G R I F F I N M I N I N G L I M I T E D
G R I F F I N M I N I N G
REPORT &
ACCOUNTS
2000
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CONTENTS
CONTENTS
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Chairman’s statement
Review of operations
Directors
Directors’ report
Report of independent auditors
Consolidated profit and loss account
Consolidated balance sheet
Statement of total recognised gains and losses
Consolidated cash flow statement
Accounting policies
Notes to the financial statements
Corporate information
Griffin Mining Limited’s shares are quoted on the Alternative Investment Market (AIM)
of the London Stock Exchange (symbol GFM).
Information on the Company, is available on the Company’s web site: www.griffinmining.com
Registered number: EC13667 Bermuda.
Registered Office: Clarendon House, 2 Church Street, Hamilton HM11, Bermuda
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CHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENT
Dear Shareholder, it gives me great pleasure to address you in this my first Statement as the Chairman of your
company, Griffin Mining Limited (“Griffin” or the “Company”).
The environment for the mining industry since late 1993, and particularly since the Bre-X scandal of 1996, has been,
to say the least, dismal. A large part of the blame, I believe, lies fairly within the purvey of the promoters and
financiers who promoted these junior mining companies with assets comprising little more than “moose pasture”
hoping to make a quick capital gain on the appreciation of their share price. Such “get rich quick schemes” inevitably
ended in failure and losses for long-term shareholders. The recent decline in metal prices, and in particular the price
of gold, has reinforced the negative view held of the metals market by the investing public.
In this truly global economy, there are only two honest ways that I know of in building substantial shareholder value
in a mining company. The first is to explore virgin ground and hope to find an economically extractable ore body.
This is not only an extremely capital intensive activity, but it is also becoming ever more difficult to accomplish given
the amount of exploration which has taken place in the western world over the past 2,000 years. The second option is
to acquire or participate in a venture in an emerging market, such as China, which already has a proven ore body but
which needs western capital to develop it. This is the course Griffin has taken as we believe the global and
intertwined nature of the world economy makes the assumption of political risk far more palatable and inexpensive
than the assumption of exploration risk. Time will tell whether we have made the correct election.
Griffin has made excellent progress in the past year in bringing the Caijiaying deposit to the stage where, subject
to the conclusion of financing arrangements, the Company is ready to begin the process of constructing processing
facilities and commission a producing zinc-gold-silver mine. In essence Griffin is on the verge of becoming a true
mining company, not an exploration and development company.
We your management, however, are under no illusion as to how the market perceives China, generally as a difficult
and risky place to do business. We tend to disagree with this view, otherwise we would not have taken the decision to
keep spending your precious funds in attempting to develop a mine in China. There are risks to operating in China,
substantial risks, but risks, which we believe, are worth taking for the rewards which potentially lie at the end of the
process.
We are also well aware that the perceived risk of China is being factored into Griffin’s share price. It is more than
likely that if Caijiaying were located in Canada, USA or Australia, the market capitalisation of Griffin would be
significantly different. There is no easy or quick solution to this dilemma. Educating the investing public is one
option in redressing the situation. To that end we have begun to show various investment professionals, including
stockbrokers and fund managers, over our Caijiaying property, our joint venture operations and China in general. I
think I am right in saying that they all have come away from such visits impressed with Caijiaying, our joint venture,
the progress we have made, Griffin’s knowledge and experience in China and the modern nature of China.
The real solution to the languishing share price is to commission the Caijiaying mine. That will not only prove to
the investment community that Griffin can operate a mine in China and expatriate earnings for its own account,
but also that it will generate significant cash flow for Griffin, so that if needs be, we can begin returning value to
our shareholders by all the means available to the management of a company, including buying back our own shares
and dividends.
We have decided not to follow the traditional path of financing the construction of a mine. Normally that process
would involve a lengthy and, for a company of Griffin’s size, prohibitively expensive bankable feasibility study
followed by debt and equity financing arranged by a commercial bank. We have opted not to follow this course for
a number of reasons, not only because of cost, but also because of the lack of knowledge of the Chinese mining
sector by the commercial markets. We believe that finance should be arranged from a position of strength rather
than going “cap in hand” to the commercial banks. Consequently, your Board took the decision at the end of 2000
to raise the approximately $2 million equity portion of the US$6.7 million needed to build and commission the
Caijiaying mine prior to canvassing the commercial banks for the debt facility. As of the 15th of June 2001, Griffin
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CHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENT
raised approximately $3.1m million before expenses comprising $2.1 million via an equity placing to institutions
and a further $1m by existing shareholders exercising the warrants issued at the same time as the placing. Griffin
now finds itself in the unusual but strong position of having raised the equity finance estimated by the board as
needed for Caijiaying. The Company is now able to speak confidently with banks to raise the debt portion needed
for Caijiaying.
The granting of the mining licence over the Caijiaying deposit will not only be a pre-condition for commencing
production but also to obtaining any debt finance. Consequently our first priority in the remainder of 2001 is to
complete the remaining matters required under the Chinese Mining Law of 1998 to convert Griffin’s exploration
licence over the Caijiaying zinc gold project into a mining licence. This will include the completion of an
environmental impact study and a number of geological and engineering studies in Mandarin compiled from previous
studies completed by the Company in English.
Griffin has also continued to instigate transactions which have the capacity to add value to the Company and most
importantly generate realisable assets which may be able to finance the construction of the Caijiaying mine without
resort to bank debt. To that effect, in April 2001 Griffin earned a 4% interest in Ozmosa Limited ("Ozmosa"), a sports
betting and casino operator in the East and South East Asia regions, in return for facilitating transactions including
that with Sportingbet.com (UK) plc ("Sportingbet"). Ozmosa has entered into agreements with Sportingbet for the
joint development of the Asian gaming market. As part of these agreements Sportingbet acquired a 1% equity interest
in Ozmosa for a consideration of £1 million, together with an option to acquire a further 18.9% of the issued share
capital of Ozmosa for £25 million."
It would be remiss of me not to thank a significant group of people who have toiled long and hard to allow Griffin to
fulfil the potential it has always shown. First, our largest shareholder Trellus Management Co, which even with a
declining share price over the years, has participated in every capital raising undertaken by the Company. I believe
that it is safe to say that if Caijiaying is the success we all believe it will be, then a large part of that success must be
attributed to the undying support of Trellus and its management. Secondly, our deepest thanks go to Charles Stanley
& Company, and in particular, Charles Dampney of that firm, who has worked tirelessly to raise capital for the
company in the most difficult of capital markets. His efforts are greatly appreciated. Thirdly, the tireless efforts of our
exploration manager Dr Bo Zhou can not go unheeded. He has been with the Caijiaying project longer than any of us
and has made, and continues to make, an incalculable contribution to the success of Caijiaying. Fourthly our thanks
go to our Finance Director, President and Company Secretary, Roger Goodwin, who has worked over and above the
call of duty for the company. Fifthly, I would like to thank the past directors of the company, in particular the past
Chairman Craig Niven, for their efforts and unflinching support in progressing the fortunes of Griffin. Finally, I would
like to thank my current fellow directors who are currently acting for no monetary compensation to continue to fulfil
the dream of building and operating the first foreign controlled hard rock mine in China.
I and my fellow directors would like to thank you the shareholders, owners and risk takers for having the loyalty,
courage and vision to subscribe for further shares and continue with your shareholding in Griffin. The management
of Griffin is patently aware that this is your Company and that we are here to act in the Company’s and your best
interests. We value the trust you have placed in the Company and us and we look forward to producing the result
you expect in 2001/2002
Mladen Ninkov
Chairman
29 June 2001
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Griffin Mining Limited (“Griffin” or “the Company”) is a mining development and investment company. Its principal
project is the Caijiaying zinc-gold project (“the Caijiaying project”) in the Peoples Republic of China (“PRC”).
