2022 Final Results   

Griffin Mining Limited ("Griffin" or the "Company") has today published its annual report and accounts for the year ended 31 December 2022 which will be available shortly on the Company's web site and will be posted to shareholders on 25 May 2023.

Despite operations being suspended by the Chinese authorities for external events for nearly five months of 2022, the Company and its subsidiaries (together the "Group") recorded;

·    Revenues of $94,397,000 (2021: $121,648,000);

·    Gross profit of $38,252,000 (2021: $58,424,000);

·    Operating profits of $15,625,000 (2021: $36,925,000);

·    Profit before tax of $15,272,000 (2021: $36,526,000);

·    Profit after tax of $7,704,000 (2021: $25,376,000); and

·    Basic earnings per share of 4.41 cents (2021: earnings per share 14.53 cents).

The results for 2022 were severely impacted by various suspensions in operations for nearly five months of the year. First quarter results were impacted by the enforced suspension of all operations at the Caijiaying Mine for the Chinese Lunar New Year holiday celebrations, the Winter Olympics and the subsequent Winter Paralympics. Mining recommenced on the 23 March 2022 and processing on the 25 March 2022. Operations were again suspended by the Chinese authorities restricting the supply and use of explosives for the duration of the Chinese Communist National Party Congress from 22 September 2022 to 17 November 2022.

As a result of the suspensions in operations in 2022, Group profits before tax decreased from $36,526,000 in 2021 to $15,272,000 in 2022 with metal in concentrate production down on that produced in 2021, whilst zinc, gold and lead metal in concentrate prices achieved in 2022 were higher than those achieved in 2021.

With the suspension in operations during 2022 mining, haulage, and processing costs (cost of sales) were down 11.2%. This reduction is less than the reduction in tonnes milled of 15.6% as a result of fixed costs and higher depreciation charges as assets are brought into use.

Operating (administration) costs excluding minority service charges interests rose by 14.9%, reflecting inflationary costs in China, additional fees on the appointment of new directors and the resumption of travel.


Turnover in 2022 of $94,397,000 was down $27,251,000 (22.4%) on that achieved in 2021 of $121,648,000. This reflects zinc in concentrate sales down $20,495,000 (21.1%) with 30,422 tonnes of zinc metal in concentrate sold in 2022 compared with 41,949 tonnes in 2021, a decrease of 27.5% with lower production, and average zinc metal in concentrate prices received in 2022 of $2,513 per tonne compared with $2,311 received in 2021 an increase of 8.7%. This price increase reflects an increase in market prices with the average LME zinc metal price of $3,488 per tonne in 2022 compared with $3,007 in 2021 (an increase of 16.0%), mitigated by an increase in smelter treatment charges with average smelter treatment charges equating to 27.9% of the average LME zinc price in 2022 compared with 23.1% in 2021.

 Lead and precious metal in concentrate sales in 2022 of $23,553,000 were down $8,362,000 (26.2%) on that

achieved in 2021 of $31,915,000. This reflects less lead and precious metals sold, with lower production, with higher gold and lead prices received, but lower silver prices received.


Total cost of sales in 2022 of $56,145,000 was down $7,079,000 (11.3%) on that incurred in 2021 of $63,224,000. In the main this reflects less tonnes mined, hauled, and processed in 2022 than 2021. Operations in 2022 were impacted by the enforced suspensions in operations for the Winter Olympics and PRC National Party Congress. Whilst costs were down 11.2%, ore tonnes mined were down 12.2% and ore tonnes milled were down 15.6% with fixed costs mitigating further cost reductions.

Mining costs in 2022 were down $2,221,000 (11.7%) on that in 2021 reflecting a 12.2% decrease in tonnes of ore mined, and reduced operational development work. Some further fixed cost savings were made in mine administration and other costs.

Haulage costs in 2022 were down $1,089,000 (9.5%) on that in 2021 reflecting a 14.3% decrease in tonnes of ore hauled and a 10.4% increase in average distances hauled from 2.97 km in 2021 to 3.28 km in 2022.

