Griffin Mining Limited — Interim / Quarterly Report 2021

Aug 9, 2021

National Storage Mechanism | Additional information

RNS Number : 9191H

Griffin Mining Ld

09 August 2021

8th Floor, 54 Jermyn Street, London, SW1Y 6LX. United Kingdom

Telephone: + 44 (0)20 7629 7772  Facsimile:  + 44 (0)20 7629 7773

E mail: [email protected]

9th AUGUST 2021

UNAUDITED INTERIM RESULTS

for the six months ended 30th June 2021

Griffin Mining Limited ("Griffin" or "the Company") has today released its unaudited results for the six months ended 30th June 2021.

Highlights:

·      Revenues of $54.1 million (30th June 2020: $21.3 million), an increase of 154%.

·      Gross Profit of $25.7 million (30th June 2020: $4.2 million), an increase of 512%.

·      Profit before tax of $15.5 million (30th June 2020: Loss $3.0 million).

·      Profit after tax of $10.3 million (30th June 2020: Loss $3.8 million).

·      Basic earnings per share of 5.88 cents (30th June 2020: Basic loss per share 2.22 cents).

Financial and Trading:

The results for the six months to 30th June 2021 reflect a step up in production following final PFA approval for previous development work at Zone III of the Caijiaying mine in late 2020, enabling increased mining rates.  Mining and processing rates have now reached the equivalent of over a million tonnes of ore per annum without the benefit of ore from the Zone II area at Caijiaying expected in 2022.

As in previous years, the 2021 first half year results were impacted by the Chinese New Year holidays in February in comparison to the 2020 first half year results which were also affected by the suspension in operations at Caijiaying imposed by the Chinese authorities to contain the Covid-19 pandemic.

Ore tonnes mined in the first half of 2021 were up 47% on that mined in the first half of 2020 and tonnes processed in the first half of 2021 were up 47.1% on that achieved in the first half of 2020.  Zinc metal in concentrate produced was up 47.8% on that achieved in the first half of 2020. Gold in concentrate production was up 213.6% on that produced in the first half of 2020 and silver in concentrate production was up 30.6% on that produced in the first half of 2020.

With 475,785 tonnes (30th June 2020: 323,536 tonnes) of ore processed, metal in concentrate production in the first six months of 2021 was:

·      19,876 tonnes of zinc ( 30th June 2020: 13,448 tonnes);

·      561 tonnes of lead (30th June 2020: 631 tonnes);

·      144,705 ounces of silver (30th June 2020: 110,832 ounces); and

·      7,584 ounces of gold (30th June 2020: 2,418 ounces). 

The results benefited from a significant improvement in the market price for zinc and lower smelter treatment charges from that in the first half of 2020, with the average price received for zinc metal in concentrate increasing by 69.4% from $1,304 per tonne in the first six months of 2020 to $2,209 per tonne in the first half of 2021.  Zinc revenues before royalties and resource taxes in the six months to 30th June 2021 were $42,102,000 (30th June 2020: $17,008,000) with 19,062 tonnes of zinc metal in concentrate sold (30th June 2020: 13,046 tonnes).   Precious metals and lead revenues were $15,136,000 (30th June 2020: $5,279,000). 

During the six months to 30th June 2021:

·      462,632 tonnes of ore were mined (30th June 2020: 314,690 tonnes);

·      471,423 tonnes of ore were hauled (30th June 2020: 321,514 tonnes); and

·      475,785 tonnes of ore were processed (30th June 2020: 323,536 tonnes).

Costs of sales (mining, haulage and processing) of $28,401,000 increased by 65.6% from that in the first six months of 2020 of $17,153,000 reflecting increased tonnes of ore mined, hauled and processed albeit with increased unit costs as mining accesses the deeper levels of the mine.

Net operating expenses (administration costs, including those of the Caijiaying site and the Chinese joint venture partners profit share) increased by 41.7% from $7,204,000 in the first six months of 2020 to $10,209,000 in the first six months of 2021. This reflects the resumption in activities from Covid-19 induced restrictions in 2020 and a 7.6% increase in the value of the Renminbi.

