Griffin Mining Share Discussion Threads

[polaris] 28/9/2018 10:26

Hedge - yes, that would have been a sensible option. Small miners never seem to hedge at favourable times, only poor ones! I have experience of this with AVM back in the day. I always stated the hedge would destroy them...and it did. That was for the comment i put in on price of zinc is price of zinc. Nice to see someone thinking beyond the obvious! ;-)

Timely trading updates - absolutely! With detail - couldn't agree more. Throw in a statement on a dividend policy going forward or why the company is retaining cash. All under the heading of transparency.

@Opodio - priced as a growth stock? It is a mining stock, not an ARM in the 90s or FEVR now. They are growth stocks, where the price today folds in a lot of revenue and profit growth going forward.

Buybacks - put it this way. I assume the remuneration for the management has an EPS component. They also have a shed load of cheap options (another bugbear for me). Would you vest the options and increase the total shares in circulation, thus cutting down the EPS and your own salary OR buyback shares in the market with free cash flow, put them into treasury and then vest the options from there? I know which one i am doing if i am on the board if i can get away with it! This falls under governance.

I would also like to know whether grades are different from parts of the pit and whether there is any chance of blending grade or altering mining to match market conditions. Again, transparency for the investors. There may be nothing here to say but get it out into the open so we know. I stated grade is grade and they can do nothing about that. That is certainly the case long term as the reserve will play out BUT you may be able to use higher or lower grades in different times of commodity prices.

All i wanted here was to prompt a relevant discussion of the company and its prospects, by asking the questions and stating some 'facts'. On inspection, even the headline 'facts' are not what they appear to be. This is what you pay your hard earned money for. If you do not look into the details when thinking about investing then it is, and always will be, a lottery.

There are people here who regularly talk to the management and this sort of thing can filter through to a smaller company. It does happen - been there, done that, failed to pursuade the board of its short sightedness (also AVM).

Would any of these have altered where we are now? Transparency would allow a better indication going forward of whether H1 was a blip or the new norm. Governance would lend credence to the management and its plans. A flexible approach to mining and hedging may have limited downside.

With the way they have approached things, we are all now guessing. Anyone with an ounce of investment sense will see that is BAD. The board need to wake up and get the investors on-side. As they have a lot of 'skin in the game' then it is also in their interests, or should be!

regards,

Paul

edit
Maybe i should add that i am not holding GFM at the moment. i sold back in April when the price of Zinc and other metals had turned. I am now looking at whether the time is right to re-enter.

[malcolmmm] 28/9/2018 09:03

Everyone hates Trump, America never had it so good and no war with North Korea as Obama apparently advocated and why should America spend billions of dollars protecting the wealthy west, Germany , France etc whilst they slap big tariffs on USA imports and have huge trade surpluses. People should look at themselves before criticising others. I would rather have Trump than Corbyn , just look who he has supported over the years.
Most shares are down, Brexit etc. causing uncertainty.

[rose_by_another_name] 28/9/2018 08:00

Sage is still name calling I see. Must
have something to do with his admiration
for Trump.

[phillis] 28/9/2018 07:58

What could the BOD do better?
Try: Give meaningful and timely trading updates, covering all operating areas including cash generation
I think I recall RG saying they had changed top mining management in 17
Not sure if this was ever included in any Commentary but perhaps Granny could find it

[vesna09] 28/9/2018 07:28

China in a bear market.Other miners just dump their tailings..When will GFM be at full output? New extension in operation.

[roguetreader] 28/9/2018 07:15

Paul
Thanks for the analysis and viewpoint. Nice to have some empirical backing to your arguments.

[slopsjon2] 28/9/2018 07:15

Don't see why the 50k share buy backs are going to help particularly as there hasn't been one since August and with no stated buy back policy why should the market think that this anything but just token buying. The Griffiths move from 6.25% to 8.51% was much bigger but didn't have an effect. The other director buys are too small to have an effect.

[mpclag] 28/9/2018 04:48

What gets me is why the bod didn't hedge when poz was high and futures were high-This just smacks of ameteurs in the driving seat with no exerience in hedging. All majors hedge their forward sell-WTH didn't gfm?

[sageman] 27/9/2018 22:27

Hi Podgy, I see your point about the sales but the mid point has stayed circa 86. I hope it is not breached because the next support is mid 70’s. Hopefully share buybacks by GFM can support current levels. Time will tell but I am not buying until the zinc trend has stabilised.

[sageman] 27/9/2018 22:20

Opodio, yet another person who lacks research. The BOD were not allowed to pay a dividend until the debt was cleared. When it was cleared the price of zinc had started to fall and the BOD were cautious. An unsustainable dividend actually makes the Sp fall.

[sageman] 27/9/2018 22:16

Polaris, breath of fresh air when you say that the major price drivers are and always will be beyond the control of the board. Sadly too many posters here are unwilling/ unable to comprehend that with Rose ( aka the clueless one) being the person displaying the highest level of incomprehension.

[alangrifbang] 27/9/2018 21:53

Very interesting posts Polaris,I think you could run GFM better Han the present BOD,because I'm nearly 80 years old with a very large holding I'm not sure I have enough time left ,it sounds they won't come right for years,

[rose_by_another_name] 27/9/2018 21:43

The one action the board can take is to
institute a dividend policy. They should
have announced one in the 2017 full year
report. Never mind that the profitability
has now changed, we need a policy of returns
to investors, even if it isn't much under
the current restraints.

