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Griffin Mining 2021 Final Results

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Griffin Mining Limited ("Griffin" or the "Company" - https://www.commodity-tv.com/ondemand/companies/profil/griffin-mining-ltd/) has today published its annual report and financial statements for the year ended 31 December 2021 which are available on the Company’s web site wwww.griffinmining.com.

In 2021, the Company and its subsidiaries (together the “Group”) recorded:

  • Revenues increased 61% to $121,648,000 (2020: $75,403,000);
  • Operating profit increased 143% to $36,925,000 (2020: $15,148,000);
  • Profit before tax increased 152% to $36,526,000 (2020: $14,515,000);
  • Profit after tax increased 185% to $25,376,000 (2020: $8,910,000); and
  • Basic earnings per share increased 182% to 14.53 cents per share (2020: 5.16 cents).

Record amounts of ore were mined and processed in 2021 which, with improved zinc metal market prices and lower smelter treatment charges (“TCs”), resulted in Group profits before tax increasing 152% from that in 2020 of $14,515,000 to $36,925,000 in 2021. Group profits after tax increased by 185% from $8,910,000 in 2020 to $25,376,000 in 2021.

Turnover in 2021 of $121,648,000 was up $46,245,000 (61%) on that achieved in 2020 of $75,403,000. This reflects zinc in concentrate sales up $43,856,000 (83%) with: 41,949 tonnes of zinc metal in concentrate sold in 2021 compared with 32,276 tonnes in 2020, an increase of 30%; and average zinc metal in concentrate prices received in 2021 of $2,311 per tonne compared with $1,645 received in 2020, an increase of 40%. This price increase reflects an increase in market prices with the average LME zinc metal price of $3,007 per tonne in 2021 compared with $2,268 in 2020, but also a reduction in TCs with average TCs equating to 23.1% of the average LME zinc price in 2021 compared with 27.5% in 2020.

Lead and precious metal in concentrate sales in 2021 of $31,915,000 were up 22.7% on that achieved in 2020 of $25,999,000. This reflects increased gold metal in concentrate sold and increased lead and silver in concentrate prices received despite lower gold prices received.

In 2021, metal in concentrate sales were:

  • Zinc 41,949 tonnes (2020: 32,276 tonnes) an increase of 30%;
  • Gold 14,417 ozs (2020: 11,218 ozs) an increase of 29%;
  • Silver 269,505 ozs (2020: 291,756 ozs) a decrease of 8%; and
  • Lead 1,069 tonnes (2020: 1,425 tonnes) a decrease of 25%.

Average prices achieved in 2021 were:

  • Zinc metal per tonne of $2,311 (2020: $1,645);
  • Gold metal per oz of $1,691 (2020: $1,759);
  • Silver metal per oz of $19.8 (2019: $17.7); and
  • Lead metal per tonne of $2,074 (2019: $1,339).

Total cost of sales in 2021 of $63,224,000 was up 47.9% on that incurred in 2020 of $42,737,000. In the main this reflects more tonnes mined, hauled and processed in 2021. Further cost increases occurred with the mine deepening, increasing mine service costs and the distances ore is hauled, whilst processing costs were impacted by tailings disposal issues and increased maintenance costs. Costs were also increased by a 4.5% appreciation of the Renminbi to the US dollar and pay awards to staff.

Administration expenses rose $3,981,000 (23%) from $17,518,000 in 2020 to $21,499,000 in 2021. Administration costs include a charge of $3,876,000 (2020: 2,943,000) incurred with Yuanrun based upon the profits of Hebei Hua Ao subject to a minimum fee. Hebei Hua Ao’s administration fees increased by 27% in 2021 with a 4.5% appreciation in the Renminbi exchange rate, pay awards to staff and additional environmental and safety regulatory compliance costs, including that to maintain Caijiaying’ s “Green Mine” status in the PRC. Administration costs outside the PRC were impacted by investor and public relation costs curtailed in previous years and significantly increased insurance premiums.

