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GRIFFIN MINING LTD (LON:GFM) Griffin Mining Limited Announces 2023 Final Results

Transparency directive : regulatory news

15/05/2024 08:00

LONDON, UK / ACCESSWIRE / May 15, 2024 / Griffin Mining Limited ("Griffin" or the "Company") has today published its annual report and accounts for the year ended 31 December 2023 which will be available shortly on the Company's web site wwww.griffinmining.com and will be posted to shareholders on 28th May 2024.

In 2023 the Company and its subsidiaries (together the "Group") recorded

  • Revenues of $146,023,000 (2022: $94,397,000);
  • Gross profit of $51,842,000 (2022: $38,252,000);
  • Earnings before depreciation, interest and tax of $51,863,000 (2022: $35,215,000)
  • Operating profit of $23,837,000 (2022: $15,625,000);
  • Profit before tax of $24,486,000 (2022: $15,272,000);
  • Profit after tax of $15,236,000 (2022: $7,704,000); and
  • Basic earnings per share of 8.03 cents (2022: 4.41 cents).
  • Record amounts of ore were mined, hauled and processed in 2023, with throughput reaching mill name plate capacity of 1.5 million tonnes per annum, resulting in record zinc metal in concentrate production.
  • Ore mined was up 76.6% to 1,505,642 tonnes on that in 2022, all of which was extracted from Zone III at Caijiaying, and ore processed up 82.1% to 1,513,977 tonnes on that in 2022, resulting in:
  • Zinc metal concentrate production up 25,146 tonnes (79.1%) on that achieved in 2022;
  • Gold in concentrate production up 6,915 ozs (68.2%) on that achieved in 2022;
  • Silver in concentrate production up 90,080 ozs (40.1%) on that achieved in 2022; and
  • Lead in concentrate production up 606 tonnes (64.5%) on that achieved in 2022.

Whilst market prices for zinc fell in 2023, smelter treatment charges and transport costs fell from 27.9% of LME in 2022 to 27.0% in 2023 with significant falls in the last quarter of 2023 to 21.8% and to 15.3% in March 2024. Gold prices have increased throughout 2023 as have silver and lead prices with Hebei Hua Ao receiving a premium price on lead and gold in concentrate sales.

With increased ore mined, hauled and processed, production (mining, haulage, and processing) costs increased by $38,036,000 (67.7%) from that in 2022 with production costs per tonne of ore processed falling from $65.8 per tonne in 2022 to $62.6 per tonne in 2023.

Operating (administration) expenses, excluding the Chinese partners profit share and share incentive scheme charges, rose by $854,000 (4.2%) from that in 2022. The Chinese partners share of Hebei Hua Ao's profits increased by $1,505,000 (62.7%) from that in 2022, which was subject to force majeure provisions. The results for 2023 include a charge of $3,019,000 (2022 nil) relating to a share incentive plan.

The Group benefited from interest receipts on bank deposits of $1,394,000 in 2023 compared with $369,000 in 2022.

As a result, Group profits before tax increased from $15,272,000 in 2022 to $24,486,000 in 2023.

TURNOVER

Turnover in 2023 of $146,023,000 was up $51,626,000 (54.7%) on that achieved in 2022 of $94,397,000. This reflects zinc in concentrate sales up $35,552,000 (46.5%) with 57,998 tonnes of zinc metal in concentrate sold in 2023 compared with 30,422 tonnes in 2022, an increase of 90.6% reflecting higher production whilst the average zinc metal in concentrate prices received fell from $2,513 in 2022 to $1,931 in 2023, a fall of 23.2%.

This reflects a fall in the average LME price from $3,488 in 2022 to $2,647 in 2023, whilst smelter treatment charges and transport costs have fallen from 27.9% of LME in 2022 to 27.0% in 2023 with significant falls in the last quarter of 2023 to 21.8%.

Lead and precious metal in concentrate sales in 2023 of $42,428,000 were up $18,875,000 (80.1%) on that achieved in 2022 of $23,553,000. This reflects increased lead and precious metals sold, with higher production, and higher metal prices received.

