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Share Name Share Symbol Market Type Share ISIN Share Description
Griffin Mining Limited LSE:GFM London Ordinary Share BMG319201049 ORD $0.01
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.50 -0.69% 71.50 70.00 73.00 72.00 71.50 72.00 12,326 09:25:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 77.7 27.3 11.6 6.3 124

Griffin Mining Ld Final Results

17/06/2020 7:00am

UK Regulatory (RNS & others)


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RNS Number : 1667Q

Griffin Mining Ld

17 June 2020

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

17(th) June 2020

2019 Results

Annual Report & Accounts

Griffin Mining Limited ("Griffin" or the "Company") has today published its annual report and financial statements for the year ended 31 December 2019 which are available on the Company's web site wwww.griffinmining.com. The release of these were delayed by travel restrictions within and to China imposed by authorities to contain the Coronavirus pandemic preventing Company personnel and the auditors completing their work at Caijiaying.

In 2019, the Company and its subsidiaries (together the "Group") recorded;

   --    Revenues of $82,267,000 (2018: $99,067,000); 
   --    Operating profit of $14,225,000 (2018: $35,555,000); 
   --    Profit before tax of $11,712,000 (2018: $34,798,000); 
   --    Profit after tax of $6,084,000 (2018: $25,477,000); and 
   --    Earnings of 3.52 cents per share (2018: 14.83 cents). 

Lower profits in 2019 were primarily caused by falling zinc prices and significantly higher smelter treatment charges resulting in lower zinc metal in concentrate prices received by the Group.

Despite greater quantities of zinc metal in concentrate being produced and sold, zinc metal in concentrate sales before royalties and resource taxes in 2019 amounted to $55,627,000 compared with $78,821,000 in 2018. Lead and precious metal in concentrate sales amounted to $29,850,000 compared with $24,920,000 in 2018.

In 2019, metal in concentrate sales were:

   --    Zinc 37,811 tonnes (2018: 36,672 tonnes); 
   --    Gold 17,712 ounces (2018: 16,206 ounces); 
   --    Silver 333,093 ounces (2018: 279,632 ounces); and 
   --    Lead 1,221 tonnes (2018: 1,027 tonnes). 

Average prices achieved in 2019 were:

   --    Zinc metal per tonne of $1,471 (2018: $2,149); 
   --    Gold metal per ounce of $1,318 (2018: $1,173); 
   --    Silver metal per ounce of $13.8 (2018: $12.60); and 
   --    Lead metal per tonne of $1,575 (2018: $2,250). 

Cost of sales of $48,609,000 in 2019 were up 6.1% on that incurred in 2018 of $45,798,000. This increase may be attributed higher mining costs with additional rock bolting and meshing costs and additional depreciation provisions reflecting increased costs capitalised being depreciated. Haulage costs were broadly in line with that incurred in 2018 and processing (milling) costs were marginally down on that incurred in 2018.

Administration expenses (including those of the Caijiaying Mine) rose $1,719,000 (9.7%) from $17,714,000 in 2018 to $19,433,000 in 2019. This increase arises mainly from inflationary increases; the pursuit of the mining licence over Zone II; levies and other costs in complying with Chinese health, safety and environmental requirements; and the expansion of activities of China Zinc in investigating potential ventures elsewhere in China.

Foreign exchange losses of $93,000 (2018: gains $42,000) were recorded in 2019.

Interest of $171,000 (2018: $223,000) was received on bank deposits in 2019 whilst $51,000 (2018: $Nil) was paid on short term bank loans.

Losses on the disposal of fixed assets of $305,000 (2018: $939,000) were recorded.

Provision of $1,985,000 (2018: $Nil) has been made to fully provide against the costs capitalised in respect of Hebei Sino Anglo's exploration licence area. Griffin intends to agree a contractual right to the licence to be transferred to Griffin's joint venture partner, prior to expiry of the licence in July 2020.

Finance costs on the lease of the dry tailings facility at Caijiaying Mine and the London and Perth offices totalling $326,000 (2018: $283,000) were incurred.

Income taxes of $5,628,000 (2018: $9,321,000) have been charged in 2019. This includes a deferred taxation charge of $380,000 (2018: credit $343,000).

Basic earnings per share in 2019 was 3.52 cents (2018: 14.83 cents) and diluted earnings per share was 3.24 cents (2018 13.35 cents).