Foreign exchange losses of $51,000 (2020: gains $22,000) were recorded in 2021, mainly on a weaker sterling. Interest of $236,000 (2020: $108,000) was received on bank deposits in 2021. Interest of $309,000 (2020: $111,000) was paid on short term bank loans. Finance interest on the lease of the dry tailings facility at Caijiaying and the London office totalling $11,000 (2020: $171,000) was charged in 2021. Deemed interest on discounted rehabilitation provisions of $84,000 (2020: $77,000) was charged in 2021.

Losses on the disposal of equipment of $293,000 (2020: $1,129,000) were recorded with equipment being replaced to meet higher Chinese environmental standards.

Income taxes of $11,150,000 (2020 $5,605,000) have been charged in 2021.

Basic earnings per share in 2021 was 14.53 cents (2020: 5.16 cents) and diluted earnings per share was 13.47 cents (2020: 4.88 cents).

Cash generated from operations of $42,880,000 (2020: $24,398,000), an increase of 76%, have been used in further developing the mine and facilities and held pending development of the Zone II area at Caijiaying.

Attributable net assets per share at 31 December 2021 was $1.50 (2020: $1.35), and increase of 11%.

Whilst the Directors do not recommend the payment of a dividend at this time, the Directors have discussed and will further consider a dividend policy later this year when current political, social and economic circumstances permit enabling such a policy to be instituted and executed over a consistent, long term basis.

Chairman’s Statement:

In terms of the Company’s financial and operational performance, it has been a stellar year, even more extraordinary considering Zone II has yet to be fully developed or brought into production and in light of the continuing restrictions imposed by the Covid-19 pandemic in China.

In 2021, in comparison to 2020:

  • Revenue was 61% higher at $121,648,000;
  • Operating profit was 143% higher at $36,925,000;
  • Profit before tax was 152% higher at $36,526,000;
  • Profit after tax was 185% higher at $25,376,000; and
  • Basic earnings per share was 182% higher at14.53 cents per share.

Operationally, record amounts of ore were mined and processed in 2021 and metal production of our 2 largest revenue producers, zinc and gold, were substantially higher than in the previous year:

  • Ore mined was up 14% at 971,492 tonnes;
  • Ore hauled was up 19% at 979,783 tonnes;
  • Ore processed was up 20% at 985,404 tonnes;
  • Zinc metal in concentrate produced was up 28% at 41,587 tonnes; and
  • Gold metal in concentrate produced was up 28% at 14,447 ounces;

This bodes very well for the future results of the Company when Zone II is commissioned and in full production. Since the grant of the new mining licence over Zone II in January 2021, the Company has been working continuously and tirelessly on obtaining approval for the design and development of Zone II. That approval is expected shortly and drive development is planned to begin on the 1st July 2022. In the interim, the first drill platform for resource drilling at Zone II was constructed in September 2021 and diamond drilling commenced in early October 2021.

What makes the above results truly exceptional is the continuing Covid-19 crisis in China and the quarantine procedures the various levels of government have put in place making the transport of materials, employees and contractors over Provincial borders at the least, extraordinarily difficult and, at the most, impossible. Furthermore, China has prevented the entrance of any foreign national into the country who does not have a pre-existing work permit and then, only with 28 days hotel quarantine. What this reinforces in simple terms is the dedication and loyalty of both our on-site staff and our ex-pat staff. The former who, in effect, now live permanently at camp as they are wary of not being permitted to return to the Caijiaying Mine site should quarantine be imposed unilaterally at local, county, city or Provincial level. The latter ex-pats, who now spend 3 to 6 months away from their partners, children and extended family, allow the Company to keep operating. I should add, all this when there is a 30,000 person shortage in the Australian mining industry where most of our ex pat staff are based. In particular, and most of all, I would like to thank John Steel, our new Chief Operating Officer, Paul Benson, our Chief Geologist, and Wendy Zhang, our site Chief Financial Officer, for their Herculean efforts over the past 12 months. All these on-site and ex-pat individuals have displayed the extent of their loyalty and I am grateful on behalf of everyone involved with the Company.