Basic earnings per share were 5.88 cents (30th June 2020: loss of 2.22 cents per share).  At 30th June 2021, attributable net assets per share amounted to 141 cents (30th June 2020: 121 cents).

Cash flows from operations in the period of $16,818,000 (30th June 2020 used in operations $4,259,000) have been directed to the further development of the Caijiaying Mine.  359,799 shares in the Company were bought in to treasury at a cost of $672,000 in the six months to 30th June 2021 (30th June 2020: nil). The Griffin Mining Group of companies remains free of any bank loans.

Chairman's Statement

Chairman Mladen Ninkov commented, "This is an extraordinary 2021 half year result, already surpassing the full year financial results for 2020.  It is a credit to the continuing team effort of the people at the mine site, office and board table. If all things remain equal, and assuming the zinc and gold prices hold firm or rise further, 2021 should prove to be an outstanding year for the Company. I would, however, caution that events can quickly turn in the current environment with the current Covid-19 coronavirus again having broken out in multiple Chinese provinces, the lack of any government announcement concerning the Winter Olympic Games and how that will impact Provincial borders and transport of workers, explosives, re-agents and other critical supplies and the ongoing diplomatic tensions between China, the US, the UK, Canada and Australia."

Teleconference Call for Griffin Mining Limited's interim results to 30th June 2021 on Monday 9th August 2021:

Time:	4.00pm British Summer Time
Dial in numbers:	Australia Toll Free: 1 800 681 584
	Canada Toll Free: 1 866 378 3566
	Berlin : +49 (0) 30 3001 90612
	Germany Toll Free: 0800 673 7932
	Hong Kong Toll Free: 800 900 476
	UK-Wide: +44 (0) 33 0551 0200
	Zurich: +41 (0) 43 456 9986
	Switzerland Toll Free: 0800 800 038
	UK Toll Free: 0808 109 0700
	New York New York: +1 212 999 6659
	USA Toll Free: 1 866 966 5335
Password:	Quote Griffin Interim results when prompted by operator

Further information

Griffin Mining Limited	Telephone: +44 (0)20 7629 7772
Mladen Ninkov - Chairman Roger Goodwin - Finance Director
Panmure Gordon (UK) Limited	Telephone: +44 (0)20 7886 2500
John Prior Ailsa Macmaster
Berenberg	Telephone: +44 (0)20 3207 7800
Matthew Armitt Jennifer Wyllie Deltir Elezi
Blythewigh	Telephone: +44(0)20 7138 3205
Tim Blythe Megan Ray
Swiss Resource Capital AG	Telephone: +41(0)71 354 8501
Jochen Staiger

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014

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

Condensed Consolidated Income Statement

(expressed in thousands US dollars)

	6 months to 30/06/2021 Unaudited		6 months to 30/06/2020 Unaudited		Year to 31/12/2020 Audited
	$000		$000		$000
Revenue	54,072		21,321		75,403
Cost of sales	(28,401)		(17,153)		(42,737)
Gross profit	25,671		4,168		32,666
Net operating expenses	(10,209)		(7,204)		(17,518)
Profit / (loss) from operations	15,462		(3,036)		15,148
Losses on disposal of equipment	(26)		(614)		(1,129)
Impairment of intangible fixed assets	(2)		(1)		(10)
Foreign exchange (losses) / gains	(7)		(147)		22
Finance income	68		45		108
Finance costs	(152)		(149)		(359)
Other income	63		76		735
Profit / (loss) before tax	15,406		(3,826)		14,515
Income tax  expense	(5,148)		-		(5,605)
Profit / (loss) after tax	10,258		(3,826)		8,910
Basic earnings / (loss) per share (cents)	5.88		(2.22)		5.16
Diluted earnings / (loss) per share (cents)	5.43		(2.22)		4.88

Griffin Mining Limited

Condensed Consolidated Statement Of Comprehensive income

(expressed in thousands US dollars)