Cash generated from operations of $21,639,000 (2018: $20,439,000) have been used in further developing the Caijiaying Mine and facilities.

Attributable net assets per share at 31 December 2019 was $1.24 (2018: $1.22)

Chairman's Statement:

Although 2019 turned out to be a successful year operationally for the Company, very low commodity prices coupled with very high treatment charges produced a below average financial result. In addition, as has been the case for far too many years to remember, any success was overshadowed by the continuing failure of regulatory authorities in China to issue the Company with its new mining licence over Zone II at the Caijiaying Mine.

Production of zinc, gold, silver and lead all increased in 2019 but prices received for zinc, gold and lead all decreased sharply leading to a 17% fall in revenue and a subsequent 60% fall in operating profit. For anyone who has ever read one of my Annual Report missives, my standard comment every year is that mining is a fixed cost business. Provided we can control our costs and maintain our production, we are at the vagaries of world commodity prices for our financial success, and even more importantly, to treatment charges offered by smelters in China. Unfortunately, 2019 was a particularly bad year for both.

Operationally, the focus was on developing Zone III for greater, and more efficient, production and that was achieved by the continued development and linking of the North and South Declines and associated infrastructure down to the 1000mRL; the development of the South Haulage Drive in preparation for the commencement of development into Zone II; significant mine ventilation improvements including two new 5 metre diameter ventilation shafts developed from surface together with an underground 5 metre diameter ventilation shaft down to the 1175mRL level and the completion of three ventilation shafts (the Underground Fresh Air Shaft totalling 126 metres, the Main Exhaust Ventilation Shaft totalling 305 metres and the Central Fresh Air Shaft totalling 176 metres) significantly improving ventilation and the working environment underground.

Geologically, the resource base continued to expand. Even more astonishingly, the conversion rate at the Caijiaying Mine from an Inferred to a Measured or Indicated Resource is effectively 157% based on a comparison of previous and current Mineral Resource Estimate reports. This means that exploration and resource definition drilling is not only successfully converting existing Inferred mineralisation to higher categories, but also defining new Measured or Indicated mineralisation. This is an extraordinary statistic and gives enormous comfort for the ultra-long mine life the Company will enjoy at the Caijiaying Mine.

In addition, ongoing exploration has utilised knowledge gained from the evolving structural model at Zone III to enable re-interpretation of structure in the adjacent zones. This is allowing the resource models for Zones II and VIII to be more accurately measured, leading to the probability of new resource estimates to be released in 2020 for these zones.

Yet, in light of all the above progress, 2019 has been overshadowed by the extraordinary beginning to 2020, the effects which remain with us still and will do for at least the next decade and perhaps forever. At the Company level, the declaration of a pandemic by the government of the People's Republic of China on the 24 January 2020 due to the Coronavirus COVID-19 outbreak forced mining and underground development operations not to restart after the traditional 2 week mining shutdown for the Chinese New Year holidays. Ore stockpiled at surface was processed until exhausted on the 30 January 2020, at which time the mill was placed on care and maintenance. Operations restarted on the 21 February 2020. Underground mining operations reached 100% of planned rates by the 13 March 2020 and, with a new supply of ore, processing operations by late March 2020. Nevertheless, international travel restrictions remain in place preventing foreign personnel returning to the Caijiaying due to the prohibition of entry into China to anyone other than Chinese citizens and permanent residents. This is currently having only a limited impact upon operations at the Caijiaying Mine.

At the operational level, we are grateful that we find our operations based in north-west China where COVID-19 virtually did not appear nor did it severely disrupt economic activity. Further, we operate, and our commodities are sold, in China where the economy has virtually returned to full production, albeit not with the projected economic growth estimated in 2019. It has been particularly pleasing to see the treatment charges start to fall significantly in the last 2 months, inevitably due to the lack of imports of foreign sourced concentrates by Chinese smelters.

At the Company level, thanks must be extended to the prudency of the directors with their long experience in the mining sector and the nature of the cyclical nature of commodities who only allowed debt to be incurred at the operational level to build or expand the operations at the Caijiaying Mine. Retained earnings, which also could have been paid out in dividends, were retained for the same capital needs. In addition, borrowings were never taken at the Griffin holding company level to buy back stock, something which will not only bankrupt a multitude companies, but also many industries, including the US Airline industry, without massive government assistance.