Needless to say, the safety and welfare of the Company’s workforce remains the overwhelming priority of the Company. Underground and surface operations operated safely and consistently in 2021 without any major incidents. With the Company’s extensive Covid-19 pandemic controls, there have been no outbreaks of Covid-19 at the Caijiaying Mine to date. With assistance from local Chinese authorities all personnel have received Chinese manufactured Covid-19 vaccinations.

Operational highlights throughout the year included the acquisition of land for the construction of new Tailings Dam 4 and the completion of the construction of the bridge to provide access to the area, the installation and extension of the paste pipe reticulation system and the continuation of the programme to further modernise and increase safety at the Caijiaying Mine. This included the introduction of 10 specific PRC Kuang Anquan (“KA”) wet brake vehicles for personnel transportation underground, further increasing mine safety, traffic management and the underground environment. In addition, a new 40 tonne low emission boiler used to heat the site processing, administration and other buildings as well as the underground workings was commissioned and a new electrical boiler was installed and commissioned at the Caijiaying Mine Camp reducing the Company’s carbon emissions footprint.

Importantly, probably the most significant non-operational event of the past year was the activism of the major shareholders of the Company to effect change at the board level with the intention of seeking to extract greater value from the Company and their shareholding. To that end, 3 new independent directors were appointed to the board. Clive Whiley was appointed to the board in August 2021 and Linda Naylor and Dean Moore in May 2022. I would like to welcome all 3 formally to the board and wish them every success and a productive and enjoyable time on the board.

With this substantial change to the board I’d like to state that I will always be enormously grateful and humbled by the contribution and comradery 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 I had this journey with these amazing individuals – the deceased Rupert Crowe and Bill Mulligan, the mining thoroughbred Dal Brynelsen and the indefatigable Roger Goodwin. To quote Bill Curry, an American football star, “It’s not for the bucks that I drive myself to the limits of my ability. It’s so that I can go back to the locker room, after having gone those last 35 yards and won the game and walk back in there with my arm around a teammate and know that we did that together, that we both gave it a little more than we really had. Now that may sound real phony but I promise you it’s the reason we play.”

To the shareholders, my overwhelming wish is that Covid-19 disappears from concern, that there be peace in Eastern Europe, the World economy avoids severe recession and inflation, that the zinc price remains high and Zone II hits our long awaited full production target. May the Year of the Tiger make it just so.

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) Limit Telephone: +44 (0)20 7886 2500

John Prior

Ailisa MacMaster

 

Berenberg Telephone: +44(0)20 3207 7800

Matthew Armitt

Jennifer Wyllie

Deltir Elezi

BlytheRay

Tim Blythe Telephone: +44(0)20 7138 3205

Swiss Resource Capital AG

Jochen Staiger

[email protected]

  

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014


Griffin Mining Limited

Summarised Consolidated Income Statement

For the year ended 31 December 2021

(expressed in thousands US dollars)

 

 

2021

 

2020

 

Audited

 

Audited

 

$000

 

$000

 

 

  

Revenue

121,648

 

75,403

 

 

  

Cost of sales

(63,224)

 

(42,737)

 

 

  

 

 

  

Gross profit

58,424

 

32,666

 

 

  

Administration expenses

(21,499)

 

(17,518)

 

 

  

 

 

  

Profit from operations

36,925

 

15,148

 

 

  

Losses on disposal of plant and equipment

(293)

 

(1,129)

Provisions against intangible assets

(11)

 

(10)

Foreign exchange (losses) / gains

(51)

 

22

Finance income

236

 

108

Finance costs

(404)

 

(359)

Other income

124

 

735

 

 

  

 

 

  

Profit before tax

36,526

 

14,515

 

 

  

Income tax expense

(11,150)

 

(5,605)

 

 

  

 

 

  

Profit for the year

25,376

 

8,910

 

 

  

 

 

  

Basic earnings per share (cents)

14.53

 

5.16

 

 

  

Diluted earnings per share (cents)

13.47

 

4.88

Griffin Mining Limited

Summarised Consolidated Statement of Comprehensive Income

For the year ended 31 December 2021

(expressed in thousands US dollars)

 

 

 

2021

 

2020

 

 

Audited

 

Audited

Restated

 

 

$000

 

$000

 

 

 

 

 

Profit for the year

 

25,376

 

8,910

  

 

 

 

Other comprehensive income that will be reclassified to profit or loss

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

3,336

 

9,837

 

 

 

 

 

 

Other comprehensive income for the year, net of tax

 

 

3,336

 

9,837

 

 

 

 

 

 

Total comprehensive income for the year

 

 

28,712

 

18,747


The 2020 exchange differences on translating foreign operations have been corrected from that reported in 2020 of $9,662,000.