CAIJIAYING ZINC GOLD PROJECT: China
BACKGROUND
Caijiaying is a polymetallic deposit, comprising mainly zinc, gold and silver, but also containing lead, gallium, arsenic,
selenium and other by-products. It is located approximately 200 km north west of Beijing in the PRC. The project
site is easily accessible by sealed and unsealed road and is connected to power supplies. Adequate water supplies are
available on site from underground sources. The Caijiaying area is on the edge of the Inner Mongolian Plateau.
Conditions are not severe although winters are cold and dry.
The Caijiaying project is held by Griffin through a
wholly owned subsidiary, China Zinc Pty Ltd (“China
Zinc”). China Zinc is an Australian company which
has been engaged in the development of Caijiaying
through the Hebei Hua’ Ao Mining Development
Company (“HSAMDC”), which is a contractual joint
venture entity established in 1994 in the PRC. China
Zinc has a 60% (80% until payback of capital) interest
in HSAMDC, the other shareholders being the
Zhangjiakou City People’s Government and the
Hebei Bureau of Land and Natural Resources.
In October 1998, HSAMDC was the first foreign
controlled joint venture to be issued with a new
exploration licence for a hard rock deposit in the
PRC, over an area of 11.3 square kilometers. This
licence area is broken down into six zones. Zone III
has been the main focus of exploration and
development activity. The other zones have not been
intensively explored, but drilling and other work in
zones II, IV and V in particular have indicated
significant potential.
Caijiaying project sketch map
Mineralisation at Caijiaying consists of multiple bodies of zinc sulphide (plus gold and silver) in the main 1 square
kilometre resource area (Zone III Deposit) which are of the porphyry intrusive related class. Elsewhere on the property,
there is potential for significant further discoveries of zinc, as well as gold and copper (and other by-product metals). It
has been Griffin’s strategy to bring the project into production first before testing these targets.
On 5 June 2000 HSAMDC was granted a three year exploration licence covering 102.2 square kilometres of highly
prospective ground surrounding the existing licence area at Caijiaying. Under Chinese mining law HSAMDC has a
statutory priority to convert the Caijiaying Exploration Licence to a mining licence.
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OVERVIEW
Exploration teams under the aegis of the Hebei Bureau of Land and Natural Resources conducted 10 years of exploration
work on Caijiaying, including 95,000 metres of diamond drilling. Subsequently some $2.8 million has been spent by
HSAMDC on Caijiaying, including the cost of a pre-feasibility study by Bateman Kinhill, a mining scoping study by
CSA Australia Pty Limited (“CSA”) in conjunction with Gillespie Mining Services Limited, approximately 8,000 metres
of diamond drilling, 300 metres of underground drive, ore-body modelling, metallurgical testwork and various geological,
metallurgical, engineering, power and transport studies.
A resource estimate for the deposit was originally prepared for China Zinc by Bateman Kinhill. Bateman Kinhill defined
an in situ resource of 27.6 million tonnes at 7.4% zinc at a 4% minimum zinc cut-off (57.8 million tonnes at 4.8% zinc
at a 1% minimum zinc cut-off). The Bateman Kinhill resource estimate was based on a geological model that showed
zinc mineralisation occurring in steeply dipping structures.
Work subsequently undertaken by Griffin initially involved infill drilling and resource studies on the open-pit concept.
A polygonal resource estimate in Micromine was prepared for Griffin by CSA, of 51 million tonnes at 5.01% zinc at a
1% cut off, and 22 million tonnes at 8.87% zinc at a 4% cut off. However, the open pit concept was hampered by
difficulties in interpretation of the ore-block geometry.
Recent underground trial mining has largely resolved the interpretation problems and shown that the main mineralised
bodies trend parallel to the drill grid. Although this has meant that the resource has had to be downgraded from that
previously estimated, it is more amenable to smaller scale underground mining than the previous interpretation. On
this basis, a resource of 2.6 million tonnes at 9.12% zinc at a 4% cut off, and 1.52 million tonnes at 12.34% zinc at a
7% cut off has been estimated. The smaller resource estimate is conservative, but it has been concluded that mining of
the reduced resource is financially robust and represents a lower cost, technically more feasible and lower risk plan that
will take advantage of the low costs of underground mining in China.
In 2000 the Company commissioned a mining scoping study from CSA in conjunction with Gillespie Mining Services
Limited. This indicates an initial capital cost of US$6.7 million to bring an underground mine into production at
Caijiaying to process some 180,000 tonnes of ore per annum at 12.3% zinc, 0.7 grams per tonne gold and 48 grams per
tonne silver over a minimum of 10 years. At this level of production, with no changes in the basis and rates of taxation
in the PRC, and assuming costs and metal prices as estimated in the scoping study but before any depreciation charge,
Caijiaying is expected to generate after tax revenues, at the project level, of approximately US$5.5 to US$6 million per
annum.
GEOLOGY
Mineralisation at Caijiaying is hosted in amphibolite grade meta-volcanics and meta-sediments, formed at the same time
as the emplacement of regional granite porphyries during the Yanshanian Orogeny being of Jurassic age (about 141
million years). The metallogenesis is interpreted as porphyry intrusive-hydrothermal, and comprises a polymetallic
mineral assemblage consisting of zinc, silver, gold and lead, with traces of copper, and a range of trace elements including
antimony, arsenic, mercury, cadmium, as well as gallium, germanium, indium and selenium. Mineralisation forms a
number of zones (I to V) covering an area of roughly 2 x 2km and is thought to be locally controlled by ENE, NW and
nearly N-S faults and fractures. Zone III forms the main mineralised zone explored (800 x 1000m) and is the basis of
the resource studies produced to date.
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Mineralisation was previously interpreted by Chinese geologists of the Third Brigade as forming a series of E-W trending,
fairly steeply (-50° to -70°) southerly-dipping lenses from 0-500m below surface. However, it was recognised that the
geometry of the lenses was complex and that there were probably a number of different orientations present. In 1994,
the first western evaluation was conducted by Bateman Kinhill of Australia using the Chinese geological model.
Concerns were expressed over ore-block continuity, however, these were not seen as serious as the plan at that time was
for an open pit where detailed geometry would be less important.
Initial follow on work by Griffin in 1998 showed that many ore zones on N-S sections appeared better interpreted as more
horizontal than steeply dipping, which implied a different ore block model than previously interpreted (see Fig. 3).
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Infill drilling carried out in the southern part of the deposit area during 1995 and by Griffin in 1998 confirmed the
occurrence of mineralisation, however direct correlation of individual ore lenses was still difficult. Angled orientated
drilling in 1998 also showed that mineralised lenses could cut-off over distances of <25m in an E-W direction which
indicated there was a problem with a simple E-W ore lens strike interpretation. However, good continuity was shown
in the N-S direction.
Due to the continuing difficulties with geological interpretation, Griffin decided to undertake underground trial mining
and underground drilling at Zone III in October 1999 to better define the dimensions of the mineralised zones. The
underground development and drilling work confirmed the presence of extensive high-grade mineralisation in the
southern end of Zone III. However, the orientation of the mineralised zones was different and more variable than
predicted and this meant that it was necessary to revise the ore-block model of the rest of the deposit to agree with the
underground findings.
The underground work showed that the orientation of the mineralised lenses is both moderate angle (50° to 60°),
southerly dipping, fault-controlled lenses, averaging 2.5m wide and very steeply dipping to sub-vertical, possibly fracture
controlled, N-S lenses, in zones from 5 to 10m wide. Areas of more patchy and possibly shallower dipping mineralisation
are developed in between. Although the highest grade zones are often thin, composite grade was maintained over much
thicker intervals (up to 12m thick at 16% Zinc), due to intervening areas carrying significant grade.