The COVID-19 crisis, debt laden balance sheets and the continuing low commodity price environment has shown the words of Warren Buffet to be truer than ever, "Only when the tide goes out do you discover who's been swimming naked." The last 3 months has seen a large closure of marginal zinc mines and world zinc production falling by at least 10%. This trend will inevitably get worse before it gets better, but it bodes well for the zinc price.

With the expectation of the granting of the new mining licence and the doubling of production, the Company appointed a new Nominated Advisor and Broker, Numis Securities Limited. We look forward to a long and successful relationship as the Company takes the next giant step in its growth.

Penultimately, it's my privilege to thank the people who have gone, and continue to go, the extra yard to maintain the Company's status as the only foreign owned mining company operating in China. That is an achievement almost none can imagine in its complexity, intricacy, difficulty and exhausting nature. It deserves all of our thanks. From the truly outstanding Company directors, our Chinese joint venture directors, our senior foreign staff, our Chinese operational staff, our contractors, consultants, Chinese government officials, spouses, partners and their children, I thank you for your time, excellence and dedication on behalf of the shareholders. You have been extraordinary.

Further information

Griffin Mining Limited Telephone: +44 (0)20 76290 7772

   Mladen Ninkov  -   Chairman 

Roger Goodwin - Finance Director

Numis Securities Limited: Telephone: +44 (0)20 7260 1000

John Prior

Alamgir Ahmed

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

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No.596/2014.

Griffin Mining Limited

Summarised Consolidated Income Statement

For the year ended 31 December 2019

(expressed in thousands US dollars)

 
                                                2019      2018 
                                             Audited   Audited 
                                                $000      $000 
 
Revenue                                       82,267    99,067 
 
Cost of sales                               (48,609)  (45,798) 
 
 
Gross profit                                  33,658    53,269 
 
Administration expenses                     (19,433)  (17,714) 
 
 
Profit from operations                        14,225    35,555 
 
Losses on disposal of plant and equipment      (305)     (939) 
Impairment of intangible assets              (1,985)         - 
Foreign exchange(losses) / gains                (93)        42 
Finance income                                   171       223 
Finance costs                                  (377)     (283) 
Other income                                      76       200 
 
 
Profit before tax                             11,712    34,798 
 
Income tax expense                           (5,628)   (9,321) 
 
 
Profit for the year                            6,084    25,477 
                                            ========  ======== 
 
 
Basic earnings per share (cents)                3.52     14.83 
                                            ========  ======== 
 
Diluted earnings per share (cents)              3.24     13.35 
                                            ========  ======== 
 

Griffin Mining Limited

Summarised Consolidated Statement of Comprehensive Income

For the year ended 31 December 2019

(expressed in thousands US dollars)

 
                                                     2019       2018 
                                                  Audited    Audited 
                                                     $000       $000 
 
Profit for the year                                 6,084     25,477 
                                                ---------  --------- 
 
Other comprehensive (expenses) / income 
 that will be reclassified to profit or loss 
 
Exchange differences on translating foreign 
 operations                                       (2,324)    (5,856) 
 
 
  Other comprehensive (expenses) / income 
  for the year, net of tax                        (2,324)    (5,856) 
                                                ---------  --------- 
 
 
  Total comprehensive income for the year           3,760     19,621 
                                                =========  ========= 
 

Griffin Mining Limited

Summarised Consolidated Statement of Financial Position

As at 31 December 2019

(expressed in thousands US dollars)

 
                                                          2019      2018 
                                                       Audited   Audited 
                                                          $000      $000 
ASSETS 
Non-current assets 
Property, plant and equipment                          228,287   213,140 
Intangible assets - exploration interests                  322     2,016 
                                                      --------  -------- 
                                                       228,609   215,156 
                                                      --------  -------- 
Current assets 
Inventories                                              3,839     4,951 
Receivables and other current assets                     1,861     2,819 
Cash and cash equivalents                               19,885    28,452 
                                                      --------  -------- 
                                                        25,585    36,222 
                                                      --------  -------- 
 
Total assets                                           254,194   251,378 
                                                      ========  ======== 
 