Sales may be summarised as follows:


2023

2022

Zinc metal in concentrate revenue before royalties ($000s)
112,008 76,456
Lead metal in concentrate revenue before royalties ($000s)
3,949 2,052
Silver metal in concentrate revenue before royalties ($000s)
6,172 3,829
Gold metal in concentrate revenue before royalties ($000s)
32,306 17,672
Royalties
(8,413) (5,612)
Zinc metal in concentrate sold (tonnes)
57,998 30,422
Lead metal in concentrate sold (tonnes)
1,557 926
Silver in concentrate sold (ozs)
317,348 221,506
Gold in concentrate sold (ozs)
17,107 10,649
Average price received per tonne (zinc) ($)
1,931 2,513
Average price received per tonne (lead) ($)
2,535 2,216
Average price received per ounce (silver) ($)
20.1 17.9
Average price received per ounce (gold) ($)
1,952 1,814

COST OF SALES

Total cost of sales (mining, haulage, and processing) costs increased by $38,036,000 (67.7%) from $56,145,000 in 2022 to $94,181,000 in 2023 with production costs per tonne of ore processed falling from $65.8 per tonne in 2022 to $62.6 per tonne in 2023. This in the main reflects the impact of the suspension of operations in 2022.

Costs of sales may be summarised as follows:


2023

Per tonne

2022

Per tonne



ore


ore


$000 $ $000 $
Mining costs
25,579 17.0 16,782 19.7
Haulage costs
18,098 12.0 10,377 12.2
Processing costs
23,197 15.4 14,390 16.9
Depreciation depletion and amortisation
25,385 17,757
Stock and WIP movements
1,922 (3,161)

94,181 62.6 56,145 65.8

Mining
1,505,642 tonnes of ore were mined in 2023, up 76.5% on that mined in 2022 of 852,579 tonnes, reflecting near continuous production in 2023. Mining costs in 2023 were up $8,797,000 (52.4%) on that in 2022, resulting in a reduction in unit costs from $19.7 per tonne mined in 2022 to $17.0 per tonne in 2023, reflecting economies of scale with fixed mine service costs.

Haulage
1,509,098 tonnes of ore were hauled in 2023, up 79.7% on that hauled in 2022 of 839,685 tonnes, tracking ore mined. Haulage costs in 2023 were up $7,721,000 (74.4%) on that in 2022, resulting in a reduction in unit costs from $12.2 per tonne hauled in 2022 to $12.0 per tonne in 2023.

Processing
1,513,977 tonnes of ore were processed in 2023, up 82.1% on that processed in 2022 of 831,549 tonnes, tracking ore mined and hauled. Processing costs in 2023 were up $8,807,000 (61.2%) on that in 2022, resulting in a reduction in unit costs from $16.9 per tonne processed in 2022 to $15.4 per tonne in 2023.

Depreciation
Depreciation charges in 2023 were up $7,628,000 (42.9%) on that incurred in 2022 reflecting increased ore mined with depreciation calculated on a unit of production basis.

OPERATING EXPENSES

Operating (administration) costs (excluding the minority interest charges and share incentive scheme charges) in 2023 of $21,083,000 were up $854,000 (4.2%) on that incurred in 2022 of $20,229,000.

Hebei Hua Ao's operating costs in 2023 of $14,393,000 were up $1,161,000 (8.7%) on that incurred in 2022 of $13,232,000. Renminbi denominated administration costs increased by 14.5%, primarily on increased personnel costs and ongoing increased environmental and safety regulatory compliance costs.

Griffin and Griffin Mining (UK Services) Limited company corporate costs of $5,880,000 (excluding share incentive scheme charges) were down $536,000 (8.4%) on that incurred in 2022 of $6,416,000 with the termination of investor relations services, lower directors' bonuses, lower travel costs and reduced directors' and officers' liability insurance premiums.

China Zinc's operating costs in Hong Kong of $723,000 were up $244,000 (50.8%) on that in 2022 of $479,000, with the engagement of additional personnel to investigate potential projects.