Therefore a large proportion of the mineralisation is now interpreted to be controlled by N-S trending fractures and not
in the E-W lodes as previously thought.
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Drilling over much of the deposit is on
100m spaced sections. Infill drilling in the
southern part of the deposit (to 50m
spacing) has confirmed the occurrence of
high grade mineralisation between the
100m spaced sections. It is therefore
reasonable to assume that additional lenses
occur between the currently drilled sections,
although these cannot be quantified with
the current drill spacing.
The geological model used for the scoping
study is believed to be conservative as it is
based on drilling that is not oriented in the
best direction. Due to the considerable
depth of overburden in many areas, it is
believed that it will be more cost-effective
to undertake the necessary infill drilling to
test for these additional lenses from
underground ahead of mining.
RESOURCES
Dark (iron-rich) zinc mineralisation exposed in a recent underground trial
stope with pale calcite gangue and green hangingwall dyke at top left
Using the new drill hole results from the 1995 and 1998 drilling programmes, CSA calculated a polygonal resource
estimate in Micromine based on the new geological interpretation of more shallowly dipping ore lenses (see Geology).
Due to the irregular drill hole spacing across the deposit, the resource estimate was categorised as Inferred. Two geological
models were created. Model 1 included both 100m spaced fully drilled sections and 50m spaced partially drilled sections
and Model 2 included only 100m spaced fully drilled sections. The two models essentially reported lower and upper
limits to the resource. The two models reported the following tonnes and grades:
Model 1
Model 2
At 1 % Zinc cut-off
At 4 % Zinc cut-off
31.47Mt @ 5.09% Zinc
13.42Mt @ 9.12% Zinc
50.69Mt @ 5.01 % Zinc
21.61Mt @ 8.87 % Zinc
A polygonal resource estimate was also calculated for Model 1 using 4% and 7% Zinc cut-offs, for all elements of interest,
with projection parameters identical to that of the 4% Zinc cut-off resource estimate. This produced resources of:
13.42Mt @ 9.12% Zinc, 0.41% lead, 38g/t silver and 0.73g/t gold, at 4% Zinc cut-off; and 7.6 Mt @ 12.34% Zinc, 0.53%
lead, 48g/t silver and 0.75g/t gold, at 7% Zinc cut-off
Despite ongoing concerns about the lens geometry, a further investigation into an open-pit option was undertaken in
1999. It involved both block modeling and optimisation studies, completed by consultant PL Kitto. A block model was
constructed in Datamine, using wireframes of the Zinc mineralisation at a 1% cut-off to constrain the model and
modeling parameters supplied by Snowdens.
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This study estimated a global resource of 48.7Mt @ 4.7% Zinc (at a 1% Zinc cut-off), which included 41.5Mt @ 5.29%
Zinc at a 2% cut-off and 25Mt @ 6.81% Zinc at a 4% cut-off. These estimates compared well with the pre-feasibility
resource estimates (45.4 Mt @ 5.7% Zinc at a 2% cut-off and 27.6 Mt @ 7.4% at a 4% cut-off), with a slight decrease
in tonnes and grade.
With doubts remaining about the ore-block geometry and the difficulties of raising the large capital required for an open
pit operation (with a high pre-strip requirement) it was decided to investigate the option of lower cost underground
mining.
Although the area of underground
development was limited it is believed that
the evidence that has been acquired from
the work has produced results that can be
applied to the whole deposit. This work
consisted of detailed mapping and
structural studies followed by underground
drilling up and down strike to test the
interpretations.
The studies enabled a reconciliation to be
made with the original polygonal resource
interpretation. Whilst this indicated a
resource in the area of some 20% of the
original resource estimation, the large
decrease is due largely to the change in
strike of the mineralisation to N-S and the
limited E-W continuity compared to the
previous models of E-W striking lodes. However, it must be stressed that there may well be intervening areas within
the area of the development that have not been identified and in addition very little information is available up and
down dip from the current level of development. Thus, the potential for additional mineralised lenses that pinch out
either above or below the development level and which were not intersected is considered high. As a result the
downgrading factor must be considered conservative.
Decline at Caijiaying
The results from the reconciliation study were then applied to the whole resource at Zone III. In order to do this an
assumption had to be made that the area of the underground development was representative of mineralisation over the
entire deposit. This has not yet been proven and represents a significant area of uncertainty. Until additional
information can be obtained from further underground development and drilling, this assumption has to be made in
order to estimate the resource. This is a common problem in estimating deep underground reserves.
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Despite these conservative assumptions, the reduction to 20% still results in substantial resources of:
2.6Mt @ 9.12% Zinc, 0.41% lead, 38g/t silver and 0.73g/t gold, at a 4% Zinc cut-off
1.52Mt @ 12.34% Zinc, 0.53% lead, 48g/t silver and 0.75g/t gold, at a 7% Zinc cut-off
The infill drilling to date has shown that mineralisation occurs between the 100m and even 50m spaced sections, so it
is reasonable to predict that significant additional undefined resources occur between the drilled sections. Because the
recent work has confirmed that the deposit can be more profitably mined by underground methods, these additional
resources can best be defined by underground drilling ahead of mining.
MINING
Under the scoping study it is planned to mine the deposit at an initial rate of 180,000 tonnes per annum over a 10 year
life by concentrating on the higher grade material, but also mining most of the lower grades as the mine develops.
Additional resources will be proved up ahead of mining by underground drilling and driving in the many areas where
mineralisation is indicated from the original surface drilling. This will be significantly cheaper than surface exploration
because of the significant overburden depth (up to 150m). The total tonnage and possibly also the grade have potential
to significantly increase as the mine develops, which represents considerable upside to the project.
It is proposed to mine the deposit by driving a new haulage decline (4 x 3.5m) to access the main high-grade lenses in
the northern part of the deposit and spiral down to reach a total depth of 450m. A number of horizontal drives at 25m
intervals are planned with an internal decline to access ore zones to the south. The existing decline (2 x 2m) will be
extended and used for ventilation, thereby obviating the need for expensive shafts.
Cash-flow analyses show that between US$6.4 and US$8.2 million is required (depending on the grade mined) to
commence production. Some of the capital works have been scheduled for payment out of early production so that
the total capital invested would be between US$12.9 and US$14.3 million. For the lower grade option, the post-tax
internal rate of return is 41% and if higher grades can be maintained it would rise to 62%. It would be expected that
this would rise as the project is expanded.
EXPLORATION POTENTIAL
The priority for Griffin’s exploration strategy for Caijiaying has been to concentrate on developing a zinc mine based
on the existing resources rather than pursuing more exploration targets. This has been necessitated by the difficult
financial markets, rather than the potential of the Caijiaying property which remains excellent. The exploration
potential of the project has recently been further enhanced by the granting of a 102.2 square kilometre exploration
licence covering the region which contains similar geology to Caijiaying.
The main cause of the mineralisation is believed to be the heat and fluids associated with a relatively young intrusive
centre emplaced during a period of volcanism that affected the area in the Jurassic. A number of volcanic centres occur
at structural intersections within a zone which trends east-northeast, parallel to the margin of the North China Plate
which is 200km to the north. These intruded and erupted over the much older Proterozoic metamorphic basement rocks
along a major crustal weakness.
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A number of empirical controls have been identified by the previous Chinese work. These include a broad stratigraphic
control within the metamorphosed amphibolitic sequence of the Early Proterozoic Datongying Formation, which is
reported to contain a number of similar (but so far smaller) deposits within the region.
Both regional and local structural controls have also been recognised. The main mineralisation occurs within synclinal
folds, formed as part of a conjugate set of structures in response to movement along the regionally important F45 Fault,
which trends east-northeast across the area south of the main deposits (Figure 4). The line of this fault is believed to
be on a zone of crustal weakness so that it may have acted as a conduit for rising mineralising fluids.
