Griffin Mining plc (GFM) – Acquires 39.2% Interest in Spitfire Oil Ltd for 2.5m
Griffin Mining Limited announces that it has agreed to purchase 16,666,667 ordinary shares in Spitfire Oil Ltd, representing a 39.2% interest in the issued share capital of Spitfire, at 15p per share for a total cash consideration of £2,500,000 from Citadel Equity Fund Ltd.
RATIONALE OF PROPOSED TRANSACTION
Griffin has been seeking acquisition opportunities for some considerable time, since successfully bringing into production its Caijiaying zinc gold project in China in the summer of 2005. Griffin’s preference has been for a resource project that already has a JORC resource that can be developed in the near term to generate significant profits and cash flow. In these uncertain times, Griffin has of late sought to spread political and commodity risk by seeking a project outside of China with alternative commodities to zinc. At 30 June 2008, Griffin reported that it had cash balances of US$84m available to invest in such projects.
Chairman Mladen Ninkov commented, “This purchase enables Griffin to acquire a strategic stake in a project that meets Griffin’s investment criteria, spreading both political and commodity risk. The opportunity to acquire this strategic stake at such a favourable price, being at a 75% discount to the original funding price, has been carefully considered and approved by the independent directors. Griffin’s investment should be well placed to benefit from Spitfire’s continuing exploration drilling program to define a JORC Indicated Resource, results expected from the L2VTM Pyrolysis tests and conceptual mine and process engineering studies to deliver a definitive feasibility study and a design basis for a phase 1 commercial plant.
With dwindling world resources and the expectation of significant increases in the price of oil in the future, this alternative energy project is highly attractive. Should the results from the L2VTM tests be successful and the development of a commercial plant be achievable, Griffin has the potential to reap significant financial rewards upon the Salmon Gums project coming into commercial operation.”