Half-year Report

RNS Number : 8648G

Griffin Mining Ld

11 August 2016

 

60 St James's Street, London SW1A 1LE, United Kingdom

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

E mail: [e-mail]

 

11^th August 2016

INTERIM STATEMENT

for the six months ended 30^th June 2016

Griffin Mining Limited ("Griffin" or "the Company") has today released its results for the six months ended 30th June 2016.

Highlights:

·     Revenues of $20.8 million (2015: $35.2 million)

·     Operating loss of $1.8 million (2015: profit $6.4 million)

·     Loss before tax of $4.1 million (2015: profit $3.7 million)

·     Loss after tax of $4.1 million (2015: Profit $2.2 million)

Financial and Trading:

Revenues and profits were severely impacted by the suspension of mining until 22^nd January following a fatality at Griffin's Caijiaying mine in October 2015 and disruption caused by the Chinese new year holidays in February resulting in a lack of ore and low grade ore to process in the first quarter of 2016.  Revenues were further impacted by relatively low commodity prices in the first quarter of 2016.  The second quarter has seen an increase in the amount of ore mined and consequentially processed which together with rising commodity prices has led to a return to profitability.  

With 13.5% less ore hauled to surface, throughput of 365,337 tonnes of ore in the six months to 30^th June 2016 at the Caijiaying Mine was down 12.8% on that achieved of 418,950 tonnes in the six months to 30^th June 2015. With surface stockpiles drawn down with lower grades, metal in concentrate production in the period was:

·     13,420 tonnes of zinc (2015: 20,081 tonnes);

·     705 tonnes of lead (2015: 962 tonnes);

·     120,953 ounces of silver (2015: 193,098 ounces); and

·     3,553 ounces of gold (2015: 6,274 ounces).

Zinc revenues before royalties and resource taxes in the six months to 30^th June 2016 were $15,798,000 (2015 $26,288,000) with less zinc metal in concentrate sold and the average price received after smelter charges of $1,190 per tonne down 13% on that received in 2015 of $1,368.  Lead and precious metals revenues were $6,372,000 (2015: $10,799,000) with less metal in concentrate sold. 

Cost of sales in the six months to 30^th June 2016 was down 16.4% on the same period in 2015 reflecting the suspension in mining and haulage and consequent reduction in throughput. Costs were further reduced by a 7.5% fall in the value of the Renminbi in the period compared to the same period in 2015.

With improved mining, haulage and processing rates in the second quarter, unit costs were down on the same period in 2015 with; costs per tonne of ore mined down 27.7%; costs per tonne of ore hauled down 20.3%; and costs per tonne of ore processed down 6.1%.  With the fall in the value of the Renminbi and less expenditure on local community projects, operating (administration) costs were $5,454,000 down 34% from that incurred in the six months to 30^th June 2015 of $8,124,000.

Profits before tax were impacted by: foreign exchange losses of $190,000 (2015: $24,000) arising from a weaker Renminbi against the US dollar in the period; interest payable on Chinese bank loans of $1,938,000 (2015: $2,480,000); finance lease interest of $307,000 (2015: $392,000); interest receivable of $80,000 (2015: $106,000); and other income of $81,000 (2015: $36,000).

In view of the losses incurred no provision for taxation has been made (2015: $1,442,000).

Basic and diluted losses per share were 2.29 cents (2015: earnings 1.24 cents).  At 30^th June 2016, attributable net assets per share amounted to 75 cents (2015: 82 cents).

Funds continue to be repatriated from China to cover central costs whilst leaving sufficient working capital within Hua Ao for the further development of the Caijiaying mine. During the period $5,620,000 was expended on mine development and plant upgrade work.

Administrative state issues in China outside the Company's control continue to delay the grant of a new mining licence over the unmined Zone III deeps, Zone II and adjacent areas at Caijiaying.  Development of the mine at Zone III continues.

In line with previous years' practice and the Company's policy of determining annual dividends at the time of the Company's full year results, no interim dividend has been declared by the Board of Griffin.

Chairman's Statement

Chairman Mladen Ninkov commented, "The interim results, although by their very nature disappointing, need to be understood in the context of the short and long term consequences of the 5 month shutdown caused by the death of a contractor at Caijiaying in late 2015.  The cessation of operations not only ceased mining, processing, production, revenues and profits, but also prevented underground clean-up activities and vital capital development to be undertaken in the down period.  The effects of the shutdown were being felt, both operationally and financially, until June of this year.  Barring any further extraneous events, the second half of 2016 is expected to return to normality and, with higher commodity prices, the Company is confident of a very acceptable second half year period.  Needless to say, the Company continues to progress the Mining Licence application and remains hopeful of a successful conclusion to this matter." 