$3,903,000 has been charged to profit and loss in respect of service fees based upon the profits of Hebei Hua Ao in 2023 compared with $2,399,000 in 2022, which was adjusted for force majeure days when operations were suspended.

A charge of $3,019,000 has been made in respect of the share incentive scheme instigated in March 2023 which allocates the value of the shares granted at date of grant over the period of return in the event of personnel leaving.

PROFIT BEFORE TAX

After interest, foreign exchange adjustments and other income, a profit before tax of $24,486,000 was recorded for 2023 compared to $15,272,000 in 2022. The profit before tax in 2023 was after charging / crediting;

FX losses of $136,000 (2022: losses, $387,000);

Bank interest charges of $24,000 (2022: $nil);

Lease interest $43,000 (2022: $48,000);

Interest in respect of rehabilitation provisions $110,000 (2022: $87,000;)

Interest receipts of $1,394,000 (2022: $369,000);

Losses on the disposal of fixed assets of $784,000 (2022: $404,000); and

Other income of $352,000 (2022: $204,000).

TAXATION

Taxation of $9,250,000 was provided for in 2023 (2022 $7,568,000) being; 25% of Hebei Hua Ao's profits under Chinese GAAP amounting to $10,881,000; withholding taxes of $897,000, primarily of 5% on inter company dividends received; UK corporation tax of $179,000 on Griffin Mining (UK Services) Limited profits; and a deferred tax credit of $2,694,000.

EARNINGS PER SHARE

Basic earnings per share increased from 4.41 cents per share in 2022 to 8.03 cents per share and diluted earnings per share from 4.11 cents in 2022 to 7.98 cents in 2023.

CASH FLOW

In the year ended 31st December 2023 cash balances increased by $25,869,000.

$48,377,000 (2022: $15,734,000) was generated from operations in 2023. Capital expenditure, net of disposals, of $23,279,000 (2022: $21,301,000), was incurred in 2023. Interest on bank deposits of $1,394,000 (2022: $369,000) was received in 2023 and interest incurred on bank loans and lease payments of $182,000 (2022:167,000) were incurred in 2023. $373,000 (2022: $nil)was incurred on the buy back of the Company's shares.

NET ASSETS

Attributable net assets per share at 31st December 2023 was $1.40 (2022: $1.40).

Whilst the directors do not recommend the payment of a dividend at this time, all possible alternatives will be considered in 2023 by the board of directors to either return excess cash to shareholders, or increase shareholder value.

CHAIRMAN'S STATEMENT:

2023 proves, beyond any reasonable doubt, that the founding directors of the Company have been proven correct. Contrary to all the naysayers throughout the long years, the Company has established a world class, environmentally friendly mining operation, developed and operated in the People's Republic of China ("PRC" or "China"), on a self-generating cash flow basis, without seeking continual capital from shareholders or incurring debt. Put simply, in the words of Helen Keller, "While they were saying it couldn't be done, it was done."

It is hard to know where to start, the news is so overwhelmingly positive and we are just at the start of the Year of the Dragon!

Financially, record revenues were generated in 2023. The Company and its subsidiaries (together the "Group") recorded

Revenues up 54.7% at $146,023,000;

Gross profit up 35.5% at $51,842,000;

EBIT up 47.3% at $51,863,000;

Operating profit up 52.5% at $23,837,000;

Profit before tax up 60.3% at $24,486,000;

Profit after tax up 97.8% at $15,236,000; and

Basic earnings per share up 82.1% at 8.03 cents.

Operationally, a record amount of ore was mined, hauled and processed, with throughput reaching mill design capacity of 1.5 million tonnes per annum. This led, inter alia, to record zinc metal production:

Ore mined was up 76.6% to 1,505,642 tonnes (all from Zone III);

Ore processed was up 82.1% to 1,513,977 tonnes;

Zinc metal in concentrate produced was up 79.1% to 56,933 tonnes;

Gold in concentrate produced was up 68.2% to 17,052 ounces;

Silver in concentrate produced was up 40.1% to 314,677 ounces; and

Lead in concentrate produced was up 64.5% to 1,546 tonnes.

