,000
in 2020 to $21,499,000 in 2021. Administration costs include a
charge of $3,876,000 (2020: 2,943,000) incurred with Yuanrun based
upon the profits of Hebei Hua Ao subject to a minimum fee. Hebei
Hua Ao's administration fees increased by 27% in 2021 with a 4.5%
appreciation in the Renminbi exchange rate, pay awards to staff and
additional environmental and safety regulatory compliance costs,
including that to maintain Caijiaying' s "Green Mine" status in the
PRC. Administration costs outside the PRC were impacted by investor
and public relation costs curtailed in previous years and
significantly increased insurance premiums.
Foreign exchange losses of $51,000 (2020: gains $22,000) were
recorded in 2021, mainly on a weaker sterling. Interest of $236,000
(2020: $108,000) was received on bank deposits in 2021. Interest of
$309,000 (2020: $111,000) was paid on short term bank loans.
Finance interest on the lease of the dry tailings facility at
Caijiaying and the London office totalling $11,000 (2020: $171,000)
was charged in 2021. Deemed interest on discounted rehabilitation
provisions of $84,000 (2020: $77,000) was charged in 2021.
Losses on the disposal of equipment of $293,000 (2020:
$1,129,000) were recorded with equipment being replaced to meet
higher Chinese environmental standards.
Income taxes of $11,150,000 (2020 $5,605,000) have been charged
in 2021.
Basic earnings per share in 2021 was 14.53 cents (2020: 5.16
cents) and diluted earnings per share was 13.47 cents (2020: 4.88
cents).
Cash generated from operations of $42,880,000 (2020:
$24,398,000), an increase of 76%, have been used in further
developing the mine and facilities and held pending development of
the Zone II area at Caijiaying.
Attributable net assets per share at 31 December 2021 was $1.50
(2020: $1.35), and increase of 11%.
Whilst the Directors do not recommend the payment of a dividend
at this time, the Directors have discussed and will further
consider a dividend policy later this year when current political,
social and economic circumstances permit enabling such a policy to
be instituted and executed over a consistent, long term basis .
Chairman's Statement:
In terms of the Company's financial and operational performance,
it has been a stellar year, even more extraordinary considering
Zone II has yet to be fully developed or brought into production
and in light of the continuing restrictions imposed by the Covid-19
pandemic in China.
In 2021, in comparison to 2020:
-- Revenue was 61% higher at $121,648,000;
-- Operating profit was 143% higher at $36,925,000;
-- Profit before tax was 152% higher at $36,526,000;
-- Profit after tax was 185% higher at $25,376,000; and
-- Basic earnings per share was 182% higher at14.53 cents per share.
Operationally, record amounts of ore were mined and processed in
2021 and metal production of our 2 largest revenue producers, zinc
and gold, were substantially higher than in the previous year:
-- Ore mined was up 14% at 971,492 tonnes;
-- Ore hauled was up 19% at 979,783 tonnes;
-- Ore processed was up 20% at 985,404 tonnes;
-- Zinc metal in concentrate produced was up 28% at 41,587 tonnes; and
-- Gold metal in concentrate produced was up 28% at 14,447 ounces;
This bodes very well for the future results of the Company when
Zone II is commissioned and in full production. Since the grant of
the new mining licence over Zone II in January 2021, the Company
has been working continuously and tirelessly on obtaining approval
for the design and development of Zone II. That approval is
expected shortly and drive development is planned to begin on the
1(st) July 2022. In the interim, the first drill platform for
resource drilling at Zone II was constructed in September 2021 and
diamond drilling commenced in early October 2021.
What makes the above results truly exceptional is the continuing
Covid-19 crisis in China and the quarantine procedures the various
levels of government have put in place making the transport of
materials, employees and contractors over Provincial borders at the
least, extraordinarily difficult and, at the most, impossible.
Furthermore, China has prevented the entrance of any foreign
national into the country who does not have a pre-existing work
permit and then, only with 28 days hotel quarantine. What this
reinforces in simple terms is the dedication and loyalty of both
our on-site staff and our ex-pat staff. The former who, in effect,
now live permanently at camp as they are wary of not being
permitted to return to the Caijiaying Mine site should quarantine
be imposed unilaterally at local, county, city or Provincial level.