EQUITY AND LIABILITIES 
Equity attributable to equity holders of the parent 
Share capital                                            1,728     1,727 
Share premium                                           68,455    68,442 
Contributing surplus                                     3,690     3,690 
Share based payments                                     2,072     2,072 
Shares held in treasury                                  (917)     (917) 
Chinese statutory re-investment reserve                  2,500     2,386 
Other reserve on acquisition of non controlling 
 interests                                            (29,346)  (29,346) 
Foreign exchange reserve                                 1,703     4,027 
Profit and loss reserve                                165,059   159,161 
                                                      --------  -------- 
Total equity attributable to equity holders of 
 the parent                                            214,944   211,242 
                                                      --------  -------- 
 
Non-current liabilities 
Long-term provisions                                     2,150     2,302 
Deferred taxation                                        2,731     2,393 
Finance lease                                              479       258 
                                                      --------  -------- 
                                                         5,360     4,953 
                                                      --------  -------- 
Current liabilities 
Trade and other payables                                31,769    33,632 
Finance lease                                            2,121     1,551 
Total current liabilities                               33,890    35,183 
                                                      --------  -------- 
 
Total equities and liabilities                         254,194   251,378 
                                                      ========  ======== 
 
Attributable net asset value per share to equity 
 holders of parent                                        1.24     $1.22 
 

Griffin Mining Limited

Summarised Consolidated Statement of Changes in Equity.

For the year ended 31 December 2019

(expressed in thousands US dollars)

 
                  Share    Share  Contributing     Share     Shares        Chinese            Other   Foreign   Profit         Total 
                Capital  Premium       surplus     Based    held in  Re-investment       reserve on  Exchange      and  attributable 
                                                                                                                  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 January 
  2018            1,790   71,310         3,690     2,072    (3,875)          1,583         (29,346)     4,871   91,174       143,269 
 
  Regulatory 
  transfer for 
  future 
  investment          -        -             -         -          -            288                               (288)             - 
Issue of 
 shares on 
 exercise 
 of options          27    1,147             -         -          -              -                -         -        -         1,174 
Purchase of 
 shares held 
 in 
 treasury             -        -             -         -      (917)              -                -         -        -         (917) 
Transaction 
 with owners         27    1,147             -         -      (917)            288                -         -    (288)           257 
                -------  -------  ------------  --------  ---------  -------------  ---------------  --------  -------  ------------ 
 
  Profit for 
  the year            -        -             -         -          -              -                -         -   25,477        25,477 
Other 
comprehensive 
expense: 
Exchange 
 differences 
 on 
 translating 
 foreign 
 operations           -        -             -         -          -          (106)                -   (5,750)        -       (5,856) 
                -------  -------  ------------  --------  ---------  -------------  ---------------  --------  -------  ------------ 
Total 
 comprehensive 
 income               -        -             -         -          -          (106)                -   (5,750)   25,477        19,621 
                -------  -------  ------------  --------  ---------  -------------  ---------------  --------  -------  ------------ 
 
  At 1 January 
  2019            1,727   68,442         3,690     2,072      (917)          2,386         (29,346)     4,027  159,161       211,242 
 
  Regulatory 
  transfer for 
  future 
  investment          -        -             -         -          -            153                               (153)             - 
Issue of 
 shares on 
 exercise 
 of options           1       13             -         -          -              -                -         -        -            14 
Transaction 
 with owners          1       13             -         -          -            153                -         -    (153)            14 
                -------  -------  ------------  --------  ---------  -------------  ---------------  --------  -------  ------------ 
 
  Profit for 
  the year            -        -             -         -          -              -                -         -    6,084         6,084 
Adjustment for 
 adoption of 
 IFRS 16 
 leases                                                                                                           (33)          (33) 
Other 
comprehensive 
expense: 
Exchange 
 differences 
 on 
 translating 
 foreign 
 operations           -        -             -         -          -           (39)                -   (2,324)        -       (2,363) 
                -------  -------  ------------  --------  ---------  -------------  ---------------  --------  -------  ------------ 
Total 
 comprehensive 
 income               -        -             -         -          -           (39)                -   (2,324)    6,051         3,688 
                -------  -------  ------------  --------  ---------  -------------  ---------------  --------  -------  ------------ 
 
  At 31 
  December 
  2019            1,728   68,455         3,690     2,072      (917)          2,500         (29,346)     1,703  165,059       214,944 
                =======  =======  ============  ========  =========  =============  ===============  ========  =======  ============ 
 