These results are all the more impressive in light of the fact that no ore is yet being delivered from Zone II, which remains under full speed development. Underground workings, services and the 3rd Portal all remain under construction and near completion. Grade control drilling continues unabated and the South Ventilation Shaft has been sunk almost 250 metres. Ore extraction from Zone II remains on schedule for the 1st Quarter of 2025.

Drilling continues in both Zones II and III with a record 7 diamond drill rigs in continual operation. This number of operating rigs is yet another record for the Caijiaying Mine. With the volume and quality of the drilling information being produced, it is our expectation that a new JORC resource will be announced in 2024.

With continuing operational and financial success, it is easy to become complacent and fail to deal with non-financial issues which impact the future viability of the Company. As such, the Company strives to be a fully responsible corporate citizen to all our relevant stakeholders, including our shareholders, employees, contractors, the people of China and the global environment. As such, the Company has committed itself to the generation and use of 100% renewable energy in the next 12 months, one third of which is already generated via the solar farm at the Caijiaying Mine. A further two 6.3MW wind turbines generating a total of 12.6MW of wind power will be constructed within 2.5km of the Caijiaying Mine. Once completed, the Caijiaying Mine will have 18.6MW of renewable electrical capacity at peak generation which exceeds the current 18.1MW peak usage. The Company is currently examining the installation of large-scale battery storage capacity and the purchase of wind or solar energy directly from state owned renewable energy projects in close proximity to the Caijiaying Mine to achieve 100% renewable power at all times regardless of light or wind conditions. I know of no other active mine or operations that can claim to have fully committed to the switch to 100% renewable energy and already be generating a third of its energy from its solar farm.

Inevitably the question then arises how to deal with the excess cash being generated by operations. It was decided by the directors of the Company not only to continue with the on-market share buy-back scheme operated by the Company's Nominated Advisor, Panmure Gordon, but to also undertake an offer for larger blocks of stock held by institutional shareholders through the Company's joint broker, Berenbergs. As such, well over 10 million shares were acquired and then cancelled by 26th February 2024 at a substantially lower share price than currently quoted. It is expected both methods of buying back the Company's stock will continue in 2024, reducing the Company's shares outstanding and improving the Company's earnings per share. To this end, and although I rarely comment on the Company's share price, it has been pleasing to see the market finally seemingly begin to understand the inherent value of the Company and even perhaps the parlous state of the world mining environment.

In that vein, I believe it appropriate to mention the very recent indicative proposal announcement by BHP in relation to Anglo-American, an attempt by BHP to acquire scarce copper assets. Although this may be a surprise to the market, it is a logical progression of the failure of the capital markets to support the mining industry, and in particular the junior miners, who overwhelmingly discover the orebodies needed to supply the world with the raw products needed for human existence. We have just begun to feel the effects of having rare resources and its expression in rising commodity prices. As Mark Burton at Bloomberg wrote recently, "A successful takeover would make BHP the biggest copper producer with about 10% of the market, but it won't make any difference toward meeting the world's supply needs. Production from existing mines is set to fall sharply in the coming years, and miners would need to spend more than $150 billion between 2025 and 2032 in order to fulfill the industry's supply needs, according to CRU Group……One key challenge is that new mines take years and often decades to build, 'There is a clear and compelling need for additional mine capacity to be brought online,' said William Tankard, principal analyst for base metals at CRU. 'The gauntlet is being laid down at the feet of the miners, and it's going to be exceptionally challenging to deliver."

I should mention that this year marks the 30th anniversary of Hebei Hua Ao Mining Industry Co Ltd ("Hebei Hua Ao"), the foreign joint venture stock company formed in 1994 to hold the interest in the Caijiaying Mine, the majority interest of which was acquired by Griffin almost 4 years later in 1997/8. Nevertheless, celebrations marking the occasion will be held in China later this year. It is my absolute hope that at these celebrations there will also be an announcement of Hebei Hua Ao converting its legal status to a limited liability company, as mandated in the PRC Foreign Investment Law (Article 42), bringing all the benefits of that legal structure to the parties involved.