Processing costs in 2022 were down $2,364,000 (14.1%) on that incurred 2021 with a 153,855 tonne (15.6%) reduction in ore throughput and fixed costs mitigating a further reduction in costs. There was a modest improvement in tailings being backfilled as opposed to discharged to dry tailings of 48% compared with 42% in 2021.

Depreciation charges in 2022 were up $3,276,000 (22.6%) on that incurred in 2021 as assets are brought into use and with an additional charge to ensure all development costs capitalised, including future development costs as estimated in the Life of Mine Plan, are fully written off at the end of the Life of Mine.


Tonnes of ore processed in 2022 were down 15.6% on that in 2021. With the zinc head grade down 0.41% in absolute terms on that in 2021, and recoveries down 0.1% on that in 2021, zinc metal in concentrate production was down 23.5% on that in 2021.

With lower throughput, recoveries, and the gold grade down 0.11 g/t (15.7%) gold metal in concentrate

production in 2022 was down 29.8% on that produced in 2021. With lower throughput and with the silver head grade down 0.88 g/t but better recoveries silver metal in concentrate production in 2022 was down 16.7% on that produced in 2021.


Operating (administration) costs (excluding service fees to Yuanrun) in 2022 of $20,228,000 were up $2,605,000 (14.9%) on that incurred in 2021 of $17,623,000. Hebei Hua Ao's operating costs in 2022 were up $1,026,000 (8.4%) on that incurred in 2021 albeit this is masked by a 3.4% fall in the value of the Renminbi. Renminbi denominated administration costs have increased by 12.1%, primarily on increased salaries and bonuses and ongoing increased environmental and safety regulatory compliance costs. Griffin and other subsidiary company costs were up with increased directors' fees and bonuses, increased travel costs and increased directors' and officers' liability insurance premiums. Service fees to Yuanrun of $2,399,000 based on 11.2% of the profits of Hebei Hua Ao, as adjusted for force majeure days when operations were suspended, has been charged to profit and loss in 2022 compared with $3,876,000 in 2021.


After interest, foreign exchange adjustments and other income, a profit before tax of $15,272,000 was recorded for 2022 compared to $36,526,000 in 2021. The profit before tax in 2022 was after charging / crediting:

·    FX losses of $387,000 (2021: losses $51,000);

·    Bank interest charges of $nil (2021: $309,000);

·    Finance lease interest $48,000 (2021: $11,000);

·    Interest in respect of rehabilitation provisions $87,000 (2021: $84,000);

·    Interest receipts of $369,000 (2021: $236,000);

·    Losses on the disposal of fixed assets of $404,000 (2021: $293,000);

·    Provisions against capitalised intangible assets (Hebei Sino Anglo) $nil (2021: $11,000); and

·    Other income of $204,000 (2021: $124,000).


Taxation of $7,568,000 has been provided for in 2022 (2021: $11,150,000) being 25% of Hebei Hua Ao's profits under PRC GAAP amounting to $6,931,000; withholding tax primarily of 5% on intercompany dividends received of $803,000; UK corporation tax on Griffin Mining (UK Services) Limited profits of $67,360 and a deferred tax credit of $260,000. 


Cash generated from operations of $15,734,000 (2021 $42,880,000) have been used in further developing the

mine and facilities.


Attributable net assets per share at 31st December 2022 was $1.40 (2021: $1.50). 

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:

Taking into consideration that operations were suspended at the Caijiaying Mine for a full 5 months due to, initially, the Chinese Lunar New Year holiday celebrations, the Winter Olympics and the Winter Paralympics and, subsequently, the Chinese Communist National Party Congress, the Griffin Mining Limited ("Griffin" or "the Company") was still able to generate its 18th continuous operating profit for the year and its 17th net profit, whilst currently holding $47 million in cash and no debt.