Griffin Mining Limited

Summarised Consolidated Statement of Financial Position

As at 31 December 2021

(expressed in thousands US dollars)

 

 

2021

 

2020

 

Audited

 

Audited

 

$000

 

$000

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

275,296

 

266,709

Intangible assets – exploration interests

387

 

325

 

275,683

 

267,034

Current assets

 

 

 

Inventories

4,516

 

5,333

Receivables and other current assets

2,174

 

6,675

Cash and cash equivalents

38,159

 

16,435

 

44,849

 

28,443

 

 

 

 

Total assets

320,532

 

295,477

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

Equity attributable to equity holders of the parent

 

 

 

Share capital

1,749

 

1,728

Share premium

69,334

 

68,470

Contributing surplus

3,690

 

3,690

Share based payments

2,072

 

2,072

Shares held in treasury

(1,644)

 

(917)

Chinese statutory re-investment reserve

2,896

 

2,830

Other reserve on acquisition of non controlling interests

(29,346)

 

(29,346)

Foreign exchange reserve

14,635

 

11,365

Profit and loss reserve

199,190

 

173,814

Total equity attributable to equity holders of the parent

262,576

 

233,706

 

 

 

 

Non-current liabilities

 

 

 

Other Payables

10,352

 

13,487

Long-term provisions

2,667

 

2,200

Deferred taxation

3,240

 

3,359

Finance leases

794

 

-

 

17,053

 

19,046

Current liabilities

 

 

 

Trade and other payables

40,726

 

42,342

Finance leases

177

 

383

Total current liabilities

40,903

 

42,725

 

 

 

 

Total equities and liabilities

320,532

 

295,477

 

 

 

 

Attributable net asset value per share to equity holders of parent

1.50

 

1.35


Griffin Mining Limited

Summarised Consolidated Statement of Changes in Equity

For the year ended 31 December 2021

(expressed in thousands US dollars)

 

 

Share

Share

Contributing

Share

Shares

Chinese

Other

Foreign

Profit

Total

 

Capital

Premium

surplus

Based

held in

statutory

re-investment

reserve on

Exchange

and loss

attributable to

  

 

 

Payments

Treasury

Reserve

acquisition of

Reserve

reserve

equity holders

       

non-controlling

  

of parent

       

interests

   
 

$000

$000

$000

$000

$000

$000

$000

$000

$000

$000

At 1st January 2020

1,728

68,455

3,690

2,072

(917)

2,500

(29,346)

1,703

165,059

214,944

Regulatory transfer for future investment

-

-

-

-

-

155

-

-

(155)

-

Issue of shares on exercise of options

-

15

-

-

-

-

-

-

-

15

Transaction with owners

-

15

-

-

-

155

-

-

(155)

15

Profit for the year

-

-

-

-

-

-

-

-

8,910

8,910

 

          

Other comprehensive income:

          

Exchange differences on translating foreign operations

-

-

-

-

-

175

-

9,662

 

9,837

Total comprehensive income

-

-

-

-

-

175

-

9,662

8,910

18,747

 

At 31st December 2020

1,728

68,470

3,690

2,072

 

(917)

2,830

 

(29,346)

11,365

173,814

233,706

Regulatory transfer for future investment

-

-

-

-

-

-

-

-

-

-

Purchase of shares held in treasury

-

-

-

-

(727)

-

-

-

-

(727)

Issue of shares on exercise of options

21

864

-

-

-

-

-

-

-

885

Transaction with owners

21

864

-

-

(727)