All that remains for me to conclude is that the old adage remains as true today as when it was written so long ago by Tacitus and re-imagined by John F Kennedy, "Success has many fathers, but failure is an orphan." An operation of the size, complexity and in the location of the Caijiaying Mine, has depended on, and will continue to depend on, the intelligence, expertise, dedication, discipline and sacrifice of a large number of individuals. I can't and won't name them as to do so would inevitably exclude someone who has deserved to be in that pantheon of champions. Suffice it to say I regularly refer to some current success which rests either on our founding directors' feet, our current operational staff and/or our relatively new directors. All have played or continue to play their vital part and we owe them our sincerest thanks. It needs to be understood by all involved that what they all do is beyond the responsibilities of ordinary corporate employment and it deserves our acknowledgment.

Lastly, and always most importantly, thank you to you, the shareholders and owners of the Company. Everyone can "talk the talk" but few can "walk the walk." It is your capital, patience and continued support which allows the Company to have the stability and confidence to continue to move forward at an ever quicker pace. We will continue to honour the commitment you have all made by moving heaven and earth to give you the returns you so richly deserve.

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
Dominic Morley
Dougie McLeod

Berenberg Telephone: +44(0)20 3207 7800
Matthew Armit
Jennifer Lee

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

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
Consolidated Income Statement
For the year ended 31 December 2023
(expressed in thousands US dollars)


2023

2022


$000 $000

Revenue
146,023 94,397

Cost of sales
(94,181) (56,145)


Gross profit
51,842 38,252

Administration expenses
(28,005) (22,627)


Operating Profit
23,837 15,625

Losses on disposal of plant and equipment
(784) (404)
Foreign exchange (losses)
(136) (387)
Finance income
1,394 369
Finance costs
(177) (135)
Other income
352 204


Profit before tax
24,486 15,272

Income tax expense
(9,250) (7,568)


Profit for the year
15,236 7,704


Basic earnings per share (cents)
8.03 4.41

Diluted earnings per share (cents)
7.98 4.11

Griffin Mining Limited
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
(expressed in thousands US dollars)


2023

2022


$000 $000

Profit for the year
15,236 7,704

Other comprehensive income / (expense) that will be reclassified to profit or loss

Exchange differences on translating foreign operations
(2,912) (15,498)

Other comprehensive (expense) for the year, net of tax
(2,912) (15,498)

Total comprehensive income / (expense) for the year
12,324 (7,794)

Griffin Mining Limited
Consolidated Statement of Financial Position
As at 31 December 2023
(expressed in thousands US dollars)


2023

2022


$000 $000
ASSETS
Non-current assets
Property, plant and equipment
250,370 258,041
Intangible assets - exploration interests
575 407
Other non-current assets
1,554 1,494

252,499 259,942
Current assets
Inventories
5,828 8,077
Receivables and other current assets
2,886 3,433
Cash and cash equivalents
60,007 34,138

68,721 45,648

Total assets
321,220 305,590

EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital
1,928 1,749
Share premium
78,550 69,334
Contributing surplus
3,690 3,690
Share based payments
3,109 168
Shares held in treasury
(2,017) (1,644)
Chinese statutory re-investment reserve
3,529 2,992
Other reserve on acquisition of non-controlling interests
(29,346) (29,346)
Foreign exchange reserve
(3,480) (618)
Profit and loss reserve
213,789 199,140
Total equity attributable to equity holders of the parent
269,752 245,465

Non-current liabilities
Other payables
3,106 6,317
Long-term provisions
3,929 2,649
Deferred taxation
- 2,717
Lease liabilities
570 683

7,605 12,366
Current liabilities
Trade and other payables
38,308 44,910
Business taxation payable
5,386 2,680
Lease liabilities
169 169
Total current liabilities
43,863 47,759