The latter ex-pats, who now spend 3 to 6 months away from their
partners, children and extended family, allow the Company to keep
operating. I should add, all this when there is a 30,000 person
shortage in the Australian mining industry where most of our ex pat
staff are based. In particular, and most of all, I would like to
thank John Steel, our new Chief Operating Officer, Paul Benson, our
Chief Geologist, and Wendy Zhang, our site Chief Financial Officer,
for their Herculean efforts over the past 12 months. All these
on-site and ex-pat individuals have displayed the extent of their
loyalty and I am grateful on behalf of everyone involved with the
Company.
Needless to say, the safety and welfare of the Company's
workforce remains the overwhelming priority of the Company.
Underground and surface operations operated safely and consistently
in 2021 without any major incidents. With the Company's extensive
Covid-19 pandemic controls, there have been no outbreaks of
Covid-19 at the Caijiaying Mine to date. With assistance from local
Chinese authorities all personnel have received Chinese
manufactured Covid-19 vaccinations.
Operational highlights throughout the year included the
acquisition of land for the construction of new Tailings Dam 4 and
the completion of the construction of the bridge to provide access
to the area, the installation and extension of the paste pipe
reticulation system and the continuation of the programme to
further modernise and increase safety at the Caijiaying Mine. This
included the introduction of 10 specific PRC Kuang Anquan ("KA")
wet brake vehicles for personnel transportation underground,
further increasing mine safety, traffic management and the
underground environment. In addition, a new 40 tonne low emission
boiler used to heat the site processing, administration and other
buildings as well as the underground workings was commissioned and
a new electrical boiler was installed and commissioned at the
Caijiaying Mine Camp reducing the Company's carbon emissions
footprint.
Importantly, probably the most significant non-operational event
of the past year was the activism of the major shareholders of the
Company to effect change at the board level with the intention of
seeking to extract greater value from the Company and their
shareholding. To that end, 3 new independent directors were
appointed to the board. Clive Whiley was appointed to the board in
August 2021 and Linda Naylor and Dean Moore in May 2022. I would
like to welcome all 3 formally to the board and wish them every
success and a productive and enjoyable time on the board.
With this substantial change to the board I'd like to state that
I will always be enormously grateful and humbled by the
contribution and comradery the directors, whom I'm proud to call
"my friends", gave so freely, warmly, genuinely and passionately.
It made this impossible dream possible and bearable and I shall
always be so grateful I had this journey with these amazing
individuals - the deceased Rupert Crowe and Bill Mulligan, the
mining thoroughbred Dal Brynelsen and the indefatigable Roger
Goodwin. To quote Bill Curry, an American football star, "It's not
for the bucks that I drive myself to the limits of my ability. It's
so that I can go back to the locker room, after having gone those
last 35 yards and won the game and walk back in there with my arm
around a teammate and know that we did that together, that we both
gave it a little more than we really had. Now that may sound real
phony but I promise you it's the reason we play."
To the shareholders, my overwhelming wish is that Covid-19
disappears from concern, that there be peace in Eastern Europe, the
World economy avoids severe recession and inflation, that the zinc
price remains high and Zone II hits our long awaited full
production target. May the Year of the Tiger make it just so.