-

-

-

-

158

Profit for the year

-

-

-

-

-

-

-

-

25,376

25,376

 

          

Other comprehensive income:

          

Exchange differences on translating foreign operations

-

-

-

-

-

66

-

3,270

-

3,336

Total comprehensive income

-

-

-

-

-

66

-

3,270

25,376

28,712

 

At 31st December 2021

1,749

69,334

3,690

2,072

 

(1,644)

2,896

 

(29,346)

14,635

199,190

262,576

Griffin Mining Limited

Summarised Consolidated Cash Flow Statement

For the year ended 31 December 2021

(expressed in thousands US dollars)

 

 

2021

 

2020

 

Audited

 

Audited

 

$000

 

$000

 

 

 

 

Net cash flows from operating activities

 

 

 

Profit before tax

36,526

 

14,515

Foreign exchange losses / (gains)

51

 

(22)

Finance income

(236)

 

(108)

Finance costs

404

 

359

Depreciation, depletion and amortisation

16,530

 

12,801

Provisions against intangible assets

11

 

10

Losses on disposal of equipment

293

 

1,129

Decrease / (increase) in inventories

817

 

(1,494)

Decrease / (increase) in receivables and other current assets

4,936

 

(4,814)

(Decrease) / increase in trade and other payables

(2,871)

 

5,666

Tax paid

(13,581)

 

(3,644)

Net cash inflow from operating activities

42,880

 

24,398

 

 

 

 

Cash flows from investing activities

 

 

 

Interest received

236

 

108

Proceeds / (costs) on disposal of equipment

1

 

(44)

Payments to acquire – mineral interests

(13,564)

 

(18,691)

Payments to acquire – plant and equipment

(6,365)

 

(5,684)

Payments to acquire office, office furniture & equipment

-

 

(5)

Payments to acquire intangible fixed assets – exploration interests

(73)

 

(11)

Net cash outflow from investing activities

(19,765)

 

(24,327)

 

 

 

 

Cash flows from financing activities

 

 

 

Issue of ordinary shares on exercise of options

885

 

15

Interest paid

(309)

 

(112)

Purchase of shares for treasury

(727)

 

-

Bank loan advances

15,500

 

-

Repayment of bank loans

(15,500)

 

-

Finance lease repayments

(462)

 

(2,469)

Net cash outflow from financing activities

(613)

 

(2,566)

 

 

 

 

Increase / (decrease) in cash and cash equivalents

22,502

 

(2,495)

 

 

 

 

Cash and cash equivalents at the beginning of the year

16,435

 

19,885

Effects of exchange rates

(778)

 

(955)

Cash and cash equivalents at the end of the year

38,159

 

16,435

 

 

 

 

Cash and cash equivalents comprise bank deposits

 

 

 

Bank deposits

38,159

 

16,435

Included within net cash flows of $22,502,000 (2020 $2,495,000) are foreign exchange losses of $51,000 (2020: gains $22,000) which have been treated as realised.

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 Company.

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 2021 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 2021 statutory financial statements.

The annual report and accounts for 2021 are 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 2021 and 2020 were derived from the Caijiaying zinc gold mine.

 

2021

 

2020

 

$000

 

$000

REVENUES

   

China

121,648

 

75,403

 

 

  

Zinc concentrate sales

96,951

 

53,095

Lead and precious metals concentrate sales

31,915

 

25,999

Royalties and resource taxes

(7,218)

 

(3,691)

 

121,648

 

75,403

 

 

  

COST OF SALES: CHINA

 

  

Mining costs

19,003

 

16,056

Haulage costs

11,466

 

7,282

Processing costs

16,574

 

8,868

Depreciation (excluding depreciation in administration costs)

14,481

 

11,780

Stock movements

1,520

 

(1,249)

 

63,224

 

42,737

 

 

  

ADMINISTRATION EXPENSES

 

  

China

16,433

 

12,939

Australia

136

 

312

UK / Bermuda

4,930

 

4,267

 

21,499

 

17,518

All revenues, cost of sales and operating expenses charged to profit relate to continuing operations.