Now I expect there will be three posters
claiming this is an impossible ask, but that
is nevertheless what I would do, which is what
you challenged me to post.

[opodio] 27/9/2018 21:18

The company is priced for growth, little yield support,
If growth rates are being questioned,
then little surprise the growth rating is being eroded. Just my take.
poor corporate governance and cash distribution to insiders just stinks

60p still my view

[polaris] 27/9/2018 21:18

@Rose - that gets you one step in the right direction but cannot be the only one.

With 20-20 hindsight - the best kind ;-) - what could the board have done differently to not be in the same share price position as now? Putting out the profit warning for H1 2018 would have been prudent but the result would be the same as we have now.

Governance is under their control and i have also stated many times on this BB that they need to move their base of operations to a serious jurisdiction country if they want the share price to be taken seriously. They also need to give more transparent reporting, particularly wrt the minority holding and the royalties on top-line revenues.

They cannot change grade of the ore - it is what it is.
They cannot change the price of zinc or the byproducts - they are what they are.

What i am getting at is that the major price drivers are, and will always be, beyond the control of the board.

[pietradura] 27/9/2018 21:11

looks weak

[polaris] 27/9/2018 21:09

Rose and Up just a little bit,

The last time zinc was $2500 or so, in June 2017, the share price was 51-52p. Will we see that price again? It is less likely as there is no longer any debt, which held GFM back in 2017.

It has nothing to do with the license, that is the cherry on the cake, not the cake itself. That is a price driver for the upside. GFM do not need it to be a profitable concern. Yes, they built the plant to handle the increased throughput but it is not fatal if the license is never granted. Zinc falling below $2000 is...

So, again, what actions would you have taken in the position of the management to 'maintain the share price' or 'preserve to a certain extent the share price'? What do you suggest now?

[rose_by_another_name] 27/9/2018 21:01

Polaris- What should the board do? Not what
they did, clearly. You correctly point out the
poor governance. The answer going forward is
good governance.

[rose_by_another_name] 27/9/2018 20:59

It was at about this level before the good news
blitz, falling back after last year's record
production turned out to be a flash in the pan,
and when people realized that the license
announcement was just another delay. Luckily
the price of zinc (which was higher in December)
doesn't seem to matter much, or the share price would be
even lower.

[polaris] 27/9/2018 20:40

Are you serious?

On the 15-16th February 2018, Zinc reached $3575. That was on the back of GFM clearing their debt (Dec 2017) and everyone counting on 40kt zinc production plus byproducts going forward. That day GFM broke out above the multi-year (if not all-time) high of 132. Everything looked rosy going forward.

Fast forward to today and you have the fact that Zinc is back to $2500, having recently hit sub $2300. Current zinc rolling 100DMA is at $2715 and rolling 200DMA about to break $3000. Nothing looks good from the base metal point of view. Then you also having falling silver and gold prices.

The H1 production stats were very poor and I believe the company was remiss in not advising of this fact and also not putting the comparisons in the H1 figures. All pretty stinky from an investor pov. The reaction is what you get when a company is incorporated in some distant minor country and not rapped on the knuckles by the FCA.

Going forward then my scenario 1 above suggests that the EPS in 2019 'could' be as low as 6c, assuming the metal prices today are the norm. At 6c 2019 EPS then you are looking at a share price of 48-60c or 36-45p. It can still get a lot worse, depending on the market conditions and the future production stats! GFM need zinc above $2000 just to breakeven. However, it may also represent a great opportunity if things turn around.

Apart from advising on the production shortfall, which would have led to the same outcome, just what do you expect the company to do? It has been rightly hammered: mostly down to the falling price of metals but also down to the poor governance.

Let me ask you this? What actions would you have taken in their position? What do you suggest now?

[up just a little bit] 27/9/2018 18:59

Look ladies and gentlemen there must, really must have been a better way to maintain the share price. I'm not talking about £1.60/£1.40 and yes indeed Sage it's obvious that zinc is the main driver however there are actions that can preserve to a certain extent the share price. 86p!!!! Really is that what it's worth? NO There are actions that should have been taken this is deplorable

[podgyted] 27/9/2018 17:15

Polaris

Good post.

Your option 1 agrees with my 12-13c EPS if nothing changes on a production basis and POZ.

My own personal emphasis is on low cost production - there's a certain floor in the uncertain world of commodities in dealing with companies that can be the last man standing. Think of Rio wrt iron ore, Saudi for oil etc, etc .....

Griffin was a low cost producer - H1 was disastrous from that perspective - not just low production but big cost increases. I feel that until Griffin produce something that says this has reversed this has a long way to fall even with the helpful increases at the moment in the POZ.

[podgyted] 27/9/2018 17:02

Sage - from 13:00 onwards it has been all sales below 86p.

[polaris] 27/9/2018 17:02

rmjones - yes, metals reaching B/E levels, approximately 20% drop from where we stand now.

[rmjones] 27/9/2018 16:42

Polaris:-
"Right now, i cannot see metals reaching these values ..."

Current Zinc=$2576/tonne
Gold= $1200 / oz
Silver is $14.40
Lead: $2060

Do you mean you can't see metal prices FALL to the break-even levels?