 

Further information

Griffin Mining Limited

Mladen Ninkov - Chairman                               Telephone: [phone]

Roger Goodwin - Finance Director

Panmure Gordon (UK) Limited                              Telephone: [phone]

             Dominic Morley

Cantor Fitzgerald Europe Limited                      Telephone: [phone] 

            Stewart Dickson

            Patrick Pittaway

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 30/06/2016 Unaudited		6 months to 30/06/2015 Restated Unaudited		Year to 31/12/2015 Audited
	$000		$000		$000
Revenue	20,818		35,216		59,779
Cost of sales	(17,290)		(20,676)		(42,948)
Gross profit	3,528		14,540		16,831
Net operating expenses	(5,354)		(8,124)		(12,530)
(Loss) / profit from operations	(1,826)		6,416		4,301
Losses on disposal of equipment	-		-		(48)
Foreign exchange (losses)	(190)		(24)		(447)
Finance income	80		106		202
Finance costs	(2,245)		(2,872)		(5,084)
Other income	81		36		136
(Loss) / profit before tax	(4,100)		3,662		(940)
Income tax  expense	-		(1,442)		(1,246)
(Loss) / profit  after tax	(4,100)		2,220		(2,186)
Basic (loss) / earnings per share (cents)	(2.29)		1.24		(1.22)
Diluted (loss) / earnings per share (cents)	(2.29)		1.24		(1.22)

 

Griffin Mining Limited

Condensed Consolidated Statement Of Comprehensive income

(expressed in thousands US dollars)

	6 months to 30/06/2016 Unaudited		6 months to 30/06/2015 Unaudited		Year to 31/12/2015 Audited
	$000		$000		$000
(Loss)/ profit for the financial period	(4,100)		2,220		(2,186)
Other comprehensive income
Exchange differences on translating foreign operations	(1,184)		10		(2,967)
Other comprehensive income for the period, net of tax	(1,184)		10		(2,967)
Total comprehensive income for the period	(5,284)		2,230		(5,153)

Griffin Mining Limited

Condensed Consolidated Statement Of Financial Position

 (expressed in thousands US dollars)

	30/06/2016		30/06/2015		31/12/2015
	Unaudited		Unaudited		Audited
	$000		$000		$000
ASSETS
Non-current assets
Property, plant and equipment	209,388		213,186		210,252
Intangible assets - Exploration interests	1,843		1,946		1,870
	211,231		215,132		212,122
Current assets
Inventories	4,718		16,797		7,182
Other current assets	4,062		3,293		3,194
Cash and cash equivalents	18,313		24,348		24,062
	27,093		44,438		34,438
Total assets	238,324		259,570		246,560
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital	1,790		1,790		1,790
Share premium	71,310		71,310		71,310
Contributing surplus	3,690		3,690		3,690
Share based payments	1,672		388		1,363
Shares held in treasury	(3,875)		(3,875)		(3,875)
Chinese statutory re-investment reserve	1,558		1,688		1,595
Other reserve on acquisition of non-controlling interests	(29,346)		(29,346)		(29,346)
Foreign exchange reserve	6,921		10,946		8,068
Profit and loss reserve	81,250		89,762		85,350
Total equity attributable to equity holders of the parent	134,970		146,353		139,945
Non-current liabilities
Long-term provisions	2,376		2,584		2,433
Deferred taxation	2,568		1,954		2,630
Finance lease	5,670		10,693		7,454
	10,614		15,231		12,517
Current liabilities
Taxation payable	-		-		-
Trade and other payables	28,654		30,197		28,977
Finance lease	2,420		725		1,982
Bank loans	61,666		67,064		63,139
Total liabilities	92,740		97,986		94,098
Total equities and liabilities	238,324		259,570		246,560
Number of shares in issue	179,041,830		179,041,830		179,041,830
Attributable net asset value / total equity per share	$0.75		$0.82		$0.78