Regional geological sketch map of Caijiaying Project Area showing original and new exploration licences and main
geological components and targets
FUTURE PLANS
The results of the scoping study, Griffin’s work on the Caijiaying project and the positive developments in the Chinese
legal environment have confirmed Griffin’s view that Caijiaying is capable of being developed immediately to
economically produce zinc, gold, silver and possibly other minerals. For a relatively small capital cost the opportunity
exists for Griffin to generate significant cash flows in the near future. Consequently, and subject to the successful raising
of the necessary project finance required to bring Caijiaying into production, the Company has decided to move forward
as quickly as possible to construct and commission the Caijiaying deposit as an underground mining operation.
Following the completion of a private placing to raise $2.1m before expenses and $1m from the excercise of warrants,
in Spring 2001, Griffin has commissioned an Environmental Impact Study and a Staged Geological Report and is
upgrading and converting the scoping study to meet Chinese requirements for a feasibility study required as part of the
mining licence application process.
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The Company believes that should it be able to commission the first majority foreign owned mine in the PRC at
Caijiaying, then the possibility exists for world class projects to be offered to Griffin by various arms of the PRC’s local,
provincial and central governments for development, commissioning and operation. The capital raising in Spring
2001 and consequential step closer to the commissioning of Caijiaying lays the foundation not only for Griffin to become
a profitable mining company, but also gives it the potential to further expand its influence in the mining sector of the
world’s largest mineral producer.
The Company also continues to seek out and evaluate other opportunities to acquire world class assets and participate
in transactions which will add real value to shareholders.
OTHER PROJECTS
During 2000 Griffin formed Griff-Tech.com plc (“Griff-Tech”), since renamed Future Internet Technologies plc, in
order to take advantage of the cross border opportunities which then existed in the internet, telecommunications and
high technology sectors. Ordinary shares in Griff-Tech were offered to shareholders in Griffin on the basis of 1 share
in Griff-Tech for every 2 shares held in Griffin and 86% of the shares offered were taken up by Griffin shareholders with
the balance taken up pursuant to the underwriting arrangements. Griffin exercised its option to subscribe for 7,150,591
ordinary shares at an exercise price of 1p. Griff-Tech’s ordinary shares were admitted to trading on AIM on 28 February
2000. On 5th June 2000 Griff-Tech. acquired the whole of the allotted share capital of Future Internet Technologies
Limited (“F.I.T.”), and raised £3 million by way of an equity placing at 2p a share thereby reducing Griffin’s equity
interest to 2.4%. The acquisition was in effect a reverse takeover of Griff Tech by F.I.T. Future Internet Technologies
plc provides internet based solutions for the management of People Actions and Time.
On 23 March 2000 Aurex AB (“Aurex”) acquired all of Griffin’s gold interests in Burkina Faso for an initial
consideration of $75,000 with a further deferred consideration of between $250,000 and $400,000 payable, depending
on the gold price at the time, when cumulative gold production reaches 5,000 ozs. Should cumulative gold production
reach 200,000 ozs a further consideration of 100,000 shares in Aurex or cash equivalent becomes payable.
In April 2001 Griffin earned a 4% interest in Ozmosa Limited (“Ozmosa”), a sports betting and casino operator in the
East and South East Asia regions, in return for facilitating transactions including that with Sportingbet.com (UK) plc
(“Sportingbet”). Ozmosa has entered into agreements with Sportingbet for the joint development of the Asian gaming
market. As part of these agreements Sportingbet acquired a 1% equity interest in Ozmosa for a consideration of £1
million, together with an option to acquire a further 18.9% of the issued share capital of Ozmosa for £25 million.
FINANCIAL
The Group recorded a loss for the year of $608,000 (1999 loss $1,006,000).
Profits on disposals of investments during 2000 amounted to $39,000 (1999 losses $179,000). Operating costs in 2000
were $629,000 (1999 $774,000).
During 2000 profits were recorded on the disposal of the Group’s interests in; Britcan Minerals Plc of $13,000;
STREMCO gold project in Burkina Faso of $42,000; and Nordic diamond exploration project in Sweden of $3,000.
Provisions were made in respect of other investments of $55,000.
Shareholder funds rose from $5,503,000 at 31 December 1999 to $5,565,000 at 31 December 2000.
12
R E P O R T A N D A C C O U N T S 2 0 0 0
DIRECTORS
DIRECTORS
Mladen Ninkov, Chairman, Australia, aged 40
Mladen Ninkov holds a Masters of Law Degree from Trinity Hall, Cambridge and Bachelor of Laws (with Honours) and
Bachelor of Jurisprudence Degree from the University of Western Australia. He is a principal of Keynes Investments
Pty Limited. He has a mining, legal, fund management and investment banking background and is admitted as a barrister
and solicitor of the Supreme Court of Western Australia. He was a director and Head of International Corporate Finance
at ANZ Grindlays Bank Plc in London, managing director of Maxwell Central and East European Partners plc in London
and a Vice President of Prudential-Bache Securities Inc. in New York. He also worked at Skadden Arps Slate Meagher
& Flom in New York and Freehill Hollingdale & Page in Australia. He was Chairman of Westgold Resources NL and
a director of Ramsgate Resources NL, both companies listed on the Australian Stock Exchange, and was also a director
of Mt Monger Gold Project Pty Ltd, Castle Hill Resources NL and Matu Mining Pty Ltd.
Roger Goodwin, President and Finance Director, UK, aged 46
Roger Goodwin is a Chartered Accountant. He has been with the Company since 1996 having previously held senior
positions in a number of public and private companies within the natural resources sector. He is currently a non
executive director of Texas Oil & Gas Plc and Alamos plc. He has a strong professional background with considerable
public company and corporate finance experience, with experience of emerging markets particularly in Africa, the CIS
and Eastern Europe.
Dal Brynelsen, Director, Canada, aged 55
Dal Brynelsen is a graduate of the University of British Columbia in Urban Land Economics. Mr. Brynelsen has been
involved in the resource industry for over 20 years. He has been responsible for the discovery, development and
operation of several underground gold mines during his career. Over the past five years he has focused on the exploration
potential of Sub-Sahara Africa. Mr. Brynelsen is the President and a director of Pacific Vangold Mines Limited and
provides independent consulting services to private and institutional corporations. Mr. Brynelsen was a director of
Graffoto Industries Limited.
Gordon Montgomery, Director, UK, aged 44
Gordon Montgomery is a Chartered Accountant with a background in corporate finance and venture capital with
experience in deal assessment, negotiation and capital raising. He is currently a director of Oasis Europe Limited (a
mergers and acquisitions adviser) and Nale Industries Limited (an inspection equipment manufacturer), as well as being
a director and adviser to a number of other businesses.
William Mulligan, Director, USA, aged 58
William Mulligan has a BSc from Thomas Clarkson University, an MS in Geological Engineering from the University of
Connecticut and an MBA from NYU Bernard Baruch School of Business Administration. He is currently the Managing
Director for Global Projects and Political Risk at AIG Global Trade and Political Risk Insurance Company, a wholly owned
subsidiary of American International Group Inc., and a director of AIG Investment Bank (ZAO) Ltd based in Moscow.
From 1994 to 1996 he was Executive Vice President for Corporate Development at Latin American Gold Limited. He is a
director of Arcon International Plc, the Dublin based company which operates the Galmoy zinc mine in Ireland.
John Steele, Director, Canada, aged 58
John Steele has an MSc in Geophysics from the University of Toronto. From 1984 to 1987, he worked for Yorkton Securities
Inc in Toronto where he was responsible for mining projects throughout South East Asia. He is currently a director of the
following companies active in the natural resource sector: Iriana Resources Corporation, International Dunlap Minerals
Corporation, Asian Tiger Resources Ltd, Geothai Services Company Ltd and Vietnam Exploration and Development
Corporation. He is also a director and convention committee Co-Chairman for the Prospectors and Developers Association
of Canada. He was a director of Westgold Resources N.L and Golden Tiger Resources N L. (Vietnam).
