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Griffin's ascent checked

After an extraordinary financial performance in 2017, Griffin's next development phase looks arrested
April 12, 2018

Zinc, gold, silver and lead. The metals that come out of Griffin Mining's (GFM) Caijiaying project are in demand, and so are the Aim-traded group’s shares. But after a staggering run over the last year, investors might conclude that the group could be about to hit a wall. That’s one possible conclusion from 2017’s record results, which provided no news on a long-sought licence that might allow the Chinese miner to double production.

IC TIP: Sell at 139p

Of course, based on last year’s numbers, shareholders have much to cheer. Record throughput, improved grades, while higher prices and stable costs meant operating cash flow more than tripled to $77.4m (£54.5m), which in turn allowed Griffin to retire its borrowings. Free of interest payments, and with metal prices again up on the year, there’s little wonder that Griffin’s price-to-book value now sits at a two-year high.

Yet chairman Mladen Ninkov included a sanguine note to his commentary, reiterating his frustration at “the continuing inability to secure the new licence for the greater Zone II area”. It's a shame, as processing facilities are in place, and a second portal to improve ore transportation efficiency is nearly complete. Despite these sunk costs, Griffin has decided to keep hold of its swelling cash deposits, rather than pay a dividend.

On average, analysts expect adjusted pre-tax profit of $52.2m and EPS of 21¢ for this year, compared with forecasts of $53.8m and 22¢ for 2017.

GRIFFIN MINING (GFM)  
ORD PRICE:139pMARKET VALUE:£237m
TOUCH:138.5-140p12-MONTH HIGH:148pLOW: 49p
DIVIDEND YIELD:nilPE RATIO:8
NET ASSET VALUE:113¢NET CASH:$26.5m
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201371.114.84.6nil
201445.61.00.1nil
201559.8-0.9-1.2nil
201666.310.43.3nil
201712760.924.6nil
% change+91+486+646-
Ex-div:na   
Payment:na   
£1=$1.42