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
John Prior
Ailisa MacMaster
Berenberg Telephone: +44(0)20 3207 7800
Matthew Armitt
Jennifer Wyllie
Deltir Elezi
BlytheRay
Tim Blythe Telephone: +44(0)20 7138 3205
Swiss Resource Capital AG
Jochen Staiger Telephone: + 41(0)71 354 8501
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014
Griffin Mining Limited
Summarised Consolidated Income Statement
For the year ended 31 December 2021
(expressed in thousands US dollars)
2021 2020
Audited Audited
$000 $000
Revenue 121,648 75,403
Cost of sales (63,224) (42,737)
Gross profit 58,424 32,666
Administration expenses (21,499) (17,518)
Profit from operations 36,925 15,148
Losses on disposal of plant and equipment (293) (1,129)
Provisions against intangible assets (11) (10)
Foreign exchange (losses) / gains (51) 22
Finance income 236 108
Finance costs (404) (359)
Other income 124 735
Profit before tax 36,526 14,515
Income tax expense (11,150) (5,605)
Profit for the year 25,376 8,910
======== ========
Basic earnings per share (cents) 14.53 5.16
======== ========
Diluted earnings per share (cents) 13.47 4.88
======== ========
Griffin Mining Limited
Summarised Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
(expressed in thousands US dollars)
2021 2020
Audited Audited
Restated
$000 $000
Profit for the year 25,376 8,910
-------- ---------
Other comprehensive income that will be
reclassified to profit or loss
Exchange differences on translating foreign
operations 3,336 9,837
Other comprehensive income for the year,
net of tax 3,336 9,837
-------- ---------
Total comprehensive income for the year 28,712 18,747
======== =========
The 2020 exchange differences on translating foreign operations
have been corrected from that reported in 2020 of $9,662,000.
Griffin Mining Limited
Summarised Consolidated Statement of Financial Position
As at 31 December 2021
(expressed in thousands US dollars)
2021 2020
Audited Audited
$000 $000
ASSETS
Non-current assets
Property, plant and equipment 275,296 266,709
Intangible assets - exploration interests 387 325
-------- --------
275,683 267,034
-------- --------
Current assets
Inventories 4,516 5,333
Receivables and other current assets 2,174 6,675
Cash and cash equivalents 38,159 16,435
-------- --------
44,849 28,443
-------- --------
Total assets 320,532 295,477
======== ========
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent
Share capital 1,749 1,728
Share premium 69,334 68,470
Contributing surplus 3,690 3,690
Share based payments 2,072 2,072
Shares held in treasury (1,644) (917)
Chinese statutory re-investment reserve 2,896 2,830
Other reserve on acquisition of non controlling
interests (29,346) (29,346)
Foreign exchange reserve 14,635 11,365
Profit and loss reserve 199,190 173,814
-------- --------
Total equity attributable to equity holders of
the parent 262,576 233,706
-------- --------
Non-current liabilities
Other Payables 10,352 13,487
Long-term provisions 2,667 2,200
Deferred taxation 3,240 3,359
Finance leases 794 -
-------- --------
17,053 19,046
-------- --------
Current liabilities
Trade and other payables 40,726 42,342
Finance leases 177 383
Total current liabilities 40,903 42,725
-------- --------
Total equities and liabilities 320,532 295,477
======== ========
Attributable net asset value per share to equity
holders of parent 1.50 1.35
Griffin Mining Limited
Summarised Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
(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 attributable
re-investment loss to
Payments Treasury Reserve acquisition Reserve reserve equity
of holders
non-controlling of parent
interests
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 1(st)
January 2020 1,728 68,455 3,690 2,072 (917) 2,500 (29,346) 1,703 165,059 214,944
------- ------- ------------ -------- --------- ------------- --------------- -------- ------- ------------
Regulatory
transfer for
future
investment - - - - - 155 - - (155) -
Issue of
shares on
exercise
of options - 15 - - - - - - - 15
Transaction
with owners - 15 - - - 155 - - (155) 15
------- ------- ------------ -------- --------- ------------- --------------- -------- ------- ------------
Profit for
the year - - - - - - - - 8,910 8,910
Other
comprehensive
income
:
Exchange
differences
on
translating
foreign
operations - - - - - 175 - 9,662 9,837
------- ------- ------------ -------- --------- ------------- --------------- -------- ------- ------------
Total
comprehensive
income - - - - - 175 - 9,662 8,910 18,747