13
G R I F F I N M I N I N G L I M I T E D
DIRECTORS REPORT
DIRECTORS REPORT
The Directors submit their report together with the audited consolidated accounts of Griffin Mining Limited (“the
Company”) and its subsidiaries (“the Group”) for the year ended 31 December 2000.
Financial results
Group loss on ordinary activities before taxation, amounted to US$608,000 (1999 - loss US$1,006,000). No taxation was
charged (1999 - nil). The Group loss after taxation and minority interests amounted to US$608,000 (1999 - loss
US$1,006,000). The loss for the year after taxation of US$608,000 (1999 - loss US$1,006,000) has been charged to reserves.
The loss per share amounted to 1.5 cents (1999 - loss 4.2 cents). The attributable net asset value per share at 31
December 2000 amounted to 14 cents (1999 - 14 cents).
The Directors do not recommend the payment of a dividend.
Principal activities
The principal activity of the Group is that of mining. A review of the Group’s operations for the year ended
31 December 2000 and the indication of likely future developments are set out on pages 4 to 12.
Directors
The Directors of the Company during the year were:
Mladen Ninkov - Australian - Chairman
Roger Goodwin - British - President and Finance Director - Appointed 22nd December 2000
Dal Brynelsen - Canadian
John Goodger - British - Resigned 22nd December 2000
Gordon Montgomery - British
William Mulligan - American (US)
Craig Niven - British - Resigned 22nd December 2000
John Steele - Canadian
Under the bye laws of the Company, the Directors serve until re-elected at the next Annual General Meeting of the
Company. Being eligible all the Directors currently in office offer themselves for re-election at the forthcoming
Annual General Meeting of the Company.
The interests of the Directors holding office at 31 December 2000 and their immediate families in the share capital of
the Company were as follows:
Name
At 31 December 2000
At 1 January 2000
Or date of appointment
Ordinary shares
no.
33,001
20,000
1
44,110
1
27,501
Options over
ordinary shares no.
1,000,000
200,000
250,000
250,000
250,000
250,000
Mladen Ninkov
Roger Goodwin
Dal Brynelsen
Gordon Montgomery
William Mulligan
John Steele
14
Ordinary shares
Options over
no. ordinary shares no.
1,000,000
200,000
250,000
100,000
100,000
100,000
30,001
20,000
1
40,100
1
25,001
R E P O R T A N D A C C O U N T S 2 0 0 0
DIRECTORS REPORT
DIRECTORS REPORT
Each Option granted gave the holder the right to subscribe for new ordinary shares in the Company at an exercise price
of US 24 cents at any time from the date of grant up to and including 31 August 2001.
On 26 March 2001 Gordon Montgomery exercised his subscription rights over 22,055 new ordinary shares under the
terms of warrants granted to shareholders on 16 March 2001.
On 27 March 2001 Roger Goodwin exercised his subscription rights over 10,000 new ordinary shares under the terms
of warrants granted to shareholders on 16 March 2001.
On 26 March 2001 options were granted to the directors over 8,000,000 new ordinary shares in the Company and at
the same time existing options over 2,200,000 ordinary shares previously granted to the Directors and due to expire
on 31 August 2001 were cancelled. Each new option entitles the holder to subscribe for new ordinary shares in Griffin
at 5 pence per share on or before 31 March 2004. On 27 April 2001 these options were allocated to the directors as
follows:
New options
Total number of
options to subscribe
for one new ordinary
share now held
following grant
No.
6,000,000
800,000
300,000
300,000
300,000
300,000
No.
6,000,000
800,000
300,000
300,000
300,000
300,000
8,000,000
8,000,000
Mladen Ninkov
Roger Goodwin
Dal Brynelsen
Gordon Montgomery
William Mulligan
John Steele
Total
All of the Directors’ interests detailed are beneficial.
Substantial interests
The following persons were on the register of members of the Company as being the registered holders of 3% or more
of the issued ordinary shares at 31 December 2000 and at 15 June 2001.
At 31 December 2000.
At 15th June 2001.
UBS (Luxembourg) SA CEDEL Account
MSS Nominees Limited 811366 ACCT
Everett Financial Nominees Limited P Acct
Trellus Partners LP
HSBC Global Custody Nominee (UK) Ltd 811366 ACCT
Morstan Nominees Ltd
RBSTB Nominees Ltd
Number
7,175,225
3,333,333
3,333,333
1,666,667
_
_
_
%
18.4
8.56
8.56
4.28
_
_
_
Number
8,415,688
_
_
_
3,337,433
19,116,423
7,245,000
%
8.89
_
_
_
3.53
20.20
7.66
15
G R I F F I N M I N I N G L I M I T E D
DIRECTORS REPORT
DIRECTORS REPORT
In order to improve the speed and efficiency in settling trades in the Company’s shares, which are not settled through
CREST, shareholders may register their shareholdings with UBS (Luxembourg) SA CEDEL Account, reference
003682323, for clearance through the international CEDEL clearance system. Further details may be obtained from
the Company Secretary.
Griffin is aware that at 31 December 2000 Trellus Partners L.P. had a beneficial interest in 2,916,667 Ordinary Shares
registered in the name of Morstan Nominees Limited, and a beneficial interest in 1,800,000 Ordinary Shares registered
in the name of UBS (Luxembourg) SA CEDEL Account, which together with an interest registered in the name of
Trellus Partners LP amounts in aggregate to 15.6% of the entire issued share capital of Griffin at 31 December 2000.
Post balance sheet events
At a Special General Meeting of the Company held on 15 March 2001, shareholders approved resolutions to:
•
•
Reduce the issued share capital of the Company with effect from 15 March, 2001, from $4,100,355 to $410,035
by a reduction in par value of each of the 41,003,550 shares in issue from 10 cents each par value to 1 cent each
par value with $3,690,320 of the paid up share capital being reclassified as contributed surplus;
Subdivide the unissued capital of $9,589,965 comprising 95,899,650 shares of 10 cent each par value, into
958,996,500 shares of a par value of 1 cent each; and
• Confirm the authorised share capital of the Company, following the reduction and sub-division at $10 million,
but divided into 1,000,000,000 shares of US$0.01 par value each.
On 22 March 2001 Griffin completed an equity placing of 41,751,922 new ordinary shares of par value one cent each
at 3.5 pence per share to raise $2.1 million before expenses. As part of the placing arrangements existing shareholders
were issued with up to 20,501,776 warrants exercisable at 3.5 pence per share on or before 15 May 2001. A total of
11,882,130 warrants have been exercised by warrant holders raising £416,000 ($580,000) for Griffin. The balance of
8,619,645 warrants have been exercised in accordance with the terms of the warrants with the 8,619,645 ordinary
shares resulting from the exercise thereof placed by Charles Stanley & Company Limited to raise a further £302,000
($420,000) for Griffin.
The monies raised from the placing and on excise of the warrants will be used by Griffin to complete the remaining
matters required under the Chinese Mining Law of 1998 to convert Griffin’s exploration licence over the Caijiaying
zinc gold project into a mining licence.
Corporate Governance
Although registered in Bermuda and therefore not obliged to comply with the code of best practice established by the
Combined Code issued by the Committee on Corporate Governance, the Company has reviewed and broadly supports
this code. The Company does not comply where compliance would not be commercially justified allowing for the
practical limitations relating to the Company’s size.
The Board of directors includes a number of non executive directors who are independent and free from any business
or other relationship which could materially interfere with the exercise of their independent judgement. The Board
meets regularly and is responsible for the overall strategy of the Group, its performance, management and major
financial matters.