Total equities and liabilities
321,220 305,590

Attributable net asset value per share to equity holders of parent
1.40 1.40

Griffin Mining Limited
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
(expressed in thousands US dollars)



Share
Capital


Share
Premium

Contributing surplus

Share Based
payments
Share
held in
treasury
Chinese statutory
re-investment
reserve
Other reserve on
acquisition of non-controlling interests
Foreign
exchange
reserve

Profit
and loss reserve


Total
attributable to equity holders of parent


$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
At 1 January 2022
1,749 69,334 3,690 2,072 (1,644) 2,896 (29,346) 14,635 199,190 262,576
Regulatory transfer for future investment
- - - - - 341 - - (341) -
Transfer on surrender of options (note 19)
- - - (1,904) - - - - (7,413) (9,317)
Transaction with owners
- - - (1,904) - 341 - - (7,754) (9,317)
Profit for the year
- - - - - - - - 7,704 7,704
Other comprehensive income:
Exchange differences on translating foreign operations
- - - - - (245) - (15,253) - (15,498)
Total comprehensive income
- - - - - (245) - (15,253) 7,704 (7,794)
At 31 December 2022
1,749 69,334 3,690 168 (1,644) 2,992 (29,346) (618) 199,140 245,465
Regulatory transfer for future investment
- - - - - 587 - - (587) -
Issue of shares on cancellation of share purchase options
101 9216 - - - - - - - 9,317
Share based payments (19)
78 - - 2,941 - - - - 3,019
Purchase of shares for treasury (note 20)
- - - - (373) - - - - (373)
Transaction with owners
179 9,216 - 2,941 (373) 587 - - (587) 11,963
Profit for the year
- - - - - - - - 15,236 15,236
Other comprehensive income:
Exchange differences on translating foreign operations
- - - - - (50) - (2,862) - (2,912)
Total comprehensive income
- - - - - (50) - (2,862) 15,236 12,324
At 31 December 2023
1,928 78,550 3,690 3,109 (2,017) 3,529 (29,346) (3,480) 213,789 269,752


Griffin Mining limited
Consolidated Cash Flow statement
For the year ended 31 December 2023
(expressed in thousands US dollars)


2023

2022





$000 $000

Net cash flows from operating activities
Profit before taxation
24,486 15,272
Share based payments
3,019 -
Foreign exchange losses
136 387
Finance income
(1,394) (369)
Finance costs
177 135
Depreciation
28,026 19,590
Losses on disposal of equipment
784 404
Decrease / (increase) in inventories
2,249 (3,561)
Decrease / (increase) in receivables and other assets
547 (1,807)
(Decrease) in trade and other payables
(415) (6,284)
Taxation paid
(9,238) (8,033)
Net cash inflow from operating activities
48,377 15,734

Cash flows from investing activities
Interest received
1,394 369
(Costs) on disposal of equipment
(263) (178)
Payments to acquire - mineral interests and development
(16,792) (7,348)
Payments to acquire - property, plant, and equipment
(6,056) (13,749)
Payments to acquire - office lease, furniture & equipment
- (6)
Payments to acquire - intangible fixed assets - exploration interests
(168) (20)
Net cash outflow from investing activities
(21,885) (20,932)

Cash flows from financing activities
Issue of ordinary shares on exercise of options
- -
Interest paid
(27) -
Purchase of shares for treasury
(373) -
Bank loan advances
4,271 -
Repayment of bank loans
(4,271) -
Lease liability repayments including interest
(155) (167)
Net cash outflow from financing activities
(555) (167)

Increase / (decrease) in cash and cash equivalents
25,937 (5,365)

Cash and cash equivalents at the beginning of the year
34,138 38,159
Effects of foreign exchange rates
(68) 1,344
Cash and cash equivalents at the end of the year
60,007 34,138

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 Group.

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 2023 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 2023 statutory financial statements.

The annual report and accounts for 2023 is being sent by post to all registered shareholders. Additional copies of the annual report and accounts are available from the Company's London office, 8th 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 2023 and 2022 were derived from the Caijiaying zinc gold mine.