	6 months to 30/06/2021 Unaudited		6 months to 30/06/2020 Unaudited		Year to 31/12/2020 Audited
	$000		$000		$000
Profit / (loss) for the financial period	10,258		(3,826)		8,910
Other comprehensive income
Exchange differences on translating foreign operations	2,514		(1,891)		9,662
Other comprehensive income for the period, net of tax	2,514		(1,891)		9,662
Total comprehensive income / (losses) for the period	12,772		(5,717)		18,572

Griffin Mining Limited

Condensed Consolidated Statement Of Financial Position

(expressed in thousands US dollars)

	30/06/2021		30/06/2020		31/12/2020
	Unaudited		Unaudited		Audited
	$000		$000		$000
ASSETS
Non-current assets
Property, plant and equipment	268,930		225,898		266,709
Intangible assets - exploration interests	349		325		325
	269,279		226,223		267,034
Current assets
Inventories	6,257		3,896		5,333
Receivables and other current assets	4,175		2,275		6,675
Cash and cash equivalents	25,143		10,351		16,435
	35,575		16,522		28,443
Total assets	304,854		242,745		295,477
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital	1,749		1,728		1,728
Share premium	69,334		68,455		68,470
Contributing surplus	3,690		3,690		3,690
Share based payments	2,072		2,072		2,072
Shares held in treasury	(1,589)		(917)		(917)
Chinese statutory re-investment reserve	2,858		2,463		2,830
Other reserve on acquisition of non-controlling interests	(29,346)		(29,346)		(29,346)
Foreign exchange reserve	13,851		(151)		11,365
Profit and loss reserve	184,072		161,233		173,814
Total equity attributable to equity holders of the parent	246,691		209,227		233,706
Non-current liabilities
Other payables	13,622		-		13,487
Long-term provisions	2,264		3,802		2,200
Deferred taxation	3,392		2,691		3,359
Finance leases	-		-		-
	19,278		6,493		19.046
Current liabilities
Trade and other payables	38,842		25,311		42,342
Finance leases	43		1,714		383
### Total liabilities	38,885		27,025		42,725
Total equities and liabilities	304,854		242,745		295,477
Number of shares in issue	174,892,894		172,786,228		172,826,228
### Attributable net asset value / total equity per share	$1.41		$1.21		$1.35

Griffin Mining Limited

Condensed Consolidated Statement of Changes in Equity

(expressed in thousands US dollars)

	Share	Share	Contributing	Share	Shares	Chinese	Other	Foreign	Profit	Total
	Capital	Premium	surplus	based payments	held in treasury	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 31st December 2019	1,728	68,455	3,690	2,072	(917)	2,500	(29,346)	1,703	165,059	214,944
Retained (loss) for the 6 months	-	-	-	-	-	-	-	-	(3,826)	(3,826)
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(37)	-	(1,854))	-	(1,891)
Total comprehensive income for the period	-	-	-	-	-	(37)	-	(1,854)	(3,826)	(5,717)
At 30th June 2020 (Unaudited)	1,728	68,455	3,690	2,072	(917)	2,463	(29,346)	(151)	161,233	209,227
Regulatory transfer for future investment	-	-	-	-	-	155	-	-	(155)	-
Issue of shares on exercise of options	-	15	-	-	-	-	-	-	-	15
Transaction with owners	-	15	-	-	-	155	-		(155)	15
Retained profit for the 6 months	-	-	-	-	-	-	-	-	12,736	12,736
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	212	-	11,516	-	11,728
Total comprehensive income for the period	-	-	-	-	-	212	-	11,516	12,736	24,464
At 31st December 2020	1,728	68,470	3,690	2,072	(917)	2,830	(29,346)	11,365	173,814	233,706
Purchase of shares for treasury	-	-	-	-	(672)					(672)
Issue of shares on exercise of options	21	864	-	-	-	-	-	-	-	885
Transaction with owners	21	864	-	-	(672)	-	-	-	-	213
Retained profit for the 6 months	-	-	-	-	-	-	-	-	10,258	10,258
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	28	-	2,486	-	2,514
Total comprehensive income for the period	-	-	-	-	-	28	-	2,486	10,258	12,772
At 30th June 2021 (Unaudited)	1,749	69,334	3,690	2,072	(1,589)	2,858	(29,346)	13,851	184,072	246,691