16
R E P O R T A N D A C C O U N T S 2 0 0 0
DIRECTORS REPORT
DIRECTORS REPORT
Auditors
Grant Thornton have indicated their willingness to continue in office as auditors to the Company and a resolution
proposing their appointment will be put to the forthcoming Annual General Meeting.
Statement of directors’ responsibilities in respect of the accounts
Bermuda company law and generally accepted best practice requires the Directors to prepare accounts for each financial
year which give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that
period. In preparing these accounts, the Directors have:
•
selected suitable accounting policies and applied them consistently;
• made judgements and estimates that are reasonable and prudent;
•
stated whether applicable accounting standards have been followed, subject to any material departures disclosed
and explained in the accounts; and
•
prepared the accounts on the going concern basis
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the Group. They are also responsible for safeguarding the assets of the Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
This report was approved by the Board and signed on its behalf by:
Roger Goodwin
President and Finance Director
29 June 2001
London
17
G R I F F I N M I N I N G L I M I T E D
REPORT OF INDEPENDENT AUDITORS
REPORT OF INDEPENDENT AUDITORS
TO THE MEMBERS OF GRIFFIN MINING LIMITED
We have audited the financial statements on pages 19 to 31 which have been prepared in accordance with International
Accounting Standards and under the accounting policies set out on pages 23 and 24.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the Annual Report. As described on page 17 this includes responsibility for
preparing the financial statements in accordance with applicable Bermuda law and International Accounting Standards.
Our responsibilities, as independent auditors, are established by statute in Bermuda, the Auditing Practices Board in the
United Kingdom, and by our profession’s ethical guidance.
We report to you our opinion as to whether the financial statements give a true and fair view. We also report to you if, in
our opinion, the directors’ report is not consistent with the financial statements, if the company has not kept proper
accounting records, or if we have not received all the information and explanations we require for our audit.
We read the other information contained in the Annual Report and consider whether it is consistent with the audited
financial statements. We consider the implications for our report if we become aware of any apparent misstatements
or material inconsistencies with the financial statements.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board in the United
Kingdom. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant estimates and judgements made by the directors
in the preparation of the financial statements, and of whether the accounting policies are appropriate to the
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated
the overall adequacy of the presentation or information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state of affairs of the group at 31 December
2000 and of its loss for the year then ended in accordance with International Accounting Standards.
GRANT THORNTON
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
Southampton
29 June 2001
18
CONSOLIDATED PROFIT AND LOSS ACCOUNT
CONSOLIDATED PROFIT AND LOSS ACCOUNT
R E P O R T A N D A C C O U N T S 2 0 0 0
For the year ended 31 December 2000 (expressed in thousands US dollars)
Income
Gains / (losses) on the disposal of investments
Net operating expenses
Other income
Provisions in respect of continuing operations
Profit on disposal of discontinued operations
Operating (loss)
Foreign exchange (losses) / gains
Interest receivable and similar income
(Loss) on ordinary activities before taxation
Taxation on ordinary activities
(Loss) on ordinary activities after taxation
Minority interests
(Loss) for the financial year
(Loss) per share (cents)
Notes
2000
$000
1999
$000
1
2
4
5
6
7
19
17
8
39
(179)
(629)
22
(55)
58
(774)
–
(74)
–
(565)
(1,027)
(85)
42
4
17
(608)
(1,006)
–
–
(608)
(1,006)
–
–
(608)
(1,006)
(1.5)
(4.2)
19
G R I F F I N M I N I N G L I M I T E D
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
As at 31 December 2000 (expressed in thousands US dollars)
Fixed assets
Intangible assets
Negative goodwill
Tangible assets
Current assets
Portfolio investments
Accounts receivable
Prepaid expenses
Cash and deposits
Creditors: Amounts falling due within one year
Accrued expenses
Creditors
Net current assets
Total net assets
Capital and reserves
Share capital
Share premium
Investment revaluation reserve
Foreign exchange reserve
Profit & loss account
Equity shareholders’ funds
Equity minority interests
Equity interests
Number of shares in issue
Notes
9
10
11
12
13
14
15
16
17
18
19
2000
$000
4,542
–
4
4,546
501
261
18
370
1,150
(64)
(67)
1999
$000
5,122
(288)
259
5,093
82
10
3
1,501
1,596
(155)
(364)
1,019
1,077
5,565
6,170
4,100
13,154
(372)
160
(11,477)
3,895
13,084
(764)
266
(10,978)
5,565
5,503
–
667
5,565
6,170
41,003,551 38,946,501
Attributable net asset value per share
20
$0.14
$0.14
The accounts on pages 19 to 31 were approved by the Board of Directors and signed on its behalf by:
Mladen Ninkov .
Chairman
29 June 2001
20
Roger Goodwin
President and Finance Director
STATEMENT OF RECOGNISED GAINS AND LOSSES
STATEMENT OF RECOGNISED GAINS AND LOSSES
R E P O R T A N D A C C O U N T S 2 0 0 0
For the year ended 31 December 2000 (expressed in thousands US dollars)
Notes
2000
$000
1999
$000
(Loss) for the financial year
Unrealised gains on investments
16
Currency translation differences in foreign currency net investments
(608)
(1,006)
392
3
147
23
Total gains and losses recognised in the year
18
(213)
(836)
Losses and profits for the financial year are the same as those on an historical cost basis.
21
G R I F F I N M I N I N G L I M I T E D
CONSOLIDATED CASH FLOW STATEMENT
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2000 (expressed in thousands US dollars)
Net cash (outflow) from operating activities
(997)
(381)
Notes
2000
$000
1999
$000
Investing activities
Payments to acquire intangible fixed assets
Receipts from the disposal of discontinued operations
Net cash (outflow) from investing activities
Net cash (outflow) before financing
Financing
Issue of ordinary share capital
Expenses paid in connection with share issue
(Decrease) / increase in cash and cash equivalents
Reconciliation of operating (loss) to net cash (outflow) from
operating activities
9
14
15
13
(488)
88
(819)
–
(400)
(819)
(1,397)
(1,200)
285
(19)
266
2,774
(481)
2,293
(1,131)
1,093
(Loss) on ordinary activities before taxation
(608)
(1,006)
Taxation
Depreciation
(Gains) / losses on sale of investments
Receipts on the sale of investments
Payments to acquire investments
Provisions in respect of continuing operations
Profits on disposal of discontinued operations
(Increase) / decrease in debtors
(Decrease) / increase in creditors
Other non-cash income, including exchange differences
–
5
(39)
71
(114)
55
(58)
(16)
(303)
10
(997)
–
4
179
51
–
74
–
12
287
18
(381)
22
R E P O R T A N D A C C O U N T S 2 0 0 0
ACCOUNTING POLICIES
ACCOUNTING POLICIES
Basis of accounting
The accounts have been prepared in accordance with applicable International Accounting Standards.
The significant accounting policies adopted are detailed below:
Accounting convention
The accounts have been prepared under the historical cost convention modified for the revaluation of portfolio
investments.
Consolidation basis
The Group accounts consolidate the accounts of the Company and all its subsidiary undertakings drawn up to 31
December each year.
The results of subsidiary undertakings acquired are included from the date of acquisition. Profits or losses on intra-
group transactions are eliminated in full. On acquisition of a subsidiary, all of the subsidiary’s assets and liabilities
which existed at the date of acquisition are recorded at their fair values reflecting their condition at that date.
Fixed assets
Intangible assets
Expenditure on licences, concessions and exploration incurred by subsidiary undertakings are carried as intangible
assets until such time as it is determined that there are commercially exploitable reserves at which time such costs will
be transferred to tangible fixed assets to be amortised over the expected productive life of the asset. The Group’s
intangible assets are subject to periodic review by the Directors. Exploration, appraisal and development costs
determined as unsuccessful are written off to the profit and loss account.