Notes (continued):

TOTAL ASSETS

2021

 

2020

 

$000

 

$000

China

312,026

 

290,147

Australia

1,011

 

967

UK / Bermuda

7,495

 

4,363

 

320,532

 

295,477

 

 

  

CAPITAL EXPENDITURE

2021

 

2020

 

$000

 

$000

China

19,929

 

24,375

Australia

-

 

-

UK / Bermuda

963

 

5

 

20,892

 

24,380

FINANCE INCOME

2021

 

2020

 

$000

 

$000

Interest on bank deposits

236

 

108

FINANCE COSTS

2021

 

2020

 

$000

 

$000

Interest payable on short term bank loans

309

 

111

Interest on rehabilitation provisions

84

 

77

Finance lease interest

11

 

171

 

404

 

359

OTHER INCOME

2021

 

2020

 

$000

 

$000

Scrap and sundry other sales

124

 

735

 

Income Tax Expense

 

2021

 

2020

 

$000

 

$000

Profit for the year before tax

36,526

 

14,515

 

 

 

 

Expected tax expense at a standard rate of PRC income tax of 25% (2018 25%)

9,132

 

3,629

Adjustment for tax exempt items:

 

 

 

- Income and expenses outside the PRC not subject to tax

934

 

567

 

 

 

 

Adjustments for short term timing differences:

 

 

 

- In respect of accounting differences

890

 

(298)

- In respect of other timing differences

(4)

 

-

 

 

 

 

Adjustments for permanent timing differences other

372

 

1,051

 

 

 

 

Withholding tax on intercompany dividends and charges

21

 

232

 

 

 

 

Current taxation expense

11,345

 

5,181

 

 

 

 

Deferred taxation expense

 

 

 

Origination and reversal of temporary timing differences

(195)

 

424

 

(195)

 

424

 

 

 

 

Total tax expense

11,150

 

5,605

Notes (continued):

INCOME TAX EXPENSE (continued)

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 2021 (25% in 2020) based upon the profits calculated under Chinese generally accepted accounting principles (Chinese “GAAP").

EARNINGS PER SHARE

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

 

 

 

2021

 

 

 

  

2020

  

 

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

 

 

 

 

 

 

     

Earnings attributable to ordinary shareholders

 

25,376

 

 

174,653,602

 

 

14.53

 

8,910

 

172,788,420

 

5.16

Dilutive effect of securities

 

 

 

 

 

 

     

Options

-

 

13,730,107

 

(1.06)

 

-

 

9,861,227

 

(0.28)

Diluted earnings per share

 

25,376

 

 

188,383,709

 

 

13.47

 

8,910

 

182,649,647

 

4.88

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

 

Notes (continued):

Property, plant and equipment

 

 

Mineral

Interests

 

Mill and mobile mine equipment

 

Offices furniture & equipment

 

Total

At 1 January 2020

177,583

 

50,373

 

331

 

228,287

Foreign exchange adjustments

8,292

 

3,408

 

5

 

11,705

Additions during the year

18,691

 

5,684

 

5

 

24,380

Provision for licence transfer fees

16,338

 

-

 

-

 

16,338

Change in estimate of mine closure costs

(115)

 

-

 

-

 

(115)

Transfer of rehabilitation provision

697

 

(697)

 

-

 

-

Disposals

-

 

(1,085)

 

-

 

(1,085)

Depreciation charge for the year

(6,542)

 

(6,084)

 

(175)

 

(12,801)

At 31 December 2020

214,944

 

51,599

 

166

 

266,709

        

Foreign exchange adjustments

3,405

 

1,224

 

(2)

 

4,627

Transfer

(773)

 

773

 

-

 

-

Additions during the year

13,564

 

6,365

 

963

 

20,892

Change in estimate of mine closure costs

327

 

-

 

-

 

327

Release of rehabilitation provision

(435)

 

-

 

-

 

(435)

Disposals

-

 

(294)

 

-

 

(294)

Depreciation charge for the year

(10,200)

 

(6,180)

 

(150)

 

(16,530)

At 31 December 2021

220,832

 

53,487

 

977

 

275,296

        

At 31 December 2019

       