Griffin Mining Limited

Summarised Consolidated Cash Flow Statement

For the year ended 31 December 2019

(expressed in thousands US dollars)

 
                                                         2019      2018 
                                                      Audited   Audited 
                                                         $000      $000 
 
Net cash flows from operating activities 
Profit before taxation                                 11,712    34,798 
Foreign exchange losses / (gains)                          93      (42) 
Finance income                                          (171)     (223) 
Finance costs                                             377       283 
Depreciation, depletion and amortisation               12,343    10,328 
Impairment of intangible assets                         1,985         - 
Losses on disposal of equipment                           305       939 
Decrease in inventories                                 1,112       917 
Decrease / (increase) in receivables and other 
 current assets                                           959   (1,059) 
Increase / (decrease) in trade and other payables       4,016  (12,917) 
Taxation paid                                        (11,092)  (12,585) 
                                                     --------  -------- 
Net cash inflow from operating activities              21,639    20,439 
                                                     --------  -------- 
 
Cash flows from investing activities 
Interest received                                         171       223 
Proceeds on disposal of equipment                           1       351 
Payments to acquire - mineral interests              (18,883)  (10,669) 
Payments to acquire - plant and equipment             (8,193)   (6,134) 
Payments to acquire office, office furniture & 
 equipment                                               (69)         - 
Payments to acquire intangible fixed assets - 
 exploration interests                                  (308)      (81) 
                                                     --------  -------- 
Net cash outflow from investing activities           (27,281)  (16,310) 
                                                     --------  -------- 
 
Cash flows from financing activities 
Issue of ordinary shares on exercise of options            14     1,174 
Purchase of shares for treasury                             -     (917) 
Interest paid                                            (52)         - 
Finance lease advance                                      65 
Finance lease repayments                              (2,762)   (2,728) 
Net cash outflow from financing activities            (2,735)   (2,471) 
                                                     --------  -------- 
 
(Decrease) / increase in cash and cash equivalents    (8,377)     1,658 
 
Cash and cash equivalents at the beginning of 
 the year                                              28,452    26,518 
Effects of exchange rates                               (190)       276 
                                                     --------  -------- 
Cash and cash equivalents at the end of the year       19,885    28,452 
                                                     --------  -------- 
 
Cash and cash equivalents comprise bank deposits. 
Bank deposits                                          19,885    28,452 
                                                     ========  ======== 
 

Included within net cash flows of $8,377,000 (2018 $1,658,000) are foreign exchange losses of $93,000 (2018: gains $42,000) which have been treated as realised.

Notes:

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 2019 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 2019 statutory financial statements.

The annual report and accounts for 2019 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 2019 and 2018 were derived from the Caijiaying zinc gold mine.

 
                                                              2019      2018 
                                                              $000      $000 
 REVENUES 
 China                                                      82,267    99,067 
                                                          ========  ======== 
 
 Zinc concentrate sales                                     55,627    78,821 
 Lead and precious metals concentrate sales                 29,850    24,920 
 Royalties and resource taxes                              (3,210)   (4,674) 
                                                          --------  -------- 
                                                            82,267    99,067 
                                                          ========  ======== 
 
 COST OF SALES: CHINA 
 Mining costs                                               17,652    16,680 
 Haulage costs                                               8,277     8,374 
 Processing costs                                           10,019    10,423 
 Depreciation (excluding depreciation in administration 
  costs)                                                    11,462     9,652 
 Stock movements                                             1,199       669 
                                                          --------  -------- 
                                                            48,609    45,798 
                                                          ========  ======== 
 
 ADMINISTRATION EXPENSES 
 China                                                      14,253    13,122 
 Australia                                                     414       442 
 UK / Bermuda                                                4,766     4,150 
                                                          --------  -------- 
                                                            19,433    17,714 
                                                          ========  ======== 
 

All revenues, cost of sales and operating expenses charged to profit relate to continuing operations.