Tangible assets
Plant and equipment, office furniture and equipment and motor vehicles are shown at cost less depreciation and
provisions for permanent diminution in value (see note 11).
Depreciation
Plant and equipment will be depreciated at rates appropriate to the expected life of the asset once production has
commenced. Office equipment and motor vehicles are depreciated over four years on a straight line basis.
23
G R I F F I N M I N I N G L I M I T E D
ACCOUNTING POLICIES
ACCOUNTING POLICIES
Investments
Current asset investments are valued as follows:
Portfolio investments
Marketable securities listed or traded on a recognised stock exchange, or an over the counter market, are valued at the
bid market price on such exchange or market.
Unquoted investments are initially valued at cost. A reduction in the value of an unquoted investment will be made if
considered appropriate in the light of a company’s condition or prospects. Increases in value will only be made if
substantiated by significant transactions in the relevant company’s shares by third parties or in the event of a material
change in the underlying value of the company.
Realised gains and losses on sales of investments are calculated based on the average cost of the investment and are
reflected in income when realised.
Investment revaluation reserve
Unrealised appreciation and depreciation of portfolio investments as of 31 December are reflected within the
investment revaluation reserve.
Foreign currency transactions
Investments and monetary items have been translated at rates in effect at the balance sheet date. Foreign currency
transactions have been translated at the rate in effect at the date of transaction. Any realised or unrealised exchange
adjustments have been charged or credited to income.
The accounts of overseas subsidiary undertakings are translated at the rate of exchange ruling at the balance sheet
date. The exchange difference arising on the retranslation of opening net assets is taken directly to the foreign
exchange reserve. All other translation differences are taken to the profit and loss account.
Negative goodwill
The excess of the fair value of the attributable net assets acquired on acquisition of a subsidiary over the fair value of
the consideration given, representing a discount on the fair value of assets acquired, being “negative goodwill”, will be
recognised as income when the assets are disposed of, or amortised over the expected productive life of the assets to
which it relates.
Income
Income comprises, gains on disposal of investments and other income receivable from third parties net of Value Added
Tax or similar taxes
24
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
R E P O R T A N D A C C O U N T S 2 0 0 0
1. Income
The Group’s income arises in North America and from continuing operations.
2. Net operating expenses
Administrative expenses
All operating expenses charged to profit relate to continuing operations.
3. Directors’ remuneration
2000
$000
629
1999
$000
774
The following fees and remuneration were receivable by the Directors holding office during the year:
Fees
Salary
Mladen Ninkov
Dal Brynelsen
John Goodger (resigned 22 December 2000)
Roger Goodwin (appointed 22 December 2000)
Gordon Montgomery
William Mulligan
Craig Niven (resigned 22 December 2000)
John Steele
$000
–
12
9
–
–
12
–
–
$000
–
–
–
1
–
–
–
–
Taxable
benefits
$000
–
–
–
–
–
–
–
–
Total
2000
$000
–
12
9
1
–
12
–
–
Total
1999
$000
–
13
13
–
–
13
–
–
Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust,
received fees under a consultancy agreement of $200,000 (1999 $200,000) for the provision of advisory and related
services to Griffin Mining Limited and its subsidiaries during the year. Mladen Ninkov is a director and employee of
Keynes Investments Pty Limited.
Gordon Montgomery is a partner in Company Investigations and Information Systems. $12,000 (1999 $13,000) of fees
were receivable by Company Investigation and Information Systems during the year from the Company for the
provision of the services of Gordon Montgomery as a Director of the Company.
Craig Niven is a director and shareholder of Zetachoice Limited. Under the terms of a consultancy agreement Zetachoice
Limited received fees of $146,000 (1999 $175,000) from Griffin Mining Limited and its subsidiaries for the provision of
services including that of Craig Niven as a Director and Chairman of the Company during the year.
John Steele is a Director of Asian Tiger Resources Inc. $9,000 (1999 $12,000) of fees were receivable by Asian
Tiger Resources Inc during the year from the Company for the provision of the services of John Steele as a
Director of the Company.
25
G R I F F I N M I N I N G L I M I T E D
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
4. Provisions in respect of continuing operations
Provisions made in respect of the recoverability of assets.
Swedish diamond exploration expenditure
Thakadu copper exploration and development expenditure
Burkina Faso gold exploration and development expenditure
Total provisions against intangible assets
Portfolio investments written off
2000
$000
1999
$000
–
–
–
–
55
55
41
5
28
74
–
74
The Directors have considered the value of each of the Group’s projects having regard to the current stage of
development and the economic and other factors affecting the realisable value of each project.
5. Profits on the disposal of discontinuing operations
Nordic Exploration AB - Swedish diamond exploration
Britcan Minerals Plc
STREMCO SA - Burkina Faso gold exploration and development
6. Interest receivable and similar income
Bank and short term interest
7. Taxation on ordinary activities
Taxation on ordinary activities
Corporation tax
2000
$000
3
13
42
58
2000
$000
42
2000
$000
–
1999
$000
–
–
–
–
1999
$000
17
1999
$000
–
The Company is resident for corporation tax purposes in the United Kingdom. No charge to corporation tax arises in
the UK due to losses in the year. The Company has unutilised income tax losses estimated at $4.2m, and capital losses
estimated at $1.1m.
8. (Loss) per share
The loss per share has been calculated on the basis of the net loss after taxation of US$608,000 (loss US$1,006,000 in 1999)
and the weighted average number of shares in issue in the year ended 31 December 2000 of 40,834,868 (24,200,537 in 1999).
There is no dilutive effect of share purchase options.
26
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
R E P O R T A N D A C C O U N T S 2 0 0 0
9. Intangible assets
Exploration interests
COST / VALUATION
At 1 January 2000
Foreign exchange adjustments
Additions during the year
Disposals during the year
At 31 December 2000
PROVISIONS
At 1 January 2000
Foreign exchange adjustments
Amounts provided during the year
Disposals during the year
At 31 December 2000
NET BOOK VALUE
At 31 December 2000
At 31 December 1999
Analysis by geographical area and nature of activity
China - Zinc
Burkina Faso - Gold
$000
9,308
312
488
(5,566)
4,542
(4,186)
(320)
–
4,506
0
4,542
5,122
2000
$000
4,542
–
4,542
1999
$000
4,066
1,056
5,122
Intangible assets represent fair values on acquisition, plus subsequent expenditure on licences, concessions, exploration,
appraisal and development work. Where expenditure on an area is determined as unsuccessful such expenditure is written
off to the profit and loss account. 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. Should
economically exploitable mineral deposits be established, sufficient finance would be required to bring such discoveries
into production.
10. Negative goodwill
At 1 January 2000
Disposals in the year
At 31 December 2000
$000
288
(288)
0
Negative goodwill represents the excess of the fair value of the attributable net assets acquired on the acquisition of a
subsidiary company, over the fair value of the consideration given, being a discount on the fair value of the assets
acquired. Negative goodwill of $288,000 arose on the acquisition of STREMCO S.A which was sold during the year.
27
G R I F F I N M I N I N G L I M I T E D
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
11. Tangible assets
COST / VALUATION
At 1 January 2000
Disposals during the year
At 31 December 2000
DEPRECIATION
At 1 January 2000
Provided during the year
Disposals during the year
At 31 December 2000
PROVISION FOR DIMINUTION IN VALUE
At 1 January 2000
Disposals during the year
At 31 December 2000
NET BOOK VALUE
At 31 December 2000
At 31 December 1999
Tangible fixed assets comprise:
Cost:
Plant and equipment
Office furniture and equipment
Depreciation:
Office furniture and equipment
Provisions for diminution in value:
Plant and equipment
NET BOOK VALUE
28
$000
549
(530)
19
64
5
(54)
15
226
(226)
0
4
259
1999
$000
318
231
549
2000
$000
–
19
19
(15)
(64)
–
4
(226)
259
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
R E P O R T A N D A C C O U N T S 2 0 0 0
12. Portfolio investments
Quoted (cost $873,000- 1999 $846,000)
Quoted securities are valued at the bid market price.
