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Griffin announced FY2023 results that were better than Panmure Gordon and Bloomberg estimates. As noted at the time of the Q1 FY2024 production update, we believe Caijiaying is now delivering upon its significant potential, helped by the robust pricing environment for Gold, Silver and Lead. In this note, we have taken the opportunity to review and update our forecasts for Griffin.
Griffin Mining Limited
Griffin announced FY2023 results that were better than Panmure Gordon and Bloomberg estimates, which is not overly surprising given the strong production results recently announced. As noted at the company’s recent Q1 FY2024 production update, we believe Caijiaying is now delivering upon its significant potential, helped by the robust pricing environment for Gold, Silver and Lead. In this note, we have compared the company’s actual results against our previous assumptions.
Griffin’s Q1 FY2024 production and sales update was better than expected vs. Panmure Gordon and company expectations. After a solid FY2023, we believe Caijiaying is further delivering upon its significant potential, helped by the robust pricing environment for Gold, Silver and Lead.
Griffin’s Q4/FY2023 production was as expected vs. Panmure Gordon and company expectations. After the issues in FY2022, FY2023 was the type of performance management have long described as their target, even back when the original expansion to 1.5mtpa of throughput was first completed in 2016. We anticipated FY2023 was well placed to make up for FY2022 and are pleased to see this delivered.
Griffin’s Q3 FY2023 production and sales update saw mine production continue at the planned 1.5mtpa annualised throughput rate, albeit with low-grade zones impacting overall production levels. We do not see this as a long-term concern, but more a function of production normalising, after a period of outperformance with higher volumes of lower grade material now being processed before Zone II ore becomes the dominant feed source.
Griffin’s H1 FY2023 results reflected the positive momentum the company has highlighted in its recent operational updates where zinc production continues to increase, driven by record mining and processing rates. It should be noted that annualised throughput rates are already exceeding the planned 1.5mtpa rate, from the historical Zone III area. With Zone II development work progressing on track, we expect a gradual improvement in operating grades driven by reduced dilution, to become more evident. We also look towards the potential for further significant resource expansion at Zones II, V and VIII, underpinning why Griffin is well placed to further grow its profitable operations at Caijiaying.
Griffin’s Q2 FY2023 production and sales update saw zinc production continue to increase, driven by record mining and processing rates. It should be noted that annualised throughput rates are already exceeding the planned 1.5mtpa rate, just from the historical Zone III area. With Zone II development work ongoing and further significant resource expansion potential at Zones II, V and VIII, Griffin is well placed to further grow its profitable operations at Caijiaying.
Griffin’s Q1 FY2023 production and sales update was better than expected vs. Panmure Gordon and company expectations. After a challenging FY2022, we believe Caijiaying can finally begin to deliver upon its inherent potential, helped even further by the robust pricing environment for both Zinc and Gold.
Griffin’s Q4/FY2022 production was as expected vs. Panmure Gordon and company expectations. Production in FY2022 had been impacted by the numerous disruptions previously discussed at length. However, with a restart of operations in Q4, strong metals prices and the reversal of China’s Covid-zero policy, FY2023 is well placed to make up for the difficulties of FY2022.
FY2022 has been a year of frustration for investors, management and analysts alike. Disrupted production plans due to a confluence of one-off factors have effectively meant the Caijiaying mine will have operated for a total of just seven months in FY2022. Given Caijiaying has already delivered annualised production rates of ~1.5mtpa, when operating unconstrained by Government mandated closures, we anticipate a significantly stronger production outcome in FY2023. Additionally, our structurally positive view towards Zinc supports a material increase in shareholder returns. In conclusion, given the underperformance of the shares in 2022, we see considerable upside should our production estimates be achieved. In this note we review our anticipated outcomes for FY2022 to FY2024.
Griffin Mining has confirmed the haulage and processing of ore at its Caijiaying mine recommenced on 1st November and following the delivery of explosives to site this weekend, full operational activity is expected to recommence on Monday 7th November.
Griffin Mining will be temporarily halting operations at the Caijiaying mine during the upcoming Plenary Session and Chinese Communist Congress, due to the government’s safety measures including the restriction on the production and sale of explosives. Frustratingly, operations at Caijiaying had been recording record throughput rates but the extended shutdown, beyond the company’s own budgets, will inevitably have some impact on the full year’s outcome.
Griffin Mining has announced its H1 FY2022 results for its Caijiaying mine in China. The operation rallied well in Q2 with record quarterly zinc production, following mandatory state-imposed mine closure in Q1 due to emissions controls connected with the Beijing Winter Olympics.
After the well-documented suspension of operations at Caijiaying in Q1 FY2022 for the Chinese Lunar New Year holidays, the Winter Olympics and Paralympics resulted in operations recommencing in the final week of March, Q2 saw Caijiaying make vast strides in its efforts to make up for lost time. The quarter saw record volumes of ore mined, hauled and processed to achieve the highest level of zinc metal in concentrate produced. We see this step change in production volumes being core to our positive view towards Griffin Mining.
Recovering production volumes amid an exceptionally strong pricing environment confirm the undervalued nature of Griffin in the near term. However, incorporating the planned material production increase in which Griffin’s Caijiyang operation is expected to reach an annualised run rate of ~1.5Mtpa by the end of the year compounds the valuation argument given our structurally positive view towards Zinc. As such, we see considerable upside for the shares. In this note we review our anticipated outcomes for FY2022 and FY2023 as well as publishing our estimates for FY2024.