Notes (continued):

 
 TOTAL ASSETS              2019      2018 
                           $000      $000 
 China                  248,119   245,505 
 Australia                  686       924 
 UK / Bermuda             5,389     4,949 
                       --------  -------- 
                        254,194   251,378 
                       ========  ======== 
 
 CAPITAL EXPITURE       2019      2018 
                           $000      $000 
 China                   27,076    16,803 
 Australia                   65 
 UK / Bermuda                 4         - 
                       --------  -------- 
                         27,145    16,803 
                       ========  ======== 
 
 
 FINANCE INCOME               2019   2018 
                              $000   $000 
 Interest on bank deposits     171    223 
                             =====  ===== 
 
 
 FINANCE COSTS                                2019   2018 
                                              $000   $000 
 Interest payable on short term bank loans      51      - 
 Finance lease interest                        326    283 
                                             -----  ----- 
                                               377    283 
                                             =====  ===== 
 
 
 OTHER INCOME                    2019   2018 
                                 $000   $000 
 Scrap and sundry other sales      76    200 
                                =====  ===== 
 

Income Tax Expense

 
                                                               2019     2018 
                                                               $000     $000 
 Profit for the year before tax                              11,712   34,798 
                                                            -------  ------- 
 
 Expected tax expense at a standard rate of PRC income 
  tax of 25% (2018 25%)                                       2.929    8,699 
 Adjustment for tax exempt items : 
 - Income and expenses outside the PRC not subject 
  to tax                                                        746      629 
 
 Adjustments for short term timing differences : 
 - In respect of accounting differences                       (234)    (704) 
 
 Adjustments for permanent timing differences re 
  prior year adjustments                                          -    (185) 
 Adjustments for permanent timing differences other           1,757    1,154 
 
 Withholding tax on intercompany dividends and charges           50       71 
 
 Current taxation expense                                     5,248    9,664 
                                                            -------  ------- 
 
 Deferred taxation expense / (credit) 
 Correction of provision brought forward                         18    (674) 
 Origination and reversal of temporary timing differences       362      331 
                                                                380    (343) 
                                                            -------  ------- 
 
 Total tax expense                                            5,628    9,321 
                                                            =======  ======= 
 

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 2019 (25% in 2018) 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:

 
                                            2019                                     2018 
                            Earnings        Weighted    Per share    Earnings        Weighted    Per share 
                                             Average       amount                     Average       amount 
                                $000          number      (cents)                      number      (cents) 
                                           of shares                     $000       of shares 
 Basic earnings per 
  share 
 Earnings attributable 
  to ordinary 
  shareholders                 6,084     172,748,831        13.52      25,477     171,842,166        14.83 
 Dilutive effect of 
  securities 
 Options                           -      15,107,500       (0.28)           -      16,494,541       (1.30) 
                           ---------   -------------   ----------   ---------   -------------   ---------- 
 Diluted earnings 
  per share                    6,084     187,856,331         3.24      25,477     188,336,707        13.53 
                           =========   =============   ==========   =========   =============   ========== 
 
 

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 and   Office furniture       Total 
                                  Interests    mobile mine        & equipment 
                                                 equipment 
 
   At 1 January 2018                167,046         47,567                 82     214,695 
 Foreign exchange adjustments       (4,450)        (2,291)                  -     (6,741) 
 Additions during the year           10,669          6,134                  -      16,803 
 Disposals                                -        (1,289)                  -     (1,289) 
 Depreciation charge for 
  the year                          (5,927)        (4,374)               (27)    (10,328) 
                                -----------  -------------  -----------------  ---------- 
 At 1 January 2019                  167,338         45,747                 55     213,140 
 Foreign exchange adjustments       (1,611)          (786)                  -     (2,397) 
 Additions during the year           18,883          8,193                 69      27,145 
 Change in estimate of mine 
  closure costs                       (115)              -                  -       (115) 
 Adjustment for adoption 
  of IFRS 16 leases                       -              -                370         370 
 Adjustment for change in 
  accounting estimate on 
  finance lease                           -          2,792                  -       2,792 
 Disposals                                -          (305)                  -       (305) 
 Depreciation charge for 
  the year                          (6,912)        (5,268)              (163)    (12,343) 
                                -----------  -------------  -----------------  ---------- 
 
   At 31 December 2019              177,582         50,373                331     228,287 
                                ===========  =============  =================  ========== 
 
 At 31 December 2017 
 Cost                               200,708         72,366                134     273,208 
 Accumulated depreciation          (33,662)       (24,799)               (52)    (58,513) 
                                -----------  -------------  -----------------  ---------- 
 Net carrying amount                167,046         47,567                 82     214,695 
                                ===========  =============  =================  ========== 
 