------- ------- ------------ -------- --------- ------------- --------------- -------- ------- ------------
At 31st
December
2020 1,728 68,470 3,690 2,072 (917) 2,830 (29,346) 11,365 173,814 233,706
======= ======= ============ ======== ========= ============= =============== ======== ======= ============
Regulatory - -
transfer for
future
investment - - - - - - - -
Purchase of
shares held
in
treasury - - - - (727) - - - - (727)
Issue of
shares on
exercise
of options 21 864 - - - - - - - 885
Transaction
with owners 21 864 - - (727) - - - - 158
------- ------- ------------ -------- --------- ------------- --------------- -------- ------- ------------
Profit for
the year - - - - - - - - 25,376 25,376
Other
comprehensive
income:
Exchange
differences
on
translating
foreign
operations - - - - - 66 - 3,270 - 3,336
------- ------- ------------ -------- --------- ------------- --------------- -------- ------- ------------
Total
comprehensive
income - - - - - 66 - 3,270 25,376 28,712
------- ------- ------------ -------- --------- ------------- --------------- -------- ------- ------------
At 31st
December
2021 1,749 69,334 3,690 2,072 (1,644) 2,896 (29,346) 14,635 199,190 262,576
======= ======= ============ ======== ========= ============= =============== ======== ======= ============
Griffin Mining Limited
Summarised Consolidated Cash Flow Statement
For the year ended 31 December 2021
(expressed in thousands US dollars)
2021 2020
Audited Audited
$000 $000
Net cash flows from operating activities
Profit before tax 36,526 14,515
Foreign exchange losses / (gains) 51 (22)
Finance income (236) (108)
Finance costs 404 359
Depreciation, depletion and amortisation 16,530 12,801
Provisions against intangible assets 11 10
Losses on disposal of equipment 293 1,129
Decrease / (increase) in inventories 817 (1,494)
Decrease / (increase) in receivables and other
current assets 4,936 (4,814)
(Decrease) / increase in trade and other payables (2,871) 5,666
Tax paid (13,581) (3,644)
-------- --------
Net cash inflow from operating activities 42,880 24,398
-------- --------
Cash flows from investing activities
Interest received 236 108
Proceeds / (costs) on disposal of equipment 1 (44)
Payments to acquire - mineral interests (13,564) (18,691)
Payments to acquire - plant and equipment (6,365) (5,684)
Payments to acquire office, office furniture &
equipment - (5)
Payments to acquire intangible fixed assets -
exploration interests (73) (11)
-------- --------
Net cash outflow from investing activities (19,765) (24,327)
-------- --------
Cash flows from financing activities
Issue of ordinary shares on exercise of options 885 15
Interest paid (309) (112)
Purchase of shares for treasury (727) -
Bank loan advances 15,500 -
Repayment of bank loans (15,500) -
Finance lease repayments (462) (2,469)
Net cash outflow from financing activities (613) (2,566)
-------- --------
Increase / (decrease) in cash and cash equivalents 22,502 (2,495)
Cash and cash equivalents at the beginning of
the year 16,435 19,885
Effects of exchange rates (778) (955)
-------- --------
Cash and cash equivalents at the end of the year 38,159 16,435
-------- --------
Cash and cash equivalents comprise bank deposits
Bank deposits 38,159 16,435
======== ========
Included within net cash flows of $22,502,000 (2020 $2,495,000)
are foreign exchange losses of $51,000 (2020: gains $22,000) which
have been treated as realised.
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 Company.
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 2021 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 2021 statutory
financial statements.
The annual report and accounts for 2021 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,
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 2021 and 2020 were derived from the Caijiaying zinc gold
mine.
2021 2020
$000 $000
REVENUES
China 121,648 75,403
======== ========
Zinc concentrate sales 96,951 53,095
Lead and precious metals concentrate sales 31,915 25,999
Royalties and resource taxes (7,218) (3,691)
-------- --------
121,648 75,403
======== ========
COST OF SALES: CHINA
Mining costs 19,003 16,056
Haulage costs 11,466 7,282
Processing costs 16,574 8,868
Depreciation (excluding depreciation in administration
costs) 14,481 11,780
Stock movements 1,520 (1,249)
-------- --------
63,224 42,737
======== ========
ADMINISTRATION EXPENSES
China 16,433 12,939
Australia 136 312
UK / Bermuda 4,930 4,267
-------- --------
21,499 17,518
======== ========
All revenues, cost of sales and operating expenses charged to
profit relate to continuing operations.