Griffin Mining Limited

Condensed Consolidated Cash Flow Statement

(expressed in thousands US dollars)

	6 months to 30/06/21 Unaudited		6 months to 30/06/2020 Unaudited		Year to 31/12/2020 Audited
	$000		$000		$000
Net cash flows from operating activities
Profit /(loss)  before taxation	15,406		(3,826)		14,515
Foreign exchange losses / (gains)	7		147		(22)
Finance income	(68)		(45)		(108)
Finance costs	152		149		359
Depreciation, depletion and amortisation	7,964		5,518		12,801
Impairment of intangible assets	2		1		10
Losses on disposal of equipment	26		614		1,129
(Increase) / decrease in inventories	(924)		(57)		(1,494)
Decrease / (Increase) in receivables and other current assets	2,936		(414)		(4,814)
Increase / (decrease) in trade and other payables	(1,395)		(2,762)		5,666
Taxation paid	(7,288)		(3,584)		(3,644)
Net cash inflow / (outflow) from operating activities	16,818		(4,259)		24,398
### Cash flows from investing activities
Interest received	68		45		108
Proceeds / (expenses) on disposal of equipment	-		(34)		(44)
Payments to acquire - mineral interests (mine development)	(7,471)		(3,379)		(18,691)
Payments to acquire - plant & equipment	(1,215)		(984)		(5,684)
Payments to acquire - office equipment	-		(4)		(5)
Payments to acquire - intangible assets - exploration interests	(26)		(3)		(11)
Net cash (outflow) from investing activities	(8,644)		(4,359)		(24,327)
Cash flows from financing activities
Issue of shares on exercise of share purchase options	885		-		15
Purchase of shares for treasury	(672)		-		-
Interest paid	(101)		-		(112)
Finance lease repayments	(357)		(929)		(2,469)
Net cash (outflow) from financing activities	(245)		(929)		(2,566)
Increase / (decrease) in cash and cash equivalents	7,929		(9,547)		(2,495)
Cash and cash equivalents at beginning of the period	16,435		19,885		19,885
Effects of exchange rate changes	779		13		(955)
Cash and cash equivalents at end of the period	25,143		10,351		16,435
Cash and cash equivalents comprise bank deposits
Bank deposits	25,143		10,351		16,435

Griffin Mining Limited

Notes to the Interim Statement

1.     These unaudited condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31st December 2020.  

2.     This interim report will be available on the Company's web site, www.griffinmining.com. Hard copies are available from the Company's London office, 8th Floor, Royal Trust House, 54 Jermyn Street, London. SW1Y 6LX.

3.     The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 434 of the UK Companies Act 2006.  The consolidated statement of financial position at 31st December 2020 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2020 statutory financial statements upon which the auditors' opinion is unqualified, and should be read in conjunction with the accompanying notes contained therein.

4.     The summary accounts have been prepared on a going concern basis.  Having considered recent events, including the impact of Covid-19, the Group's cash resources, banking facilities and forecasts regularly updated, the directors consider that the Group will be able to meet its liabilities as they fall due.

5.     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 period. 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. There was no dilutive effect on the losses per share in the six months to 30th June 2020. Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below:

	6 months to 30/06/2021 # Unaudited			6 months to 30/06/2020 Unaudited				Year to 31/12/2020 Audited
	Earnings $000	Weighted average number of shares	Per share amount (cents)	Earnings $000	Weighted average number of shares	Per share amount (cents)	Earnings $000		Weighted average number of shares	Per share amount (cents)
Basic (loss) / earnings per share
(Loss) earnings  attributable to ordinary shareholders	10,258	174,410,343	5.88	3,826	172,728,728	(2.22)	8,910		172,788,420	5.16
Dilutive effect of securities
Options		14,374,897	(0.45)						9,861,227	(0.28)
Diluted earnings per share	10,258	188,785,241	5.43				8,910		182,649,647	4.88

6.   As at 30th June 2021 there were no adjusting post balance sheet events. Since 30th June the Company bought in 40,000 shares to be held in treasury at a cost of $54,000.

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