2023

2022


$000 $000
REVENUES
China
146,023 94,397

Zinc concentrate sales
112,008 76,456
Lead and precious metals concentrate sales
42,428 23,553
Royalties and resource taxes
(8,413) (5,612)

146,023 94,397


2023 2022

$000 $000
COST OF SALES: CHINA
Mining costs
25,579 16,782
Haulage costs
18,098 10,377
Processing costs
23,197 14,390
Depreciation (excluding depreciation in administration expenses)
25,385 17,757
Stock movements
1,922 (3,161)

94,181 56,145


2023 2022

$000 $000
ADMINISTRATION EXPENSES
China / Hong Kong
19,023 16,136
Australia
77 75
UK / Bermuda
5,886 6,416

24,986 22,627
Fair value of shares issued under share incentive plan
3,019 -

28,005 22,627

2023

2022


$000 $000
TOTAL ASSETS
China
299,094 299,810
Australia
1,201 1,044
UK / Bermuda
20,925 4,736

321,220 305,590


2023 2022

$000 $000
CAPITAL EXPENDITURE
China
23,016 21,117
UK / Bermuda
- 6

23,016 21,123

Finance Income


2023

2022


$000 $000
Interest on bank deposits
1,394 369

Finance Costs


2023

2022


$000 $000
Interest payable on short term bank loans
24 -
Interest on rehabilitation provisions
110 87
Lease interest
43 48

177 135

Other Income


2023

2022


$000 $000
Scrap and sundry other revenues
352 204

Income Tax Expense

2023

2022

$000

$000

Profit for the year before tax

24,486

15,272

Expected tax expense at a standard rate of PRC income tax of 25% (2022 25%)

6,121

3,818

Adjustment for tax exempt items:

- Income and expenses outside the PRC not subject to tax

1,985

1,054

Adjustments for short term timing differences:

- In respect of accounting differences

2,851

1,862

- In respect of other timing differences

(25)

-

Adjustments for permanent timing differences other

129

291

Withholding tax on intercompany dividends and charges

897

803

Prior period tax credit

(14)

-

Current taxation expense

11,944

7,828

Deferred taxation expense (credit)

Origination and reversal of temporary timing differences

(2,694)

(260)

(2,694)

(260)

Total tax expense

9,250

7,568

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 2023 (25% in 2022) based upon the profits calculated under Chinese Generally Accepted Accounting Principles (Chinese "GAAP").

Earnings per share

The calculation of the basic earnings per share is based upon 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.

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

2023

2022

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
Basic earnings attributable to ordinary shareholders

15,236

189,771,884

8.03

7,704

174,892,894

4.41

Dilutive effect of securities
Options

-

1,234,740

(0.05)

-

12,384,576

(0.30)

Diluted earnings per share

15,236

191,006,624

7.98

7,704

187,277,470

4.11

Property, plant and equipment


Mineral
Interests

Mill and mobile mine equipment

Offices furniture & equipment

Total


$000 $000 $000 $000
At 1 January 2022
220,832 53,487 977 275,296
Foreign exchange adjustments
(12,832) (4,836) 8 (17,660)
Transfer re rehabilitation deposit
(1,012) - - (1,012)
Change in mine closure costs
130 - - 130
Additions during the year
7,348 13,749 6 21,103
Disposals
- (226) - (226)
Depreciation charge for the year
(13,328) (6,104) (158) (19,590)
At 31 December 2022
201,138 56,070 833 258,041

Foreign exchange adjustments
(2,269) (929) - (3,198)
Change in mine closure costs
1,226 - - 1,226
Additions during the year
16,792 6,056 - 22,848
Disposals
- (521) - (521)
Depreciation charge for the year
(21,505) (6,380) (141) (28,026)
At 31 December 2023
195,382 54,296 692 250,370

At 1 January 2022
Cost
285,471 97,910 1,544 384,925
Accumulated depreciation
(64,639) (44,423) (567) (109,629)
Net carrying amount
220,832 53,487 977 275,926

At 31 December 2022
Cost
275,250 101,763 1,106 378,119
Accumulated depreciation
(74,112) (45,693) (273) (120,078)
Net carrying amount
201,138 56,070 833 258,041

At 31 December 2023
Cost
290,077 103,479 1,558 395,114
Accumulated depreciation
(94,695) (49,183) (866) (144,744)
Net carrying amount
195,382 54,296 692 250,370

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 $3,416,000 (2022: $14,007,000) of assets under construction yet to be depreciated.