Notes (continued):
TOTAL ASSETS 2021 2020
$000 $000
China 312,026 290,147
Australia 1,011 967
UK / Bermuda 7,495 4,363
-------- --------
320,532 295,477
======== ========
CAPITAL EXPITURE 2021 2020
$000 $000
China 19,929 24,375
Australia - -
UK / Bermuda 963 5
-------- --------
20,892 24,380
======== ========
FINANCE INCOME 2021 2020
$000 $000
Interest on bank deposits 236 108
===== =====
FINANCE COSTS 2021 2020
$000 $000
Interest payable on short term bank loans 309 111
Interest on rehabilitation provisions 84 77
Finance lease interest 11 171
----- -----
404 359
===== =====
OTHER INCOME 2021 2020
$000 $000
Scrap and sundry other sales 124 735
===== =====
Income Tax Expense
2021 2020
$000 $000
Profit for the year before tax 36,526 14,515
------- -------
Expected tax expense at a standard rate of PRC income
tax of 25% (2018 25%) 9,132 3,629
Adjustment for tax exempt items :
- Income and expenses outside the PRC not subject
to tax 934 567
Adjustments for short term timing differences :
- In respect of accounting differences 890 (298)
- In respect of other timing differences (4) -
Adjustments for permanent timing differences other 372 1,051
Withholding tax on intercompany dividends and charges 21 232
Current taxation expense 11,345 5,181
------- -------
Deferred taxation expense
Origination and reversal of temporary timing differences (195) 424
(195) 424
------- -------
Total tax expense 11,150 5,605
======= =======
Notes (continued):
INCOME TAX EXPENSE (continued)
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 2021 (25% in 2020) based upon the profits calculated
under Chinese generally accepted accounting principles (Chinese
"GAAP").
EARNINGS PER SHARE
Reconciliation of the earnings and weighted average number of
shares used in the calculations are set out below:
2021 2020
Earnings Weighted Per Earnings Weighted Per share
Average share Average amount
$000 number amount number (cents)
of shares (cents) $000 of shares
Basic earnings per
share
Earnings attributable
to ordinary
shareholders 25,376 174,653,602 14.53 8,910 172,788,420 5.16
Dilutive effect of
securities
Options - 13,730,107 (1.06) - 9,861,227 (0.28)
--------- -------------- --------- --------- ------------- ----------
Diluted earnings
per share 25,376 188,383,709 13.47 8,910 182,649,647 4.88
========= ============== ========= ========= ============= ==========
The calculation of the basic earnings per share is based on 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.
Notes (continued):
Property, plant and equipment
Mineral Mill Offices Total
Interests and mobile furniture
mine equipment & equipment
At 1 January 2020 177,583 50,373 331 228,287
Foreign exchange adjustments 8,292 3,408 5 11,705
Additions during the year 18,691 5,684 5 24,380
Provision for licence transfer
fees 16,338 - - 16,338
Change in estimate of mine
closure costs (115) - - (115)
Transfer of rehabilitation
provision 697 (697) - -
Disposals - (1,085) - (1,085)
Depreciation charge for the
year (6,542) (6,084) (175) (12,801)
----------- ---------------- ------------- ----------
At 31 December 2020 214,944 51,599 166 266,709
----------- ---------------- ------------- ----------
Foreign exchange adjustments 3,405 1,224 (2) 4,627
Transfer (773) 773 - -
Additions during the year 13,564 6,365 963 20,892
Change in estimate of mine
closure costs 327 - - 327
Release of rehabilitation
provision (435) - - (435)
Disposals - (294) - (294)
Depreciation charge for the
year (10,200) (6,180) (150) (16,530)
----------- ---------------- ------------- ----------
At 31 December 2021 220,832 53,487 977 275,296
=========== ================ ============= ==========
At 31 December 2019
Cost 222,589 80,935 573 304,097
Accumulated depreciation (45,006) (30,562) (242) (75,810)
----------- ---------------- ------------- ----------
Net carrying amount 177,583 50,373 331 228,287
=========== ================ ============= ==========
At 31 December 2020
Cost 267,763 90,173 583 358,519
Accumulated depreciation (52,819) (38,574) (417) (91,810)
----------- ---------------- ------------- ----------
Net carrying amount 214,944 51,599 166 266,709
=========== ================ ============= ==========
At 31 December 2021
Cost 285,471 97,910 1,544 384,628
Accumulated depreciation (64,639) (44,423) (567) (106,929)
----------- ---------------- ------------- ----------
Net carrying amount 220,832 53,487 977 275,926
=========== ================ ============= ==========
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 $5,795,000 (2020:
$3,872,000) of assets under construction yet to be depreciated.