As highlighted previously, operations at Caijiaying were suspended throughout Q1 FY2022 for the Chinese Lunar New Year holidays, the Winter Olympics and Paralympics, preventing operations from recommencing until the final week of March. Operations are now normalising and we expect the company to make up for lost time, given the exceptional metals price environment.
Griffin has today confirmed, as expected, that all staff and contractors are scheduled to return to the Caijiaying Mine and that underground mining operations are scheduled to recommence on 15th March 2022. More positively, underground drilling at both Zones II and III will recommence earlier than planned, on 7th March 2022.
Griffin’s Q4/FY2021 production was mixed vs. Panmure Gordon and company expectations, with production in Q4 impacted by the anticipated disruption associated with the upcoming Lunar New Year and Winter Olympic Games. Nevertheless, full year zinc production growth of 28% alongside a 40% increase in price is still the best production outcome since 2017’s and highlights how Caijiaying retains such potential for investors seeking exposure to Zinc.
Growing production volumes and stronger than expected pricing confirm the undervalued nature of Griffin over the long term. However, incorporating what we believe may turn out to be an overly cautious outcome from the anticipated disruption to operations in Q1 FY2022, we concur with management’s safety-first approach when considering the known unknowns around the Winter Olympic Games and the Paralympic Games next year. Longer term, we see considerable upside and remain poised to take advantage of any mispricing by the market during what could be a disruptive time for all commodity prices. In this note we review our anticipated outcomes for FY2021 and beyond.
Positively, Griffin has received notice that vital operating supplies will continue to be delivered to the Caijiaying Mine Site until midnight on the 31st December 2021, the only mine granted such an accommodation in Hebei Province. This rolling permission had been expected to conclude, along with other regional producers, at the end of November. We see this as a validation of the operations importance and best practices adhered to at Caijiaying.
Q3 FY2021 production results from Griffin demonstrated further improvement over the comparative period in FY2020, driven by stable production and robust commodity prices, most notably for Zinc. The company continues to target production growth from its Caijiaying deposit in China and we see significant growth in the years ahead, but we concur with management’s more cautious outlook in the lead up to the Winter Olympics.
Griffin Mining released interim financial results for the half that were up very significantly on H1 2020. Both increased production levels and the higher Zinc price resulted in very strong financial performance for the half.
Growing production volumes and stronger than expected pricing confirm the undervalued nature of Griffin. In this note we review our anticipated outcomes for FY2021 and beyond.
Griffin Mining : Nothing mythical about this opportunity
Griffin Mining : Forecasts revised (22-Jan-2018)
Griffin Mining’s interim results, as noted the company’s trading statement, confirmed the very strong performance in H1 FY2017. Profitable, cash generative and with a balance sheet that is rapidly reducing debt, Griffin should be go-to small cap mining company for investors seeking zinc exposure.
Griffin Mining provided a positive trading update ahead of its planned interim results yesterday afternoon to confirm that whilst stronger commodity prices in general have been a positive, an exceptional 90% increase in the average price for its zinc concentrate over the last 12 months will drive profits higher than current market expectations. We have thereby significantly increased our forecasts for FY2017 and reiterate our Buy recommendation with a target price of 87p, underpinned by our 100p valuation of the Caijiaying operation.
Griffin Mining has today announced preliminary results for the year ended 31 December 2016, that saw the company erase the loss of last year and return to profitable cash generative operations, despite various operational difficulties. We have reviewed our forecasts and reinstate formal coverage with a Buy recommendation and new 87p target price.
Griffin has today announced interim results that lay bare the impact of a tough first quarter. In spite of this, the second quarter saw the company return to profitability, both through increasing production rates and a significant recovery in commodity prices. Following the >50% increase in the shares since we moved to Buy in April, we move to reassess our model forecasts given the improvement in fortunes.
Griffin Mining has today published its FY2015 preliminary results that lay bare the issues faced during what was a tumultuous year. Despite the well-publicised negatives the company has indeed made some significant strides in improving the overall operations at Caijiaying. We remain cautious over the timing for the new licence award, but believe that upon a successful conclusion Griffin offers investors an attractive opportunity to benefit from the positive fundamentals in the zinc market. We reinstate our Buy recommendation and new 30p target price.
Griffin Mining todays announces that following the Chinese state safety bureau completing their investigatory work into a fatality at the Caijiaying mine in October the suspension of mining has been lifted. Additionally, and more positively is the news that the proposed 35kV power line to the Caijiaying mine has now been connected and is live, allowing work to recommence on commissioning the new third main ball mill. Our recommendations remain under review following a change of coverage and pending a reappraisal of financial forecasts.
Griffin Mining sadly experienced another fatality at its Caijiaying operations on 17 October. With underground operations suspended, the company confirmed it would continue to process stockpiled ore for a minimum of two months at current rates. Following a change of analyst we have placed our recommendation and financial forecasts under review.
Griffin Mining has reported a slightly better set of H1 results than we had anticipated driven by better zinc grades and gold recoveries and continued cost control. However given the continued weak zinc price environment, we are keeping our full year earnings forecast unchanged at 2.0c per share. The company ended H1 with net debt of US$54m.