 At 31 December 2018 
 Cost                               205,840         72,028                134     278,002 
 Accumulated depreciation          (38,502)       (26,281)               (79)    (64,862) 
                                -----------  -------------  -----------------  ---------- 
 Net carrying amount                167,338         45,747                 55     213,140 
                                ===========  =============  =================  ========== 
 
 At 31 December 2019 
 Cost                               222,588         80,935                573     304,097 
 Accumulated depreciation          (45,006)       (30,562)              (242)    (75,810) 
                                -----------  -------------  -----------------  ---------- 
 Net carrying amount                177,582         50,373                331     213,140 
                                ===========  =============  =================  ========== 
 

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.

Property, plant and equipment includes $1,997,000 (2018: $15,034,000) of assets under construction yet to be depreciated.

The offices, office furniture and equipment disclosed above relates solely to the fixed assets of the Company and China Zinc Pty Limited.

Notes (continued):

Property, plant and equipment (continued)

During 2013 plant and equipment with a value of $11,381,000, revalued in 2019 to $14,150,000, were acquired under a finance lease, upon which depreciation of $5,123,000 (2018: $4,035,000) has been provided. At 31 December 2019 the net carrying amount of this equipment was $9,027,000 (2018: $7,534,000). In 2019 the Company's London office lease was capitalised to comply with IFRS 16 with a value of $371,000 upon which depreciation of $114,000 has been provided in 2019. At 31 December 2019 the net carrying amount of this office was $247,000.

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, most notably metal prices, 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.

The directors have reassessed the net carrying value of capitalised costs at 31 December 2019, particularly in view of the decline in metal prices for zinc and smelter treatment charges experienced in 2019. In estimating the discounted future cash flows from the continuing operations at the Caijiaying mine the following principal assumptions were made:

-- Future market prices for zinc of $2,425 per tonne, gold of $1,500 per troy ounce and silver of $15 per troy ounce;

   --    Zinc treatment charges of 30% of market prices; 

-- Extraction of measured and indicated resources at Zone III at Caijiaying of 30 million tonnes with ore mined and processed at a rate of 1.2 million tonnes of ore per annum;

-- Operating costs, recoveries and payables based upon past performance and that budgeted for 2020;

-- Capital costs based upon that initially scheduled with sustaining capital based on future scheduling:

   --    Discount interest rate of 10%; and 

-- Continued maintenance and grant of applicable licences and permits. This assumes that Hebei Hua Ao will be converted to an equity joint stock company with an indefinite life without compensation to the Chinese Joint Venture Partner and that the business licence will be renewed at no significant cost.

Notes (continued):

Intangible Assets

China - mineral exploration interests

 
                                        $000 
 At 1 January 2018                     2,035 
 Foreign exchange adjustments          (100) 
 Additions during the year                81 
                                    -------- 
 At 1 January 2019                     2,016 
 Foreign exchange adjustments           (17) 
 Additions during the year               308 
 Impairment during the year          (1,985) 
 At 31 December 2018                     322 
                                    ======== 
 

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 2019 impairment charges of $1,985,000 (2018: $Nil) had been provided and charged to the income statement in respect of the above exploration costs previously capitalised by Hebei Sino Anglo. Griffin intends to agree a contractual right to transfer the exploration licence to Griffin's joint venture partner, Yuanrun, prior to expiry of the licence.

POST BALANCE SHEET EVENTS

Since the year end operations at Caijiaying were suspended for a month from 24 January to comply with restrictions instigated by the PRC authorities to contain the COVID 19 pandemic. Operations at Caijiaying recommenced on 21 February 2020 and have since steadily increased such that underground mining operations reached 100% of planned rates by mid-March and processing operations by late March. Since the re-commencement of operations at Caijiaying, restrictions in place to contain the coronavirus pandemic throughout China have relaxed, and as a result Hebei Hua Ao has been able to sell its output. As a result of these events, production and sale of metals in concentrate, and profitability was impacted in the first quarter of 2020, but has returned to planned levels subsequently.

As at 31 December 2019 there were no adjusting post balance sheet events (2018: none).

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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June 17, 2020 02:00 ET (06:00 GMT)

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