Notes (continued):
Property, plant and equipment (continued)
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.
During 2013 plant and equipment with a deemed value of
$11,381,000, revalued in 2019 to $14,150,000, were acquired under a
finance lease, upon which depreciation of $8,132,000 (2020:
$6,712,000) has been provided. At 31 December 2021 the net carrying
amount of this equipment was $7,351,000 (2020: $8,417,000). In 2019
the London office lease was capitalised, and in November 2021
renewed. To comply with IFRS16 a deemed value of $1,581,000 has
been applied upon which depreciation of $618,000 has been provided.
At 31 December 2021 the net carrying amount of this office was
$963,000 (2020: $124,000).
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 business segment. 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 2021. However, as best
practice management have updated the impairment model.
In determining any indications of impairment in the carrying
value of the Caijiaying Mine the directors have reassessed the net
carrying value of capitalised costs at 31 December 2021 by
reference to the estimated mineral resources at Caijiaying that may
be extracted by 2056 and 2037 when the current business licence of
Hebei Hua Ao expires. However, it is expected that Hebei Hua Ao
will be converted to an equity joint venture company with an
indefinite life before then in order to comply with new PRC
legislation. Accordingly, a Life of Mine plan ("LOM") has been
prepared by the Company that indicates the continued extraction of
ore until 2056. 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 $3,000 per tonne, gold of
$1,800 per troy ounce and silver of $22.5 per troy ounce;
-- Zinc treatment charges of 30% of market prices;
-- Extraction of measured and indicated resources of 23.8
million tonnes to 2037 when the current business licence of Hebei
Hua Ao expires, with ore mined and processed rising to a maximum
rate of 1.6 million tonnes of ore per annum and the extraction of
50.3 million tonnes by 2056;
-- Operating costs, recoveries and payables based upon past
performance and that budgeted for 2022;
-- Capital costs based upon that initially scheduled with
sustaining capital based on future scheduling;
-- Discount rate of 10%;
-- Continued maintenance and grant of applicable licences and permits;
-- A Renminbi to US dollar foreign exchange rate of Rmb6.5 to USD1; and
-- No significant impact as a result of climate change, earthquakes or other natural events.
Notes (continued):
Intangible Assets
China - mineral exploration interests
$000
At 1 January 2020 322
Foreign exchange adjustments 2
Additions during the year 11
Impairment during the year (10)
-----
At 1 January 2021 325
Additions during the year 73
Impairment during the year (11)
At 31 December 2021 387
=====
Intangible assets represent cost on acquisition, plus subsequent
expenditure on licences, concessions, exploration, appraisal and
development work in respect to regional exploration in China. Where
expenditure on an area of interest is determined as unsuccessful
such expenditure is written off to profit or loss. The
recoverability of these assets depends, initially, on successful
appraisal activities, details of which are given in the report on
operations. The outcome of such appraisal activity is uncertain.
Upon economically exploitable mineral deposits being established,
sufficient finance will be required to bring such discoveries into
production. At 31 December 2021 impairment charges of $11,000
(2020: $10,000) had been provided and charged to the income
statement in respect of the above exploration costs previously
capitalised by Hebei Sino Anglo.
POST BALANCE SHEET EVENTS
As at 31 December 2021 there were no adjusting post balance
sheet events (2020: none).
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