China-based zinc-gold miner Griffin Mining returned to profitability after restarting operations at its Caijiaying mine, which had been suspended for most of the first half of 2009 due to the sharp fall in commodity prices.
The closure allowed the company to carry out structural maintenance and an operational efficiency review, which resulted in higher ore grades, production and revenues, and lower unit costs, when operations resumed. These improvements allowed an immediate return to profitability despite sharp falls in the volumes of ore mined and processed, and lower production volumes of all commodities except gold.
Griffin finally secured a permit to let it mine deeper, more continuous and higher-grade ore at Caijiaying, which allows for more mechanised mining and higher extraction rates. To exploit this, the company is upgrading the processing plant to increase throughput capacity to 750,000 tonnes a year. This higher capacity is expected to be available from August and should provide substantial economic benefits. Given ongoing concerns over the global economy, the company has hedged most of its zinc production for the next year.
| GRIFFIN MINING (GFM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 46p | MARKET VALUE: | £83.3m | |
| TOUCH: | 45-47p | 12-MONTH HIGH: | 52p | LOW: 32p |
| DIVIDEND YIELD: | nil | PE RATIO: | 34 | |
| NET ASSET VALUE: | 74¢ | NET CASH: | $67.6m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2005 | 6.1 | 0.3 | 0.2 | nil |
| 2006 | 42.8 | 29.5 | 16.0 | 3.00 |
| 2007 | 38.0 | 26.8 | 12.1 | 3.00 |
| 2008 | 32.1 | 7.0 | 2.9 | nil |
| 2009 | 25.4 | 7.2 | 2.0 | nil |
| % change | -21 | +4 | -31 | - |
£1=$1.483 | ||||