Of course, the most significant operational and financial milestone of 2022 was the fulfilment of the Company's long held aim of having the Caijiaying Mine run at an annualised production throughput of 1.5 million tonnes per annum. This was achieved and has been maintained since the restart of operations post the Chinese Communist National Party Congress in November 2022. A record of 136,000 tonnes of ore were processed in December 2022 and the 1st quarter of 2023 was a record for the 1st quarter of any year since the commissioning of the Caijiaying Mine in 2005. The implications of this achievement cannot be underestimated and are already being reflected in the financial results of the Company in 2023.

What makes these operational results even more remarkable is that not one tonne of ore was sourced from Zone II. All ore was obtained from the traditional mining area of Zone III. With the approval by the Hebei Provincial Emergency Response Bureau of the Mine Design for Zone II, including the expansion of the production throughput rate, it can only portend what is yet to come when Zone II is fully developed and slotted into the production profile.

The decision by the government of the People's Republic of China ("PRC") to allow the Covid-19 epidemic to be considered at an end and the subsequent re-opening of the PRC's borders with the rest of the world in late 2022, has allowed normal staffing and transport to commence with materials and services becoming normalised. Consequently, exploration has recommenced at the Caijiaying Mine and the likelihood that exploration tenements will begin to be issued in Hebei and the southern provinces of the PRC has become more positive. This will include exploration below the 1000RL at Zone III, the resource drilling in Zone II, further exploration at Zones V & VIII, exploration drilling out to the far eastern boundary of the Caijiaying Mine's mining licence area and the possibility that virgin exploration tenements will be granted over other areas.

With the growing cash balances of the Company and the increasing cash generating capacity of the Caijiaying Mine, and with the relatively recent addition of new directors, discussions have intensified concerning the strategic direction of the Company's future. These discussions have been, and will continue to be, wide ranging and include dividends, share buybacks in various forms, rationalisation and realisation of asset value, acquisitions and joint or primary listings on other stock exchanges. It is expected that these issues will take centre stage at board level this year.

I am fully aware that the value of the Company's assets have not yet been reflected in the share price and that it has taken an inordinate amount of time to do so. Such is the nature of operating at the infancy of mining in a foreign country, the dwindling profile of the London Stock Market and the disappearance of the retail investor as capital is squeezed in less and less hands, mainly institutional, driven by Environment Sustainability and Governance ("ESG") and other non-financial concerns.

Although the following may sound trite, I do not mean it to be. Mining is facing a critical, if not insurmountable, supply problem. The danger is real and frightening. The easily found deposits of all metals have been discovered and generally mined over the past 100 years. The non-carbon future will require large amounts of capital for advanced exploration techniques and drilling. The projected time from exploration discovery to production, even in a perfect world, is now estimated to be over 30 years and that does not take into consideration native title and ESG issues. With just one wind turbine requiring 4 tonnes of zinc, I remain convinced the value of the Caijiaying Mine will be fully revealed in this surge for metals.

As a result, and without knowing the Company's, my or anyone else's future, it would be remiss of me not to thank everyone who has been involved with the success of the Company. It has been a unique, extraordinary and memorable experience. Billions of dollars of metal value have been discovered and added to the Company's resource inventory. The Company has been the sole trailblazer for foreign mining in China. Extraordinary men have done extraordinary things with little to no recognition by people who have no idea of how to create value, how difficult it has traditionally been to operate in China, mining and, sadly, the bonds of friendship.

I hesitate to name anyone individually for their contribution as it immediately leads to forgetting someone and causing offence. But I am going to repeat what I wrote last year, because I can't do better this year that I will always be enormously grateful and humbled by the contribution and camaraderie of the directors, whom I'm proud to call "my friends", gave so freely, warmly, genuinely and passionately. It made this impossible dream possible and bearable and I shall always be so grateful.

With production running at an annualized 1.5 million tonne throughput since November 2022 through to the date of this statement, I predict 2023 will break all operating and financial records for the Company including tonnes mined, hauled, processed and zinc, gold, silver and lead produced. I look forward to being able to deliver that news as the year progresses

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


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