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 31 December 2014	1,790	71,310	3,690	3,064	-	1,686	(29,365)	10,957	84,794	147,926
Cost of share based payments	-	-	-	72	-	-	-	-		72
Transfer on expiry of options				(2,748)	-	-	-	-	2,748	-
Purchase of shares for treasury	-	-	-		(3,875)	-	-	-	-	(3,875)
Transaction with owners	-	-	-	(2,676)	(3,875)	-	-		2,748	(3,803)
Retained profit for the 6 months	-	-	-	-	-	-	-	-	2,220	2,220
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	2	19	(11)	-	10
Total comprehensive income for the period	-	-	-	-	-	2	19	(11)	2,220	2,230
At 30 June 2015 (unaudited)	1,790	71,310	3,690	388	(3,875)	1,688	(29,346)	10,946	89,762	146,353
Regulatory transfer for future investment	-	-	-	-	-	6	-	-	(6)	-
Cost of share based payments	-	-	-	975	-	-	-	-	-	975
Transaction with owners	-	-	-	975	-	6	-	-	(6)	975
Retained profit for the 6 months	-	-	-	-	-	-	-	-	(4,406)	(4,406)
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(99)	-	(2,878)	-	(2,977)
Total comprehensive income for the period	-	-	-	-	-	(99)	-	(2,878)	(4,406)	(007,383)
At 31 December 2015	1,790	71,310	3,690	1,363	(3,875)	1,595	(29,346)	8,068	85,350	139,945
Cost of share based payments	-	-	-	309	-	-	-	-	-	309
Transaction with owners	-	-	-	309	-	-	-	-	-	309
Retained profit for the 6 months	-	-	-	-	-	-	-	-	(4,100)	(4,100)
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-	-	(37)	-	(1,147)	-	(1,184)
Total comprehensive income for the period	-	-	-	-	-	(37)	-	(1,147)	(4,100)	(5,284)
At 30th June 2016	1,790	71,310	3,690	1,672	(3,875)	1,558	(29,346)	6,921	81,250	134,970

Griffin Mining Limited

Condensed Consolidated Cash Flow Statement

 (expressed in thousands US dollars)

	6 months to 30/06/2016 Unaudited		6 months to 30/06/2015 Restated Unaudited		Year to 31/12/2015 Audited
	$000		$000		$000
Net cash flows from operating activities
(Loss) / profit before taxation	(4,100)		3,662		(940)
Foreign exchange losses	190		24		447
Finance (income)	(80)		(106)		(202)
Finance costs	2,245		2,872		5,084
Adjustment in respect of share based payments	309		72		1,047
Depreciation, depletion and amortisation	3,510		3,823		6,808
Losses on disposal of equipment	-		-		48
Decrease / (increase) in inventories	2,464		680		10,295
(Increase)/ decrease in receivables and other current assets	(926)		29		804
(Decrease) / increase  in trade and other payables	(326)		3,654		2,748
Net cash inflow from operating activities	3,286		14,710		26,139
Taxation paid	-		(1,223)		(974)
Cash flows from investing activities
Interest received	80		106		202
(Payments) to acquire / receipts from intangible fixed assets - exploration interests	(17)		(30)		(68)
Payments to acquire - mine development	(4,035)		(4,012)		(8,960)
Payments to acquire - plant & equipment	(1,585)		(4,547)		(7,218)
Net cash (outflow) from investing activities	(5,557)		(8,483)		(16,044)
Cash flows from financing activities
Purchase of shares for treasury	-		(3,875)		(3,875)
Interest paid	(1,938)		(2,480)		(4,324)
Finance lease	(1,469)		(866)		(2,573)
Proceeds from bank loans	-		3,328		3,171
Net cash (outflow) from financing activities	(3,407)		(3,893)		(7,601)
Increase / (decrease) in cash and cash equivalents	(5,678)		1,111		1,520
Cash and cash equivalents at beginning of the period	24,062		23,371		23,371
Effects of exchange rate changes	(71)		(134)		(829)
Cash and cash equivalents at end of the period	18,313		24,348		24,062
Cash and cash equivalents comprise bank deposits
Bank deposits	18,313		24,348		24,062

Griffin Mining Limited

Notes to the Interim Statement

1.     These 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 31 December 2015.  

2.     Copies of this interim report are being sent to all registered shareholders.  Additional copies are available from the Company's London office, 60 St James's Street, London, SW1A 1LE.

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 condensed consolidated statement of financial position at 31 December 2015 and the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and the condensed consolidated cash flow statement for the year then ended have been extracted from the Group's 2015 statutory financial statements upon which the auditors' opinion is unqualified.

4.     The summary accounts have been prepared on a going concern basis.  As at 30th June 2016, Hebei Hua Ao (a subsidiary of the Company) had bank loans outstanding of $61,666,000 (30^th June 2015 $67,064,000).  Having previously rolled over each of the bank facilities Hebei Hua Ao expects to roll over the existing facilities for a further 12 months.  Having considered the cash resources, banking facilities and forecasts for the remainder of the Hebei Hua Ao joint venture term, the directors do not expect any going concern issues to arise.

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. Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below:

	6 months to 30/06/2016 Unaudited					6 months to 30/06/2015 Unaudited			Year to 31/12/2015 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 earnings per share
Earnings  attributable to ordinary shareholders		(4,100)	179,041,830		(2.29)	2,220	179,041,830	1.24	(2,186)	179,041,830	(1.22)
Dilutive effect of securities
Options		-	-	-		-	-	-	-	-	-
Diluted earnings per share		(4,100)	179,041,830	(2.29)		2,220	179,041,830	1.24	(2,186)	179,041,830	(1.22)

 

END

 

 

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