13. Cash and deposits
Analysis of changes in cash and cash equivalents
At 1 January 2000
Net cash inflow
At 31 December 2000
14. Share capital
2000
$000
501
1999
$000
82
$000
1,501
(1,131)
370
AUTHORISED:
Ordinary shares of US$0.10 each
100,000,000
10,000
100,000,000
10,000
2000
1999
Number
$000
Number
$000
CALLED UP ALLOTTED AND FULLY PAID
Ordinary shares of $0.10 each
At 1 January
Issued during the year
At 31 December
38,946,501
2,057,050
41,003,551
3,895
205
4,100
20,993,779
17,952,722
38,946,501
2,099
1,796
3,895
At a Special General Meeting of the Company held on 15 March 2001, shareholders approved resolutions to; reduce
the issued share capital of the Company with effect from 15 March, 2001, from $4,100,355 to $410,035 by a reduction
in par value of each of the 41,003,551 shares in issue from 10 cents each par value to 1 cent each par value with
$3,690,320 of the paid up share capital being reclassified as contributed surplus; subdivide the unissued capital of
$9,589,965 comprising 95,899,650 shares of 10 cent each par value, into 958,996,500 shares of a par value of 1 cent
each; and confirm the authorised share capital of the Company, following the reduction and sub-division at $10 million,
but divided into 1,000,000,000 shares of US$0.01 par value each.
On 24 January 2000 1,957,050 new ordinary shares in the Company were allotted at 9 UK pence ($0.145) per ordinary
share on the exercise of outstanding warrants.
On 26 May 2000 100,000 new ordinary shares in the Company were allotted at $0.10 per ordinary share in respect of
an introduction fee on the sale the Company’s interests in Burkina Faso to Aurex AB.
29
G R I F F I N M I N I N G L I M I T E D
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
15. Share premium
At 1 January 2000
Premium on shares issued in period
Expenses paid in connection with share issue
At 31 December 2000
16. Investment revaluation reserve
At 1 January 2000
Movements during the year
At 31 December 2000
17. Profit and loss account
At 1 January 2000
(Loss) for the financial year
Foreign exchange transfer
At 31 December 2000
18. Reconciliation of shareholders’ funds
Total gains and (losses) recognised in the year
Issue of ordinary shares in the year
Net additions to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
19. Equity minority interests
At 1 January 2000
Disposals in the year
At 31 December 2000
$000
13,084
89
(19)
13,154
$000
(764)
392
(372)
$000
(10,978)
(608)
109
(11,477)
1999
$000
(836)
2,293
1,457
4,046
5,503
$000
667
(667)
0
2000
$000
(213)
275
62
5,503
5,565
Equity minority interests of $667,000 arose on the acquisition of STREMCO S.A which was sold during the year.
20. Attributable net asset value per share
The attributable net asset value per share has been calculated from the consolidated net assets of the Group after
deducting the minority interest divided by the number of ordinary shares in issue at 31 December 2000 of 41,003,551
(38,946,501 at 31 December 1999).
30
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
R E P O R T A N D A C C O U N T S 2 0 0 0
21. Subsidiary companies
At 31 December 2000, Griffin Mining Limited had interests in the share capital of the following principal
subsidiary companies.
Class of
shares held
Proportion of
shares held
Nature of
business
Country of
incorporation
Ordinary
100%
Holding company
Australia
Name
China Zinc
Pty Limited
Hebei Hua’ Ao Mining
Development Company
Limited*
Professional Property
Projects (Pty) Ltd (‘PPP’)
Ordinary
80%
reducing to
60%(after payback of
capital expenditure)**
75%
Zinc exploration
and development
China
Holding company
Botswana
Thakadu Mining
(Pty) Ltd. (‘TMP’)*
Ordinary
75%
Copper mining
Botswana
* China Zinc Pty Limited and PPP are directly owned by the Company. China Zinc Pty Limited has a controlling interest
in Hebei Hua’ Ao Mining Development Company Limited, see below, and TMP is a wholly owned subsidiary of PPP.
** The joint venture contract establishing the Hebei Hua’ Ao Mining Development Company Limited provides that
80% of the net profits generated by the joint venture, together with a coupon of 4.5%, will be paid to the foreign party
until such time as the foreign party’s investment in the project has been recouped by it. Thereafter the foreign party will
receive 60% of the net profits, in accordance with its share in the equity interest in the joint venture.
22. Financial instruments
The Group finances its operations primarily from equity issues. The Group does not enter into derivative transactions
such as interest rate swaps, forward rate agreements or forward currency contracts. The Group has no borrowings other
than trade creditors and funds in excess of immediate requirements are placed in floating rate deposits. Although the
Group has overseas subsidiaries operating in China and Australia, whose costs are denominated in local currencies,
liabilities are primarily incurred in US dollars.
23. Post balance sheet events
On 22 March 2001 Griffin completed an equity placing of 41,751,922 new ordinary shares of par value one cent each
at 3.5 pence per share to raise $2.1 million before expenses. As part of the placing arrangements existing shareholders
were issued with up to 20,501,776 warrants exercisable at 3.5 pence per share on or before 15 May 2001. A total of
11,882,130 warrants have been exercised by warrant holders raising £416,000 ($580,000) for Griffin. The balance of
8,619,645 warrants have been exercised in accordance with the terms of the warrants with the 8,619,645 ordinary shares
resulting from the exercise thereof placed by Charles Stanley & Company Limited to raise a further £302,000 ($420,000)
for Griffin.
31
G R I F F I N M I N I N G L I M I T E D
CORPORATE INFORMATION
CORPORATE INFORMATION
Principal office:
Registered office:
Directors:
4th Floor, Linen Hall,
162-168 Regent Street,
London W1R 5TE, United Kingdom.
Telephone: + 44 (0)20 7663 9855
Facsimile: + 44 (0)20 7663 9856
Email: griffin@griffinmining.demon.co.uk
Web site: www.griffinmining.com
Clarendon House,
2 Church Street, Hamilton HM11, Bermuda.
Mladen Ninkov (Chairman)
Roger Goodwin (President and Finance Director)
Dal Brynelsen
Gordon Montgomery
William Mulligan
John Steele
Company Secretary:
Roger Goodwin
Nominated Adviser for AIM:
Insinger English Trust.
A division of Insinger de Beaufort (Corporate Finance) Limited
44 Worship Street, London, EC2A 2JT. UK.
Broker for AIM:
Auditors:
Solicitors:
Bankers:
Charles Stanley and Company Limited
25 Luke Street, London EC2A 4AR
Grant Thornton
31 Carlton Crescent, Southampton. SO15 2EW.
Denton Wilde Sapte
One Fleet Place, London, EC4M 7WS. UK.
Conyers Dill & Pearman
Clarendon House, Church Street, P.O. Box HM 666,
Hamilton, HMCX, Bermuda.
National Westminster Bank PLC.
St James’s and Piccadilly, London. W1A 2DG. UK.
The Bank of N T Butterfield & Son Ltd
Rosebank Centre, 14 Bermudiana Road, Pembroke, Bermuda.
UK Registrars & transfer agents:
Capita IRG plc
Balfour House, 390/398 High Street, Ilford, Essex IG1 1NQ. UK.
Canadian Transfer Agents:
CIBC Mellon Trust Company
320 Bay Street, Toronto, Ontario, M5H 4A6. Canada.
32