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.

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 Cash Generation Unit. 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 2023 (2022: nil). However, as best practice and in response to an updated Life of Mine Plan ("LOM"), management have updated the impairment model for latest forecast metal prices, smelter treatment charges , and revisions to mine development costs.

In determining any indications of impairment in the carrying value of the Caijiaying Mine the directors have reassessed the net carrying value of property plant and equipment at 31 December 2023 by reference to the estimated mineral resources at Caijiaying that may be extracted by 2050 (2022: 2050). While the current business licence of Hebei Hua Ao expires in 2037, Hebei Hua Ao will be converted to an equity joint venture company with an indefinite life in order to comply with new PRC legislation. Accordingly, a LOM has been prepared by the Company that indicates the continued extraction of ore until at least 2050.

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 $2,654 (2022: $3,097) per tonne, gold of $2,000 (2022: $1,800) per troy ounce and silver of $23.4 (2022: $22.7) per troy ounce;

Zinc treatment charges of 25% (2022: 30%) of market prices;

Extraction of measured and indicated resources of 41.2 million tonnes (2022: 40.4 million tonnes) to 2050 (2022: 2050) with ore mined and processed of circa 1.5 million tonnes (2022: 1.5 million tonnes) of ore per annum;

Operating costs, recoveries and payables based upon past performance and that budgeted for 2024 and on internal management forecast, for future years;

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

Discount rate of 10% (2022: 10%);

Continued maintenance and grant of applicable licences and permits;

No significant impact as a result of climate change, earthquakes or other natural events; and

A Renminbi to US dollar exchange rate of 7 Rmb to $1 (2022: 7 Rmb to $1)

Having considered the impact of climate change, the directors consider that there will not be any significant adverse impact on future operations from climate change.

Whilst the directors consider the assumptions reasonable, sensitivities have been considered to assess the impact of changes in key assumptions including, forecast metal prices, foreign exchange and discount rates, and have concluded that there were no reasonable possible changes to the key assumptions that could result in an impairment.

Attributable net asset value per share to total equity per holders of parent shares

The attributable net asset value / total equity per share has been calculated from the consolidated net assets / total equity of the Group at 31 December 2023 of $269,752,000 ($245,465,000 at 31 December 2022) divided by the number of ordinary shares in issue at 31 December 2023 of 192,828,420 (174,892,894 at 31 December 2022).

POST BALANCE SHEET EVENTS

On 31 December 2023, options over 1,500,000 new ordinary shares in the Company exercisable at 30 pence per share and over 500,000 new ordinary shares in the Company exercisable at 40 pence per share were exercised. These shares were issued and admitted to trading on AIM on 8 January 2024.

On 5 January 2024 the Company entered into trades committing to purchase, through its joint broker Joh. Berenberg, Gossler & Co. KG, 8,886,128 of the Company's own ordinary shares ("Ordinary Shares"), representing 4.6% of the Company's issued share capital (excluding shares already held in treasury), at a price of 88 pence per Ordinary Share, for a total consideration of £7,819,792, excluding brokers fees.

On 15 March 2024 10,297,943 ordinary shares in Griffin Mining Limited ("the Company") purchased under share buyback programmes and held in treasury were cancelled. Following the cancellation of these shares, there are 184,530,477 ordinary shares on issue with no outstanding options or warrants.

At 31 December 2023 there were no adjusting post balance sheet events (2022: 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

SOURCE: Griffin Mining Ltd



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