Cost

222,589

 

80,935

 

573

 

304,097

Accumulated depreciation

(45,006)

 

(30,562)

 

(242)

 

(75,810)

Net carrying amount

177,583

 

50,373

 

331

 

228,287

        

At 31 December 2020

       

Cost

267,763

 

90,173

 

583

 

358,519

Accumulated depreciation

(52,819)

 

(38,574)

 

(417)

 

(91,810)

Net carrying amount

214,944

 

51,599

 

166

 

266,709

        

At 31 December 2021

       

Cost

285,471

 

97,910

 

1,544

 

384,628

Accumulated depreciation

(64,639)

 

(44,423)

 

(567)

 

(106,929)

Net carrying amount

220,832

 

53,487

 

977

 

275,926

 

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 $5,795,000 (2020: $3,872,000) of assets under construction yet to be depreciated.


Notes (continued):

Property, plant and equipment (continued)

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.

During 2013 plant and equipment with a deemed value of $11,381,000, revalued in 2019 to $14,150,000, were acquired under a finance lease, upon which depreciation of $8,132,000 (2020: $6,712,000) has been provided. At 31 December 2021 the net carrying amount of this equipment was $7,351,000 (2020: $8,417,000). In 2019 the London office lease was capitalised, and in November 2021 renewed. To comply with IFRS16 a deemed value of $1,581,000 has been applied upon which depreciation of $618,000 has been provided. At 31 December 2021 the net carrying amount of this office was $963,000 (2020: $124,000).

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 business segment. 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 2021. However, as best practice management have updated the impairment model.

In determining any indications of impairment in the carrying value of the Caijiaying Mine the directors have reassessed the net carrying value of capitalised costs at 31 December 2021 by reference to the estimated mineral resources at Caijiaying that may be extracted by 2056 and 2037 when the current business licence of Hebei Hua Ao expires. However, it is expected that Hebei Hua Ao will be converted to an equity joint venture company with an indefinite life before then in order to comply with new PRC legislation. Accordingly, a Life of Mine plan (“LOM”) has been prepared by the Company that indicates the continued extraction of ore until 2056. 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 $3,000 per tonne, gold of $1,800 per troy ounce and silver of $22.5 per troy ounce;
  • Zinc treatment charges of 30% of market prices;
  • Extraction of measured and indicated resources of 8 million tonnes to 2037 when the current business licence of Hebei Hua Ao expires, with ore mined and processed rising to a maximum rate of 1.6 million tonnes of ore per annum and the extraction of 50.3 million tonnes by 2056;
  • Operating costs, recoveries and payables based upon past performance and that budgeted for 2022;
  • Capital costs based upon that initially scheduled with sustaining capital based on future scheduling;
  • Discount rate of 10%;
  • Continued maintenance and grant of applicable licences and permits;
  • A Renminbi to US dollar foreign exchange rate of Rmb6.5 to USD1; and
  • No significant impact as a result of climate change, earthquakes or other natural

Notes (continued):

Intangible Assets

 

China – mineral exploration interests

     

$000

At 1 January 2020

    

322

Foreign exchange adjustments

    

2

Additions during the year

    

11

Impairment during the year

    

(10)

At 1 January 2021

    

325

Additions during the year

    

73

Impairment during the year

    

(11)

At 31 December 2021

    

387

Intangible assets represent cost on acquisition, plus subsequent expenditure on licences, concessions, exploration, appraisal and development work in respect to regional exploration in China. Where expenditure on an area of interest is determined as unsuccessful such expenditure is written off to profit or loss. The recoverability of these assets depends, initially, on successful appraisal activities, details of which are given in the report on operations. The outcome of such appraisal activity is uncertain. Upon economically exploitable mineral deposits being established, sufficient finance will be required to bring such discoveries into production. At 31 December 2021 impairment charges of $11,000 (2020: $10,000) had been provided and charged to the income statement in respect of the above exploration costs previously capitalised by Hebei Sino Anglo.

POST BALANCE SHEET EVENTS

As at 31 December 2021 there were no adjusting post balance sheet events (2020: none).

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